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Accounting Policies of Kothari World Finance Ltd. Company

Mar 31, 2018

Note 1 : SIGNIFICANT ACCOUNTING POLICIES 1.1. Corporate Information

Kothari World Finance Limited (''the Company) is a Public Company incorporated under the provisions of the Companies Act, 1956 on January 5, 1985 and registered as a Non-Banking Finance Company (NBFC) under section 45-IA of the Reserve Bank of India Act, 1934. The Company is engaged in the business of Lending & Investment Activities.

1.2. Basis of Preparation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these Financial Statements to comply in all material respects, with the Accounting Standards notified under Section 133 of the Companies Act, 2013 together with Rule 7 of the Companies (Accounting Standards) Rules, 2014, (as amended), the relevant provisions of the Companies Act, 2013 and guidelines issued by the Reserve Bank of India (RBI) for Non-Banking Finance Companies. The financial statements have been prepared on accrual basis under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year except policy dealing with prudential norms.

1.3. Prudential Norms

The Company follows the prudential norms issued by the RBI for assets classifications, income recognitions, provisioning for non-performing assets and contingency provision on standard assets.

1.4. Uses of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosures relating to contingent assets and liabilities at the end of the reporting period. Although these estimates are based on the management’s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in material or immaterial adjustments to the carrying amounts of assets or liabilities in future periods. Any revision of accounting estimates is recognized prospectively in the current and future periods.

1.5. Stock in Trade

Securities held as Stock in Trade are valued at lower of cost and fair value. Cost includes cost of purchase and other directly attributable cost towards purchase costs.

1.6. 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.

i. Income from financing activities:

a. Interest income is recognized on accrual basis with reference to the terms of contractual arrangement entered with borrowers except for interest on non-performing assets ("NPA”) which is recognized as per income recognition and assets classification norms prescribed by RBI.

b. Loan processing fee income is accounted for upfront upon processing of loan as and when it becomes due.

ii. Income from investment activities:

a. Dividend income is recognized when right to receive payment is established by the Balance Sheet date.

b. Interest on Securities is accounted for on accrual basis except where ultimate collection cannot be established with reasonable certainty.

c. Interest income on fixed deposits is recognized on a time proportion basis taking into account the amount of outstanding and applicable interest rate.

iii. Lease rental income

Lease rental income is recognized in the statement of profit and loss on a straight-line basis over the lease term.

1.7. Property, plant and equipment

Property, plant and equipment are stated at cost, net of accumulated depreciation and impairment losses, if any. The cost includes any cost attributable for bringing asset to its working condition, which comprises of purchase consideration, other directly attributable costs of bringing the assets to their working condition for their intended use and interest on borrowings attributable to acquisition of qualifying assets upto the date the asset is ready for its intended use.

1.8. Depreciation on Property, plant and equipment

a. Depreciation is provided on a pro rata basis for all property, plant and equipment on straight line method over the useful life of assets as prescribed under part C of schedule ll of the Companies Act, 2013 except some building / go down premises where useful life is considered based on Valuation Report of value.

b. Depreciation on Lease hold improvement is provided for on straight line method over the primary period of the lease of premises.

c. Fixed assets costing up to Rs. 5,000 individually are depreciated fully in the year of purchase

1.9. Intangible Assets and amortization thereof-

Intangible assets are stated at cost net of accumulated amortization and impairment losses, if any. The Cost includes any cost attributable to bringing asset to its working condition. which comprises of purchase consideration, other directly attributable costs of bringing the assets to their working condition for their intended use and interest on borrowings attributable to acquisition of qualifying assets up to the date the asset is ready for its intended use.

Software is amortized over its estimated useful life on Straight Line Method which is 5 years.

1.10. Impairment of Assets-

At each Balance Sheet date, the Company reviews whether there is any indication of impairment of asset. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss.

Recoverable amount of the asset is the higher of an asset’s net selling price and value in use. In assessing the value in use, the estimated future cash flow expected from continuing use of the asset and from its disposal is discounted to its present value using a pre-tax discount rate that reflects the current market assessments of time value of money and the risk specific to the asset. If the recoverable amount of an asset is estimated to be less than the carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognized immediately in the Statement of Profit and Loss. 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 above the lower of the recoverable amount and the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

1.11. Investments -

i. Investment Property

Property that is held for long-term rental yields or for capital appreciation or for both, and that is not in use by the Company, is classified as investment property.

Investment property is stated at cost less accumulated depreciation and impairment losses, if any.

Investment property is measured initially at its acquisition cost, including related transaction costs and where applicable borrowing costs and are carried at cost less accumulated depreciation and accumulated impairment losses.

Depreciation on Investment property is provided on a pro rata basis on straight line method over the useful life of assets as prescribed under part C of schedule ll of the Companies Act,

ii. Investment in Shares and Securities

a. 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. All other investments are classified as long-term investments. All investments are initially measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.

b. Current investments are stated at lower of cost and market/fair value determined on an individual investment basis.

Long term investments are carried at cost. However, provision for diminution in values is made to recognize a decline other than temporary in the value of the investments.

c. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.

