Accounting Policies of Moongipa Capital Finance Ltd. Company

Mar 31, 2014

1. Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year. The company follows the directions prescribed by the Reserve bank of India for Non Banking Financial Companies.

2. Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

3. Non Performing Assets

Income recognition, assets classification, and provisioning in respect of NPA have been done in accordance with RBI directives.

4. Cash and cash equivalents

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

5. Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

6. Depreciation and amortisation

Depreciation has been provided on the written down value method as per the rates prescribed in Schedule XIV to the Companies Act, 1956 and are on pro-rata basis with respect to the date of addition/ installation/its put to use

7. Revenue recognition

(a) Income is accounted on accrual basis except for dividend income which is accounted on receipt basis.

(b) Further Interest income on NPA accounts are accounted for on realization basis as per RBI Guideline.

8. Tangible fixed assets

Fixed assets are carried at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets includes interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date. Subsequent expenditure relating to fixed assets is capitalized only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance

9. Investments

Long-term investments are carried individually at cost. Current investments are carried individually, at the lower of cost and fair value. Cost of investments includes acquisition charges such as brokerage, fees and duties. Any permanent diminution in the value in recognized in accounts.

10. Employee benefits

(a) The company has only few employees and the provision for gratuity has been made on estimated basis as per the payment of Gratuity Act 1971 but not on actuarial basis.

11. Segment reporting

The company is involved in the business of financing activity only as such there is only one reportable segment. Further the company is operating in India only. Therefore, the reporting requirements as prescribed under AS-17 are not applicable.

12. Taxes on income

Current tax is determined with respect to the income calculated in accordance with the provisions of the Income Tax Act, 1961 Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

13. Deferred Tax

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are recognised for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their realisability.

14. Impairment of assets

The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use.

15. Provisions and contingencies

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes.

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Mar 31, 2013

1. Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis under the historical cost convention The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year. The company follows the directions prescribed by the Reserve bank of India for Non Banking Financial Companies.

2. Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes thai the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

3. Non Performing Assets

Income recognition, assets classification, and provisioning in respect of NPA have been done in accordance with RBI directives.

4. Cash and cash equivalents

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

5. Cash flow statement

Cash flows are reported using the indirect method, whereby proW(loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

6. Depreciation and amortisation

Depreciation has been provided on the written down value method as per the rates prescribed in Schedule XIV to the Companies Act, 1956 and are on pro-rata basis with respect to the date of addition/installation/its put to use

7. Revenue recognition

(a) Income is accounted on accrual basis except for dividend income which is accounted on receipt basis.

(b) Further, inlereslincomeonNPAaccounts are accountedfor on realization basis as per RBI guidelines.

8. Tangible fixed assets

Fixed assets are carried at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets includes interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date. Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

9. Investments

Long-term investments are carried individually at cost. Current investments are carried individually, at the lower of cost and fair value. Cost of investments includes acquisition charges such as brokerage, fees and duties. Any permanent diminution in the value in recognized in accounts.

10. Employee benefits

(a) Leave Encashment benefit are charged to Profit and Loss Afc on each year on the basis of actual payment made to employee. There are no rules for carried forward of leaves.

(b) The company has only few employees and the provision for gratuity has been made on estimated basis as per the payment of Gratuity Act 1971 but not on actuarial basis.

11. Segment reporting

The company is involved in the business of financing activity only as such there is only one reportable segment. Further the company is operating in India only. Therefore, the reporting requirements as prescribed under AS-17 are not applicable.

12. Taxes on Income

Current tax is determined with respect to the income calculated in accordance with the provisions of the Income Tax Act, 1961 .Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

13. Deferred Tax

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and cany forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are recognised for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their readability.

14. Impairment of assets

The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, If the carrying amount of these assets exceeds their recoverable amount The recoverable amount is the greater of the net selling price and their value in use.

15. Provisions and contingencies

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes.

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Mar 31, 2012

1. The financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting and they comply the relevant provisions of the Companies Act, 1956 and the Accounting Standards verified under the Companies Act 1956. The Company follows the directions prescribed by the Reserve bank of India for Non Banking Financial Companies.

