Accounting Policies of Dhani Services Ltd. Company
Mar 31, 2023
SIGNIFICANT ACCOUNTING POLICIES
for the year ended 31 March 2023
(All amounts in Indian Rupees in lakh unless stated otherwise)
Dhani Services Limited (''DSL'', ''the Holding Company'', ''the Company'') along with its subsidiaries and associate,
collectively referred to as ''the Group'' in following notes. The Group''s primary businesses are "Broking and Related
activities", "Financing and Related activities" and "Asset Reconstruction and Related activities". Broking and related
activities include business as a stock broker on the National Stock Exchange of India Limited (''NSE'') and the BSE
Limited (''BSE''), business as a commodity broker on the Multi Commodity Exchange of India Limited and the National
Commodity and Derivative Exchange Limited, business of cross selling of real estate and providing other ancillary
services relating to broking activities. Financing and Related activities include personal loans, business installment
loans etc. Asset Reconstruction and Related activities include asset reconstruction business of stressed assets.
On 2 April 2008, the equity shares of the Holding Company were listed on the NSE and the BSE after the demerger
of the Holding Company from Indiabulls Financial Services Limited (erstwhile holding company) vide Scheme of
Arrangement. The Holding Company is domiciled in India and its registered office is situated at 1/1 E, First Floor, East
Patel Nagar, New Delhi - 110008.
Note - 2General information and statement of compliance with Ind AS
These consolidated financial statements (''financial statements'') have been prepared in accordance with the Indian
Accounting Standards (hereinafter referred to as the ''Ind AS'') as notified by Ministry of Corporate Affairs (''MCA'')
under section 133 of the Companies Act, 2013 (''Act'') read with the Companies (Indian Accounting Standards) Rules,
2015, as amended and other relevant provisions of the Act. The Group has uniformly applied the accounting policies
during the periods presented in this consolidated financial statements.
These consolidated financial statements for the year ended 31 March 2023 are the consolidated financial statements
which has been prepared in accordance with Ind AS.
The consolidated financial statements for the year ended 31 March 2023 were authorized and approved for issue by
the Board of Directors on 26 May 2023.
The consolidated financial statements have been prepared on going concern basis in accordance with accounting
principles generally accepted in India. Further, the consolidated financial statements have been prepared on historical
cost basis except for certain financial assets and financial liabilities and share based payments which are measured at
fair values as explained in relevant accounting policies. These consolidated financial statements of the Company are
presented in Indian Rupees (INR) which is also the Company''s functional currency.
Note - 4Basis of consolidation
Subsidiaries
The consolidated financial statements comprise financial statements of the Holding Company and its subsidiaries.
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an
entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power to direct the relevant activities of the entity. The Group can have
power over the investee even if it owns less than majority voting rights i.e. rights arising from other contractual
arrangements. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They
are deconsolidated from the date that control ceases. Statement of profit and loss [including other comprehensive
income (''OCI'')] of subsidiaries acquired or disposed of during the period are recognized from the effective date of
acquisition, or up to the effective date of disposal, as applicable.
Note - 4Basis of consolidation (continued)
The Group combines the financial statements of the Holding Company and its subsidiaries line by line adding together
like items of assets, liabilities, equity, income and expenses. Intercompany transactions, balances and unrealised gains
on transactions between group companies are eliminated. Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests, presented as part of equity, represent the portion of a subsidiary''s statement of profit and
loss and net assets that is not held by the Group. Statement of profit and loss balance [including other comprehensive
income (''OCI'')] is attributed to the equity holders of the Holding Company and to the non-controlling interest basis
the respective ownership interests and such balance is attributed even if this results in controlling interests having a
deficit balance.
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions
with equity owners of the group. Such a change in ownership interest results in an adjustment between the carrying
amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any
difference between the amount of the adjustment to non-controlling interests and any consideration paid or received
is recognized within equity.
An associate is an entity over which the Group has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee but is not control or joint control those
policies. Investments in associates are accounted for using the equity method of accounting, after initially being
recognised at cost.
Interest in associates are accounted for using the equity method, after initially being recognized at cost. The carrying
amount of the investment is adjusted thereafter for the post acquisition change in the share of net assets of the
investee, adjusted where necessary to ensure consistency with the accounting principles and policies of the Group.
The consolidated statement of profit and loss (including the other comprehensive income) includes the Group''s share
of the results of the operations of the investee. Dividends received or receivable from associates are recognized as
a reduction in the carrying amount of the investment. Unrealised gains on transactions between the Group and its
associates are eliminated to the extent of the Group''s interests in associates.
The Group applies the acquisition method in accounting for business combinations. The consideration transferred
by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets
transferred, liabilities incurred and the equity interests issued by the Group. Acquisition costs are expensed as
incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their acquisition-date fair values. Goodwill is measured as excess of the aggregate of the fair value of the
consideration transferred, the amount recognized for non-controlling interests and fair value of any previous interest
held, over the fair value of the net of identifiable assets acquired and liabilities assumed. If the fair value of the net of
identifiable assets acquired and liabilities assumed is in excess of the aggregate mentioned above, the resulting gain
on bargain purchase is recognized in OCI and accumulated in equity as capital reserve. However, if there is no clear
evidence of bargain purchase, the entity recognizes the gain directly in equity as capital reserve, without routing the
same through other comprehensive income.
Business combinations involving entities or businesses under common control have been accounted for using the
pooling of interest method. The assets and liabilities of the combining entities are reflected at their carrying amounts.
No adjustments have been made to reflect fair values, or to recognize any new assets or liabilities.
Note - 5I Significant management judgement in applying accounting policies and estimation uncertainty
The preparation of the Group''s financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the related
disclosures. Actual results may differ from these estimates.
Significant management judgements
Recognition of deferred tax assets - The extent to which deferred tax assets can be recognized is based on an
assessment of the probability of the future taxable income against which the deferred tax assets can be utilized.
Business model assessment - The Group determines the business model at a level that reflects how groups
of financial assets are managed together to achieve a particular business objective. This assessment includes
judgement reflecting all relevant evidence including how the performance of the assets is evaluated and their
performance measured, the risks that affect the performance of the assets and how these are managed and
how the managers of the assets are compensated. The Group monitors financial assets measured at amortised
cost that are derecognised prior to their maturity to understand the reason for their disposal and whether the
reasons are consistent with the objective of the business for which the asset was held. Monitoring is part of the
Group''s continuous assessment of whether the business model for which the remaining financial assets are held
continues to be appropriate and if it is not appropriate whether there has been a change in business model and
so a prospective change to the classification of those assets.
Evaluation of indicators for impairment of assets - The evaluation of applicability of indicators of impairment
of assets requires assessment of several external and internal factors which could result in deterioration of
recoverable amount of the assets.
Impairment of financial assets - The evaluation of applicability of indicators of impairment of assets requires
assessment of several external and internal factors which could result in deterioration of recoverable amount of
the assets.
Expected credit loss (''ECL'') - The measurement of expected credit loss allowance for financial assets measured
at amortised cost requires use of complex models and significant assumptions about future economic conditions
and credit behaviour (e.g. likelihood of customers defaulting and resulting losses). The Group makes significant
judgements with regard to the following while assessing expected credit loss:
¦ Determining criteria for significant increase in credit risk;
¦ Establishing the number and relative weightings of forward-looking scenarios for each type of product/
market and the associated ECL; and
¦ Establishing groups of similar financial assets for the purposes of measuring ECL.
Provisions - At each balance sheet date basis the management judgment, changes in facts and legal aspects, the
Group assesses the requirement of provisions against the outstanding contingent liabilities. However, the actual
future outcome may be different from this judgement.
Useful lives of depreciable/amortisable assets - Management reviews its estimate of the useful lives of
depreciable/amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties
in these estimates relate to technical and economic obsolescence that may change the utility of assets.
Defined benefit obligation (DBO) - Management''s estimate of the DBO is based on a number of underlying
assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary
increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined
benefit expenses.
Fair value measurements - Management applies valuation techniques to determine the fair value of financial
instruments (where active market quotes are not available). This involves developing estimates and assumptions
consistent with how market participants would price the instrument.
II Summary of significant accounting policies
The consolidated financial statements have been prepared using the significant accounting policies and
measurement bases summarised below. These were used throughout all periods presented in the consolidated
financial statements, except where the Group has applied certain accounting policies and exemptions upon
transition to Ind AS.
a. Property, plant and equipmentRecognition and initial measurement
Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price,
borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its
working condition for the intended use. Any trade discount and rebates are deducted in arriving at the
purchase price. Subsequent costs are included in the asset''s carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with the item will
flow to the Group. All other repair and maintenance costs are recognised in consolidated statement of profit
and loss as incurred.
Subsequent measurement (depreciation and useful lives)
Property, plant and equipment are subsequently measured at cost less accumulated depreciation and
impairment losses. Depreciation on property, plant and equipment is provided on a straight-line basis,
computed on the basis of useful lives prescribed in Schedule II to the Companies Act 2013. Leasehold
improvements are amortised over the duration of the lease.
Property, plant and equipment individually costing up to INR 5,000 are fully depreciated in the year of
acquisition. Depreciation is calculated on pro rata basis from the date on which the asset is ready for use or
till the date the asset is sold or disposed.
The residual values, useful lives and method of depreciation are reviewed at the end of each financial year.
De-recognition
An item of property, plant and equipment and any significant part initially recognised is derecognised upon
disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising
on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is recognized in the consolidated statement of profit and loss, when the asset
is derecognised.
b. Intangible assetsRecognition and initial measurement
Intangible assets are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if
capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for
the intended use.
Subsequent measurement (amortisation method, useful lives and residual value)
Intangible assets are amortised from the date when the assets are available for use. The estimated useful
life (amortisation period) of the intangible assets is arrived basis the expected pattern of consumption of
economic benefits and is reviewed at the end of each financial year and the amortisation period is revised
to reflect the changed pattern, if any.
The Company had developed a software that is used to enhance the company''s business in e-wallet
segment. Useful life of that software were estimated 4 year basis the expected economic benefit from the
software . However, the company has reassessed the expected pattern of consumption of economic benefit
basis technical estimate of the software and expect benefits will flow to the Company till 10 years.
c. Intangible assets under development
Intangible assets under development represents expenditure incurred in respect of intangible assets under
development and are carried at cost. Cost includes development cost, borrowing costs and other direct
expenditure necessary to create, produce and prepare the asset to be capable of operating in the manner
intended by management. These are recognised as assets when the Group can demonstrate following
recognition requirements:
¦ The development costs can be measured reliably;
¦ The project is technically and commercially feasible;
¦ The Group intends to and has sufficient resources to complete the project;
¦ The Group has the ability to use or sell the such intangible asset; and
¦ The asset will generate probable future economic benefits.
Amortisation of the asset begins when development is complete and the asset is available for use.
Revenue (other than for those items to which Ind AS 109 Financial Instruments are applicable) towards
satisfaction of a performance obligation is measured at the amount of transaction price (net of variable
consideration) allocated to that performance obligation. The transaction price of goods sold and services
rendered is net of variable consideration on account of various discounts and schemes offered by the
company as part of the contract. Ind AS 115, Revenue from contracts with customers, outlines a single
comprehensive model of accounting for revenue arising from contracts with customers.
The Group 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 Group 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 Group allocates the transaction price to each performance
obligation in an amount that depicts the amount of consideration to which the Group expects to be entitled
in exchange for satisfying each performance obligation.
Step 5: Recognise revenue when (or as) the Group satisfies a performance obligation.
The Company recognises revenue from the following sources:
Interest consists of consideration for the time value of money, for the credit risk associated with the principal
amount outstanding during a particular period of time and for other basic lending risks and costs, as well
as a profit margin. Interest income are recognised using the effective interest method (''EIR''). Calculation
of the EIR includes all fees received or cost incurred that are incremental and directly attributable to the
acquisition of a financial asset. Interest income is calculated by applying the EIR to the gross carrying amount
of non-credit impaired financial assets.
Gains arising out of direct assignment transactions comprise the difference between the interest on the
loan portfolio and the applicable rate at which the direct assignment is entered into with the assignee, also
known as the right of excess interest spread (EIS). The future EIS basis the scheduled cash flows on execution
of the transaction, discounted at the applicable rate entered into with the assignee is recorded upfront in
the statement of profit and loss. EIS evaluated and adjusted for ECL and expected prepayment.
Interest on investments and deposits
Interest income is recorded on accrual basis using the effective interest rate (EIR) method.
Income from services rendered as a broker is recognised upon rendering of the services on a trade date
basis, in accordance with the terms of contract.
Management fee is recognised as revenue on accrual basis based on contractual arrangement, when there
is no uncertainty in the ultimate realisation/collection.
Recovery/incentive fee
Recovery/incentive fee is recognised as revenue on accrual basis based on contractual arrangement, when
there is no uncertainty in the ultimate realisation/collection.
Commissions / brokerage from distribution of financial products are recognised on accrual basis upon
allotment of the securities to the applicant.
Revenue from Digital Wallet Service & Merchant Fee
Revenue from digital services is recognized for providing payment gateway aggregation services and as a
platform for merchant transactions executed through the wallets provided to customers through payment
gateways, on a periodic basis as and when transactions are settled. Wallet maintenance fees in relation to
facilitating wallet transactions and maintenance of related technical platforms is recognized on an accrual
basis. Merchant fees from wallet transaction are recognized on the basis of successful pay-out of wallet
usage to the respective merchants. The settlements are done daily for such transactions with the merchants.
Revenue from banking correspondence services are recognised on accrual basis in accordance with the
terms and conditions of the underlying mandates entered into with bank. The Group provides card enabled
prepaid payment program management and remittance services. In such contracts, revenue is recognised
as and when transactions are done through cards.
Depository account maintenance income
Depository account maintenance income is recognised on accrual basis and as at the time when the right to
receive is established by the reporting date.
In respect of sale of pharmaceutical products, where the performance obligation is satisfied at a point in
time, revenue is recognised when the control of goods is transferred to the customer.
Revenue from consultation, is recognised as the underlying services has performed. Upfront non-refundable
payments received under these arrangements are deferred and recognised as revenue over the expected
period over which the related services are expected to be performed.
Dividend income is recognised when the right to receive payment of the dividend is established, it is
probable that the economic benefits associated with the dividend will flow to the Group and the amount of
the dividend can be measured reliably.
