Accounting Policies of U Y Fincorp Ltd. Company
Mar 31, 2023
1. CORPORATE INFORMATION
U. Y Fincorp Limited (UYFL) is a RBI registered Non-Banking Financial Company. The Company was originally incorporated with the Registrar of Companies, West Bengal on October 7, 1993 as Golden Securities Private Limited. Pursuant to Shareholders Resolution dated November 30, 1994. The Company was converted into Public Limited Company and the name was changed to "Golden Securities Limited". Fresh Certificate of Incorporation consequent to such change of name was issued by the Registrar of Companies, West Bengal vide certificate dated December 13, 1994. The name of our Company was changed to Golden Goenka Fincorp Limited and a fresh Certificate of Incorporation reflecting the new name was issued by the Registrar of Companies, West Bengal on November 21,2011. Subsequently the name of Company was changed to its present name "U. Y Fincorp Limited" and a fresh Certificate of Incorporation reflecting the new name was issued by the Registrar of Companies, West Bengal on December 10, 2018. Company made its public issue in the year 1995 and subsequently got its shares listed at BSE Limited and The Calcutta Stock Exchange Limited in the same year. The RBI granted a certificate of registration dated April 20, 1998, permitting the Company to carry on the business of a NBFC as a non deposit taking company. Subsequently, Company has received a fresh certificate pursuant to change of name of Company. U. Y Fincorp Limited is primarily focused in providing inter corporate loans, personal loans and investments in securities and trading in securities.
1. SIGNIFICANT ACCOUNTING POLICIESA) Basis of Preparation
The financial statements of the Company have been prepared in accordance with the relevant provisions of the Companies Act, 2013, Indian Accounting Standards (Ind AS) prescribed under section 133 of the Companies Act, 2013.
"The financial statements of the Company have been prepared in accordance with the relevant provisions of the Companies Act, 2013, Indian Accounting Standards (Ind AS) prescribed under section 133 of the Companies Act, 2013.
The financial statements have been prepared on historical cost basis, except for financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
Fair value for measurement and/ or disclosures in these financial statements is determined on such a basis, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 -Inventories or value in use in Ind AS 36 - Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1,2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability."
B) Use of estimates and critical accounting judgements
The preparation of the financial statements require the use of accounting estimates which, by definition, will seldom equal the actual result. Management also needs to exercise judgement in applying the Companyâs accounting policies.
This note provides an overview of the areas that involved a high degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
Critical estimates and judgements
The areas involving critical estimates and judgements are:
The Company is engaged in agricultural activities and also subject to tax liability under MAT provisions. Significant judgement is involved in determining the tax liability for the Company. Also there are many transactions and calculations during the ordinary course of business for which the ultimate tax determination is uncertain. Further judgement is involved in determining the deferred tax position on the balance sheet date.
ii) Depreciation and amortisation
Depreciation and amortisation is based on management estimates of the future useful lives of the property, plant and equipment and intangible assets. Estimates may change due to technological developments, competition, changes in market conditions and other factors and may result in changes in the estimated useful life and in the depreciation and amortisation charges.
The present value of the defined benefit obligations and long term employee benefits depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) include the discount rate. Any changes in these assumptions will impact the carrying amount of defined benefit obligations.
The Company determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the obligations. In determining the appropriate discount rate, the Company considers the interest rates of Government securities that have terms to maturity approximating the terms of the related defined benefit obligation. Other key assumptions for obligations are based in part on current market conditions.
iv) Provisions and Contingencies
Provisions and contingencies are based on Managementâs best estimate of the liabilities based on the facts known at the balance sheet date.
v) Impairment charges on loans and advances
The measurement of impairment losses requires judgement, in particular, the estimation of the amount and timing of future cash flows and collateral values when determining impairment losses and the assessment of a significant increase in credit risk. These are based on the assumptions which are driven by a number of factors resulting in future changes to the impairment allowance.
A collective assessment of impairment takes into account data from the loan portfolio (such as credit quality, nature of assets underlying assets financed, levels of arrears, credit utilization, loan to collateral ratios etc.), and the concentration of risk and economic data (including levels of unemployment, country risk and performance of different individual groups). These significant assumptions have been applied consistently to all period presented.
The Companyâs EIR methodology, recognises interest income / expense using a rate of return that represents the best estimate of a constant rate of return over the expected behavioural life of loans given / taken and recognises the effect of potentially different interest rates at various stages and other characteristics of the product life cycle (including prepayments and penalty interest and charges).
This estimation, by nature, requires an element of judgement regarding the expected behaviour and life-cycle of the instruments, as well expected changes to Indiaâs base rate and other fee income/expense that are integral parts of the instrument.
C) Property, plant and equipment
An item of property, plant and equipment is recognised as an asset if it is probable that the future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. This recognition principle is applied to the costs incurred initially to acquire an item of property, plant and equipment and also to costs incurred subsequently to add to, replace part of, or service it. All other repair and maintenance costs, including regular servicing, are recognised in the statement of profit and loss as incurred. When a replacement occurs, the carrying
value of the replaced part is de-recognised. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items.
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment. Cost includes all direct costs and expenditures incurred to bring the asset to its working condition and location for its intended use. Trial run expenses (net of revenue) are capitalised. Borrowing costs incurred during the period of construction is capitalised as part of cost of the qualifying assets.
The gain or loss arising on disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the statement of profit and loss.
Subsequent to initial recognition, intangible assets with definite useful lives are reported at cost less accumulated amortisation and accumulated impairment losses.
E) Depreciation and amortisation of property, plant and equipment and intangible assets
Depreciation is provided on prorata basis on straight line method at the rates determined based on estimated useful lives of tangible assets where applicable, specified in Schedule II to the Act. These charges are commenced from the dates the assets are available for their intended use and are spread over their estimated useful economic lives or, in the case of leased assets, over the lease period, if shorter. The estimated useful lives of assets and residual values are reviewed regularly and, when necessary, revised. No further charge is provided in respect of assets that are fully written down but are still in use. Depreciation on assets under construction commences only when the assets are ready for their intended use.
F) Impairmenti) Tangible and Intangible Assets
At each balance sheet date, the Company reviews the carrying values of its property, plant and equipment and intangible assets to determine whether there is any indication that the carrying value of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the extent of impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. An impairment loss is recognised in the statement of profit and loss as and when the carrying value of an asset exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying value of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount so that the increased carrying value does not exceed the carrying value that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised in the statement of profit and loss immediately.
ii) Investment in Subsidiaries and Associates
The carrying amount of the investment is tested for impairment in accordance with Ind AS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with Ind AS 36 to the extent that the recoverable amount of the investment subsequently increases.
The Company determines whether an arrangement contains a lease by assessing whether the fulfillment of a transaction is dependent on the use of a specific asset and whether the transaction conveys the right to use that asset to the Company in return for payment. Where this occurs, the arrangement is deemed to include a lease and is accounted for either as finance or operating lease.
Leases are classified as finance leases where the terms of the lease transfers substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Company as lessee(i) Operating lease
Rentals payable under operating leases are charged to the statement of profit and loss on a straight line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Finance leases are capitalised at the commencement of lease, at the lower of the fair value of the property or the present value of the minimum lease payments.The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in the statement of profit and loss over the period of the lease.
Amounts due from lessees under finance leases are recognised as receivables at the amount of the Companyâs net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Companyâs net investment outstanding in respect of the leases.Rental income from operating leases is generally recognised on a straight-line basis over the term of the relevant lease. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the Companyâs expected inflationary cost increases, such increases are recognised in the year in which such benefits accrue.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability. The transaction costs directly attributable to the acquisition of financial assets and financial liabilities at fair value through profit and loss are immediately recognised in the statement of Profit & Loss.
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period.
a) Financial assets Cash and bank balances
Cash and bank balances consist of :
(i) Cash and cash equivalents -
which includes cash in hand, deposits held at call with banks and other short term deposits which are readily convertible into known amounts of cash, are subject to an insignificant risk of change in value and have maturities of less than one year from the date of such deposits. These balances with banks are unrestricted for withdrawal and usage.
which includes balances and deposits with banks that are restricted for withdrawal and usage.
Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Financial assets measured at fair value
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows or to sell these financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Company in respect of equity investments (other than in subsidiaries, associates and joint ventures) which are not held for trading has made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of such equity instruments. Such an election is made by the Company on an instrument by instrument basis at the time of initial recognition of such equity investments
Financial asset not measured at amortised cost or at fair value through other comprehensive income is carried at fair value through the statement of profit and loss.
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 on the following financial assets.
⢠Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits and trade receivables
⢠Financial assets that are debt instruments and are measured as at FVTOCI
⢠Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 18.
The Company follows âsimplified approachâ for recognition of impairment loss allowance on trade receivables. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, the Company reverts to recognising impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date. ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cashflows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/expense in the statement of profit and loss. This amount is reflected under the head âother expensesâ in the statement of profit and loss. The balance sheet presentation for various financial instruments is described below:
Financial assets measured as at amortised cost: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
Debt instruments measured at FVTOCI: Since financial assets are already reflected at fair value, impairment allowance is not further reduced from its value. Rather, ECL amount is presented as âaccumulated impairment amountâ in the OCI.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.