2. INCOME RECOGNITION

Revenue its being recognized in accordance with the generally accepted ac- counting principles in India on accrual basis. Accordingly, wherever there are uncertainties in the realization of income, the same is not accounted for till such time the uncertainty is resolved. Subject to the above, specific incomes have been accounted for as under

(i) Lease rental are accounted for on accrual basis

(ii) Interest on loans & advances and income from service charges are ac- counted for on accrual basis except on NPA accounts where income has been realized on realization basis as per RBI guidelines,

(iii) Dividends are accounted for as and when received.

3. FIXED ASSETS & DEPRECIATION

(i) Leased out assets are stated at cost less depreciation. Depreciation on plant & machinery is provided as per straight line method and on other leased assets as per written down value method at the rates and In the manner specified in schedule XVI of the Companies Act, 1956.

(ii) Assets other than leased out assets are also stated at cost less depreciation. Depreciation on these assets has been calculated in the same manner as stated above for leased out assets.

(iii) The leased assets whose lease period expired during the year have been written off.

4. INVESTMENTS

Investments are stated at cost. Profit /Loss on sale of long term investments is provided at the time of Sale / transfer of Investments. Any diminution in the value other than temporary Is recognized in the accounts.

5. NON PERFORMING ASSETS

Income recognition, assets classification, and provisioning in respect of non- performing assets have been done in accordance of RBI directives.

6. RETIREMENT BENEFIT

a) Leave encashment benefit are charged to Profit & Loss Account on each year on the basis of actual payment made to employee. There are no rules for carried forward leave.

b) The Company has only few employees and the provision for gratuity has been made on the estimated basis as per the payment of Gratuity Act, 1971 but not on actuarial valuation.

7. ACCOUNTING FOR TAXES ON INCOME

1. Tax expenses comprise Income Tax & Deferred Tax. Current Income Tax is measured at the amount expected to be paid to the Tax authorities in accordance with the provisions of Income Tax Act 1961.

2. The Deferred Tax resulting from timing difference between book and tax- able profit is accounted for using tax rates and tax law that have been enacted or subsequently enacted as at the Balance Sheet date. The deferred tax asset is recognized and carried forward only to the extent there is reasonable certainty that the asset will be realized in the future.

8. IMPAIRMENT OF ASSETS

The carrying amount of assets is reviewed at each balance sheet date to ascertain Impairment based on internal/ external factors. An impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is greater of the assets' net selling price and value in use.

9. CONTINGENT LIABILITIES

Contingent Liabilities are not provided and are disclosed in notes to the ac- counts

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Mar 31, 2010

1. The financial statements ate prepared and presented under the historical cost convention on the accrual basis of accounting and they comply with the relevant provisions of the Companies Act, 1956 and the Accounting Standards Issued by the Institute of chartered Accountants of India (ICAI), as applicable. The Company follows the directions prescribed by the Reserve bank of India for Non Banking Financial Companies.

2. INCOME RECOGNITION

Revenue is being recognized in accordance with the generally accepted accounting principles in India on accrual basis. Accordingly, wherever there are uncertainties in the realization of income, the same Is not accounted for till such time the uncertainty is resolved. Subject to the above, specific incomes have been accounted for as under

(I) Lease rental are accounted for on accrual basis

(II) Interest on loans & advances and income from service charges are accounted for on accrual basis except on NPA accounts where Income has been realized on realization basis as per RBI guidelines..

(III) Dividends are accounted for as and when received.

3. FIXED ASSETS & DEPRECIATION

(I) Leased out assets are stated at cost less depredation. Depredation on plant & machinery is provided as per straight line method and on other leased assets as per written down value method at the rates and in the manner specified in schedule XIV of the Companies Act, 1956.

(I) Assets other than leased out assets are also stated at cost lest depre- dation. Depreciation on these assets has been calculated in the same manner as stated above for leased out assets.

(iii) The leased assets whose lease period expired during the year have been written off.

4. INVESTMENTS

Investments are stated at cost. Prom /Loss on sale of long term Investments Is provided at the time of Sale / transfer of Investments. Any diminution In the value other than temporary Is recognized in the accounts.