1.12. Employee Benefits

Short-term employee benefits are recognized as an expense at the undiscounted amount in the statement of profit and loss of the year in which the related service is rendered. The company is providing one-month salary of leave encashment in the last month of the respective financial year.

1.13. Leases Where the company is Lessee

Assets taken on lease, under which the lessor effectively retains all the risks and rewards of ownership, are classified as operating lease. Operating lease payments are recognized as expense in the statement of profit and loss on a straight-line basis over the lease term.

Assets acquired under leases where all the risks and rewards of ownership are substantially transferred to company are classified as finance leases. Such leases are capitalized at the inception of the lease at the lower of fair value or the present value of minimum lease payments and liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each period.

Where the company is Lessor

Leases in which the company transfers substantially all the risks and benefits of ownership of the asset are classified as finance leases. Assets given under finance lease are recognized as a receivable at an amount equal to the net investment in the lease. After initial recognition, the company apportions lease rentals between the principal repayment and interest income so as to achieve a constant periodic rate of return on the net investment outstanding in respect of the finance lease. The interest income is recognized in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognized immediately in the statement of profit and loss.

Leases in which the company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Assets subject to operating leases are included in fixed assets. Lease income on an operating lease is recognized in the statement of profit and Loss on a straight-line basis over the lease term. Costs, including depreciation, are recognized as an expense in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognized immediately in the statement of profit and loss.

1.14. Cash and cash Equivalents

Cash and cash Equivalents for the purpose of Cash flow statement comprise cash at bank, cash in hand, and short-term investments which have original maturity period of three months or less than three months.

1.15. Earnings Per Share

Basic earnings per share are 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 earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all diluting potential equity shares.

1.16. Income Taxes

Income tax expenses comprises current and deferred tax.

Current Tax

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961.

Deferred Tax

Deferred tax is recognized on timing differences, between taxable income and accounting income that originated in one period and is capable of reversal in one or more subsequent periods. The deferred tax charge or credit and the corresponding deferred tax assets or liabilities are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognized when there is reasonable certainty that the asset can be realized in future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognized to the extent there is virtual certainty of realization of such assets. The Company reviews the carrying value of Deferred tax assets on each reporting date and written down and written up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realized.

1.17. Provisions, Contingent Liabilities & Contingent Assets-

a. Provisions

A provision is recognized when the company has present obligations as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations and reliable estimate can be made of amount of the obligation. Provisions are not discounted at their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Provision for non-performing assets and contingent provisions against standard assets have been made as per the RBI Guidelines.

b. Contingent Liabilities

A Contingent liability is a possible obligation that arises from the 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. A contingent liability also arises in extremely rare cases where there is liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but disclose its existence in the financial statement.

1.18. Statutory Reserve

In accordance with Section 45 - IC of the Reserve Bank of India (Amendment) Act 1997, Twenty percent of the profit after taxation has been transferred to Statutory Reserve.

1.19. Security of Loans Given-

Housing Loans/ Loans against property are granted are secured by equitable registered mortgage of property and / or undertaking to create a security. Other Secured Loans are secured against hypothecation of respective assets.


Mar 31, 2016

BASIS OF PREPARATION:_

The Financial statements are prepared in accordance with generally accepted accounting principles in India. The Company has prepared these financial statements to comply in all material respects with the Accounting Standards notified under the Companies (Accounts) Rules, 2014 issued under Section133 of the Companies Act, 2013.The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

The company has also re-classified the previous year figures in accordance with the requirements applicable in the current year.

USE OF ESTIMATES:_

The preparation of financial statements requires the management of the company to make estimates and assumptions that affect the reported balance of assets & liabilities, revenue and expenses and disclosures relating to contingent liabilities. The management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. Any revision of accounting estimates is recognized prospectively in the current and future periods.

FIXED ASSETS

i) Fixed Assets are stated at cost inclusive of all expenses directly attributable in bringing the Assets to their working condition.

ii) The Company provides depreciation on the basis of the useful life and residual value of fixed assets, as prescribed under Schedule II of the Companies Act, 2013.

STOCK IN TRADE & INVESTMENTS_

i) The securities acquired with the intention of short term holding and trading position are considered as stock in trade and shown as Current Assets. Other securities acquired with the intention of long-term holding are considered as Long Term Investments and are stated at Cost.

ii) In respect of investment, brokerage and stamp duty payable are considered to arrive at the cost. However, in respect of the securities held in stock in trade, brokerage and stamp duty are written off as revenue expenditure.

iii) The securities held as stock in trade under the current asset are valued at cost or market value whichever is lower.

iv) The investments are shown in the Balance Sheet at cost.

STATUTORY RESERVES_

In accordance with Section 45 - IC of the Reserve Bank of India (Amendment) Act 1997, Twenty percent of the profit after taxation has been transferred to Statutory Reserve.

Leave encashment is not provided in the Books. It is accounted on a cash basis.


Mar 31, 2014

A) BASIS OF PREPARATION:

The financial statements are prepared in accordance with generally accepted accounting principles in India. The Company has prepared these financial statements to comply in all material respects with the Accounting Standards notified under the Companies ( Accounting Standard ) Rules 2006 issued under Subsection 3C of Section 211 of The Companies Act , 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year. The company has also re- classified the previous year figures in accordance with the requirements applicable in the current year.