The Company does not have any purchased or originated credit-impaired (POCI) financial assets, i.e., financial assets which are credit impaired on purchase/ origination.
Derecognition of financial assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the assets and an associated liability for amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
b) Financial liabilities and equity instruments Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial l iability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method where the time value of money is significant.
Interest bearing bank loans, overdrafts and issued debt are initially measured at fair value and are subsequently measured at amortised cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in the statement of profit and loss.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or they expire.
Derivative financial instruments
In the ordinary course of business, the Company uses certain derivative financial instruments to reduce business risks which arise from its exposure to foreign exchange and interest rate fluctuations. The instruments are confined principally to forward foreign exchange contracts and interest rate swaps. The instruments are employed as hedges of transactions included in the financial statements or for highly probable forecast transactions/firm contractual commitments. These derivatives contracts do not generally extend beyond six months except for interest rate derivatives.
Derivatives are initially accounted for and measured at fair value from the date the derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period.
I) Employee benefitsDefined contribution plans
Payments to defined contribution plans are charged as an expense as they fall due. Payments made to state managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Companyâs obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.
For defined benefit retirement schemes the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuation being carried out at each balance sheet date. Re-measurement gains and losses of the net defined benefit liability/(asset) are recognised immediately in other comprehensive income. The service cost and net interest on the net defined benefit liability/(asset) is treated as a net expense within employment costs.
Past service cost is recognised as an expense when the plan amendment or curtailment occurs or when any related restructuring costs or termination benefits are recognised, whichever is earlier.
The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit
obligation as reduced by the fair value plan assets.
Short term compensated expenses are charged to the Statement of Profit and Loss in the year in which the related service is rendered.
Provisions are recognised in the balance sheet when the Company has a present obligation (legal or constructive) as a result of a past event, which is expected to result in an outflow of resources embodying economic benefits which can be reliably estimated. Each provision is based on the best estimate of the expenditure required to settle the present obligation at the balance sheet date. Where the time value of money is material, provisions are measured on a discounted basis.
Constructive obligation is an obligation that derives from an entityâs actions where:
(a) by an established pattern of past practice, published policies or a sufficiently specific current statement, the entity has indicated to other parties that it will accept certain responsibilities and;
(b) as a result, the entity has created a valid expectation on the part of those other parties that it will discharge those responsibilities.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.
Tax expense for the year comprises current and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Companyâs liability for current tax is calculated using tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying values of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences. In contrast, deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
The carrying value of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates and tax laws that have been enacted or substantially enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to cover or settle the carrying value of its assets and liabilities.
Deferred tax assets and liabilities are offset to the extent that they relate to taxes levied by the same tax authority and there are legally enforceable rights to set off current tax assets and current tax liabilities within that jurisdiction.
Current and deferred tax are recognised as an expense or income in the statement of profit and loss, except when they relate to items credited or debited either in other comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income or directly in equity.
Deferred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. MAT is recognised as deferred tax assets in the Balance Sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable net of discounts, taking into account contractually defined terms and excluding taxes or duties collected on behalf of the government.
Interest income from financial assets is recognised by applying the Effective Interest Rate (âEIRâ) to the gross carrying amount of financial assets, other than credit-impaired assets and those classified as measured at Fair Value through Profit or Loss (FVTPL) or Fair Value through Other Comprehensive Income (FVOCI). Interest Income on credit impaired financial assets is recognised by applying the effective interest rate to the net amortised cost (net of provision) of the financial asset.
Income from dividend is recognised when the Companyâs right to receive such dividend is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds including interest expense calculated using the effective interest method, finance charges in respect of assets acquired on finance lease. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
Borrowings costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for the intended use or sale.
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment, if any.
Q) Segment Reporting Identification of Segments
The management is of the view that the business of the company predominantly falls within a single primary segment viz"Financial & Related Services" and hence there are no seperate reportable segments as per Ind-AS dealing with the segment reporting.
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per 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.
S) Contingent Liabilities and Assets
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. The company does not recognize a contingent liability but discloses its existence in the financial statements.Contingent assets are not recognised in the financial statements, but are disclosed where an inflow of economic benefits is probable.
Mar 31, 2018
1 Significant Accounting Policies
1.1 Basis of 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 (âASâ) specified under Section 133 of the Companies Act, 2013 (âthe Actâ) read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Act as applicable. Further, the Company follows the guidelines issued by the Reserve Bank of India (âRBIâ) as applicable to a Non-Banking Financial (Non-Deposit Accepting or Holding) Company (âNBFCâ). The financial statements have been prepared under the historical cost convention, on accrual basis. The accounting policies applied by the Company are consistent with those applied in the previous year except as otherwise stated elsewhere.
1.2 Use of estimates
The preparation of financial statements requires the management to make estimates and assumptions which are considered to arrive at the reported amounts of assets and liabilities and disclosure of contingent liabilities as on the date of the financial statements and the reported income and expenses during the reporting year. Although these estimates are based upon the managementâs best knowledge of current events and actions, actual results could differ from these estimates. The difference between the actual results and the estimates are recognised in the periods in which the results are known / materialised. Any revision to the accounting estimates are recognised prospectively in the current and future years.
1.3 Fixed Assets, Depreciation/Amortisation and Impairment
a) Fixed Assets
Tangible Fixed Assets are carried at cost less accumulated depreciation/amortisation and impairment losses, if any. Cost comprises of the purchase price and any directly attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets, which takes substantial period of time to get ready for their intended use, are also capitalised to the extent they relate to the period till such assets are ready to put to use.
b) Depreciation/Amortisation
Depreciation/Amortization is provided under straight line method at the rates determined based on the useful lives of the respective assets and residual values in accordance with Schedule II of the Companies Act, 2013.
Fixed Asset costing upto Rs.5,000/- are depreciated fully over a period of 12 months from the date of purchase.
c) Impairment
The carrying amount of assets is reviewed at each Balance Sheet date to determine if there is any indication of impairment, based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation, if there was no impairment.
1.4 Investments
Investments which are readily realisable and intended to be held for not more than one year from the date on which such investments are made are classified as current investments in accordance with the RBI guidelines and Accounting Standard 13 on âAccounting for Investmentsâ as notified under the Companies (Accounting Standards) Rules, 2006. Current investments also include current maturities of long-term investments. All other investments are classified as non-current investments. Current investments are carried at lower of cost and market price determined category-wise. All non-current investments including investments in Subsidiary Companies are carried at cost. However, provision for diminution in value, other than temporary in nature, is made to recognise a decline, on an individual basis.
Cost is arrived at on weighted average method for the purpose of valuation of investment.
1.5 Stock for Trade
Stock for Trade is carried at lower of cost and market price, determined category-wise.
1.6 Loan Assets
Loan Assets include loans advanced by the Company, secured by collateral offered by the customers, if applicable.
Loan assets are carried at net amount including installments fallen due and are net of unmatured / unearned finance charges, amounts received, assets not paid for, etc.
1.7 Provisioning / Write-off of Assets
The Company makes provision for Standard and Non-Performing Assets as per the Non-Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015, as amended from time to time. The Company also makes additional provision towards loan assets, to the extent considered necessary, based on the managementâs best estimate. Provision for other financial services is also made on similar basis.
1.8 Revenue Recognition
Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured:
a) Revenue from sale of Stock for Trade (shares/securities, commodities and mutual fund) is recognised when a binding obligation has been entered into.
b) Interest Income from Loan assets is recognised in the Statement of Profit and Loss on accrual basis as per the terms and conditions of the loan agreement, except in the case of non-performing assets where it is recognised upon realisation, as per the Prudential Norms / Directions of the Reserve Bank of India, applicable to NBFCs. Penal interest is recognized upon realization.
c) Profit/loss from derivative instruments (futures and options) are recognised on a marked to market basis.
d) Dividend income is recognised when the right to receive the dividend is established.
e) Profit or Loss on sale of investments is recognised when a binding obligation has been entered into.
f) Interest is recognised using the time proportion basis taking into account the amount outstanding and the interest rate applicable.
g) All other income is accounted for on accrual basis.
1.9 Prior Period and Extra Ordinary Items
Prior Period and Extra Ordinary items having material impact on the financial affairs of the Company are disclosed separately.
1.10 Retirement and other Employee Benefits
a) Gratuity
Liability for gratuity, which is a defined benefit scheme, is provided for based on an actuarial valuation carried out as at the balance sheet date. The Company has taken a policy administered by Life Insurance Corporation of India. Actuarial gains/losses are charged to the Statement of Profit and Loss and are not deferred.
b) Compensated Absences
Short term compensated expenses are charged to the Statement of Profit and Loss in the year in which the related service is rendered.
c) Provident Fund and Employee State Insurance
The provision of Employeesâ Provident Fund (under the provisions of the Employeesâ Provident Funds and Miscellaneous Provisions Act, 1952) and Employee State Insurance is not applicable to the Company as the number of employees were less than 20 during the year and at year end.
1.11 Borrowing Costs
Borrowing costs relating to the acquisition / construction of qualifying assets are capitalised until the time all substantial activities necessary to prepare the qualifying assets for their intended use are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.
