Accounting Policies of East India Securities Ltd. Company

Mar 31, 2018

NOTE-1: SINGNIFICANT ACCOUNTING POLICIES

1.1 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 Act”) and guidelines issued by the Securities and Exchange Board of India (SEBI). 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.

1.2 Use of Estimates:

The preparation of financial statements requires management to make estimates and assumptions that affect amounts in the financial statements and reported notes thereto. The management believes that the estimates used in preparation of financial statements are prudent and reasonable. Future results could differ from these estimates. Differences between the actual result and estimates are recognized in periods in which the results are known/ materialized.

1.3 Cash and cash equivalents (for purposes of cash flow statement)

Cash comprises cash in hand and demand deposits with banks. Cash equivalents are short-term (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.

1.4 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.

1.5 Fixed Assets:

Fixed assets are stated at cost of acquisition or construction less accumulated depreciation and impairment loss, if any. The cost of an asset comprises of its purchase price and any directly attributable cost of bringing the assets to working condition for its intended use. Expenditure on additions, improvements and renewals is capitalized and expenditure for maintenance and repairs is charged to profit and loss account.

1.6 Depreciation:

Depreciation is provided on a written down value basis from the date the asset is put to use. As per the requirement of Schedule II of the Companies Act, 2013, the Company has evaluated the useful lives of the respective fixed assets which are as per the provisions of Part C of the Schedule II of the Act for calculating the depreciation.

1.7 Valuation of Inventories:

Inventories or stock in trade are valued at lower of cost and market value. Cost comprises expenditure incurred in the normal course of business in bringing such stock to their location and conditions and has been determined following the cost formula on FIFO basis. Closing stock of shares include shares pledged with stock exchanges as margin and does not include stock held on behalf of clients/constituents.

1.8 Valuation of Investments:

i. Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments.

ii. Current Investments are carried at lower of cost and fair market value determined on an individual investment basis.

iii. Long-term investments are carried at cost unless there is diminution, other then temporary, in their value. Diminution is considered other than temporary based on criteria that include the extent to which cost exceeds the market value, the duration of the market decline and the financial health and specific prospects of the issuer.

1.9 Revenue Recognition:

i. Revenue from broking activities for capital market is accounted for on the trade date of transaction.

ii. Revenue on account of trading in securities, MFs, Bonds and other financial securities is recognized on the basis of each trade executed at the stock exchange during the financial year.

iii. In respect of derivatives, the profit and loss is accounted for on marked to market basis on the closure of each trade.

iv. Interest income is recognized on accrual basis.

v. Depository Income has been accounted for on cash basis

vi. Revenue from management and advisory services is recognized for when the rendering of services under a contract is completed or substantially completed.

vii. Dividend is accounted for as income in year of receipt

viii. In respect of other heads of income accrual basis of accounting is followed.

ix. Revenue excludes taxes and other recoverable taxes.

1.10 Employee Benefits:

All employee benefits payable within twelve months of rendering of services are classified as short term benefits. Benefits include salaries, wages, awards, ex-gratia, performance pay, etc. and are recognized in the period in which the employee renders the related service. Liability on account of encashment of leave, bonus to employee is considered as short term compensated expense provided on actual.

Provident fund and ESI is a defined contribution scheme and the contribution what ever required as per law is charged to profit and loss account.

1.11 Earning Per Share

Basic earning per share is computed by dividing the net profit after tax for the year after prior period adjustments attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

1.12 Taxation & Deferred Tax

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961. Deferred Income Tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years

The Deferred Tax for timing differences between the book and tax profit for the year is accounted for using the tax rates and laws that have been substantially enacted as of the Balance Sheet date. Deferred tax asset is recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realised. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

The carrying amount of deferred tax asset is reviewed at each Balance Sheet date. The Company writes down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

At each Balance Sheet date, the Company recognizes the unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax asset can be realized.

1.13 Contingent Liabilities / Provisions

Contingent liabilities are not provided in the accounts and are disclosed separately in notes on accounts.

1.14 Impairment of Assets

An asset is considered as impaired in accordance with Accounting Standard 28 on Impairment of Assets when at the balance sheet date there are indications of impairment and the carrying amount of the assets, or where applicable the cash generating unit to which the asset belongs, exceeds its recoverable amount (i.e. the higher of the asset’s net selling price and value in use).

(ii) Rights attached to the Equity Shares

The Company has issued only one class of equity share having a face value of ‘10/- per share. The holder of each equity share is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets of the Company, after settling the dues of preferential and other creditors as per priority. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per the records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares as at the balance sheet date.

(iv) The company has not reserved any shares for issue under any option and contracts/commitments

(v) The company has neither issued any bonus shares nor have bought back its shares in last five years

(vi) The company has not forfeited any shares and there is no unpaid calls on any class of shares.