5. NON PERFORMING ASSETS

Income recognition, assets classification, and provisioning In respect of non- performing assets have been done In accordance of RBI directives.

6. RETIREMENT BENEFIT

No provision has been made for the retirement benefits payable to the employees skies no employee has yet put in the qualifying period of services. The same will be provided when it becomes due.

7. ACCOUNTING FOR TAXES ON INCOME

1) Tax expenses comprise Income Tax, Defamed Tax & Fringe Benefit Tax. Current Income Tax and Fringe Benefit Tax is measured at the amount expected to be paid to the Tax authorities in accordance with the provisions of Income Tax Act 1961.

2) The Deferred Tax resulting from timing difference between book and taxable profit is accounted for using tax rates and tax law that have been enacted or substantially enacted as at the Balance Sheet date. The deferred tax asset is recognized and carried forward only to the extent there is reasonable certainty that the asset will be realized in the future.

8. IMPAIRMENT OF ASSETS

The carrying amount of assets is reviewed at each balance sheet date to ascertain Impairment based on Internal/ external factors. An impairment loss Is recognized when the carrying amount of an asset exceeds Its recoverable amount The recoverable amount is greater of the assets net selling price and value in use.

9. CONTINGENT LIABILITIES

Contingent Liabilities are not provided and are disclosed in notes to the accounts

10. HYPOTHECATED STOCK

Hypothecated stock has been stated at the total amount of Installments recoverable as reduced by the interest element pertaining to the following financial year

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Mar 31, 2003

A) INCOME RECOGNITION

Revenue is being recognised in accordance with the guidance note on accrual basis of accounting issued by The institute of Chartered Accountants of India. Accordingly, wherever there are uncertainties in the realisation of income, the same is not accounted for till such time the uncertainty is resolved. Subject to the above, specific incomes have been accounted for as under:

(i) Lease rentals are accounted for on accrual basis. Please refer to Note No. 2 here under.

(ii) Interest on loans & advances and income from service charges are accounted for on accrual basis.

(iii) Dividends are accounted as and when received.

B) FIXED ASSETS & DEPRECIATION

(i) Leased out assets are stated at cost less depreciation. Depreciation on computers and plant & machinery is provided as per straight line method and on other leased assets as per written down value method at the rates specified in schedule XIV of the Companies Act, 1956.

(ii) Assets other than leased out assets are also stated at cost less depreciation. Depreciation on these assets has been calculated in the same manner as stated above for leased out assets.

(iii) No depreciation has been charged during the year on the leased assets purchased on or before 31.03.1998 as the lease period of such assets has been expired and these are pending transfer to the lessee.

(iv) The leased assets whose lease period expired during the year have been written off at the close of the financial year.

C) INVESTMENTS

Investments are stated at cost. Profit /Loss on long term investments is provided at the time of Sale / transfer of Investments.

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Mar 31, 2002

A) INCOME RECOGNITION

Revenue is being recognised in accordance with the guidance note on accrual basis of accounting issued by The Institute of Chartered Accountants of India.Accordingly,wherever there are uncertainties in the realisation of income,the same is not accounted for till such time the uncertainty is resolved. Subject to the above, specific incomes have been accounted for as under:

(i) Lease rentals are accounted for on accrual basis. Please refer to Note No. 2 here under.

(ii) Interest on loans & advances and income from service charges are accounted for on accrual basis.

(iii) Dividends are accounted as and when received.

B) FIXED ASSETS & DEPRECIATION

(i) Leased out assets are stated at cost less depreciation. Depreciation on computers and plant & machinery is provided as per straight line method and on other leased assets as per written down value method at the rates specified in schedule XIV of the Companies Act, 1956.

(ii) Assets other than leased out assets are also stated at cost less depreciation. Depreciation on these assets has been calculated in the same manner as stated above for leased out assets.

(iii) No depreciation has been charged during the year on the leased assets purchased on or before 31.03.1998 as the lease period of such assets has been expired and these are pending transfer to the lessees.

(iv) The leased assets whose lease period expired during the year have been written off at the close of the financial year.

C) INVESTMENTS

Investments are stated at cost. Profit /Loss on long term investments is provided at the time of Saletransfer or Investments.