The ancillary costs incurred in connection with the arrangement of borrowings are amortised over the life of underlying borrowings. Premium payable on redemption of debentures is amortised over the tenure of the debentures. These form part of the borrowing costs.
Borrowing costs also include exchange differences arising from Foreign currency borrowings, to the extent they are regarded as an adjustment to the borrowing costs.
All other costs related to borrowings are recognised as expense in the period in which they are incurred.
1.12 Segment reporting
Based on the risks and returns associated with business operations and in terms of Accounting Standard-17 (Segment Reporting), the Company is predominantly engaged in a single reportable segment of âFinancing and Related Servicesâ.
1.13 Leases
Leases, where the lessor effectively retains substantially all the risks and rewards of ownership of the leased asset, are classified as operating leases. Operating lease payments are recognised on a straight-line basis over the lease term.
1.14 Earnings Per Share (EPS)
Basic EPS is calculated by dividing the net profit or loss for the year, attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted EPS, 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.
1.15 Cash and Cash Equivalents
Cash and Cash Equivalents in the Cash Flow Statement comprise of cash on hand and at bank, demand deposits with banks, cheques on hand, remittances in transit and short term highly liquid investments with an original maturity of three months or less.
1.16 Taxes on Income
Tax expense comprises of current tax [(net of Minimum Alternate Tax (MAT) credit entitlement)] and deferred tax.
Current tax is the amount of tax payable on the taxable income for the year determined in accordance with the provisions of the Income Tax Act, 1961.
Deferred 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.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities. The deferred tax assets and deferred tax liabilities relate to the taxes on income levied by the same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.
At each Balance Sheet date, the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets 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 assets can be realised.
MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in Guidance Note issued by The Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period.
1.17 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the company has a present obligation as a result of past event and it is probable that outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on 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 not recognised but are disclosed in the notes to financial statements. Contingent Assets are neither recognised nor disclosed in the financial statements.
Mar 31, 2016
1 Significant Accounting Policies
1.1 Basis of 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 (âASâ) specified under Section 133 of the Companies Act, 2013 (âthe Actâ) read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Act as applicable. Further, the Company follows the guidelines issued by the Reserve Bank of India (âRBIâ) as applicable to a Non-Banking Financial (Non-Deposit Accepting or Holding) Company (âNBFCâ). The financial statements have been prepared under the historical cost convention, on accrual basis. The accounting policies applied by the Company are consistent with those applied in the previous year except as otherwise stated elsewhere.
1.2 Use of estimates
The preparation of financial statements requires the management to make estimates and assumptions which are considered to arrive at the reported amounts of assets and liabilities and disclosure of contingent liabilities as on the date of the financial statements and the reported income and expenses during the reporting year. Although these estimates are based upon the management''s best knowledge of current events and actions, actual results could differ from these estimates. The difference between the actual results and the estimates are recognized in the periods in which the results are known / materialized. Any revision to the accounting estimates are recognized prospectively in the current and future years.
1.3 Fixed Assets, Depreciation/Amortization and Impairment
a) Fixed Assets
Tangible Fixed Assets are carried at cost less accumulated depreciation / amortization and impairment losses, if any. Cost comprises of the purchase price and any directly attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets, which takes substantial period of time to get ready for their intended use, are also capitalized to the extent they relate to the period till such assets are ready to put to use.
b) Depreciation/Amortization
Depreciation/Amortization is provided under straight line method at the rates determined based on the useful lives of the respective assets and residual values in accordance with Schedule II of the Companies Act, 2013.
Fixed Asset costing up to Rs.5,000/- are depreciated fully over a period of 12 months from the date of purchase.
c) Impairment
The carrying amount of assets is reviewed at each Balance Sheet date to determine if there is any indication of impairment, based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation, if there was no impairment.
1.4 Investments
Investments which are readily realizable and intended to be held for not more than one year from the date on which such investments are made are classified as current investments in accordance with the RBI guidelines and Accounting Standard 13 on âAccounting for Investmentsâ as notified under the Companies (Accounting Standards) Rules, 2006. Current investments also include current maturities of long-term investments. All other investments are classified as noncurrent investments. Current investments are carried at lower of cost and market price determined category-wise. All noncurrent investments including investments in Subsidiary Companies, are carried at cost. However, provision for diminution in value, other than temporary in nature, is made to recognize a decline, on an individual basis.
Cost is arrived at on weighted average method for the purpose of valuation of investment.
1.5 Stock for Trade
Stock for Trade is carried at lower of cost and market price, determined category-wise.
1.6 Loan Assets
Loan Assets include loans advanced by the Company, secured by collateral offered by the customers, if applicable.
Loan assets are carried at net amount including installments fallen due and are net of unmetered / unearned finance charges, amounts received, assets not paid for, etc.
1.7 Provisioning / Write-off of Assets
The Company makes provision for Standard and Non-Performing Assets as per the Non-Systemically Important Nonbanking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015, as amended from time to time. The Company also makes additional provision towards loan assets, to the extent considered necessary, based on the management''s best estimate. Provision for other financial services is also made on similar basis.
1.8 Revenue Recognition
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured:
a) Revenue from sale of Stock for Trade (shares/securities, commodities and mutual fund) is recognized when a binding obligation has been entered into.
b) Interest Income from Loan assets is recognized in the Statement of Profit and Loss on accrual basis as per the terms and conditions of the loan agreement, except in the case of non-performing assets where it is recognized, upon realization, as per the Prudential Norms / Directions of the Reserve Bank of India, applicable to NBFCs. Penal interest is recognized upon realization.
c) Profit/loss from derivative instruments (futures and options) are recognized on a marked to market basis.
d) Dividend income is recognized when the right to receive the dividend is established.
e) Profit or Loss on sale of investments is recognized when a binding obligation has been entered into.
f) Interest is recognized using the time proportion basis taking into account the amount outstanding and the interest rate applicable.
g) All other income is accounted for on accrual basis.
1.9 Prior Period and Extra Ordinary Items
Prior Period and Extra Ordinary items having material impact on the financial affairs of the Company are disclosed separately.
1.10 Retirement and other Employee Benefits
a) Gratuity
Liability for gratuity, which is a defined benefit scheme, is provided for based on an actuarial valuation carried out as at the balance sheet date. The Company has taken a policy administered by Life Insurance Corporation of India. Actuarial gains/losses are charged to the Statement of Profit and Loss and are not deferred.
b) Compensated Absences
Short term compensated expenses are charged to the Statement of Profit and Loss in the year in which the related service is rendered.
c) Provident Fund and Employee State Insurance
The provision of Employees'' Provident Fund (under the provisions of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952) and Employee State Insurance is not applicable to the Company as the number of employees were less than 20 during the year and at year end.
1.11 Borrowing Costs
Borrowing costs relating to the acquisition / construction of qualifying assets are capitalized until the time all substantial activities necessary to prepare the qualifying assets for their intended use are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.
The ancillary costs incurred in connection with the arrangement of borrowings are amortized over the life of underlying borrowings. Premium payable on redemption of debentures is amortized over the tenure of the debentures. These form part of the borrowing costs.
Borrowing costs also include exchange differences arising from Foreign currency borrowings, to the extent they are regarded as an adjustment to the borrowing costs.
All other costs related to borrowings are recognized as expense in the period in which they are incurred.
1.12 Segment reporting
Based on the risks and returns associated with business operations and in terms of Accounting Standard-17 (Segment Reporting), the Company is predominantly engaged in a single reportable segment of âFinancing and Related Services''.
1.13 Leases
Leases, where the lessor effectively retains substantially all the risks and rewards of ownership of the leased asset, are classified as operating leases. Operating lease payments are recognized on a straight-line basis over the lease term.
1.14 Earnings Per Share (EPS)
Basic EPS is calculated by dividing the net profit or loss for the year, attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted EPS, 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.
1.15 Cash and Cash Equivalents
Cash and Cash Equivalents in the Cash Flow Statement comprise of cash on hand and at bank, demand deposits with banks, cheques on hand, remittances in transit and short term highly liquid investments with an original maturity of three months or less.
1.16 Taxes on Income
Tax expense comprises of current tax [(net of Minimum Alternate Tax (MAT) credit entitlement)] and deferred tax.
Current tax is the amount of tax payable on the taxable income for the year determined in accordance with the provisions of the Income Tax Act, 1961.
Deferred 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.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities. The deferred tax assets and deferred tax liabilities relate to the taxes on income levied by the same governing taxation laws. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. 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.
At each Balance Sheet date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets 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 assets can be realized.
MAT credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by The Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period.
1.17 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when the company has a present obligation as a result of past event and it is probable that outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on 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 not recognized but are disclosed in the notes to financial statements. Contingent Assets are neither recognized nor disclosed in the financial statements.
Mar 31, 2015
1.1 Basis of 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 ('AS') specified
under Section 133 of the Companies Act, 2013 ("the Act") read with Rule
7 of the Companies (Accounts) Rules, 2014 and the relevant provisions
of the Act as applicable. Further, the Company follows the guidelines
issued by the Reserve Bank of India ('RBI') as applicable to a
Non-Banking Financial (Non-Deposit Accepting or Holding) Company
('NBFC'). The financial statements have been prepared under the
historical cost convention, on accrual basis. The accounting policies
applied by the Company are consistent with those applied in the
previous year except as otherwise stated elsewhere.