Net gain on fair value changes
The Group designates certain financial assets for subsequent measurement at fair value through profit or
loss (FVTPL) or fair value through other comprehensive income (FVOCI). The Group recognises gains on fair
value change of financial assets measured at FVTPL and realised gains on derecognition of financial asset
measured at FVTPL and FVOCI on net basis.
All other income is recognized on an accrual basis, when there is no uncertainty in the ultimate realization/
collection.
Borrowing costs directly attributable to the acquisition and/or construction of a qualifying asset are
capitalized during the period of time that is necessary to complete and prepare the asset for its intended use
or sale. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended
use. All other borrowing costs are charged to the consolidated statement of profit and loss as incurred basis
the effective interest rate method.
Tax expense recognized in consolidated statement of profit and loss comprises the sum of deferred tax and
current tax except the ones recognized in other comprehensive income or directly in equity.
Current tax is determined as the tax payable in respect of taxable income for the year and is computed
in accordance with relevant tax regulations. Current income tax relating to items recognised outside
consolidated profit and loss is recognised outside profit and loss (either in other comprehensive income or
in equity).
Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognised
amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
Minimum alternate tax (''MAT'') credit entitlement is recognised as an asset only when and to the extent
there is convincing evidence that normal income tax will be paid during the specified period. In the year in
which MAT credit becomes eligible to be recognised as an asset, the said asset is created by way of a credit
to the consolidated statement of profit and loss and shown as MAT credit entitlement. This is reviewed at
each balance sheet date and the carrying amount of MAT credit entitlement is written down to the extent it
is not reasonably certain that normal income tax will be paid during the specified period.
Deferred tax is recognised in respect of temporary differences between carrying amount of assets and
liabilities for financial reporting purposes and corresponding amount used for taxation purposes. Deferred
tax assets on unrealised tax loss are recognised to the extent that it is probable that the underlying tax
loss will be utilised against future taxable income. This is assessed based on the Group''s forecast of future
operating results, adjusted for significant non-taxable income and expenses and specific limits on the use
of any unused tax loss. Unrecognised deferred tax assets are re-assessed at each reporting date and are
recognised to the extent that it has become probable that future taxable profits will allow the deferred tax
asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date. The measurement of deferred tax reflects the tax consequences
that would follow from the manner in which the Group expects, at the reporting date to recover or settle
the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset only if there is a
legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle
the liability on a net basis or simultaneously. Deferred tax relating to items recognised outside statement of
profit and loss is recognised outside consolidated statement of profit and loss (either in other comprehensive
income or in equity).
g. Employee benefits
Short-term employee benefits
Short-term employee benefits comprise of employee costs such as salaries, bonus etc. is recognized on the
basis of the amount paid or payable for the period during which services are rendered by the employee.
Other long-term employee benefits
The Group also provides the benefit of compensated absences to its employees which are in the nature of
long-term employee benefit plan. Liability in respect of compensated absences becoming due and expected
to availed after one year from the Balance Sheet date is estimated in the basis of an actuarial valuation
performed by an independent actuary using the projected unit credit method as on the reporting date.
Actuarial gains and losses arising from past experience and changes in actuarial assumptions are charged to
consolidated statement of profit and loss in the year in which such gains or losses are determined.
Post-employment benefit plans are classified into defined benefits plans and defined contribution plans as
under:
The Group has a defined contribution plans namely provident fund, pension fund, labour welfare fund
and employees state insurance scheme. The contribution made by the Group in respect of these plans are
charged to the consolidated statement of profit and loss.
The Group has unfunded gratuity as defined benefit plan where the amount that an employee will receive
on retirement is defined by reference to the employee''s length of service and final salary. The liability
recognised in the balance sheet for defined benefit plans as the present value of the defined benefit
obligation (DBO) at the reporting date. Management estimates the DBO annually with the assistance of
independent actuaries. Actuarial gains/losses resulting from re-measurements of the liability are included
in other comprehensive income.
The Holding Company has formulated various Employees Stock Option Schemes. The fair value of
options granted under Employee Stock Option Plan is recognised as an employee benefits expense with
a corresponding increase in other equity. The total amount to be expensed is determined by reference to
the fair value of the options. The total expense is recognised over the vesting period, which is the period
over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity
revises its estimates of the number of options that are expected to vest based on the non-market vesting
and service conditions. It recognises the impact of the revision to original estimates, if any, in consolidated
statement of profit and loss, with a corresponding adjustment to equity.
Cash and cash equivalents comprise cash on hand, demand deposits and short-term highly liquid investments
that are readily convertible into known amount of cash and which are subject to an insignificant risk of
changes in value. For cash flow statement purposes, cash and cash equivalents includes bank overdrafts that
are repayable on demand and form an integral part of the Group''s cash management.
Mar 31, 2021
Nature of principal activities
Dhani Services Limited (''DSL'' or ''the Company'', CIN: L74999DL1995PLC069631) (formerly Indiabulls Ventures Limited) had carried business as stock broker on the National Stock Exchange of India Limited (''NSE'') and the BSE Limited (''BSE''); depository participants and renders other related ancillary services untill 20th February 2020. The Company has transferred its stock broking business, including depository and other related ancillary services, through slump sale on going concern basis to its wholly owned subsidiary company Dhani Stocks Limited (formerly Indiabulls Securities Limited) w.e.f. 21st February 2020. Post slump sale, the Company has assets in the form of loans given to subsidiary companies and investments made in subsidiary companies. Further, since the Company was a Non-Banking Financial Company as defined under Rule 2(g) of the Companies (Indian Accounting Standards) Rules, 2015 issued under Section 133 of the Companies Act, 2013 till 20 February 2020 and having regard to the nature of the continuing operations of the Group, the Management has continued to present the standalone financial statements using Division III of Schedule III to the Companies Act, 2013.
On 2 April 2008 the Equity shares of the Company got listed on the NSE and the BSE after the demerger of the Company from Indiabulls Financial Services Limited (erstwhile holding Company) vide Scheme of Arrangement. The Company is domiciled in India and its registered office is situated at M-62 & 63, First Floor, Connaught Place, New Delhi - 110001.
The name of the Company has been changed from ''Indiabulls Ventures Limited'' to ''Dhani Services Limited'' with effect from 6 October 2020 in order to align Group''s business of providing technology enabled subscription based healthcare and transaction finance services, through its Dhani App.
General information and statement of compliance with Ind AS
These standalone financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ''Ind AS'') as notified by Ministry of Corporate Affairs (''MCA'') under section 133 of the Companies Act, 2013 (''Act'') read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and other relevant provisions of the Act. The Company has uniformly applied the accounting policies during the periods presented in these financial statements.
The standalone financial statements for the year ended 31 March 2021 were authorized and approved for issue by the Board of Directors on 18 June 2021.
Basis of preparation
The standalone financial statements have been prepared on going concern basis in accordance with accounting principles generally accepted in India. Further, the standalone financial statements have been prepared on historical cost basis except for certain financial assets and financial liabilities and share based payments which are measured at fair values as explained in relevant accounting policies. These standalone financial statements of the Company are presented in Indian Rupees (INR) which is also the Company''s functional currency.
I Significant management judgement in applying accounting policies and estimation uncertainty
The preparation of the Company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the related disclosures.
Significant management judgements
Recognition of deferred tax assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilized.
Evaluation of indicators for impairment of assets - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Impairment of financial assets - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Provisions - At each balance sheet date basis the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding contingent liabilities. However, the actual future outcome may be different from this judgement.
Significant estimates
Useful lives of depreciable/amortisable assets - Management reviews its estimate of the useful lives of depreciable/ amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of assets.
Defined benefit obligation (DBO) - Management''s estimate of the DBO is based on a number of underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Fair value measurements - Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available). This involves developing estimates and assumptions consistent with how market participants would price the instrument.
II Summary of significant accounting policies
The standalone financial statements have been prepared using the significant accounting policies and measurement bases summarised below. These were used throughout all periods presented in the standalone financial statements, except where the Company has applied certain accounting policies and exemptions upon transition to Ind AS.
a) Property, plant and equipment
Recognition and initial measurement
Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.
Subsequent measurement (depreciation and useful lives)
Property, plant and equipment are subsequently measured at cost less accumulated depreciation and impairment losses. Depreciation on property, plant and equipment is provided on a straight-line basis, computed on the basis of useful lives prescribed in Schedule II to the Act. Leasehold Improvements are amortised over the duration of the lease.
|
Asset class |
Useful life |
|
Furniture and fixtures |
10 years |
|
Vehicles |
8-10 years |
|
Office equipment |
3-5 years |
|
Computers 3 years |
|
The residual values, useful lives and method of depreciation are reviewed at the end of each financial year.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognized in the statement of profit and loss, when the asset is derecognised.
b) Intangible assets
Recognition and initial measurement
Intangible assets are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use.
Subsequent measurement (amortisation)
Intangible assets consisting of software are amortised on a straight line basis over a period of 4 years from the date when the assets are available for use. The estimated useful life (amortisation period) of the intangible assets is arrived basis the expected pattern of consumption of economic benefits and is reviewed at the end of each financial year and the amortisation period is revised to reflect the changed pattern, if any.
c) Intangible assets under development
Intangible assets under development represents expenditure incurred in respect of intangible assets under development and are carried at cost. Cost includes development cost, borrowing costs and other direct expenditure necessary to create, produce and prepare the asset to be capable of operating in the manner intended by management. These are recognised as assets when the Company can demonstrate following recognition requirements:
¦ The development costs can be measured reliably;
¦ The project is technically and commercially feasible;
¦ The Company intends to and has sufficient resources to complete the project;
¦ The Company has the ability to use or sell the such intangible asset; and
¦ The software will generate probable future economic benefits.
Amortisation of the asset begins when development is complete and the asset is available for use.
d) Revenue recognition
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.
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.
The Company recognises revenue from the following sources:
Interest income
Interest income is recorded on accrual basis using the effective interest rate (EIR) method.
Brokerage income
Income from services rendered as a broker is recognised upon rendering of the services on a trade date basis, in accordance with the terms of contract.
Commission income
Commissions / brokerage from distribution of financial products are recognised upon allotment of the securities to the applicant.
Depository account maintenance income
Depository account maintenance income is recognised on accrual basis and as at the time when the right to receive is established by the reporting date.
Dividend income
Dividend income is recognised when the right to receive payment of the dividend 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.
e) Borrowing costs
Borrowing costs directly attributable to the acquisition and/or construction of a qualifying asset are capitalized during the period of time that is necessary to complete and prepare the asset for its intended use or sale. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to the statement of profit and loss as incurred basis the effective interest rate method.
f) Taxation
Tax expense recognized in statement of profit and loss comprises the sum of deferred tax and current tax except the ones recognized in other comprehensive income or directly in equity.
Current tax is determined as the tax payable in respect of taxable income for the year and is computed in accordance with relevant tax regulations. Current Income-tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity).
Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
Deferred tax is recognised in respect of temporary differences between carrying amount of assets and liabilities for financial reporting purposes and corresponding amount used for taxation purposes. Deferred tax assets on unrealised tax loss are recognised to the extent that it is probable that the underlying tax loss will be utilised against future taxable income. This is assessed based on the Company''s forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss.
Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously. Deferred tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit or loss (either in other comprehensive income or in equity).
g) Employee benefits
Short-term employee benefits
Short-term employee benefits comprise of employee costs such as salaries, bonus etc. is recognized on the basis of the amount paid or payable for the period during which services are rendered by the employee.
Defined contribution plans
The Company has a defined contribution plans namely provident fund, pension fund, labour welfare fund and employees state insurance scheme. The contribution made by the Company in respect of these plans are charged to the statement of profit and loss.
Defined benefit plans
The Company has unfunded gratuity as defined benefit plan where the amount that an employee will receive on retirement is defined by reference to the employee''s length of service and final salary. The liability recognised in the balance sheet for defined benefit plans as the present value of the defined benefit obligation (DBO) at the reporting date. Management estimates the DBO annually with the assistance of independent actuaries. Actuarial gains/losses resulting from re-measurements of the liability are included in other comprehensive income.
Other long-term employee benefits
The Company also provides the benefit of compensated absences to its employees which are in the nature of long-term employee benefit plan. Liability in respect of compensated absences becoming due and expected to availed after one year from the Balance Sheet date is estimated in the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method as on the reporting date. Actuarial gains and losses arising from past experience and changes in actuarial assumptions are charged to statement of profit and loss in the year in which such gains or losses are determined.
h) Share based payments
The Company has formulated various Employees Stock Option Schemes. The fair value of options granted under Employee Stock Option Plan is recognised as an employee benefits expense with a corresponding increase in other equity. The total amount to be expensed is determined by reference to the fair value of the options. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in statement of profit and loss, with a corresponding adjustment to equity.
i) Dividend
Provision is made for the amount of any dividend declared on or before the end of the reporting period but not distributed at the end of the reporting period, being appropriately authorised and no longer at the discretion of the Company. The final dividend on shares is recorded as a liability on the date of approval by the shareholders, and interim dividends are recorded as a liability on the date of declaration by the Company''s Board of Directors.
j) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits and short-term highly liquid investments that are readily convertible into known amount of cash and which are subject to an insignificant risk of changes in value. For cash flow statement purposes, cash and cash equivalents includes bank overdrafts that are repayable on demand and form an integral part of the Company''s cash management.
k) Equity investment in subsidiaries
Investment in subsidiaries is recognised at cost and are not adjusted to fair value at the end of each reporting period as allowed by Ind AS 27 ''Separate financial statement''. Cost of investment represents amount paid for acquisition of the said investment and a proportionate recognition of the fair vale of shares granted to employees of subsidiary under a group share based payment arrangement.
Impairment of Investments
The Company assesses at the end of each reporting period, if there are any indications that the said investment may be impaired. If so, the Company estimates the recoverable value/amount of the investment and provides for impairment, if any i.e. the deficit in the recoverable value over cost.
l) Provisions, contingent assets and contingent liabilities
Provisions are recognized only when there is a present obligation, as a result of past events, and when a reliable estimate of the amount of obligation can be made at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. Provisions are discounted to their present values, where the time value of money is material.
Contingent liability is disclosed for:
a) Possible obligations which will be confirmed only by future events not wholly within the control of the Company or
b) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are neither recognised nor disclosed except when realisation of income is virtually certain, related asset is disclosed.
m) Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs. Subsequent measurement of financial assets and financial liabilities is described below.