B) USE OF ESTIMATES:

The preparation of financial statements requires the management of the company to make estimates and assumptions that affect the reported balance of assets & liabilities, revenue and expenses and disclosures relating to contingent liabilities. The management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. Any revision of accounting estimates is recognized prospectively in the current and future periods.

C) FIXED ASSETS:

i) Fixed Assets are stated at cost inclusive of all expenses directly attributable in bringing the Assets to their working condition.

ii) Depreciation

a) The Company provides depreciation on Written Down Value Method at the rates prescribed under Schedule XIV OF THE Companies Act, 1956.

b) Depreciation on Assets has been provided on pro-rata basis from the date of acquisition or till the date of disposal as the case may be.

D) STOCK IN TRADE & INVESTMENTS

i) The securities acquired with the intention of short term holding and trading position are considered as stock in trade and shown as Current Assets. Other securities acquired with the intention of long-term holding are considered as Long Term Investments and are stated at Cost.

ii) In respect of investment,brokerage and stamp duty payable are considered to arrive at the cost. However in respect of the securities held in stock in trade, brokerage and stamp duty are written off as revenue expenditure.

iii) The securities held as stock in trade under the current asset are valued at cost or market value whichever is lower.

iv) The investments are shown in the Balance Sheet at cost.

E) STATUTORY RESERVES

In accordance with Section 45 - IC of the Reserve Bank of India (Amendment) Act,1997, Twenty percent of the profit after taxation has been transferred to Statutory Reserve.

F) Leave encashment is not provided in the Books. It is accounted on a cash basis.


Mar 31, 2012

A) Basis of Accounting

The Financial Statements are prepared under historical cost convention and on accrual basis.

b) Fixed Assets

(i) Fixed Assets are stated at cost inclusive of all expenses directly attributable in bringing the assets to their working condition.

(ii) Depreciation

(iii) The Company provides depreciation on Written down Value Method at the rates prescribed under Schedule XIV of the Companies Act, 1956.

(iv) Depreciation on Assets has been provided on pro -rata basis from the date of acquisition or till the date of disposal as the case may be.

c) Stock in trade and investments

(i) The securities acquired with the intention of short term holding and trading position are considered as stock in trade and shown as Current Assets. Other securities acquired with the intention of long-term holding are considered as Investments being of long term nature are stated at Cost.

(ii) In respect of investment, brokerage and stamp duty payable are considered to arrive at the cost. However in respect of the securities held in stock in trade, brokerage and stamp duty are written off as revenue expenditure.

(iii) The securities held as stock in trade under the current asset are valued at cost or market value whichever is lower.

(iv) The investments are shown in Balance Sheet at cost, In the case of quoted investments, provisions for diminution in value of investments is not made, since the Investments are Long Term Investments.

d) Statutory Reserve

In accordance with Section 45 - IC of the Reserve Bank of India (Amendment) Act, 1997, Twenty percent of the profit after taxation has been transferred to Statutory Reserve.


Mar 31, 2009

A) Basis of Accounting

The Financial Statements are prepared under historical cost convention and on accrual basis.

B) Fixed Assets

i) Fixed Assets are stated at cost inclusive of all expenses directly attributable in bringing the Assets to their working condition.

ii) Depreciation

a) The Company provides depreciation on Written Down Value Method at the rates prescribed under Schedule XIV OF THE Companies Act, 1956.

b) Depreciation on Assets has been provided on pro -rata basis from the date of acquisition or till the date of disposal as the case may be.

C) Stock in trade and investments

i) The securities acquired with the intention of short term holding and trading position are considered as stock in trade and shown as Current Assets. Other securities acquired with the intention of long-term holding are considered as Investments being of long term nature are stated at Cost.

ii) In respect of investment.brokerage and stamp duty payable are considered to arrive at the cost. However in respect of the securities held in stock in trade, brokerage and stamp duty are written off as revenue expenditure.

iii) The securities held as stock in trade under the current asset are valued at cost or market value whichever is lower.

iv) The investments are shown in Balance Sheet at cost, In case of quoted investments, provisions for diminution in value of investments is made, if such diminution is of permanent nature in the opinion of management.

D) Statutory Reserve

In accordance with Section 45 - IC of the Reserve Bank of India (Amendment) Act, 1997, Twenty percent of the profit after taxation have been transferred to Statutory Reserve.

E) Earning per share: -

In accordance with the Accounting Standard 20"Earaing per Share" issued by The institute of Chartered Accountants of India, basic earning per share is computed by dividing net profit after tax for the year by the weighted number of equity shares outstanding for the period. Diluted earning per shares has not been computed, as the company has not issued any dilutive potential equity shares

F) Segment Reporting: -

Based on the guiding principle given in the Accounting Standard -17 "Segment Reporting " issued by the institute of Chartered Accountants of India, the companys main activities is investment and finance and hence the said segment wise reporting is not applicable.

G) There are no amount payable to any small scale industrial undertaking.

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