1.2 Use of estimates
The preparation of financial statements requires the management to make
estimates and assumptions which are considered to arrive at the
reported amounts of assets and liabilities and disclosure of contingent
liabilities as on the date of the financial statements and the reported
income and expenses during the reporting year. Although these estimates
are based upon the management's best knowledge of current events and
actions, actual results could differ from these estimates. The
difference between the actual results and the estimates are recognised
in the periods in which the results are known / materialised. Any
revision to the accounting estimates are recognised prospectively in
the current and future years.
1.3 Fixed Assets, Depreciation/Amortisation and Impairment
a) Fixed Assets
Tangible Fixed Assets are carried at cost less accumulated
depreciation/amortisation and impairment losses, if any Cost comprises
of the purchase price and any directly attributable cost of bringing
the asset to its working condition for its intended use. Borrowing
costs relating to acquisition of fixed assets, which takes substantial
period of time to get ready for their intended use, are also
capitalised to the extent they relate to the period till such assets
are ready to put to use.
b) Depreciation/Amortisation
Depreciation/Amortisation is provided under straight line method at the
rates determined based on the useful lives of the respective assets and
residual values in accordance with Schedule II of the Companies Act,
2013.
Fixed Asset costing upto Rs 5,000/- are depreciated fully over a period
of 12 months from the date of purchase.
c) Impairment
The carrying amount of assets is reviewed at each Balance Sheet date to
determine if there is any indication of impairment, based on
internal/external factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
A previously recognized impairment loss is increased or reversed
depending on changes in circumstances. However the carrying value after
reversal is not increased beyond the carrying value that would have
prevailed by charging usual depreciation, if there was no impairment.
1.4 Investments
Investments which are readily realisable and intended to be held for
not more than one year from the date on which such investments are made
are classified as current investments in accordance with the RBI
guidelines and Accounting Standard 13 on 'Accounting for Investments'
as notified under the Companies (Accounting Standards) Rules, 2006.
Current investments also include current maturities of long-term
investments. All other investments are classified as non-current
investments. Current investments are carried at lower of cost and
market price determined category-wise. All non-current investments
including investments in Subsidiary Companies, are carried at cost.
However, provision for diminution in value, other than temporary in
nature, is made to recognise a decline, on an individual basis.
Cost is arrived at on weighted average method for the purpose of
valuation of investment.
1.5 Stock for Trade
Stock for Trade is carried at lower of cost and market price,
determined category-wise.
1.6 Loan Assets
Loan Assets include loans advanced by the Company, secured by
collateral offered by the customers, if applicable.
Loan assets are carried at net amount including installments fallen due
and are net of unmatured / unearned finance charges, amounts received,
assets not paid for, etc.
1.7 Provisioning / Write-off of Assets
The Company makes provision for Standard and Non-Performing Assets as
per the Non-Banking Financial (Non-Deposit Accepting or Holding)
Companies Prudential Norms (Reserve Bank) Directions, 2007, as amended
from time to time. The Company also makes additional provision towards
loan assets, to the extent considered necessary, based on the
management's best estimate. Provision for other financial services is
also made on similar basis.
1.8 Revenue Recognition
Revenue is recognised to the extent it is probable that the economic
benefits will flow to the Company and the revenue can be reliably
measured:
a) Revenue from sale of Stock for Trade (shares/securities, commodities
and mutual fund) is recognised when a binding obligation has been
entered into.
b) Interest Income from Loan assets is recognised in the Statement of
Profit and Loss on accrual basis as per the terms and conditions of the
loan agreement, except in the case of non-performing assets where it is
recognised, upon realisation, as per the Prudential Norms / Directions
of the Reserve Bank of India, applicable to NBFCs. Penal interest is
recognized upon realization.
c) Fees from consultancy services are recognised pro-rata over the
period of the contract as and when services are rendered. The Company
collects service tax on behalf of the government and, therefore, it is
not an economic benefit flowing to the company. Hence, it is excluded
from revenue. Other fee based income is accounted for on accrual basis.
d) Profit/loss from derivative instruments (futures and options) are
recognised on a marked to market basis.
e) Dividend income is recognised when the right to receive the dividend
is established.
f) Profit or Loss on sale of investments is recognised when a binding
obligation has been entered into.
g) Interest is recognised using the time proportion basis taking into
account the amount outstanding and the interest rate applicable.
h) All other income is accounted for on accrual basis.
1.9 Prior Period and Extra Ordinary Items
Prior Period and Extra Ordinary items having material impact on the
financial affairs of the Company are disclosed separately
1.10 Retirement and other Employee Benefits
a) Gratuity
Liability for gratuity, which is a defined benefit scheme, is provided
for based on an actuarial valuation carried out as at the balance sheet
date. The Company has taken a policy administered by Life Insurance
Corporation of India. Actuarial gains/ losses are charged to the
Statement of Profit and Loss and are not deferred.
b) Compensated Absences
Short term compensated expenses are charged to the Statement of Profit
and Loss in the year in which the related service is rendered.
c) Provident Fund and Employee State Insurance
The provision of Employees' Provident Fund (under the provisions of the
Employees' Provident Funds and Miscellaneous Provisions Act, 1952) and
Employee State Insurance is not applicable to the Company as the number
of employees were less than 20 during the year and at year end.
1.11 Borrowing Costs
Borrowing costs relating to the acquisition / construction of
qualifying assets are capitalised until the time all substantial
activities necessary to prepare the qualifying assets for their
intended use are complete. A qualifying asset is one that necessarily
takes substantial period of time to get ready for its intended use.
The ancillary costs incurred in connection with the arrangement of
borrowings are amortised over the life of underlying borrowings.
Premium payable on redemption of debentures is amortised over the
tenure of the debentures. These form part of the borrowing costs.
Borrowing costs also include exchange differences arising from Foreign
currency borrowings, to the extent they are regarded as an adjustment
to the borrowing costs.
All other costs related to borrowings are recognised as expense in the
period in which they are incurred.
1.12 Segment Reporting
Based on the risks and returns associated with business operations and
in terms of Accounting Standard-17 (Segment Reporting), the Company is
predominantly engaged in a single reportable segment of 'Financing and
Related Services'.
1.13 Leases
Leases, where the lessor effectively retains substantially all the
risks and rewards of ownership of the leased asset, are classified as
operating leases. Operating lease payments are recognised on a
straight-line basis over the lease term.
1.14 Earnings Per Share (EPS)
Basic EPS is calculated by dividing the net profit or loss for the
year, attributable to equity shareholders, by the weighted average
number of equity shares outstanding during the year.
For the purpose of calculating diluted EPS, 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.
1.15 Cash and Cash Equivalents
Cash and Cash Equivalents in the Cash Flow Statement comprise of cash
on hand and at bank, demand deposits with banks, cheques on hand,
remittances in transit and short term highly liquid investments with an
original maturity of three months or less.
1.16 Taxes on Income
Tax expense comprises of current tax [(net of Minimum Alternate Tax
(MAT) credit entitlement)] and deferred tax.
Current tax is the amount of tax payable on the taxable income for the
year determined in accordance with the provisions of the Income Tax
Act, 1961.
Deferred 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.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the Balance Sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities. The deferred tax assets and deferred tax liabilities
relate to the taxes on income levied by the same governing taxation
laws. Deferred tax assets are recognised only to the extent that there
is reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realised. In
situations where the company has unabsorbed depreciation or carry
forward tax losses, all deferred tax assets are recognised only if
there is virtual certainty supported by convincing evidence that they
can be realised against future taxable profits.
At each Balance Sheet date, the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets 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 assets can be realised.
MAT credit is recognised as an asset only when and to the extent there
is convincing evidence that the company will pay normal income tax
during the specified period. In the year in which the MAT credit
becomes eligible to be recognised as an asset in accordance with the
recommendations contained in Guidance Note issued by The Institute of
Chartered Accountants of India, the said asset is created by way of a
credit to the Statement of Profit and Loss and shown as MAT Credit
Entitlement. The Company reviews the same at each Balance Sheet date
and writes down the carrying amount of MAT Credit Entitlement to the
extent there is no longer convincing evidence to the effect that the
Company will pay normal income tax during the specified period.
1.17 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the company has a present obligation as
a result of past event and it is probable that outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to their
present value and are determined based on 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 not recognised but are disclosed
in the notes to financial statements. Contingent Assets are neither
recognised nor disclosed in the financial statements.
Mar 31, 2014
1.1 Basis of Preparation of Financial Statements
The financial statements of the Company have been prepared in
conformity with Generally Accepted Accounting Principles in India, to
comply in all material respects with the Accounting Standards (AS'')
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
15/2013 dated 13* September, 2013 of the Ministry of Corporate Affairs)
and the relevant provisions of the 1956 Act/ 2013 Act, as applicable.
Further, the Company follows the guidelines issued by the Reserve Bank
of India (''RBI'') as applicable to a Non-Banking Financial (Non-Deposit
Accepting or Holding) Company fNBFC). The financial statements have
been prepared under the historical cost convention, on accrual basis.