Subsequent measurement
i. Financial assets carried at amortised cost - a financial asset is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
ii. Investments in equity instruments - Investments in equity instruments which are held for trading are classified as at fair value through profit or loss (FVTPL). For all other equity instruments, the Company makes an irrevocable choice upon initial recognition, on an instrument by instrument basis, to classify the same either as at fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL). Amounts presented in other comprehensive income are not subsequently transferred to profit or loss. However, the Company transfers the cumulative gain or loss within equity. Dividends on such investments are recognised in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.
iii. Investments in mutual funds - Investments in mutual funds are measured at fair value through profit and loss (FVTPL).
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a nonfinancial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques, as summarised below:
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.
Level 3 financial instruments: Those that include one or more unobservable input that is significant to the measurement as whole. Based on the Company''s business model for managing the investments, the Company has classified its investments and securities for trade at FVTPL.
Financial liabilities are carried at amortised cost using the effective interest rate method. For trade and other payables the carrying amount approximates the fair value due to short maturity of these instruments.
De-recognition of financial assets
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. Further, if the Company has not retained control, it shall also derecognise the financial asset and recognise separately as assets or liabilities any rights and obligations created or retained in the transfer.
Subsequent measurement
Subsequent to initial recognition, all financial liabilities are measured at amortised cost using the effective interest method.
De-recognition of financial liabilities
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When 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 the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
Convertible debentures
Convertible debentures are separated into liability and equity components basis the terms of the contract. On issuance of the convertible debentures, the fair value of the liability component is determined using a market rate for an equivalent non-convertible instrument. This amount is classified as financial liability measured at amortised cost until it is extinguished on conversion. The remainder of the proceeds is recognised in equity since conversion option meets the fixed for fixed criteria.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
n) Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets. The Company factors historical trends and forward looking information to assess expected credit losses associated with its assets and impairment methodology applied depends on whether there has been a significant increase in credit risk.
Trade receivables
In respect of trade receivables, the Company applies the simplified approach of Ind AS 109, which requires measurement of loss allowance at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
Other financial assets
In respect of its other financial assets, the Company assesses if the credit risk on those financial assets has increased significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the Company measures the loss allowance at an amount equal to 12-month expected credit losses, else at an amount equal to the lifetime expected credit losses. The Company assumes that the credit risk on a financial asset has not increased significantly since initial recognition, if the financial asset is determined to have low credit risk at the balance sheet date.
Write-offs
Financial assets are written off either partially or in their entirety to the extent that there is no realistic prospect of recovery. Any subsequent recoveries are credited to impairment on financial instrument in the statement of profit and loss.
o) Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. Recoverable amount is higher of an asset''s net selling price and its value in use. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If at the reporting date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.
p) Earnings per equity share
Basic earnings per equity share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue. Partly paid-up equity shares are treated as a fraction of an equity share to the extent they are entitled to participate in dividend relative to a fully paid-up equity share during the reporting period. Compulsory convertible debentures are treated as equivalent of equity share for the purpose of basic earnings per equity share. Treasury shares are adjusted for computation of weighted average equity shares.
For the purpose of calculating diluted earnings per equity share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
q) Segment reporting
The Company identifies segment basis the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/ loss amounts are regularly reviewed by the CODM (''chief operating decision maker'') in deciding how to allocate resources and in assessing performance.
r) Foreign currency
Functional and presentation currency
Items included in the standalone financial statement of the Company are measured using the currency of the primary economic environment in which the entity operates (''the functional currency''). The standalone financial statements have been prepared and presented in Indian Rupees (INR), which is the Company''s functional and presentation currency.
Transactions and balances
Foreign currency transactions are recorded in the functional currency, by applying to the exchange rate between the functional currency and the foreign currency at the date of the transaction. Foreign currency monetary items outstanding at the balance sheet date are converted to functional currency using the closing rate. Non-monetary items denominated in a foreign currency which are carried at historical cost are reported using the exchange rate at the date of the transaction.
Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates different from those at which they were initially recorded, are recognized in the statement of profit and loss in the year in which they arise.
s) Treasury shares
The Company had created "Indiabulls Ventures Limited - Employee Welfare Trust" (''Trust'') for the implementation of schemes namely employees stock options plans, employees stock purchase plan and stock appreciation rights plan. During the year ended 31 March 2021, name of the Trust has been changed to "Udaan Employee Welfare Trust" ("UEWT"). The Company treats UEWT as its extension and the Company''s own shares held by UEWT are treated as treasury shares. Treasury shares are presented as a deduction from other equity. The original cost of treasury shares and the proceeds of any subsequent sale are presented as movements in equity.
The Company enters into leasing arrangements for various premises. The assessment (including measurement) of the lease is based on several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee''s option to extend/terminate etc. After the commencement date, the Company reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to extend or to terminate.
Leases
Till previous year, assets acquired on leases where a significant portion of risk and rewards of ownership are retained by the lessor are classified as operating leases. Lease rental are charged to statement of profit and loss on straight-line basis except where scheduled increase in rent compensate the lessor for expected inflationary costs.
Recognition and initial measurement
At lease commencement date, the Company recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Company, an estimate of any costs to dismantle and remove the asset at the end of the lease (if any), and any lease payments made in advance of the lease commencement date (net of any incentives received).
Subsequent measurement
The Company depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Company also assesses the right-of-use asset for impairment when such indicators exist.
At lease commencement date, the Company measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Company''s incremental borrowing rate. Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed payments) and variable payments based on an index or rate. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is re-measured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments. When the lease liability is re-measured, the corresponding adjustment is reflected in the right-of-use asset.
The Company has elected to account for short-term leases using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in statement of profit and loss on a straight-line basis over the lease term.
u) Non-current assets held for sale and discontinued operations
The Company classifies assets as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use.
Assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable, and the asset is available for immediate sale in its present condition. Actions required to complete the sale/ distribution should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the sale and the sale expected within one year from the date of classification.
For these purposes, sale transactions include exchanges of assets for other assets when the exchange has
commercial substance.
The Company treats sale of the asset to be highly probable when:
- The appropriate level of management is committed to a plan to sell the asset,
- An active programme to locate a buyer and complete the plan has been initiated (if applicable),
- The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value,
- The sale is expected to qualify for recognition as a completed sale within one year from the date of classification, and
- Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Assets and liabilities classified as held for sale are presented separately from other items in the balance sheet.
The results of discontinued operations are presented separately in the Statement of Profit and Loss.
v) New Accounting Pronouncement
On 24 March 2021, the Ministry of Corporate Affairs ("MCA") through a notification, amended Schedule III of the
Companies Act, 2013. The amendments revise Division I, II and III of Schedule III and are applicable from 1 April
2021. Key amendments relating to Division II which relate to companies whose financial statements are required
to comply with Companies (Indian Accounting Standards) Rules 2015 are:
Balance Sheet
- Lease liabilities should be separately disclosed under the head ''financial liabilities'', duly distinguished as current or noncurrent.
- Certain additional disclosures in the statement of changes in equity such as changes in equity share capital due to prior period errors and restated balances at the beginning of the current reporting period.
- Specified format for disclosure of shareholding of promoters.
- Specified format for ageing schedule of trade receivables, trade payables, capital work-in-progress and intangible asset under development.
- If a company has not used funds for the specific purpose for which it was borrowed from banks and financial institutions, then disclosure of details of where it has been used.
- Specific disclosure under ''additional regulatory requirement'' such as compliance with approved schemes of arrangements, compliance with number of layers of companies, title deeds of immovable property not held in name of company, loans and advances to promoters, directors, key managerial personnel (KMP) and related parties, details of benami property held etc.
Statement of profit and loss:
- Additional disclosures relating to Corporate Social Responsibility (CSR), undisclosed income and crypto or virtual currency specified under the head ''additional information'' in the notes forming part of the standalone financial statements.
The amendments are extensive and the Company will evaluate the same to give effect to them as required by law.
Mar 31, 2018
a) Basis of accounting and preparation of financial statements:
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 (âthe Actâ), read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended). The financial statements have been prepared on an 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:
The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/ materialise.
c) Cash and cash equivalents (for purposes of Cash Flow Statement):
Cash comprises cash on hand and balances with banks in current and deposits accounts. 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.
d) Revenue recognition:
- Revenue from brokerage activities is accounted for on the trade date of the transaction.
- Revenue from interest charged to customers on margin funding is recognised on a daily/ monthly basis up to the last day of accounting period.
- Depository income is accounted on accrual basis as and when the right to receive the income is established. Annual maintenance charges are recognised on pro-rata basis over the period it is charged.
- Income from trading account maintenance is accounted on accrual basis and when the right to receive the income is established.
- Revenue from interest on fixed deposits is recognised on accrual basis.
- Commission on mutual funds is recognised on accrual basis.
e) Other income:
- Dividend income on equity shares is recognised when the right to receive the dividend is unconditional as at the Balance Sheet date.
- Dividend income on units of mutual funds is recognised when the right to receive the dividend is unconditional as at the Balance Sheet date. Any gains/ losses on sale/ redemption of units are recognised on the date of sale/ redemption.
- Interest income on inter corporate deposits is recognised on accrual basis.
f) Commercial papers:
The liability is recognised at face value of the commercial paper at the time of issue of the commercial paper. The discount on issue of the commercial paper is amortised over the tenure of the instrument.
g) Property, plant and equipment:
i. Recognition and initial measurement:
Property, plant and equipment are stated at their cost of acquisition less accumulated depreciation/ impairment losses, if any. Cost comprises purchase price and expense directly attributable to bringing the asset to its working condition and intended use. Any trade discount and rebates are deducted in arriving at the purchase price. Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company. All other repair and maintenance costs are recognised in the Statement of Profit and Loss.
ii. Depreciation and useful lives:
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.
Depreciation on property, plant and equipment is provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013. Leasehold Improvements are amortised over the duration of the lease. Depreciation on sale/ deduction from fixed assets is provided for up to the date of sale/ scrapping, as the case may be. Assets costing Rs. 5,000 or less per item are fully depreciated in the year of capitalisation.
iii. De-recognition:
An item of property, plant and equipment initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of an asset (calculated as difference between the net disposal proceeds and carrying amount of an asset) is recognised in the Statement of Profit and Loss when an asset is derecognised.
h) Intangible assets:
i. Recognition and initial measurement:
Intangible assets are stated at their cost of acquisition less accumulated amortisation/ impairment losses, if any. Cost comprises purchase price and expense directly attributable to bringing the asset to its working condition and intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
ii. Amortisation and useful lives:
Intangible assets consisting of membership rights of the BSE Limited are amortised on a straight-line method basis over a period of five years from the date when the rights became available for use. Intangible assets consisting of software are amortised on a straight line basis over a period of four years from the date when the assets are available for use.
The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation period is revised to reflect the changed pattern, if any.
iii. Intangible assets under development:
Expenditure on development eligible for capitalisation are carried as Intangible assets under development where such assets are not yet ready for their intended use.
i) Impairment of assets:
The carrying values of assets/ cash generating units at each balance sheet date are reviewed for impairment, if any indication of impairment exists.
If the carrying amount of these assets exceeds their recoverable amount, an impairment is recognised for such excess amount.
The recoverable amount is the greater of the net selling price and their 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, except in case of revalued assets, to the extent the amount was previously charged to the Statement of Profit and Loss.
j) Investments:
Investments are classified as long-term and current. Long-term investments, are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties.
k) Foreign currency transactions and translations:
i. Recognition & translation
- Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of transaction.
- Monetary items denominated in foreign currencies at the year end are translated at year end exchange rates.
- Non monetary foreign currency items are carried at cost.
- Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss.
ii. Exchange differences
- Exchange differences arising on a monetary item that in substance, forms part of the Companyâs net investment in a non-integral foreign operation is accumulated in the foreign currency translation reserve until the disposal of the net investment. On the disposal of such net investment, the cumulative amount of the exchange differences which have been deferred and which relate to that investment is recognised as income or as expenses in the same period in which the gain or loss on disposal is recognised.
- The exchange differences arising on settlement/ restatement of long-term foreign currency monetary items are capitalised as part of the depreciable fixed assets to which the monetary item relates and depreciated over the remaining useful life of such assets. If such monetary items do not relate to acquisition of depreciable fixed assets, the exchange difference is amortised over the maturity period/ upto the date of settlement of such monetary items, whichever is earlier, and charged to the Statement of Profit and Loss except in case of exchange differences arising on net investment in non-integral foreign operations, where such amortisation is taken to foreign currency translation reserve until disposal/ recovery of the net investment. The unamortised exchange difference is carried in the Balance Sheet as foreign currency monetary item translation difference account net of the tax effect thereon, where applicable.
- Exchange differences arising on other long-term foreign currency monetary items are accumulated in the foreign currency monetary item translation difference account and amortised over the remaining life of the concerned monetary item.