The accounting policies applied by the Company are consistent with
those applied in the previous year except as otherwise stated
elsewhere.
1.2 Use of estimates
The preparation of financial statements requires the management to make
estimates and assumptions which are considered to arrive at the
reported amounts of assets and liabilities and disclosure of contingent
liabilities as on the date of the financial statements and the reported
income and expenses during the reporting year. Although these estimates
are based upon the management''s best knowledge of current events and
actions, actual results could differ from these estimates. The
difference between the actual results and the estimates are recognised
in the periods in which the results are known / materialised. Any
revision to the accounting estimates are recognised prospectively in
the current and future years.
1.3 Fixed Assets, Depreciation/Amortisation and Impairment
a) Fixed Assets
Tangible Fixed Assets are carried at cost less accumulated
depreciation/amortisation and impairment losses, if any. Cost
comprises of the purchase price and any directly attributable cost of
bringing the asset to its working condition for its intended use.
Borrowing costs relating to acquisition of fixed assets, which takes
substantial period of time to get ready for their intended use, are
also capitalised to the extent they relate to the period till such
assets are ready to put to use.
b) Depreciation/Amortisation
Depreciation/Amortisation is provided on the Written Down Value Method
fWDV) as per the rates and in the manner prescribed in Schedule XIV of
the Act. Management estimates the useful lives of Fixed Assets to be in
accordance with the useful lives prescribed in the aforementioned
Schedule.
Fixed Asset costing upto Rs. 5,000/- are depreciated fully over a period
of 12 months from the date of purchase.
Depreciation/Amortisation on assets purchased / sold during the
reporting period is recognised on pro-rata basis.
c) Impairment
The carrying amount of assets is reviewed at each Balance Sheet date to
determine if there is any indication of impairment, based on
internal/external factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
A previously recognized impairment loss is increased or reversed
depending on changes in circumstances. However the carrying value after
reversal is not increased beyond the carrying value that would have
prevailed by charging usual depreciation, if there was no impairment.
1.4 Investments
Investments which are readily realisable and intended to be held for
not more than one year from the date on which such investments are made
are classified as current investments in accordance with the RBI
guidelines and Accounting Standard 13 on Accounting for Investments'' as
notified under the Companies (Accounting Standards) Rules, 2006.
Current investments also include current maturities of long-term
investments. All other investments are classified as non-current
investments. Current investments are carried at lower of cost and
market price determined category-wise. All non-current investments
including investments in Subsidiary Companies, are carried at cost.
However, provision for diminution in value, other than temporary in
nature, is made to recognise a decline, on an individual basis.
Cost is arrived at on weighted average method for the purpose of
valuation of investment.
1.5 Stock for Trade
Stock for Trade is carried at lower of cost and market price,
determined category-wise.
1.6 Loan Assets
Loan Assets include loans advanced by the Company, secured by
collateral offered by the customers, if applicable.
Loan assets are carried at net amount including installments fallen due
and are net of unmatured / unearned finance charges, amounts received,
assets not paid for, etc.
1.7 Provisioning / Write-off of Assets
The Company makes provision for Standard and Non-Performing Assets as
per the Non-Banking Financial (Non-Deposit Accepting or Holding)
Companies Prudential Norms (Reserve Bank) Directions, 2007, as amended
from time to time. The Company also makes additional provision towards
loan assets, to the extent considered necessary, based on the
management''s best estimate. Provision for other financial services is
also made on similar basis.
1.8 Revenue Recognition
Revenue is recognised to the extent it is probable that the economic
benefits will flow to the Company and the revenue can be reliably
measured:
a) Revenue from sale of Stock for Trade (shares/securities, commodities
and mutual fund) is recognised when a binding obligation has been
entered into.
b) Interest Income from Loan assets is recognised in the Statement of
Profit and Loss on accrual basis as per the terms and conditions of the
loan agreement, except in the case of non-performing assets where it is
recognised, upon realisation, as per the Prudential Norms / Directions
of the Reserve Bank of India, applicable to NBFCs. Penal interest is
recognized upon realization.
c) Fees from consultancy services are recognised pro-rata over the
period of the contract as and when services are rendered. The Company
collects service tax on behalf of the government and, therefore, it is
not an economic benefit flowing to the company. Hence, it is excluded
from revenue. Other fee based income is accounted for on accrual basis.
d) Profit/loss from derivative instruments (futures and options) are
recognised on a marked to market basis.
e) Dividend income is recognised when the right to receive the dividend
is established.
f) Profit or Loss on sale of investments is recognised when a binding
obligation has been entered into.
g) Interest is recognised using the time proportion basis taking into
account the amount outstanding and the interest rate applicable.
h) All other income is accounted for on accrual basis.
1.9 Prior Period and Extra Ordinary Items
Prior Period and Extra Ordinary items having material impact on the
financial affairs of the Company are disclosed separately.
1.10 Retirement and other Employee Benefits
a) Gratuity
Liability for gratuity, which is a defined benefit scheme, is provided
for based on an actuarial valuation carried out as at the balance sheet
date. The Company has taken a policy administered by Life Insurance
Corporation of India. Actuarial gains/ losses are charged to the
Statement of Profit and Loss and are not deferred.
b) Compensated Absences
Short term compensated expenses are charged to the Statement of Profit
and Loss in the year in which the related service is rendered.
c) Provident Fund and Employee State Insurance
The provision of Employees'' Provident Fund (under the provisions of the
Employees'' Provident Funds and Miscellaneous Provisions Act, 1952) and
Employee State Insurance is not applicable to the Company as the number
of employees were less than 20 during the year and at year end.
1.11 Borrowing Costs
Borrowing costs relating to the acquisition / construction of
qualifying assets are capitalised until the time all substantial
activities necessary to prepare the qualifying assets for their
intended use are complete. A qualifying asset is one that necessarily
takes substantial period of time to get ready for its intended use.
The ancillary costs incurred in connection with the arrangement of
borrowings are amortised over the life of underlying borrowings.
Premium payable on redemption of debentures is amortised over the
tenure of the debentures. These form part of the borrowing costs.
Borrowing costs also include exchange differences arising from Foreign
currency borrowings, to the extent they are regarded as an adjustment
to the borrowing costs.
All other costs related to borrowings are recognised as expense in the
period in which they are incurred.
1.12 Segment reporting
Based on the risks and returns associated with business operations and
in terms of Accounting Standard-17 (Segment Reporting), the Company is
predominantly engaged in a single reportable segment of ''Financing and
Related Services''.
1.13 Leases
Leases, where the lessor effectively retains substantially all the
risks and rewards of ownership of the leased asset, are classified as
operating leases. Operating lease payments are recognised on a
straight-line basis over the lease term.
1.14 Earnings Per Share (EPS)
Basic EPS is calculated by dividing the net profit or loss for the
year, attributable to equity shareholders, by the weighted average
number of equity shares outstanding during the year.
For the purpose of calculating diluted EPS, 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.
1.15 Cash and Cash Equivalents
Cash and Cash Equivalents in the Cash Flow Statement comprise of cash
on hand and at bank, demand deposits with banks, cheques on hand,
remittances in transit and short term highly liquid investments with an
original maturity of three months or less.
1.16 Taxes on Income
Tax expense comprises of current tax [(net of Minimum Alternate Tax
(MAT) credit entitlement)] and deferred tax.
Current tax is the amount of tax payable on the taxable income for the
year determined in accordance with the provisions of the Income Tax
Act, 1961.
Deferred 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.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the Balance Sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities. The deferred tax assets and deferred tax liabilities
relate to the taxes on income levied by the same governing taxation
laws. Deferred tax assets are recognised only to the extent that there
is reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realised. In
situations where the company has unabsorbed depreciation or carry
forward tax losses, all deferred tax assets are recognised only if
there is virtual certainty supported by convincing evidence that they
can be realised against future taxable profits.
At each Balance Sheet date, the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets 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 assets can be realised.
MAT credit is recognised as an asset only when and to the extent there
is convincing evidence that the company will pay normal income tax
during the specified period. In the year in which the MAT credit
becomes eligible to be recognised as an asset in accordance with the
recommendations contained in Guidance Note issued by The Institute of
Chartered Accountants of India, the said asset is created by way of a
credit to the Statement of Profit and Loss and shown as MAT Credit
Entitlement. The Company reviews the same at each Balance Sheet date
and writes down the carrying amount of MAT Credit Entitlement to the
extent there is no longer convincing evidence to the effect that the
Company will pay normal income tax during the specified period.
1.17 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the company has a present obligation as
a result of past event and it is probable that outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to their
present value and are determined based on 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 not recognised but are disclosed
in the notes to financial statements. Contingent Assets are neither
recognised nor disclosed in the financial statements.
2 Deferred Tax Assets (Net)
In terms of Accounting Standard 22, the Deferred Tax Assets (DTA)
recognised during the year is Rs. 799,366 (Previous year: Rs. 746,250) and
the Deferred Tax Liabilities recognised during the year is Rs. 329,363
(Previous year: Rs. 531,272). Consequently, the net DTA as at 31st
March, 2014 stands at Rs. 470,003 (Previous year: Rs. 214,978).
Mar 31, 2013
1.1 Basis of Preparation of Financial Statements
The financial statements of the Company have been prepared in
conformity with Generally Accepted Accounting Principles in India, to
comply in all material respects with the notified Accounting Standards
(AS'') under the Companies (Accounting Standards) Rules, 2006, the
relevant provisions of the Companies Act, 1956 (Âthe Act'') and the
guidelines issued by the Reserve Bank of India (ÂRBI'') as applicable to
a Non-Banking Financial (Non-Deposit Accepting or Holding) Company
(ÂNBFC). The financial statements have been prepared under the
historical cost convention, on accrual basis. The accounting policies
applied by the Company are consistent with those applied in the
previous year except as otherwise stated elsewhere.
Presentation and disclosure in Financial Statements
From the year ended 31st March, 2012, the revised Schedule VI notified
under the Companies Act, 1956 has become applicable to the Company for
preparation and presentation of its financial statements. Except
accounting for dividend on investment in subsidiary, the adoption of
new Schedule VI does not impact recognition and measurement principles
followed for preparation of financial statements. However, it has
significant impact on presentation and disclosures made in the
financial statements.
Operating Cycle
As per the revised Schedule VI, ''An operating cycle is the time between
the acquisition of assets for processing and their realisation in cash
or cash equivalents".
For the company, there is generally no clearly identifiable normal
operating cycle and hence the normal operating cycle for the company is
assumed to have a duration of 12 months.
Current and Non-Current Asset
An asset is classified as Âcurrent'' when it satisfies any of the
following criteria:
i. it is expected to be realised in, or is intended for sale or
consumption in, the Company''s normal operating cycle; or
ii. it is held primarily for the purpose of being traded; or
iii. it is expected to be realised within twelve months after the
reporting date; or
iv. it is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least twelve months
after the reporting date. All other assets are classified as
Ânon-current''.
Current and Non-Current Liability
A liability is classified as Âcurrent'' when it satisfies any of the
following criteria:
i. it is expected to be settled in the Company''s normal operating
cycles; or
ii. it is held primarily for the purpose of being traded; or
iii. it is due to be settled within twelve months after the reporting
date; or
iv. the company does not have an unconditional right to defer
settlement of the liability for at least twelve months after the
reporting date.
All other liabilities are classified as Ânon-current''.
1.2 Use of estimates
The preparation of financial statements requires the management to make
estimates and assumptions which are considered to arrive at the
reported amounts of assets and liabilities and disclosure of contingent
liabilities as on the date of the financial statements and the reported
income and expenses during the reporting year. Although these estimates
are based upon the management''s best knowledge of current events and
actions, actual results could differ from these estimates. The
difference between the actual results and the estimates are recognised
in the periods in which the results are known / materialised. Any
revision to the accounting estimates are recognised prospectively in
the current and future years.
1.3 Fixed Assets, Depreciation/Amortisation and Impairment
a) Fixed Assets
Tangible Fixed Assets are carried at cost less accumulated
depreciation/amortisation and impairment losses, if any. Cost comprises
of the purchase price and any directly attributable cost of bringing
the asset to its working condition for its intended use. Borrowing
costs relating to acquisition of fixed assets, which takes substantial
period of time to get ready for their intended use, are also
capitalised to the extent they relate to the period till such assets
are ready to put to use.
b) Depreciation/Amortisation
Depreciation/Amortisation is provided on the Written Down Value Method
(ÂWDV) as per the rates and in the manner prescribed in Schedule XIV of
the Act. Management estimates the useful lives of Fixed Assets to be in
accordance with the useful lives prescribed in the aforementioned
Schedule.
Fixed Asset costing upto Rs. 5,000/- are depreciated fully over a period
of 12 months from the date of purchase.
Depreciation/Amortisation on assets purchased / sold during the
reporting period is recognised on pro-rata basis.
c) Impairment
The carrying amount of assets is reviewed at each Balance Sheet date to
determine if there is any indication of impairment, based on
internal/external factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
A previously recognized impairment loss is increased or reversed
depending on changes in circumstances. However the carrying value after
reversal is not increased beyond the carrying value that would have
prevailed by charging usual depreciation, if there was no impairment.
1.4 Investments
Investments which are readily realisable and intended to be held for
not more than one year from the date on which such investments are made
are classified as current investments in accordance with the RBI
guidelines and Accounting Standard 13 on Accounting for Investments'' as
notified under the Companies (Accounting Standards) Rules, 2006.
Current investments also include current maturities of long-term
investments. All other investments are classified as non-current
investments. Current investments are carried at lower of cost and
market price determined category-wise. All non-current investments
including investments in Subsidiary Companies, are carried at cost.
However, provision for diminution in value, other than temporary in
nature, is made to recognise a decline, on an individual basis.
Cost is arrived at on weighted average method for the purpose of
valuation of investment.
1.5 Stock for Trade
Stock for Trade is carried at lower of cost and market price,
determined category-wise.
1.6 Loan Assets
Loan Assets include loans advanced by the Company, secured by
collateral offered by the customers, if applicable.
Loan assets are carried at net amount including installments fallen due
and are net of unmatured / unearned finance charges, amounts received,
assets not paid for, etc.
1.7 Provisioning / Write-off of Assets
The Company makes provision for Standard and Non-Performing Assets as
per the Non-Banking Financial (Non-Deposit Accepting or Holding)
Companies Prudential Norms (Reserve Bank) Directions, 2007, as amended
from time to time. The Company also makes additional provision towards
loan assets, to the extent considered necessary, based on the
management''s best estimate. Provision for other financial services is
also made on similar basis.
1.8 Revenue Recognition
Revenue is recognised to the extent it is probable that the economic
benefits will flow to the Company and the revenue can be reliably
measured:
a) Revenue from sale of Stock for Trade (shares/securities, commodities
and mutual fund) is recognised when a binding obligation has been
entered into.
b) Interest Income from Loan assets is recognised in the Statement of
Profit and Loss on accrual basis as per the terms and conditions of the
loan agreement, except in the case of non-performing assets where it is
recognised, upon realisation, as per the Prudential Norms / Directions
of the Reserve Bank of India, applicable to NBFCs.
c) Fees from consultancy services are recognised pro-rata over the
period of the contract as and when services are rendered. The Company
collects service tax on behalf of the government and, therefore, it is
not an economic benefit fowing to the company. Hence, it is excluded
from revenue. Other fee based income is accounted for on accrual basis.
d) Profit/loss from derivative instruments (futures and options) are
recognised on a marked to market basis.
e) Dividend income is recognised when the right to receive the dividend
is established.
f) Profit or Loss on sale of investments is recognised when a binding
obligation has been entered into.
g) Interest is recognised using the time proportion basis taking into
account the amount outstanding and the interest rate applicable.
h) All other income is accounted for on accrual basis.
1.9 Prior Period and Extra Ordinary Items
Prior Period and Extra Ordinary items having material impact on the
financial affairs of the Company are disclosed separately.
1.10 Retirement and other Employee Benefits
a) Gratuity
Liability for gratuity, which is a defined benefit scheme, is provided
for based on an actuarial valuation carried out as at the balance sheet
date. The Company has taken a policy administered by Life Insurance
Corporation of India. Actuarial gains/ losses are charged to the
Statement of Profit and Loss and are not deferred.
b) Compensated Absences
Short term compensated expenses are charged to the Statement of Profit
and Loss in the year in which the related service is rendered.
c) Provident Fund and Employee State Insurance
The provision of Employees'' Provident Fund (under the provisions of the
Employees'' Provident Funds and Miscellaneous Provisions Act, 1952) and
Employee State Insurance is not applicable to the Company as the number
of employees were less than 20 during the year and at year end.
1.11 Borrowing Costs
Borrowing costs relating to the acquisition / construction of
qualifying assets are capitalised until the time all substantial
activities necessary to prepare the qualifying assets for their
intended use are complete. A qualifying asset is one that necessarily
takes substantial period of time to get ready for its intended use.
The ancillary costs incurred in connection with the arrangement of
borrowings are amortised over the life of underlying borrowings.
Premium payable on redemption of debentures is amortised over the
tenure of the debentures. These form part of the borrowing costs.
Borrowing costs also include exchange differences arising from Foreign
currency borrowings, to the extent they are regarded as an adjustment
to the borrowing costs.
All other costs related to borrowings are recognised as expense in the
period in which they are incurred.
1.12 Segment reporting
Based on the risks and returns associated with business operations and
in terms of Accounting Standard-17 (Segment Reporting), the Company is
predominantly engaged in a single reportable segment of ÂFinancing and
Related Services''.
1.13 Leases
Leases, where the lessor effectively retains substantially all the
risks and rewards of ownership of the leased asset, are classified as
operating leases. Operating lease payments are recognised on a
straight-line basis over the lease term.
1.14 Earnings Per Share (EPS)
Basic EPS is calculated by dividing the net profit or loss for the
year, attributable to equity shareholders, by the weighted average
number of equity shares outstanding during the year.
For the purpose of calculating diluted EPS, 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.
1.15 Cash and Cash Equivalents
Cash and Cash Equivalents in the Cash Flow Statement comprise of cash
on hand and at bank, demand deposits with banks, cheques on hand,
remittances in transit and short term highly liquid investments with an
original maturity of three months or less.