- All other exchange differences are recognised as income or as expenses in the period in which they arise.
l) Employee benefits:
i. Defined contribution plans:
The Company has a defined contribution plans namely provident fund, employees state insurance, labour welfare fund and employees national pension scheme. The contribution made by the Company in respect of these plans are charged to the Statement of Profit and Loss. In respect of these contributions, the Company has no further obligations beyond making the contribution, and hence, such employee benefit plans are classified as defined contribution plans.
ii. Defined benefits plan:
The Company has unfunded gratuity as defined benefit where the amount that employee will receive on retirement is defined by reference to employeeâs length of service and last drawn salary. The liability recognised in the balance sheet for defined benefit plan is the present value of defined benefit obligation at the reporting date. The present value of defined benefit obligation is determined on the basis of an actuarial valuation at the end of the year using the projected unit credit method. Actuarial gains/ losses comprise experience adjustments and the effects of change in actuarial assumptions and are recognised in the Statement of Profit and Loss as income or expenses as applicable.
iii. Other long-term benefit:
The Company also provides the benefit of compensated absences to its employees which are in the nature of long-term employee benefit plan. Liability in respect of compensated absences becoming due and expected to availed after one year from the Balance Sheet date is estimated in the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method as on the reporting date. Actuarial gains/ losses comprise experience adjustments and the effects of change in actuarial assumptions and are recognised in the Statement of Profit and Loss as income or expenses as applicable.
m) Deferred employeeâs stock compensation cost:
The Company follows the intrinsic value method as per the Guidance Note on âAccounting for Employee Sharebased Paymentsâ issued by The Institute of Chartered Accountants of India for accounting for Employee Stock Options granted. Deferred employee stock compensation cost for stock options are recognised and measured by the difference between the intrinsic value of the Companyâs shares of the stock options at the grant date and the exercise price to be paid by the option holders. The compensation expense is amortised over the vesting period of the options. The fair value of options for disclosure purposes is measured on the basis of a fair valuation certified by an independent firm of Chartered Accountants in respect of the stock options granted.
n) Taxes on income:
i. Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.
ii. Minimum alternate tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.
iii. Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. Deferred tax assets are reviewed at each balance sheet date for their realisability.
iv. Current and deferred tax relating to items directly recognised in reserves are recognised in reserves and not in the Statement of Profit and Loss.
o) Leases:
i. Assets leased by the Company in its capacity as a lessee, where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalised at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.
ii. Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis.
p) Share issue expenses:
Share issue expenses are adjusted against the securities premium account as permissible under Section 52 of the Companies Act, 2013, to the extent any balance is available for utilisation in the securities premium account. Share issue expenses in excess of the balance in the securities premium account is expensed in the Statement of Profit and Loss.
q) Borrowing costs:
Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised during the time period that is necessary to complete and prepare an asset for its intended use. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to the Statement of Profit and Loss.
r) Segment reporting:
- The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/ loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.
- The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segment on the basis of their relationship to the operating activities of the segments.
- Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under âunallocated revenue / expenses / assets / liabilitiesâ.
s) Provisions and contingencies:
A provision is recognised when the Company has a present obligation as a result of past events 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. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date.
i. Contingent liability is disclosed for;
- Possible obligations which will be confirmed only by future events not wholly within the control of the Company; or
- Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation can not be made.
ii. Contingent Assets are not recognised in the financial statements.
t) Operating cycle:
Based on the nature of products/ activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
Mar 31, 2017
a) Basis of Accounting and Preparation of Financial Statements:
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 and the relevant provisions of the Companies Act, 2013 (âthe 2013 Actâ) / Companies Act, 1956 (âthe 1956 Actâ), as applicable. The financial statements have been prepared on an 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:
The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.
c) Cash and Cash Equivalents (for purposes of Cash Flow Statement):
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.
d) Cash Flow Statement:
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
e) Revenue Recognition:
- Revenue from brokerage activities is accounted for on the trade date of the transaction.
- Income from fee based advisory services and consultancy is recognised on accrual basis.
- Revenue from interest charged to customers on margin funding is recognised on a daily/monthly basis up to the last day of accounting period.
- Depository income is accounted on accrual basis as and when the right to receive the income is established. Annual Maintenance charges are recognised on pro-rata basis over the period it is charged.
- Income from trading account maintenance is accounted on accrual basis and when the right to receive the income is established.
- Revenue from interest on fixed deposits is recognised on accrual basis.
- Commission on mutual funds is recognised on accrual basis.
f) Other Income:
- Dividend income on Equity shares is recognised when the right to receive the dividend is unconditional as at the Balance Sheet date.
- Dividend income on units of mutual funds is recognised when the right to receive the dividend is unconditional as at the Balance Sheet date. Any gains/losses on sale / redemption of units are recognised on the date of sale / redemption.
- Interest income on Inter-Corporate Deposits is recognised on accrual basis.
g) Commercial Papers:
The liability is recognised at face value of the commercial paper at the time of issue of the commercial paper. The discount on issue of the commercial paper is amortised over the tenure of the instrument.
h) Fixed Assets:
(i) Tangible Assets:
Tangible fixed assets are stated at cost, net of tax / duty credits availed, if any, less accumulated depreciation/ impairment losses, if any. Cost includes original cost of acquisition, including incidental expenses related to such acquisition and installation.
(ii) Intangible Assets:
Intangible assets are stated at cost, net of tax / duty credits availed, if any, less accumulated amortisation/ impairment losses, if any. Cost includes original cost of acquisition, including incidental expenses related to such acquisition and installation.
(iii) Intangible assets under development:
Expenditure on development eligible for capitalisation are carried as Intangible assets under development where such assets are not yet ready for their intended use.
i) Depreciation and Amortisation:
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.
Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013. Leasehold Improvements are amortised over the duration of the lease. Depreciation on sale / deduction from fixed assets is provided for up to the date of sale / deduction / scrapping, as the case may be. Assets costing Rs. 5,000 or less per item are fully depreciated in the year of capitalisation.
Intangible assets consisting of Membership Rights of the BSE Limited are amortised on a straight-line method basis over a period of five years from the date when the rights became available for use.
Intangible assets consisting of Software are amortised on a straight line basis over a period of four years from the date when the assets are available for use.
The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation period is revised to reflect the change pattern, if any.
j) Impairment of Assets:
The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment, if any indication of impairment exists.
If the carrying amount of these assets exceeds their recoverable amount, an impairment is recognised for such excess amount.
The recoverable amount is the greater of the net selling price and their 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, except in case of revalued assets, to the extent the amount was previously charged to the Statement of Profit & Loss.
k) Investments:
Investments are classified as long-term and current. Long-term investments, are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties.
l) Foreign Currency Transactions and Translations:
Recognition & translation
i. Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of transaction.
ii. Monetary items denominated in foreign currencies at the year end are translated at year end exchange rates.
iii. Non monetary foreign currency items are carried at cost.
iv. Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss.
Exchange Differences
i. Exchange differences arising on a monetary item that in substance, forms part of the Companyâs net investment in a non-integral foreign operation is accumulated in the Foreign Currency Translation Reserve until the disposal of the net investment. On the disposal of such net investment, the cumulative amount of the exchange differences which have been deferred and which relate to that investment is recognised as income or as expenses in the same period in which the gain or loss on disposal is recognised.
ii. The exchange differences arising on settlement / restatement of long-term foreign currency monetary items are capitalised as part of the depreciable fixed assets to which the monetary item relates and depreciated over the remaining useful life of such assets. If such monetary items do not relate to acquisition of depreciable fixed assets, the exchange difference is amortised over the maturity period / upto the date of settlement of such monetary items, whichever is earlier, and charged to the Statement of Profit and Loss except in case of exchange differences arising on net investment in non-integral foreign operations, where such amortisation is taken to âForeign currency translation reserveâ until disposal / recovery of the net investment. The unamortised exchange difference is carried in the Balance Sheet as âForeign currency monetary item translation difference accountâ net of the tax effect thereon, where applicable.
iii. Exchange differences arising on other long-term foreign currency monetary items are accumulated in the âForeign Currency Monetary Item Translation Difference Accountâ and amortised over the remaining life of the concerned monetary item.
iv. All other exchange differences are recognised as income or as expenses in the period in which they arise.
m) Employee Benefits:
The Company has a defined contribution plan namely Provident Fund. Annual contribution to the Employees Provident Fund Organisation is charged to the Statement of Profit and Loss. The Company has unfunded defined benefit plans namely long-term compensated absences and gratuity for all eligible employees, the liability for which is determined on the basis of an actuarial valuation at the end of the year using the Projected Unit Credit Method. Actuarial gains / losses comprise experience adjustments and the effects of change in actuarial assumptions and are recognised in the Statement of Profit and Loss as income or expenses as applicable.
n) Deferred Employee Stock Compensation Cost:
The Company follows the intrinsic value method as per the Guidance Note on âAccounting for Employee Share-based Paymentsâ issued by The Institute of Chartered Accountants of India for accounting for Employee Stock Options granted. Deferred employee stock compensation cost for stock options are recognised and measured by the difference between the intrinsic value of the Companyâs shares of the stock options at the grant date and the exercise price to be paid by the option holders. The compensation expense is amortised over the vesting period of the options. The fair value of options for disclosure purposes is measured on the basis of a fair valuation certified by an independent firm of Chartered Accountants in respect of the stock options granted.
o) Taxes on Income:
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability.
Current and deferred tax relating to items directly recognised in reserves are recognised in reserves and not in the Statement of Profit and Loss.
p) Leases:
Assets leased by the Company in its capacity as a lessee, where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalised at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis.
q) Share Issue Expenses:
Share issue expenses are adjusted against the Securities Premium Account as permissible under Section 52 of the Companies Act, 2013, to the extent any balance is available for utilisation in the Securities Premium Account. Share issue expenses in excess of the balance in the Securities Premium Account is expensed in the Statement of Profit and Loss.
r) Borrowing Costs:
Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as part of cost of the asset. All other borrowing costs are charged to the Statement of Profit and Loss.
s) Segment Reporting:
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segment on the basis of their relationship to the operating activities of the segments.
Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under âunallocated revenue / expenses / assets / liabilities.
t) Provisions and Contingencies:
A provision is recognised when the Company has a present obligation as a result of past events 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. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements.
u) Derivative Contracts:
Derivative contracts which are closely linked to the existing assets and liabilities are accounted as per the policy stated for Foreign currency transactions and translations.
v) Operating Cycle:
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
Mar 31, 2015
A) Basis of Accounting and Preparation of Financial Statements:
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") / Companies Act, 1956 ("the 1956
Act"), as applicable. The financial statements have been prepared on an
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:
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known/ materialise.
c) Cash and Cash Equivalents (for purposes of Cash Flow Statement):
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.
d) Cash Flow Statement:
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
e) Revenue Recognition:
* Revenue from brokerage activities is accounted for on the trade date
of the transaction.
* Income from fee based advisory services and consultancy is recognised
on an accrual basis.
* Revenue from interest charged to customers on margin funding is
recognised on a daily/monthly basis up to the last day of accounting
period.
* Depository income is accounted on an accrual basis as and when the
right to receive the income is established. Annual Maintenance charges
are recognised pro-rata over the period it is charged.
* Income from trading account maintenance is accounted on an accrual
basis and when the right to receive the income is established.
* Revenue from interest on fixed deposits is recognised on an accrual
basis.
* Commission on mutual funds is recognised on an accrual basis.
* Dividend income on Equity shares is recognised when the right to
receive the dividend is unconditional as at the Balance Sheet date.
* Dividend income on units of mutual funds is recognised when the right
to receive the dividend is unconditional as at the Balance Sheet date.
Any gains/losses on sale / redemption of units are recognised on the
date of sale / redemption.
* Interest income on Inter-Corporate Deposits is recognised on an
accrual basis.
f) Commercial Papers:
The liability is recognised at face value of the commercial paper at
the time of issue of the commercial paper. The discount on issue of the
commercial paper is amortised over the tenure of the instrument.
g) Fixed Assets:
(i) Tangible Assets:
Tangible fixed assets are stated at cost, net of tax / duty credits
availed, if any, less accumulated depreciation / impairment losses, if
any. Cost includes original cost of acquisition, including incidental
expenses related to such acquisition and installation.
(ii) Intangible Assets:
Intangible assets are stated at cost, net of tax / duty credits
availed, if any, less accumulated amortisation/ impairment losses, if
any. Cost includes original cost of acquisition, including incidental
expenses related to such acquisition and installation.
h) Depreciation and Amortisation:
Depreciable amount for assets is the cost of an asset, or other amount
substituted for cost, less its estimated residual value.
Depreciation on tangible fixed assets has been provided on the
straight-line method as per the useful life prescribed in Schedule II
to the Companies Act, 2013. Leasehold Improvements are amortised over
the duration of the lease. Depreciation on sale/ deduction from fixed
assets is provided for up to the date of sale / deduction / scrapping,
as the case may be. Assets costing Rs. 5,000 or less per item are fully
depreciated in the year of capitalisation.
Intangible assets consisting of Membership Rights of the BSE Limited
are amortised on a straight-line method basis over a period of five
years from the date when the rights became available for use.
Intangible assets consisting of Software are amortised on a straight
line basis over a period of four years from the date when the assets
are available for use. The estimated useful life of the intangible
assets and the amortisation period are reviewed at the end of each
financial year and the amortisation period is revised to reflect the
change pattern, if any.
i) Impairment of Assets:
The carrying values of assets / cash generating units at each balance
sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their 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,
except in case of revalued assets.
j) Investments:
Investments are classified as long-term and current. Long-term
investments, are carried individually at cost less provision for
diminution, other than temporary, in the value of such investments.
Current investments are carried individually, at the lower of cost and
fair value. Cost of investments include acquisition charges such as
brokerage, fees and duties.
k) Foreign Currency Transactions and Translations:
Recognition & translation
i. Transactions denominated in foreign currencies are recorded at the
exchange rates prevailing on the date of transaction.
ii. Monetary items denominated in foreign currencies at the year end
are translated at year end exchange rates.
iii. Non monetary foreign currency items are carried at cost.
iv. Any income or expense on account of exchange difference either on
settlement or on translation is recognised in the Statement of Profit
and Loss.
Exchange Differences
i. Exchange differences arising on a monetary item that in substance,
forms part of the Company's net investment in a non-integral foreign
operation is accumulated in the Foreign Currency Translation Reserve
until the disposal of the net investment. On the disposal of such net
investment, the cumulative amount of the exchange differences which
have been deferred and which relate to that investment is recognised as
income or as expenses in the same period in which the gain or loss on
disposal is recognised.
ii. The exchange differences arising on settlement / restatement of
long-term foreign currency monetary items are capitalised as part of
the depreciable fixed assets to which the monetary item relates and
depreciated over the remaining useful life of such assets. If such
monetary items do not relate to acquisition of depreciable fixed
assets, the exchange difference is amortised over the maturity period /
upto the date of settlement of such monetary items, whichever is
earlier, and charged to the Statement of Profit and Loss except in case
of exchange differences arising on net investment in non-integral
foreign operations, where such amortisation is taken to "Foreign
currency translation reserve" until disposal / recovery of the net
investment. The unamortised exchange difference is carried in the
Balance Sheet as "Foreign currency monetary item translation difference
account" net of the tax effect thereon, where applicable.
iii. Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortised over the remaining life
of the concerned monetary item.
iv. All other exchange differences are recognised as income or as
expenses in the period in which they arise.
l) Employee Benefits:
The Company has a defined contribution plan namely Provident Fund.
Annual contribution to the Employees Provident Fund Organisation is
charged to the Statement of Profit and Loss. The Company has unfunded
defined benefit plans namely long-term compensated absences and
gratuity for all eligible employees, the liability for which is
determined on the basis of an actuarial valuation at the end of the
year using the Projected Unit Credit Method. Actuarial gains / losses
comprise experience adjustments and the effects of change in actuarial
assumptions and are recognised in the Statement of Profit and Loss as
income or expenses as applicable.
m) Deferred Employee Stock Compensation Cost:
The Company follows the intrinsic value method as per the Guidance Note
on "Accounting for Employee Share-based Payments" issued by The
Institute of Chartered Accountants of India for accounting for Employee
Stock Options granted. Deferred employee stock compensation cost for
stock options are recognised and measured by the difference between the
intrinsic value of the Company's shares of the stock options at the
grant date and the exercise price to be paid by the option holders. The
compensation expense is amortised over the vesting period of the
options. The fair value of options for disclosure purposes is measured
on the basis of a fair valuation certified by an independent firm of
Chartered Accountants in respect of the stock options granted.
n) Taxes on Income:
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the applicable tax rates and the
provisions of the Income Tax Act, 1961 and other applicable tax laws.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets are recognised for timing differences of items other than
unabsorbed depreciation and carry forward losses only to the extent
that reasonable certainty exists that sufficient future taxable income
will be available against which these can be realised. However, if
there are unabsorbed depreciation and carry forward of losses and items
relating to capital losses, deferred tax assets are recognised only if
there is virtual certainty supported by convincing evidence that there
will be sufficient future taxable income available to realise the
assets. Deferred tax assets and liabilities are offset if such items
relate to taxes on income levied by the same governing tax laws and the
Company has a legally enforceable right for such set off. Deferred tax
assets are reviewed at each balance sheet date for their realisability.
Current and deferred tax relating to items directly recognised in
reserves are recognised in reserves and not in the Statement of Profit
and Loss.
o) Leases:
Assets leased by the Company in its capacity as a lessee, where
substantially all the risks and rewards of ownership vest in the
Company are classified as finance leases. Such leases are capitalised
at the inception of the lease at the lower of the fair value and the
present value of the minimum lease payments and a liability is created
for an equivalent amount. Each lease rental paid is allocated between
the liability and the interest cost so as to obtain a constant periodic
rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
in the Statement of Profit and Loss on a straight-line basis.
p) Share Issue Expenses:
Share issue expenses are adjusted against the Securities Premium
Account as permissible under Section 52 of the Companies Act, 2013, to
the extent any balance is available for utilisation in the Securities
Premium Account. Share issue expenses in excess of the balance in the
Securities Premium Account is expensed in the Statement of Profit and
Loss.
q) Borrowing Costs:
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of cost of
the asset. All other borrowing costs are charged to the Statement of
Profit and Loss.
r) Segment Reporting:
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit / loss amounts are evaluated regularly by the executive
Management in deciding how to allocate resources and in assessing
performance.
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segment on the basis of their relationship to the operating
activities of the segments.
Revenue, expenses, assets and liabilities which relate to the Company
as a whole and are not allocable to segments on reasonable basis have
been included under "unallocated revenue / expenses / assets /
liabilities.
s) Provisions and Contingencies:
A provision is recognised when the Company has a present obligation as
a result of past events 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. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
balance sheet date. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes. Contingent assets are not recognised in the
financial statements.
t) Derivative Contracts:
Derivative contracts which are closely linked to the existing assets
and liabilities are accounted as per the policy stated for Foreign
currency transactions and translations.
Mar 31, 2014
A) Basis of Accounting and Preparation of Financial Statements:
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 notified under
Section 211(3C) of the Companies Act, 1956 ("the 1956 Act") (which
continue to be applicable in respect of Section 133 of the Companies
Act, 2013 ("the 2013 Act") in terms of General Circular 1 5/2013 dated
September 13, 2013 of the Ministry of Corporate Affairs) and the
relevant provisions of the 1956 Act/ 2013 Act, as applicable. The
financial statements have been prepared 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:
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
c) Cash and Cash Equivalents (for purposes of Cash Flow Statement):
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.
d) Cash Flow Statement:
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
e) Revenue Recognition:
- Revenue from brokerage activities is accounted for on the trade date
of the transaction.
- Income from fee based advisory services and consultancy is recognised
on an accrual basis.
- Revenue from interest charged to customers on margin funding is
recognised on a daily/monthly basis up to the last day of accounting
period.
- Depository income is accounted on an accrual basis as and when the
right to receive the income is established. Annual Maintenance charges
are recognised pro-rata over the period it is charged.
- Income from trading account maintenance is accounted on an accrual
basis and when the right to receive the income is established.
- Revenue from interest on fixed deposits is recognised on an accrual
basis.
- Commission on mutual funds is recognised on an accrual basis.
- Dividend income on Equity shares is recognised when the right to
receive the dividend is unconditional as at the Balance Sheet date.
- Dividend income on units of mutual funds is recognised when the right
to receive the dividend is unconditional as at the Balance Sheet date.
Any gains/losses on sale / redemption of units are recognised on the
date of sale / redemption.
- Interest income on Inter-Corporate Deposits is recognised on an
accrual basis.
f) Stock-in-trade:
Stock-in-trade comprising of securities held for the purposes of
trading is valued at lower of cost and net realisable value. Profit or
loss on sale of such securities is determined using the weighted
average cost method.
g) Commercial Papers:
The liability is recognised at face value of the commercial paper at
the time of issue of the commercial paper. The discount on issue of
the commercial paper is amortised over the tenure of the instrument.
h) Fixed Assets:
(i) Tangible Assets:
Tangible fixed assets are stated at cost, net of tax / duty credits
availed, if any, less accumulated depreciation / impairment losses, if
any. Cost includes original cost of acquisition, including incidental
expenses related to such acquisition and installation.
(ii) Intangible Assets:
Intangible assets are stated at cost, net of tax / duty credits
availed, if any, less accumulated amortisation / impairment losses, if
any. Cost includes original cost of acquisition, including incidental
expenses related to such acquisition and installation.
i) Depreciation and Amortisation:
Depreciation on tangible fixed assets is provided on a straight-line
method as per the rates prescribed in Schedule XIV to the Companies
Act, 1956, except leasehold improvements which are amortised over the
tenure of the lease. Depreciation on additions to fixed assets is
provided on a pro-rata basis from the date the asset is available for
use. Depreciation on sale / deduction from fixed assets is provided for
up to the date of sale / deduction / scrapping, as the case may be.
Assets costing Rs. 5,000 or less per item are fully depreciated in the
year of capitalisation.
Intangible assets consisting of Membership Rights of the BSE Limited
are amortised on a straight-line method basis over a period of five
years from the date when the rights became available for use.
Intangible assets consisting of Software are amortised on a straight
line basis over a period of four years from the date when the assets
are available for use.
j) Impairment of Assets:
The carrying values of assets / cash generating units at each balance
sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their 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,
except in case of revalued assets.
k) Investments:
Investments are classified as long-term and current. Long-term
investments, are carried individually at cost less provision for
diminution, other than temporary, in the value of such investments.
Current investments are carried
individually, at the lower of cost and fair value. Cost of investments
include acquisition charges such as brokerage, fees and duties.
l) Foreign Currency Transactions and Translations: Recognition &
translation i. Transactions denominated in foreign currencies are
recorded at the exchange rates prevailing on the date
of transaction.
ii. Monetary items denominated in foreign currencies at the year end
are translated at year end exchange rates.
iii. Non monetary foreign currency items are carried at cost. iv.
Any income or expense on account of exchange difference either on
settlement or on translation is recognised in the Statement of Profit
and Loss.
Exchange Differences
i. Exchange differences arising on a monetary item that in substance,
forms part of the Company''s net investment in a non-integral foreign
operation is accumulated in the Foreign Currency Translation Reserve
until the disposal of the net investment. On the disposal of such net
investment, the cumulative amount of the exchange differences which
have been deferred and which relate to that investment is recognised as
income or as expenses in the same period in which the gain or loss on
disposal is recognised.
ii. The exchange differences arising on settlement / restatement of
long-term foreign currency monetary items are capitalised as part of
the depreciable fixed assets to which the monetary item relates and
depreciated over the remaining useful life of such assets. If such
monetary items do not relate to acquisition of depreciable fixed
assets, the exchange difference is amortised over the maturity period /
upto the date of settlement of such monetary items, whichever is
earlier, and charged to the Statement of Profit and Loss except in case
of exchange differences arising on net investment in non-integral
foreign operations, where such amortisation is taken to "Foreign
currency translation reserve" until disposal / recovery of the net
investment. The unamortised exchange difference is carried in the
Balance Sheet as "Foreign currency monetary item translation difference
account" net of the tax effect thereon, where applicable.
iii. Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortised over the remaining life
of the concerned monetary item.
iv. All other exchange differences are recognised as income or as
expenses in the period in which they arise.
m) Employee Benefits:
The Company has a defined contribution plan namely Provident Fund.
Annual contribution to the Employees Provident Fund Organisation is
charged to the Statement of Profit and Loss. The Company has unfunded
defined benefit plans namely long-term compensated absences and
gratuity for all eligible employees, the liability for which is
determined on the basis of an actuarial valuation at the end of the
year using the Projected Unit Credit Method. Actuarial gains / losses
comprise experience adjustments and the effects of change in actuarial
assumptions and are recognised in the Statement of Profit and Loss as
income or expenses as applicable.
n) Deferred Employee Stock Compensation Cost:
The Company follows the intrinsic value method as per the Guidance Note
on "Accounting for Employee Share- based Payments" issued by The
Institute of Chartered Accountants of India for accounting for Employee
Stock Options granted. Deferred employee stock compensation cost for
stock options are recognised and measured by the difference between the
intrinsic value of the Company''s shares of the stock options at the
grant date and the exercise price to be paid by the option holders. The
compensation expense is amortised over the vesting period of the
options. The fair value of options for disclosure purposes is measured
on the basis of a fair valuation certified by an independent firm of
Chartered Accountants in respect of the stock options granted.
o) Taxes on Income:
Current tax is determined as the tax payable in respect of taxable
income for the year and is computed in accordance with the provisions
of the Income Tax Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets are recognised for timing differences of items other than
unabsorbed depreciation and carry forward losses only to the extent
that reasonable certainty exists that sufficient future taxable income
will be available against which these can be realised. However, if
there are unabsorbed depreciation and carry forward of losses, deferred
tax assets are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise the
assets. Deferred tax assets and liabilities are offset if such items
relate to taxes on income levied by the same governing tax laws and the
Company has a legally enforceable right for such set off. Deferred tax
assets are reviewed at each balance sheet date for their realisability.
p) Leases:
Assets leased by the Company in its capacity as a lessee, where
substantially all the risks and rewards of ownership vest in the
Company are classified as finance leases. Such leases are capitalised
at the inception of the lease at the lower of the fair value and the
present value of the minimum lease payments and a liability is created
for an equivalent amount. Each lease rental paid is allocated between
the liability and the interest cost so as to obtain a constant periodic
rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
in the Statement of Profit and Loss on a straight-line basis.
q) Share Issue Expenses:
Share issue expenses are adjusted against the Securities Premium
Account to the extent of the balance available and thereafter, the
balance portion is charged to the Statement of Profit and Loss, as
incurred.
r) Borrowing Costs:
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of cost of
the asset. All other borrowing costs are charged to the Statement of
Profit and Loss.
s) Segment Reporting:
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit / loss amounts are evaluated regularly by the executive
Management in deciding how to allocate resources and in assessing
performance.
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segment on the basis of their relationship to the operating
activities of the segments.
Revenue, expenses, assets and liabilities which relate to the Company
as a whole and are not allocable to segments on reasonable basis have
been included under "unallocated revenue / expenses / assets /
liabilities.
t) Provisions and Contingencies:
A provision is recognised when the Company has a present obligation as
a result of past events 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. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
balance sheet date. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes. Contingent assets are not recognised in the
financial statements.
u) Derivative Contracts:
The Company enters into derivative contracts in the nature of foreign
currency swaps, currency options, forward contracts with an intention
to hedge its existing assets and liabilities, firm commitments and
highly probable transactions in foreign currency. Derivative contracts
which are closely linked to the existing assets and liabilities are
accounted as per the policy stated for Foreign currency transactions
and translations.
Derivative contracts designated as a hedging instrument for highly
probable forecast transactions are accounted as per the policy stated
for Hedge Accounting.
All other derivative contracts are marked-to-market and losses are
recognised in the Statement of Profit and Loss. Gains arising on the
same are not recognised, until realised, on grounds of prudence.
(i) In the event of liquidation of the Company, the holders of Equity
Shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of Equity Shares held by the
shareholders.
(ii) Holders of Global Depository Receipts (''GDRs'') will be entitled to
receive dividends, subject to the terms of the Deposit Agreement, to
the same extent as the holders of Equity Shares, less the fees and
expenses payable under such Deposit Agreement and any Indian tax
applicable to such dividends. Holders of GDRs don''t have voting rights
with respect to the Deposited Shares. The GDRs may not be transferred
to any person located in India including Indian residents or ineligible
investors except as permitted by Indian laws and regulations.
(iii) 23,486,341 Equity Shares of face value of Rs. 2 each were bought
back by the Company during the year ended March 31, 2010.
(i) Pursuant to the notification dated December 29, 2011 issued by the
Ministry of Corporate Affairs amending Accounting Standard 11 -
''Accounting for the Effects of Changes in Foreign Exchange Rates'' as
notified under the Companies (Accounting Standards) Rules, 2006, as
amended, the Company has exercised the option as per Paragraph 46A
inserted in the said Accounting Standard for amortisation of foreign
exchange gain/loss on long- term monetary items over the remaining life
of the concerned monetary items. Consequently, an amount of Rs.
11,711,656 (Previous year Rs. 7,294,807) is carried forward in the
Foreign Exchange Monetary Item Translation Difference Account as on
March 31, 2014, net of forex gain amounting to Rs. 1,738,680 (Previous
year Rs. 977,638) amortised in the Statement of Profit and Loss and Rs.
1,221,967 (Previous year Rs. Nil) utilised towards the partial amount
received from the Escrow Account.
(ii) During the year the Company has declared and paid Interim Dividend
per Share aggregating to Rs. 3 (Previous Year Rs. 2 in the respective
quarters) vide Board Resolution dated July 24, 2013, October 21, 2013
and January 23, 2014. Further, the Company has declared interim
dividend of Rs. 1 (Previous Year Rs. 1) vide Board Resolution dated April
22, 2014.