1.16 Taxes on Income
Tax expense comprises of current tax [(net of Minimum Alternate Tax
(MAT) credit entitlement)] and deferred tax.
Current tax is the amount of tax payable on the taxable income for the
year determined in accordance with the provisions of the Income Tax
Act, 1961.
Deferred 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.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the Balance Sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities. The deferred tax assets and deferred tax liabilities
relate to the taxes on income levied by the same governing taxation
laws. Deferred tax assets are recognised only to the extent that there
is reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realised. In
situations where the company has unabsorbed depreciation or carry
forward tax losses, all deferred tax assets are recognised only if
there is virtual certainty supported by convincing evidence that they
can be realised against future taxable profits.
At each Balance Sheet date, the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets 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 assets can be realised.
MAT credit is recognised as an asset only when and to the extent there
is convincing evidence that the company will pay normal income tax
during the specified period. In the year in which the MAT credit
becomes eligible to be recognised as an asset in accordance with the
recommendations contained in Guidance Note issued by The Institute of
Chartered Accountants of India, the said asset is created by way of a
credit to the Statement of Profit and Loss and shown as MAT Credit
Entitlement. The Company reviews the same at each Balance Sheet date
and writes down the carrying amount of MAT Credit Entitlement to the
extent there is no longer convincing evidence to the effect that the
Company will pay normal income tax during the specified period.
1.17 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the company has a present obligation as
a result of past event and it is probable that outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to their
present value and are determined based on 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 not recognised but are disclosed
in the notes to financial statements. Contingent Assets are neither
recognised nor disclosed in the financial statements.
Mar 31, 2012
1.1 Basis of Preparation of Financial Statements
The financial statements have been prepared in conformity with
Generally Accepted Accounting Principles in India, to comply in all
material respects with the notified Accounting Standards (AS') under
the Companies Accounting Standard Rules, 2006, the relevant provisions
of the Companies Act, 1956 (Ãthe Act') and the guidelines issued by the
Reserve Bank of India (ÃRBI') as applicable to a Non-Banking Financial
(Non-deposit Accepting or Holding) Company (ÃNBFC'). The financial
statements have been prepared under the historical cost convention, on
accrual basis. The accounting policies applied by the Company are
consistent with those applied in the previous year except as otherwise
stated elsewhere.
Presentation and disclosure in Financial Statements
During the year ended 31st March, 2012, the revised Schedule VI
notified under the Companies Act, 1956 has become applicable to the
Company for preparation and presentation of its financial statements.
Except accounting for dividend on investment in subsidiary, the
adoption of new Schedule VI does not impact recognition and measurement
principles followed for preparation of financial statements. However,
it has significant impact on presentation and disclosures made in the
financial statements. The Company has also reclassified the previous
year figures in accordance with the requirements applicable in the
current year.
Operating Cycle
As per the revised Schedule VI, "An operating cycle is the time between
the acquisition of assets for processing and their realisation in cash
or cash equivalents".
For the company, there is generally no clearly identifiable normal
operating cycle and hence the normal operating cycle for the company is
assumed to have a duration of 12 months.
Current and Non-Current Asset
An asset is classified as Ãcurrent' when it satisfies any of the
following criteria:
i. it is expected to be realised in, or is intended for sale or
consumption in, the Company's normal operating cycle; or
ii. it is held primarily for the purpose of being traded; or
iii. it is expected to be realised within twelve months after the
reporting date; or
iv. it is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least twelve months
after the reporting date.
All other assets are classified as Ãnon-current'.
Current and Non-Current Liability
A liability is classified as Ãcurrent' when it satisfies any of the
following criteria:
i. it is expected to be settled in the Company's normal operating
cycles; or
ii. it is held primarily for the purpose of being traded; or
iii. it is due to be settled within twelve months after the reporting
date; or
iv. the company does not have an unconditional right to defer
settlement of the liability for at least twelve months after the
reporting date.
All other liabilities are classified as Ãnon-current'.
1.2 Use of estimates
The preparation of financial statements requires the management to
make estimates and assumptions which are considered to arrive at the
reported amounts of assets and liabilities and disclosure of contingent
liabilities as on the date of the financial statements and the
reported income and expenses during the reporting year. Although these
estimates are based upon the management's best knowledge of current
events and actions, actual results could differ from these estimates.
Any revision to the accounting estimates are recognised prospectively
in the current and future years.
1.3 Fixed Assets, Depreciation/Amortisation and Impairment
a) Fixed Assets
Fixed assets are carried at cost less accumulated depreciation /
amortisation and impairment losses, if any. Cost comprises of the
purchase price and any directly attributable cost of bringing the asset
to its working condition for its intended use. Borrowing costs relating
to acquisition of fixed assets, which takes substantial period of time
to get ready for their intended use, are also capitalised to the extent
they relate to the period till such assets are ready to put to use.
b) Depreciation/Amortisation
Depreciation/ Amortisation is provided on the Written Down Value Method
(ÃWDV') as per the rates and in the manner prescribed in Schedule XIV
to the Act. Management estimates the useful lives of Fixed Assets to be
in accordance with the useful lives prescribed in the aforementioned
Schedule.
Fixed Asset costing upto Rs. 5,000/- are depreciated fully over a period
of 12 months from the date of purchase.
Depreciation/ Amortisation on assets purchased / sold during the
reporting period is recognised on pro-rata basis.
c) Impairment of Fixed Assets
The carrying amount of assets is reviewed at each Balance Sheet date to
determine if there is any indication of impairment, based on
internal/external factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
A previously recognized impairment loss is increased or reversed
depending on changes in circumstances. However the carrying value
after reversal is not increased beyond the carrying value that would
have prevailed by charging usual depreciation, if there was no
impairment.
1.4 Investments
Investments that are intended to be held for not more than a year are
classified as current investments. All other investments are classified
as Non-Current investments. Current investments are carried at lower of
cost and market price determined category-wise. All Non-Current
investments, including investments in Subsidiary Companies are, carried
at cost. However, provision for diminution in value, other than
temporary in nature, is made to recognize a decline, on an individual
basis.
1.5 Stock for Trade
Stock for trade is carried at lower of cost and market price.
1.6 Loan Assets
Loan Assets include loans advanced by the Company, secured by
collateral offered by the customers, if applicable.
Loan assets are carried at net amount including installments fallen due
and are net of unmatured / unearned finance charges, amounts received,
assets not paid for, etc.
1.7 Provisioning / Write-off of assets
The Company makes provision for Standard and Non-Performing Assets as
per the Non-Banking Financial (Non- Deposit Accepting or Holding)
Companies Prudential Norms (Reserve Bank) Directions, 2007, as amended
from time to time. The Company also makes additional provision towards
loan assets, to the extent considered necessary based on the
management's best estimate.
1.8 Revenue Recognition
Revenue is recognised to the extent it is probable that the economic
benefits will flow to the Company and the revenue can be reliably
measured:
a) Revenue from sale of stock for trade (shares/securities, commodities
and mutual fund) is recognised when a binding obligation has been
entered into.
b) Interest Income from Loan assets is recognised in the Statement of
Profit and Loss on accrual basis as per the term and condition of the
loan agreement, except in the case of non-performing assets where it is
recognised, upon realisation, as per the Prudential Norms / Directions
of the Reserve Bank of India, applicable to NBFCs.
c) Fees from consultancy services are recognised pro-rata over the
period of the contract as and when services are rendered. The Company
collects service tax on behalf of the government and, therefore, it is
not an economic benefit flowing to the company. Hence, it is excluded
from revenue. Other fee based income is accounted for on accrual basis.
d) Profit/loss from derivative instrument (future and options) are
recognised on a marked to market basis.
e) Dividend income is recognised when the right to receive the dividend
is established.
f) Profit or Loss on sale of investments is recognised when a binding
obligation has been entered into.
g) Interest is recognised using the time proportion basis taking into
account the amount outstanding and the interest rate applicable.
h) All other income is accounted for on accrual basis.
1.9 Prior Period and Extra Ordinary Items
Prior Period and Extra Ordinary items having material impact on the
financial affairs of the Company are disclosed separately.
1.10 Retirement and other Employee Benefits
a) Gratuity
Liability for gratuity, which is a defined benefit scheme, is
provided for based on an actuarial valuation carried out by an
independent actuary as at the balance sheet date. Actuarial gains/
losses are recognised immediately in the Statement of Profit and Loss
in the year it is earned / incurred and are not deferred.
b) Compensated absences
Compensated absences are a long-term employee benefit and is accrued
based on an actuarial valuation at the balance sheet date, carried out
by an independent actuary. The Company accrues for the expected cost of
short - term compensated absences in the year in which the employee
renders services.
c) Provident Fund
The provision of Employees' Provident Fund (under the provisions of the
Employees' Provident Funds and Miscellaneous Provisions Act, 1952) is
not applicable to the Company as the number of employees were less than
20 during the year and at year end.
1.11 Borrowing Costs
Borrowing costs relating to the acquisition / construction of
qualifying assets are capitalised until the time all substantial
activities necessary to prepare the qualifying assets for their
intended use are complete. A qualifying asset is one that necessarily
takes substantial period of time to get ready for its intended use.