(i) The Board of Directors of the Company at their meeting held on
October 21, 2013 and as approved at its Extra- Ordinary General Meeting
held on November 20, 2013 have resolved to create, offer, issue and
allot up to 58,210,000 warrants, convertible into 58,210,000 equity
shares of Rs. 2/- each on a preferential allotment basis, pursuant to
Section 81(1A) of the Companies Act, 1956, at a conversion price of Rs.
13/- per equity share of the Company, arrived at in accordance with the
SEBI Guidelines in this regard and subsequently these warrants were
allotted on December 2, 2013 to the promoters, certain promoters
entities and to an executive director and 25% application money
amounting to Rs. 189,182,500/- was received from them. The warrants will
be converted into equivalent number of equity shares on payment of the
balance amount at any time on or before June 1, 2015. In the event the
warrants are not converted into equity shares within the said period,
the Company is eligible to forfeit the amounts received towards the
warrants. Further, subsequent to the Balance Sheet date the Company has
allotted 14,144,904 Equity Shares on April 11, 2014 on conversion of
14,144,904 warrants to one of the promoter group entity on realisation
of balance 75% towards these warrants. Also, the provision of interim
dividend is made towards the converted warrants amounting to Rs.
14,144,904 (Rs. 1 per equity share).
(i) Term loans are secured against hypothecation of the vehicles
purchased. The rate of interest of such term loans ranges between 9%
p.a. to 12% p.a. The term loans are repayable in equated monthly
installments ranging for a period of 3 to 5 years.
(i) Disclosures under the Micro, Small and Medium Enterprises
Development Act, 2006:
(a) An amount of Rs. Nil (Previous year Rs. Nil) and Rs. Nil (Previous year Rs.
Nil) was due and outstanding to suppliers as at the end of the
accounting year on account of principal and interest respectively.
(b) No interest was paid during the year in terms of Section 16 of the
Micro, Small and Medium Enterprises Development Act, 2006; no amount
was paid to the supplier beyond the appointed date.
(c) No interest is payable at the end of the year other than interest
under Micro, Small and Medium Enterprises Development Act, 2006.
(d) No amount of interest was accrued and unpaid at the end of the
accounting year.
The above information regarding Micro and Small Enterprises has been
determined to the extent such parties have been identified on the basis
of the information available with the Company. This has been relied
upon by the Auditors.
(a) During the year ended March 31, 2012, Copal Partners Limited had
bought back 223,222 shares held by the Company vide the Purchase and
Cancellation Agreement for the consideration of Rs. 86,226,344. Further,
the Company had sold 586,193 shares held by it in Copal Partners
Limited to Moody''s Group UK LTD for the consideration of Rs. 231,992,806
vide the Share Purchase Deed. Further, the Company had also received Rs.
6,687,129 (Previous year Rs. 1,297,121) as an additional consideration
during the year. As a result thereof, the stake of the Company in Copal
Partners Limited had been reduced from 4.74% to 1.63%. The
proportionate cost of the shares bought back and sold aggregates to Rs.
351,362,195. Out of the total consideration of Rs. 231,992,806 receivable
from Moody''s Group UK LTD, the Company has received partial amount of Rs.
16,049,110 towards Escrow Account in the current year and Rs. 63,412,482
(excluding foreign exchange gain of Rs. 14,231,506) [Previous year Rs.
77,952,063 (excluding foreign exchange gain of Rs. 8,425,538)] is
receivable as at the year ended March 31, 2014 in the form of Loan
Notes and Escrow account of the Moody''s Group UK LTD.
(i) Fixed deposits includes:
a. Rs. 446,500,000 (Previous year Rs. 747,300,000) pledged with the banks
against bank guarantees issued by banks for base capital and additional
base capital to the National Stock Exchange of India, BSE Limited and
the National Securities Clearing Corporation Limited.
b. Rs. 12,500,000 (Previous year Rs. 47,400,000) pledged with the National
Stock Exchange of India, BSE Limited and National Securities Clearing
Corporation Limited for the purpose of base capital and additional base
capital.
c. Rs. 1,664,250,000 (Previous year Rs. 874,500,000) pledged with banks
for overdraft facilities availed by the Company and its subsidiary
companies.
d. Rs. 10,325,495 (Previous year Rs. 4,554,582) pledged for arbitration
matters.
e. Rs. 25,000 (Previous year Rs. 25,000) pledged with State Commission,
New Delhi for appeal filed by the Company in a consumer dispute matter.
(ii) Pursuant to the Arbitration order received in March 31, 2012, the
Company had thus invested sums of money aggregating to Rs. Nil (Previous
Year - Rs. 662,315,671) (Net) in various fixed deposits with a scheduled
bank and the said fixed deposits were netted off against the dues
payable to the customer. Further, in the current year, the Company has
settled the same.
Mar 31, 2012
A) Basis of Preparation of Financial Statements:
The financial statements are prepared under the historical cost
convention, on an accrual basis in accordance with the Generally
Accepted Accounting Principles in India ("Indian GAAP") and Accounting
Standards as notified under the Companies (Accounting Standards) Rules,
2006, as amended.
b) Use of Estimates:
The preparation of financial statements in conformity with Indian GAAP
requires estimates and assumptions to be made that affect the reported
amount of assets and liabilities on the date of the financial
statements and the reported amount of revenues and expenses during the
reporting period. Difference between the actual result and estimates
are recognized in the period in which the results are known /
materialized.
c) Revenue Recognition:
- Revenue from brokerage activities is accounted for on the trade date
of the transaction.
- Income from fee based advisory services is recognized on an accrual
basis.
- Revenue from interest charged to customers on margin funding is
recognized on a daily/ monthly basis up to the last day of accounting
period.
- Depository income is accounted on an accrual basis as and when the
right to receive the income is established.
- Revenue from interest on fixed deposits is recognized on an accrual
basis.
Commission on mutual funds is recognized on an accrual basis.
Dividend income on Equity shares is recognised when the right to
receive the dividend is unconditional as at the Balance Sheet date.
- Dividend income on units of mutual funds is recognised when the right
to receive the dividend is unconditional as at the Balance Sheet date.
Any gains/losses on sale / redemption of units are recognised on the
date of sale / redemption. , '
- Interest income on Inter Corporate Deposits is recognised on an
accrual basis.
d) Income from arbitrage and trading in securities and derivatives
comprises profit/loss on sale of securities held as stock-in-trade and
profit/loss on Equity derivative instruments. Profit/loss on sale of
securities is determined based on the weighted average cost of the
securities sold. Profit/loss on Equity derivative transactions is
accounted for based on the 'Guidance Note on Accounting for Equity
Index and Equity Stock Futures and Options' issued by the Institute of
Chartered Accountants of India which is more fully explained in i) to
iv) below:
Equity Index / Stock Futures:
In accordance with the Guidance Note on 'Accounting for Equity Index
and Equity Stock Futures and Options' issued by The Institute of
Chartered Accountants of India:
(i) Initial Margin - Equity Index/ Stock Futures, representing the
initial margin paid, and margin deposits representing additional margin
paid over and above the initial margin, for entering into a contract
for Equity Index/ Stock Futures which are released on final settlement
/ squaring-up of the underlying contract, are disclosed under Loans and
Advances.
(ii) Equity Index / Stock Futures are marked-to- market on a daily
basis. Debit or credit balance is disclosed under Loans and Advances or
Liabilities, respectively, in the "Mark-to-Market Margin - Equity
Index/ Stock Futures Account",
represents the net amount paid or received on the basis of movement in
the prices of index/ stock futures till the Balance Sheet date.
(iii) As on the Balance Sheet date, profit/loss on open positions in
Equity index/ stock futures is accounted for as follows:
- Credit balance in the "Mark-to-Market Margin - Equity Index/Stock
Futures Account", being the anticipated profit, is ignored and no
credit for the same is taken in the Statement of Profit and Loss.
- Debit balance in the "Mark-to-Market Margin - Equity Index/Stock
Futures Account", being the anticipated loss, is adjusted in the
Statement of Profit and Loss.
(iv) On final settlement or squaring-up of contracts for Equity
index/stock futures, the profit or loss is calculated as the difference
between the settlement/squaring-up price and the contract price.
Accordingly, debit or credit balance pertaining to the settled/
squared-up contract in "Mark-to-Market Margin - Equity Index/Stock
Futures Account" after adjustment of the provision for anticipated
losses is recognised in the Statement of Profit and Loss. When more
than one contract in respect of the relevant series of Equity
index/stock futures contract to which the squared-up contract pertains
is outstanding at the time of the squaring-up of the contract, the
contract price of the contract so squared-up is determined using the
weighted average cost method for calculating the profit/loss on
squaring-up.
e) Stock-in-trade:
Stock-in-trade comprising of securities held for the purposes of
trading is valued at lower of cost and net realizable value. Profit or
loss on sale of such securities is determined using the weighted
average cost method.
f) Commercial Papers:
The liability is recognised at face value of the commercial paper at
the time of issue of the commercial paper. The discount on issue of the
commercial paper is amortized over the tenure of the instrument.
g) Fixed Assets:
(i) Tangible Assets:
Tangible fixed assets are stated at cost, net of tax / duty credits
availed, if any, less accumulated depreciation / impairment losses, if
any. Cost includes original cost of acquisition, including incidental
expenses related to such acquisition and installation.
(ii) Intangible Assets:
Intangible assets are stated at cost, net of tax / duty credits
availed, if any, less accumulated amortization / impairment losses, if
any. Cost includes original cost of acquisition, including incidental
expenses related to such acquisition and installation.
h) Depreciation / Amortization:
Depreciation on tangible fixed assets is provided on a straight-line
method at the rates specified in Schedule XIV to the Companies Act,
1956. Depreciation on additions to fixed assets is provided on a
pro-rata basis from the date the asset is put to use. Depreciation on
sale / deduction from fixed assets is provided for up to the date
of sale/deduction / scrapping, as the case may be. Assets taken on
operating lease are depreciated over the tenure of the lease. Assets
costing Rs. 5,000 or less per item are fully depreciated in the year of
capitalization.
Intangible assets consisting of Membership Rights of the Bombay Stock
Exchange Limited are amortised on a straight-line method basis over a
period of five years from the date when the rights became available for
use.
Intangible assets consisting of Software are amortised on a straight
line basis over a period of four years from the date when the assets
are available for use.
i) Impairment of Assets:
The Company assesses at each Balance Sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset.
Recoverable amount is higher of an asset's net selling price and its
value in use. If such recoverable amount of the asset or the
recoverable amount of the cash generating unit to which the asset
belongs is less than its carrying amount, the carrying amount is
reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognised in the
Statement of Profit and Loss. If at the Balance Sheet date there is an
indication that if a previously assessed impairment loss no longer
exists, the recoverable amount is reassessed and the asset is reflected
at the recoverable amount.
j) Investments:
Investments are classified as long-term and current. Long-term
investments are carried at cost less provision, if any, for diminution
other than temporary in the value of such investment. Current
investments are valued at lower of cost and fair value.
k) Foreign Currency Transactions:
Recognition & translation
i. Transactions denominated in foreign currencies are recorded at the
exchange rates prevailing on the date of transaction.
ii. Monetary items denominated in foreign currencies at the year end
are translated at year end exchange rates.
iii. Non monetary foreign currency items are carried at cost.
iv. Any income or expense on account of exchange difference either on
settlement or on translation is recognised in the Statement of Profit
and Loss.
Exchange Differences
i. Exchange differences arising on a monetary item that in substance,
forms part of the Company's net investment in a non-integral foreign
operation is accumulated in the Foreign Currency Translation Reserve
until the disposal of the net investment. On the disposal of such net
investment. The cumulative amount of the exchange differences which
have been deferred and which relate to that investment is recognised as
income or as expenses in the same period in which the gain or loss on
disposal is recognised.
ii. Exchange differences arising on long-term foreign currency
monetary items related to acquisition of a fixed asset are capitalized
and depreciated over the remaining useful life of the asset. For this
purpose, the Company treats a foreign monetary item as "long-term
foreign currency monetary item", if it has a term of 12 months or more
at the date of its origination.
iii. Exchange differences arising on other long-
term foreign currency monetary items are accumulated in the "Foreign
Currency Monetary Item Translation Difference Account "and amortised
over the remaining life of the concerned monetary item.
iv. All other exchange differences are recognised as income or as
expenses in the period in which they arise.
I) Employee Benefits:
The Company has a defined contribution plan namely Provident Fund.
Annual contribution to the Employees Provident Fund Organization is
charged to the Statement of Profit and Loss. The Company has unfunded
defined benefit plans namely long-term compensated absences and
gratuity for all eligible employees, the liability for which is
determined on the basis of an actuarial valuation at the end of the
year using the Projected Unit Credit Method. Actuarial gains / losses
comprise experience adjustments and the effects of change in actuarial
assumptions and are recognised in the Statement of Profit and Loss as
income or expenses as applicable.
m) Deferred Employee Stock Compensation Cost:
The Company follows the intrinsic value method as per the Guidance Note
on "Accounting for Employee Share-based Payments" issued by The
Institute of Chartered Accountants of India for accounting for Employee
Stock Options granted. Deferred employee stock compensation cost for
stock options are recognised and measured by the difference between the
intrinsic value of the Company's shares of the stock options at the
grant date and the exercise price to be paid by the option holders. The
compensation expense is amortised over the vesting period of the
options. The fair value of options for disclosure purposes is measured
on the basis of a fair valuation certified by an independent firm of
Chartered Accountants in respect of the stock options granted.
n) Taxes on Income:
Current tax is determined as the tax payable in respect of taxable
income for the year and is computed in accordance with relevant tax
regulations.
Deferred tax resulting from timing differences between book profits and
tax profits is accounted for at the current rate of tax / substantively
enacted tax rates as at the Balance Sheet Date, as applicable, to the
extent that the timing differences are expected to crystallize/capable
of reversal in one or more subsequent periods.