The ancillary costs incurred in connection with the arrangement of
borrowings are amortised over the life of underlying borrowings.
Premium payable on redemption of debentures is amortised over the
tenure of the debentures. These form part of the borrowing costs.
Borrowing costs also include exchange differences arising from Foreign
currency borrowings, to the extent they are regarded as an adjustment
to the borrowing costs.
All other costs related to borrowings are recognised as expense in the
period in which they are incurred.
1.12 Segment reporting
Based on the risks and returns associated with business operations and
in terms of Accounting Standard-17 (Segment Reporting), the Group is
predominantly engaged in Trading' and ÃFinancing and related Services'
as primary reportable segments.
The Accounting policies adopted for segment reporting are in line with
the accounting policies used in preparation of the financial
statements of the Company, with following additional policies for
segment reporting.
Revenue and expenses have been identified to a segment on the basis of
relationship to operating activities of the segment. Revenue and
expenses which relate to enterprise as a whole and are not allocable to
a segment on reasonable basis have been disclosed as "Unallocable".
Segment assets and segment liabilities represent assets and liabilities
in respective segments. Fixed assets used in the Company's business
have not been identified to any of the reportable segments, as the
fixed assets are used interchangeably between segments.
1.13 Leases
Leases, where the lessor effectively retains substantially all the
risks and rewards of ownership of the leased asset, are classified as
operating leases. Operating lease payments are recognised on a
straight-line basis over the lease term.
1.14 Earnings Per Share (EPS)
Basic EPS is calculated by dividing the net profit or loss for the
year, attributable to equity shareholders, by the weighted average
number of equity shares outstanding during the year.
For the purpose of calculating diluted EPS, 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.
1.15 Cash and Cash Equivalents
Cash and Cash Equivalents in the Cash Flow Statement comprise of cash
on hand and at bank, demand deposits with banks, cheques on hand,
remittances in transit and short term highly liquid investments with an
original maturity of three months or less.
1.16 Taxes on Income
Tax expense comprises of current tax [(net of Minimum Alternate Tax
(MAT) credit entitlement)] and deferred tax.
Current tax is the amount of tax payable on the taxable income for the
year determined in accordance with the provisions of the Income Tax
Act, 1961. Deferred 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.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the Balance Sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities. The deferred tax assets and deferred tax liabilities
relate to the taxes on income levied by the same governing taxation
laws. Deferred tax assets are recognised only to the extent that there
is reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realised. In
situations where the company has unabsorbed depreciation or carry
forward tax losses, all deferred tax assets are recognised only if
there is virtual certainty supported by convincing evidence that they
can be realised against future taxable profits.
At each Balance Sheet date, the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets 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 assets can be realised.
MAT credit is recognised as an asset only when and to the extent there
is convincing evidence that the company will pay normal income tax
during the specified period. In the year in which the MAT credit
becomes eligible to be recognised as an asset in accordance with the
recommendations contained in guidance note issued by The Institute of
Chartered Accountants of India, the said asset is created by way of a
credit to the Statement of Profit and Loss and shown as MAT Credit
Entitlement. The Company reviews the same at each Balance Sheet date
and writes down the carrying amount of MAT Credit Entitlement to the
extent there is no longer convincing evidence to the effect that the
Company will pay normal income tax during the specified period.
1.17 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the company has a present obligation as
a result of past event and it is probable that outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to their
present value and are determined based on 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 not recognised but are disclosed
in the notes to financial statements. Contingent Assets are neither
recognised nor disclosed in the financial statements.
During the year , the Company issued and alloted 8,340,000 equity
shares of Rs. 10/- each, fully paid, to the promoter and 5,660,000 equity
shares of Rs. 10/- each to strategic investors not forming part of
promoter group on preferential basis at a premium of Rs. 8/- per equity
share on 19th May, 2011.
Mar 31, 2011
1. Principal Accounting Policies :
The Financial Statements have been prepared to comply in all material
aspects with all the applicable accounting principles in India, the
applicable accounting standards u/s 211(3C) of the Companies Act, 1956
and the relevant provisions of the Companies Act, 1956. A summary of
important accounting policies which have been applied consistently are
set out below. Financial statements have also been prepared in
accordance with relevant presentational requirements of the Companies
Act, 1956 of India.
2. Basis of Accounting :
The Financial Statements have been prepared under historical cost
convention on accrual basis in compliance with applicable Accounting
Standards notified by Companies (Accounting Standards) Rules, 2006 and
relevant provisions of the Companies Act, 1956.
3. Fixed Assets And Depreciation :
a) Fixed Assets:
Fixed Assets are carried at their original cost of acquisition less
accumulated depreciation. Cost includes freight, duties taxes and
incidental expenses related to acquisition and installation of the
concerned assets.
b) Depreciation:
Depreciation on Fixed Assets is being provided on Written Down Value
basis at the rates specified in Schedule XIV of the Companies Act,
1956.
4. Investments:
Investments of long term nature is stated at cost less adjustment for
diminution, other than temporary, in the value thereof.
5. Inventory Valuation:
Inventories comprising shares of companies are valued at lower of cost
and net realizable price.
6. Revenue Recognition :
i) The revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
ii) The Company recognizes income and expenses on accrual basis.
7. Retirement Benefits :
The provisions of Provident Fund Act and Gratuity Act are not
applicable and liability on account of encashment of leave has been
duly provided for (if any).
8. Taxation:
Income tax expense is the aggregate amount of current tax and deferred
tax expense incurred by the Company. The current tax expense and
deferred tax expense is determined in accordance with the provisions of
the Income Tax Act, 1961 and as per Accounting Standard 22 - Accounting
for Taxes on Income issued by the Institute of Chartered Accountants of
India, respectively. Deferred tax adjustments comprise changes in the
deferred tax assets or liabilities during the year. Deferred tax
assets and liabilities are recognised on a prudent basis for the future
tax consequences of timing differences arising between the carrying
values of assets and liabilities and their respective tax basis, and
carry forward losses. Deferred tax assets and liabilities are measured
using tax rates and tax laws that have been enacted or substantively
enacted at the Balance Sheet date. The impact of changes in deferred
tax assets and liabilities is recognised in the Profit and Loss
Account.
Deferred tax assets are recognised and re-assessed at each reporting
date, based upon management's judgement as to whether their realisation
is considered as reasonably certain.
9. Impairment of Assets :
Fixed assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset with future net
discounted cash flows expected to be generated by the asset. If such
assets are considered to be impaired, the impairment is recognized by
debiting the Profit and Loss Account and is measured as the amount by
which the carrying amount of the assets exceeds the fair value of the
assets.
10. Earning Per Share :
In determining earning per share, the Company considers the net profit
after tax and includes the post tax effect of any extra ordinary items.
The number of the shares used in computing basic earnings per share is
the weighted average number of shares outstanding during the period.
11. Preliminary Expenses :
Preliminary Expenses are fully written off in the year in which they
are incurred.
Mar 31, 2010
The Financial Statements have been prepared to comply.in all material
aspects with all the applicable accounting principles in India, the
applicable accounting standards u/s 211(3C) of the Companies Act, 1956
and the relevant provisions of the Companies Act, 1956. A summary of
important accounting policies which have been applied consistently are
set out below. Financial statements have also been prepared in
accordance with relevant presentational requirements of the Companies
Act, 1956 of India.
a) BASIS OF ACCOUNTING :
The Financial statements have been prepared under the historical cost
convention.
b) FIXED ASSETS :
Fixed Assets are recorded at cost of acquisition including any
incidental expenses incurred upto the date of installation.
c) DEPRECIATION :
Depreciation on Fixed Assets is provided on Written Down Value Basis at
the rates specified in Schedule XIV of the Companies Act, 1956.
Depreciation on leased assets has been spread over the period of lease.
Depreciation has not been provided on leased assets as the Company has
filed a suit against the lessee.
d) INVESTMENTS :
Investment of long term nature is stated at cost, less adjustment for
diminution, other than temporary, in the value thereof.
e) STOCK IN TRADE-SHARE :
Stock in trade is valued at cost or market price whichever is lower.
Unquoted Shares are valued at cost or Breakup value whichever is lower.
f) REVENUE RECOGNITIONS :
i) The revenue is recognized to the extent that it is probable that the
economic benefits will flow to the company and the revenue can be
reliably measured.
ii) The Company recognises income and expenses on accrual basis.
g) RETIREMENT BENEFITS :
The provisions of Provident Fund Act and Gratuity Act are not
applicable and liability on account of encashment of leave has been
duly provided for (If any).
h) TAXATION :
The current income tax charge is determined in accordance with the
relevant tax regulations applicable to the company.
i) DEFERRED TAXATION :
Provision for deferred taxation is made using the liability method, at
the current rates of taxation on all timing differences to the extent
that it is probable that a liability or assets will crystallise.
j) IMPAIRMENT OF ASSETS :
The company identified impairble assets based on cash generating limit
concept at the year end in terms of AS-28 issued by ICAI for the
purpose of arriving at impairment loss there on, if any being
difference between book value and recoverable value of the relevant
asset. Impairment loss, when crystalized is charged against revenue of
the year.
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