Deferred Tax Assets are recognised where realization is reasonably
certain whereas in the case Of carried forward losses or unabsorbed
depreciation, deferred tax assets are recognised only if there is a
virtual certainty of realisation backed by convincing evidence that
there will be sufficient future taxable income available to realise
such assets. Deferred Tax Assets are reviewed for their appropriateness
of their respective carrying values at each Balance Sheet date.
o) Leases:
In case of assets taken on operating lease, the lease rentals are
charged to the Statement of Profit and Loss on straight line basis and
assets taken on finance lease have been capitalised in accordance with
Accounting Standard 19 - 'Leases' as notified under the Companies
(Accounting Standards) Rules, 2006, as amended.
p) Share Issue Expenses:
Share issue expenses are adjusted against the Securities Premium
Account to the extent of the balance available and thereafter, the
balance portion is charged to the Statement of Profit and Loss, as
incurred.
q) Borrowing Costs:
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of cost of
the asset. All
other borrowing costs are charged to the Statement of Profit and Loss.
r) Segment Reporting:
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organization and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
s) Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognised only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of
obligation can be made. Contingent liability is disclosed for (1)
Possible obligations which will be confirmed only by future events not
wholly within the control of the Company or (2) Present obligations
arising from past events where it is not probable that an outflow of
resources will be required to settle the obligation or a reliable
estimate of the amount of the obligation cannot be made. Contingent
Assets are neither recognised in the financial statements nor
disclosed, since this may result in the recognition of income that may
never be realised.
Mar 31, 2011
A) Basis of Preparation of Financial Statements:
The financial statements are prepared under the historical cost
convention, on an accrual basis and in accordance with the Generally
Accepted Accounting Principles in India and Accounting Standards as
notified under the Companies (Accounting Standards) Rules, 2006.
b) Use of Estimates:
The preparation of financial statements in conformity with the
Generally Accepted Accounting Principles requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual result and estimates are recognised in the period in
which the results are known / materialised.
c) Revenue Recognition:
Revenue from brokerage activities is accounted for on the trade date of
transaction.
Revenue from interest charged to customers on margin funding is
recognised on a daily/ monthly basis up to the last day of accounting
period.
Depository income is accounted on accrual basis as and when the right
to receive the income is established.
Revenue from interest from fixed deposits is recognised on accrual
basis.
Commission on mutual fund is recognised on accrual basis.
Income from fee based advisory services is recognised on an accrual
basis.
Dividend income on equity shares is recognised when the right to
receive the dividend is unconditional at the Balance Sheet date.
Dividend Income on units of Mutual Fund is recognised when the right to
receive the dividend is unconditional at the Balance Sheet date and any
gains/losses are recognised on the date of redemption.
Interest income on inter corporate deposits is recognised on accrual
basis.
d) Income from arbitrage and trading in securities and derivatives
comprises profit/loss on sale of securities held as stock-in-trade and
profit/loss on equity derivative instruments. Profit/loss on sale of
securities is determined based on the weighted average cost of the
securities sold. Profit/loss on equity derivative transactions is
accounted for based on the 'Guidance Note on Accounting for Equity
Index and Equity Stock Futures and Options' issued by the Institute of
Chartered Accountants of India which is more fully explained in i) and
ii) below :-
Equity Index / Stock Futures:
In accordance with Guidance Note on" Accounting for Equity Index and
Equity Stock Futures and Options" issued by The Institute of Chartered
Accountants of India
(i) Initial Margin-Equity Index/ Stock Futures, representing the
initial margin paid, and margin deposits representing additional margin
paid over and above the initial margin, for entering into a contract
for equity index/ stock futures which are released on final settlement
/ squaring-up of the underlying contract, are disclosed under Loans and
Advances.
(ii) Equity Index / Stock Futures are marked-to- market on a daily
basis. Debit or credit balance disclosed under Loans and Advances or
Current Liabilities, respectively, in the "Mark-to-Market Margin-Equity
Index/ Stock Futures Account", represents the net amount paid or
received on the basis of movement in the prices of index/ stock futures
till the Balance Sheet date.
(iii) As on the Balance Sheet date, profit/loss on open positions in
Equity index/ stock futures is accounted for as follows:
Credit balance in the "Mark-to-Market Margin-Equity Index/Stock Futures
Account", being the anticipated profit, is ignored and no credit for
the same is taken in the Profit and Loss Account.
- Debit balance in the "Mark-to-Market Margin-Equity Index/Stock
Futures Account", being the anticipated loss, is adjusted in the Profit
and Loss Account.
(iv) On final settlement or squaring-up of contracts for equity
index/stock futures, the profit or loss is calculated as the difference
between the settlement/squaring-up price and the contract price.
Accordingly, debit or credit balance pertaining to the
settled/squared-up contract in "Mark-to-Market Margin-Equity Index/
Stock Futures Account" after adjustment of the provision for
anticipated losses is recognised in the Profit and Loss Account. When
more than one contract in respect of the relevant series of equity
index/stock futures contract to which the squared-up contract pertains
is outstanding at the time of the squaring-up of the contract, the
contract price of the contract so squared-up is determined using the
weighted average cost method for calculating the profit/loss on
squaring-up.
e) Stock-in-trade:
Stock-in-trade comprising of securities held for the purposes of
trading is valued at lower of cost and market value. Profit or loss on
sale of such securities is determined using weighted average cost
method.
f) Commercial Papers:
The liability is recognised at face value of the commercial paper at
the time of issue of commercial paper. The discount on issue of
commercial paper is amortised over the tenure of the instrument.
g) Fixed Assets:
(i) Tangible Assets:
Tangible fixed assets are stated at cost, net of tax / duty credits
availed, if any, less accumulated depreciation / impairment losses, if
any. Cost includes original cost of acquisition, including incidental
expenses related to such acquisition and installation.
(ii) Intangible Assets:
Intangible assets are stated at cost, net of tax / duty credits
availed, if any, less accumulated amortisation / impairment losses, if
any. Cost includes original cost of acquisition, including incidental
expenses related to such acquisition and installation.
h) Depreciation / Amortisation:
Depreciation on tangible fixed assets is provided on straight-line
method at the rates specified in Schedule XIV to the Companies Act,
1956. Depreciation on additions to fixed assets is provided on
pro-rata basis from the date the asset is put to use. Depreciation on
sale / deduction from fixed assets is provided for up to the date of
sale / deduction / scrapping, as the case may be. Assets taken on
finance lease are depreciated over the tenure of the lease. Assets
costing Rs. 5,000 or less per item are fully depreciated in the year of
purchase.
Intangible assets consisting of Membership Rights of the Bombay Stock
Exchange Limited are amortised on straight-line method basis over a
period of five years from the date when the rights became available for
use.
Intangible assets consisting of Software are amortised on a straight
line basis over a period of four years from the date when the assets
are available for use.
i) Impairment of Assets:
The Company assesses at each Balance Sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset.
Recoverable amount is higher of an asset's net selling price and its
value in use. If such recoverable amount of the asset or the
recoverable amount of the cash generating unit to which the asset
belongs is less than its carrying amount, the carrying amount is
reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognised in the Profit and Loss Account. If at
the Balance Sheet date there is an indication that if a previously
assessed impairment loss no longer exists, the recoverable amount is
reassessed and the asset is reflected at the recoverable amount.
j) Investments:
Investments are classified as long term and current investments. Long
term investments are carried at cost less provision, if any, for
diminution other than temporary in their value. Current investments are
valued at lower of cost and fair value.
k) Foreign Currency Transactions:
i. Transactions denominated in foreign currencies are recorded at the
exchange rates prevailing on the date of transaction.
ii. Monetary items denominated in foreign currencies at the year end
are translated at year end rates.
iii. Non monetary foreign currency items are carried at cost.
iv. Any income or expense on account of exchange difference either on
settlement or on translation is recognized in the Profit and Loss
Account.
I) Employee Benefits:
The Company has a defined contribution plan namely Provident Fund.
Annual contribution to Employees Provident Fund Organisation is charged
to Profit and Loss Account. The Company has unfunded defined benefit
plans namely long term compensated absences and gratuity for all
eligible employees, the liability for which is determined on the basis
of an actuarial valuation at the end of the year using the Projected
Unit Credit Method. Actuarial gains and losses comprise experience
adjustments and the effects of change in actuarial assumptions and are
recognised in Profit and Loss Account as income or expenses,
m) Deferred Employee Stock Compensation Cost:
The Company follows intrinsic value method as per Guidance Note on
"Accounting for Employee Share- based Payments" issued by The Institute
of Chartered Accountants of India for accounting for Employee Stock
Options granted. Deferred employee stock compensation cost for stock
options are recognised and measured by the difference between the
intrinsic value of the Company's shares at the stock options grant date
and the exercise price to be paid by the option holders. The
compensation expense is amortised over the vesting period of the
options. The fair value of options for disclosure purposes is measured
on the basis of a valuation performed in respect of stock options
granted.
n) Taxes on Income:
Current tax is determined as the tax payable in respect of taxable
income for the year and is computed in accordance with relevant tax
regulations.
Deferred tax resulting from timing differences between book and tax
profits is accounted for at the current rate of tax / substantively
enacted tax rates at the Balance Sheet date, as applicable, to the
extent that the timing differences are expected to crystallise.
Deferred Tax Assets are recognised where realisation is reasonably
certain whereas in case of carried forward losses or unabsorbed
depreciation, deferred tax assets are recognised only if there is a
virtual certainty of realisation backed by convincing evidence.
Deferred Tax Assets are reviewed for the appropriateness of their
respective carrying values at each Balance Sheet date.
o) Leases:
In case of assets taken on operating lease, the lease rentals are
charged to the Profit and Loss Account and assets taken on finance
lease have been capitalised, in accordance with Accounting Standard
(AS) 19-Leases as notified under the Companies (Accounting Standards)
Rules, 2006.
p) Share Issue Expenses:
Share issue expenses are adjusted against Securities Premium account to
the extent of balance available and thereafter, the balance portion is
charged off to the Profit and Loss Account, as incurred.
q) Borrowing Costs:
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of cost of
the asset. All other borrowing costs are charged to Profit and Loss
Account.
r) Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognised only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of
obligation can be made. Contingent liability is disclosed for (1)
Possible obligations which will be confirmed only by future events not
wholly within the control of the Company or
(2) Present obligations arising from past events where it is not
probable that an outflow of resources will be required to settle the
obligation or a reliable estimate of the amount of the obligation
cannot be made. Contingent Assets are not recognised in the financial
statements since this may result in the recognition of income that may
never be realised.
Mar 31, 2010
A) Basis of Consolidation:
The Consolidated Financial Statements are prepared in accordance with
Accounting Standard (AS) 21 - Consolidated Financial Statements as
notified under the Companies (Accounting Standards) Rules, 2006.
Reference in these notes to Company, Holding Company, Companies or
Croup shall mean to include Indiabulls Securities Limited or any of its
subsidiaries, unless otherwise stated.
b) Principles of consolidation:
The Consolidated Financial Statements comprise of the Financial
Statements of Indiabulls Securities Limited and its subsidiaries. The
financial statements of the group companies are prepared according to
uniform accounting policies, in accordance with accounting principles
generally accepted in India. The effects of inter company transactions
are eliminated on consolidation.
c) Goodwill / Capital Reserve on consolidation:
Goodwill / Capital Reserve represents the difference between the
Companys share in the net worth of subsidiaries, and the cost of
acquisition at each point of time of making the investment in the
subsidiaries. For this purpose, the Companys share of net worth is
determined on the basis of the latest financial statements prior to the
acquisition after making necessary adjustments for material events
between the date of such financial statements and the date of
respective acquisition. Capital Reserve on consolidation is adjusted
against Goodwill on consolidation, if any. The Goodwill on
consolidation is evaluated for impairment whenever events or changes in
circumstances indicate that its carrying amount may have been impaired.
e) Basis of Preparation of Financial Statements: The financial
statements are prepared under the historical cost convention, on an
accrual basis and in accordance with the Generally Accepted Accounting
Principles in India and Accounting Standards as notified under the
Companies (Accounting Standards) Rules, 2006.
f) Use of Estimates:
The preparation of financial statements in conformity with the
Generally Accepted Accounting Principles requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount oF revenues and expenses during the reporting period. Difference
between the actual result and estimates are recognised in the period in
which the results are known / materialised.
g) Revenue Recognition:
a Revenue from brokerage activities is accounted for on the trade date
of transaction.
b Revenue from interest charged to customers on margin funding is
recognised on a daily/ monthly basis up to the last day of accounting
period.
- Depository income is accounted on accrual
basis as and when the right to receive the income is established. m
Revenue from interest from fixed deposits is recognised on accrual
basis.
Commission on mutual fund is recognised on accrual basis.
a Income from fee based advisory services is recognised on an accrual
basis.
- Dividend income on equity shares is recognised when the right to
receive the dividend is unconditional at the balance sheet date.
- Dividend Income on units of Mutual Fund is recognised when the right
to receive the dividend is unconditional at the balance sheet date and
any gains/losses are recognised on the date of redemption.
h) Income from arbitrage and trading in securities and derivatives
comprises profit/loss on sale of securities held as stock-in-trade and
profit/loss on equity derivative instruments. Profit/loss on sale of
securities is determined based on the weighted average cost of the
securities sold. Profit/loss on equity derivative transactions is
accounted for based on the Guidance Note on Accounting for Equity
Index and Equity Stock Futures and Options issued by the Institute of
Chartered Accountants of India which is more fully explained in i) and
ii) below :-
Equity Index / Stock Futures:
In accordance with Guidance Note on "Accounting for Equity Index and
Equity Stock Futures and Options" issued by The Institute of Chartered
Accountants of India
(i) Initial Margin - Equity Index/ Stock Futures, representing the
initial margin paid, and margin deposits representing additional margin
paid over and above the initial margin, for entering into a contract
for equity index/ stock futures which are released on final settlement
/ squaring-up of the underlying contract, are disclosed under Loans and
Advances.
(ii) Equity Index / Stock Futures are marked- to-market on a daily
basis. Debit or credit balance disclosed under Loans and Advances or
Current Liabilities, respectively, in the "Mark-to-Market Margin -
Equity Index/ Stock Futures Account", represents the net amount paid or
received on the basis of movement in the prices of index/ stock futures
till the balance sheet date.
(iii) As on the balance sheet date, profit/loss on open positions in
Equity index/ stock futures is accounted for as follows:
- Credit balance in the "Mark-to-Market Margin - Equity Index/Stock
Futures Account", being the anticipated profit, is ignored and no
credit for the same is taken in the profit and loss account.
m Debit balance in the "Mark-to-Market Margin - Equity Index/Stock
Futures
Account", being the anticipated loss, is adjusted in the profit and
loss account.
(iv) On final settlement or squaring-up of
contracts for equity index/stock futures, the profit or loss is
calculated as the difference between the settlement/squaring-up price
and the contract price. Accordingly, debit or credit balance pertaining
to the settled/ squared-up contract in "Mark-to-Market Margin - Equity
Index/Stock Futures Account" after adjustment of the provision for
anticipated losses is recognised in the profit and loss account. When
more than one contract in respect of the relevant series of equity
index/stock futures contract to which the squared-up contract pertains
is outstanding at the time of the squaring- up of the contract, the
contract price of the contract so squared-up is determined using the
weighted average cost method for calculating the profit/loss on
squaring-up.
i) Stock-in-trade:
Stock-in-trade comprising of securities held for the purposes of
trading is valued at lower of cost and market value. Profit or loss on
sale of such securities is determined using weighted average cost
method.
j) Commercial Papers:
The liability is recognised at face value of the commercial paper at
the time of issue of commercial paper. The discount on issue of
commercial paper is amortised over the tenure of the instrument.
k) Fixed Assets:
(i) Tangible Assets:
Tangible fixed assets are stated at cost, net of tax / duty credits
availed, if any, less accumulated depreciation / impairment losses, if
any. Cost includes original cost of acquisition, including incidental
expenses related to such acquisition and installation.
(ii) Intangible Assets:
Intangible assets are stated at cost, net of tax / duty credits
availed, if any, less accumulated amortisation / impairment losses, if
any. Cost includes original cost of acquisition, including incidental
expenses related to such acquisition and installation.
l) Depreciation/Amortisation:
Depreciation on tangible fixed assets is provided on straight-line
method at the rates specified in Schedule XIV to the Companies Act,
1956. Depreciation on additions to fixed assets is provided on
pro-rata basis from the date the asset is put to use. Depreciation on
sale / deduction from fixed asset is provided for up to the date of
sale / deduction / scrapping, as the case may be. Assets taken on
finance lease are depreciated over the tenure of the lease. Assets
costing Rs. 5,000 or less are fully depreciated in the year of
purchase.
Intangible assets consisting of Membership Rights of the Bombay Stock
Exchange Limited are amortised on straight-line method basis over a
period of five years from the date when the rights became available for
use.
Intangible assets consisting of software are amortised on a straight
line basis over a period of four years from the date when the assets
are available for use.
m) Impairment of Assets:
The Company assesses at each Balance Sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset.
Recoverable amount is higher of an assets net selling price and its
value in use. If such recoverable amount of the asset or the
recoverable amount of the cash generating unit to which the asset
belongs is less than its carrying amount, the carrying amount is
reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognised in the Profit and Loss Account. If
at the Balance Sheet date there is an indication that if a previously
assessed impairment loss no longer exists, the recoverable amount is
reassessed and the asset is reflected at the recoverable amount.
n) Investments:
Investments are classified as long term and current investments. Long
term investments are carried at cost (ess provision, if any, for
diminution other than temporary in their value. Current investments
are valued at lower of cost and fair value.
o) Employee Benefits:
The Company has a defined contribution plan namely Provident Fund.
Annual contribution to Employees Provident Fund Organisation is charged
to profit and loss account. The Company has unfunded defined benefit
plans namely long term compensated absences and gratuity for all the
employees, the liability for which is determined on the basis of an
actuarial valuation at the end of the year using the Projected Unit
Credit Method. Actuarial gains and losses comprise experience
adjustments and the effects of change in actuarial assumptions and are
recognised in Profit and Loss account as income or expenses.
p) Deferred Employee Stocfe Compensation Cost: The Company follows
intrinsic value method as per Guidance Note on "Accounting for Employee
Share-based Payments" issued by The Institute of Chartered Accountants
of India for accounting Employee Stock Options granted. Deferred
employee stock compensation cost for stock options are recognised and
measured by the difference between the estimated value of the Companys
shares at the stock options grant date and the exercise price to be
paid by the option holders. The compensation expense is amortised over
the vesting period of the options. The fair value of options for
disclosure purpose is measured on the basis of a valuation performed in
respect of stock options granted.
q) Taxes on Income:
Current tax is determined as the tax payable in respect of taxable
income for the year and is computed in accordance with relevant tax
regulations.
Deferred tax resulting from timing differences between book and tax
profits is accounted for at the current rate of tax / substantively
enacted tax rates at the Balance Sheet Date, as applicable, to the
extent that the timing differences are expected to crystallise.
Deferred Tax Assets are recognised where realisation is reasonably
certain whereas in case of carried forward losses or unabsorbed
depreciation, deferred tax assets are recognised only if there is a
virtual certainty of realisation backed by convincing evidence.
Deferred Tax Assets are reviewed for the appropriateness of their
respective carrying values at each Balance Sheet date.
r) Fringe Benefits Tax:
Fringe Benefits Tax has been calculated in accordance with the
provisions of the Income Tax Act, 1961 and the Guidance Note on Fringe
Benefit Tax issued by the Institute of Chartered Accountants of India.
Pursuant to the enactment of the Finance Act, 2009, Fringe Benefits Tax
stands abolished w.e.f. April 01, 2009.
s> Leases:
In case of assets taken on operating lease, the lease rentals are
charged to the profit and loss account and assets taken on finance
lease have been capitalised, in accordance with Accounting Standard
(AS) 19 - Leases as notified under the Companies (Accounting Standards)
Rules, 2006.
t) Preliminary Expenses:
Preliminary expenses are adjusted against Securities Premium account
(net of tax) to the extent available and the balance, if any, is
charged off to the Profit and Loss account, as incurred.
u) Share issue Expenses:
Share issue expenses are adjusted against Securities Premium account to
the extent of balance available and thereafter, the balance portion is
charged off to the Profit and Loss account, as incurred.
v) Borrowing Costs:
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of cost of
the asset. All other borrowing costs are charged to revenue.
w) Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognised only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of
obligation can be made. Contingent liability is disclosed for (1)
Possible obligations which will be confirmed only by future events not
wholly within the control of the Company or (2) Present obligations
arising from past events where it is not probable that an outflow of
resources will be required to settle the obligation or a reliable
estimate of the amount of the obligation cannot be made. Contingent
Assets are not recognised in the financial statements since this may
result in the recognition of income that may never be realised.
Mar 31, 2009
A) Basis of preparation of financial statements:
The financial statements are prepared under the historical cost
convention, on an accrual basis and in accordance with the Generally
Accepted Accounting Principles in India and Accounting Standards as
notified under the Companies (Accounting Standards) Rules, 2006.
b) Use of Estimates:
The preparation of financial statements in conformity with the
Generally Accepted Accounting Principles requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual result and estimates are recognised, in the period
in which the results are known / materialised.
c) Revenue Recognition:
- Revenue from Brokerage activities is accounted for on the trade date
of transaction.
d) Revenue from interest charged to customers on margin funding is
recognised on a daily / monthly basis up to the last day of accounting
period.
e) Depository income is accounted on accrual basis as and when the
right to receive the income is established.
- Revenue from interest from fixed deposits is recognised on accrual
basis.
-. Commission on Mutual Fund is recognised on accrual basis.
- Transactions in respect of Purchase and Sale of Investment / Dealing
in securities are recorded on trade dates.
f) Income from Fee based advisory services is recognised on an accrual
basis.
- Dividend income on equity shares is recognised when the right to
receive the dividend is unconditional at the balance sheet date.
Dividend Income on units of Mutual Fund is recognised on accrual basis
and any gains/losses are recognised on the date of redemption.
d) Equity Index/Stock Futures:
i) initial Margin-Equity Index/ Stock Futures, representing the initial
margin paid, and Margin Deposits representing additional margin paid
over and above the initial margin, for entering into a contract for
equity index/ stock futures which are released on final settlement /
squaring-up of the underlying contract, are disclosed under Loans and
Advances.
ii) Equity Index / Stock Futures are marked-to-market on a daily basis.
Debit or credit balance disclosed under Loans and Advances or Current
Liabilities, respectively, in the Mark-to-Market Margin-Equity Index/
Stock Futures Account, represents the net amount paid or received on
the basis of movement in the prices of index/ stock futures till the
balance sheet date.
iii) As on the balance sheet date, profit/loss on open positions in
equity index/ stock futures is accounted for as follows:
- Credit balance in the Mark-to-Market Margin-Equity Index/Stock
Futures Account, being the anticipated profit, is ignored and ho credit
for the same is taken in the profit and loss account.
- Debit balance in the Mark-to-Market Margin-Equity Index/Stock Futures
Account, being the anticipated loss, is adjusted in the profit and loss
account.
iv) On final settlement or squaring-up of contracts for equity
index/stock futures, the profit or loss is calculated as the difference
between the settlement/squaring-up price and the contract price.
Accordingly, debit or credit balance pertaining to the
settled/squared-up contract in "Mark-to-Market Margin-Equity
Index/Stock Futures Account" after adjustmentof the provision for
anticipated losses is recognised in the profit and loss account.
When more than one contract in respect of the relevant series of equity
index/stock futures contract to which the squared-up contract pertains
is outstanding at the time of the squaring-up of the contract, the
contract price of the contract so squared-up is determined using the
weighted average cost method for calculating the profit/loss on
squaring-up.
e) Commercial Papers:
The liability is recognised at face value of the commercial paper at
the time of issue of commercial paper. The discount on issue of
commercial paper is amortised over the tenure of the instrument.
f) Fixed Assets:
i) Tangible Assets:
Tangible fixed assets are stated at cost, net of tax / duty credits
availed, if any, less accumulated depreciation / impairment losses, if
any. Cost includes original cost of acquisition, including incidental
expenses related to such acquisition and installation.
ii) IntangibleAssets:
Intangible assets are stated at cost, net of tax / duty credits
availed, if any, less accumulated amortisation / impairment losses, if
any. Cost includes original cost of acquisition, including incidental
expenses related to such acquisition and installation.
g) Depreciation /Amortisation:
Depreciation on tangible fixed assets is provided on straight-line
method at the rates specified in Schedule XIV to the Companies Act,
1956. Depreciation on additions to fixed assets is provided on pro-rata
basis from the date the asset is put to use. Depreciation on sale /
deduction from fixed asset is provided for up to the date of sale / ;
deduction, as the case may be. Assets taken on finance lease are
depreciated over the life of the lease. Assets costing Rs. 5,000 or
less are fully depreciated in the year of purchase. Intangible
assets consisting of Membership Rights of the Bombay Stock Exchange
Limited are amortised on straight-line method basis over a period of
five years from the date when the Rights became available for use.
Intangible assets,consisting of Software are amortised on a straight
line basis over a period of four years from the date when the assets
are available for use.
h) Impairment of Assets
The Company assesses at each Balance Sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset.
Recoverable amount is higher of an assets net selling price and its
value in use. If such recoverable amount of the asset or the
recoverable amount of the cash generating unit to which the asset
belongs is less than its carrying amount, the carrying amount is
reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognised in the. Profit and Loss Account. If
at the Balance Sheet date there is an indication that if a previously
assessed impairment loss no longer exists, the recoverable amount is
reassessed and the asset is reflected at the recoverable amount.
i) Investments:
Investments are classified as long term and current investments. Long
term investments are carried at cost less provision, if any, for
diminution other than temporary in their value. Current investments are
valued at lower of cost and fair value.
j) Employee Benefits:
The company has a defined contribution plan namely provident fund.
Annual contribution to Employees Provident Fund Organisation is charged
to profit and loss account. The Company has unfunded defined benefit
plans namely long term compensated absences and gratuity for all the
employees, the liability for which is determined on the basis of an
actuarial valuation at the end of the year using the Projected Unit
Credit method.
a . Actuarial gains and losses comprise experience adjustments and the
effects of change in actuarial assumptions and are recognised in Profit
and Loss account as income or expenses.
k) Deferred Employee Stock Compensation Cost:
The company follows intrinsic value method as per guidance note on
Accounting for Employee Share-based Payments issued by The Institute of
Chartered Accountants of India for accounting Employee Stock Options
granted. Deferred employee stock compensation cost for stock options
are recognised and measured by the difference between the estimated
value of the companys shares at the stock options grant date and the
exercise price to be paid by the option holders. The compensation
expense is amortised over the vesting period of the options. The fair
value of options for disclosure purpose is measured on the basis of a
valuation performed in respect of stock options granted.
l) Taxes on Income:
Current tax is determined as the tax payable in respect of taxable
income for the year and is computed in accordance with relevant tax
regulations. Deferred tax resulting from timing differences between
book and tax profits is accounted for at the current rate of tax /
substantively enacted tax rates at the Balance Sheet Date, as
applicable, to the extent that the timing differences are expected to
crystallise.
Deferred Tax Assets are recognised where realization is reasonably
certain whereas in case of carried forward losses or unabsorbed
depreciation, deferred tax assets are recognised only if there is a
virtual certainty of realization backed by convincing evidence.
Deferred Tax Assets are reviewed for the appropriateness of their
respective carrying values at each Balance Sheet date.
m) Fringe Benefits Tax:
Fringe Benefits Tax has been provided as per the provisions of the
Income Tax Act, 1961.
n) Leases:
In case of assets taken on operating lease, the lease rentals are
charged to the profit and loss account and assets taken on finance
lease have been capitalized, in accordance with Accounting Standard
(AS) 19 - Leases as notified under the Companies (Accounting Standards)
Rules, 2006.
o) Stock of Securities:
Stock of Securities is valued on weighted average basis, at lower of
cost and net realisable value.
p) Share Issue Expenses:
Share issue expenses are adjusted against Securities Premium account to
the extent of balance available and thereafter, the balance portion is
charged off to the Profit and Loss account, as incurred.
q) Borrowing Cost:
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of cost of
the asset. All other borrowing costs are charged to revenue.
r) Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognised only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of
obligation can be made. Contingent liability is disclosed for (1)
Possible obligations which will be confirmed only by future events not
wholly within the control of the Company or (2) Present obligations
arising from past events where it is not probable that an outflow of
resources will be required to settle the obligation or a reliable
estimate of the amount of the obligation can not be made. Contingent
Assets are not recognised in the financial statements since this may
result in the recognition of income that may never be realised.
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