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Accounting Policies of Ceejay Finance Ltd. Company
Mar 31, 2024
1. Company Information
Ceejay Finance Ltd (''the Company'') with CIN: L65910GJ1993PLC019090 is a Public Limited Company domiciled in India. The company has its registered office at CJ house, Mota pore, Nadiad, Gujarat -387001.
It is registered as Non-banking finance company under RBI Act, 1934 and Registration number A.01.400. The company is engaged predominantly in automobile financing. The Companyâs shares are listed on BSE.
2. MATERIAL ACCOUNTING POLICIES
2.1 Basis of Preparation of Financial Statements:
(i) Compliance with Ind-AS
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind-AS) notified under Section 133 of the Companies Act, 2013 (the Act) read with [Companies (Indian Accounting Standards) Rules, 2015] as amended by the Companies (Indian Accounting Standards) Rules, 2016 and other relevant provisions of the Act.
Further, the Company follows the statutory requirements, circulars and guidelines issued by the Reserve Bank of India (RBI) for Non-Banking Financial Companies (NBFC), from time to time.
(ii) Basis of measurement
The financial statements have been prepared on a historical cost basis, except for certain assets and liabilities which have been measured at the fair value amount:
a) Certain financial assets and liabilities (including derivative instruments),
b) Defined benefit plans - plan assets
Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
(iii) Functional and presentation currencies:
Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates (âthe functional currencyâ) i.e., in Indian rupees (INR) and all values are rounded off to nearest lakhs except where otherwise indicated.
2.2 Use of estimates, judgements and assumptions :
(i) Critical estimates and assumptions
The preparation of the financial statements in conformity with Ind AS requires the Management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. The management believes that the application of accounting policies require critical accounting estimates involving complex and subjective judgments and the use of assumptions. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in the current and future period.
This note provides an overview of the areas that involved a higher 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 judgement is included in the relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
(ii) Judgements
In the process of applying the Companyâs accounting policies, management has made judgements, which have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year.
The areas involving critical estimates and judgements are:
Estimation of Defined benefit obligation - refer note 2.4(i i)
Fair value of financial instruments - refer note 2.15 Effective Interest Rate (EIR) - refer note 2.3 Impairment on financial assets - refer note 2.16 Provision for tax expenses - refer note 2.4(iii)
Business model assessment - refer note below
Business model assessment
Classification and measurement of financial assets depends on the results of business model and the solely payments of principal and interest (âSPPIâ) test. The Company determines the business model at a level that reflects how groups of financial assets are managed together to achieve a particular business objective. This assessment includes judgement reflecting all relevant evidence including how the performance of the assets is evaluated and their performance measured, the risks that affect the performance of the assets and how these are managed and how the managers of the assets are compensated. The Company monitors financial assets measured at amortised cost or fair value through other comprehensive income that are derecognised prior to their maturity to understand the reason for their disposal and whether the reasons are consistent with the objective of the business for which the asset was held. Monitoring is part of the Companyâs continuous assessment of whether the business model for which the remaining financial assets are held continues to be appropriate and if it is not appropriate whether there has been a change in business model and so a prospective change to the classification of those assets.
2.3 Revenue recognition
Interest income
Interest income is recognised using the Effective Interest Rate (EIR) method for all financial assets measured at amortised cost. The EIR is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, to its gross carrying amount. The calculation of the effective interest rate includes transaction costs and transaction income that are directly attributable to the acquisition of a financial asset.
Income by way of additional interest on account of delayed payment by the customers is recognised on realisation basis, due to uncertainty in collection.
Other Revenue from Operations
Fee and commission income such as documentation charges, guarantee commission, servicer fee income that are not integral part of the effective interest rate on the financial asset are recognised as the performance obligations are performed.
Income in the nature of cheque bounce and other related charges are recognised on realisation basis, due to uncertainty in collection.
Dividends
Dividend income from investment is accounted for when the right to receive is established. Rental Income
Income from operating leases is recognised in the Statement of profit and loss on a straight-line basis over the lease term.
2.4 Expenses
(i) Finance costs
Finance costs represents Interest expense recognised by applying the Effective Interest Rate (EIR) to
the gross carrying amount of financial liabilities other than financial liabilities classified as FVTPL.
The EIR in case of a financial liability is computed :
a. As the rate that exactly discounts estimated future cash payments through the expected life of the financial liability to the gross carrying amount of the amortised cost of a financial liability.
b. By considering all the contractual terms of the financial instrument in estimating the cash flows.
c. Including all fees paid between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts.
Interest expense includes issue costs that are initially recognized as part of the carrying value of the financial liability and amortized over the expected life using the effective interest method. These include fees and commissions payable to advisers and other expenses such as external legal costs, rating fee etc., provided these are incremental costs that are directly related to the issue of a financial liability.
(ii) Employee benefits
a) Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employeesâ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
b) The liabilities for earned leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of the expected future payments to be made in respect of services provided by employee up to the end of reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.
c) Post-employment obligation:
The Company operates the following post-employment schemes:
⢠Defined benefit plans such as gratuity for its eligible employees.
⢠Defined contribution plans such as provident fund.
(i) Defined benefit obligation:
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation denominated is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on the government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
(ii) Provident fund:
Contributions to Provident Fund made to Regional Provident Fund Commissioner in respect of Employeesâ Provident Fund based on the statutory provisions are charged to Statement of Profit and Loss on accrual basis.
(iii) Taxes
(a) The income tax expense or credit for the period is the tax payable on the current periodâs taxable income based on the applicable income tax rate for each jurisdiction adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted on substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax provided in full on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
(b) Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in the statement of profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
A deferred tax asset is recognised for unclaimed tax credits that are carried forward as deferred tax assets.
2.5 Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits 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 debit balances of bank overdrafts. Other bank overdrafts are shown within borrowings in the balance sheet.
2.6 Property, Plant and Equipment
Items of property, plant & equipment are stated at cost of acquisition or construction less accumulated depreciation and impairment, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All repairs and maintenance are charged to the statement of profit or loss during the reporting period in which they are incurred.
Depreciation is provided on straight-line basis over the estimated useful lives of the assets. Useful life estimated by the Company is in line with the useful life prescribed under Schedule II of the Companies Act, 2013.
The estimated useful lives are, as follows:
Building - 60 years
Office Equipment - 5 years
Computers - 3 years
Furniture and Fixtures - 10 years
Vehicles - 8 to 10 years
Depreciation on property plant and equipment individually costing '' 5,000/- or less is provided 100% in the year of acquisition.
The cost of improvements made to rented property during the year and included under furniture and fixtures, is depreciated over the primary lease period.
An assetâs carrying amount is written down immediately to its estimated recoverable amount, if the assetâs carrying amount is greater than its estimated recoverable amount. Gain and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statement of profit or loss.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Depreciation on fixed assets added / disposed off during the year is calculated on pro-rata basis with reference to the date of addition / disposal.
2.7 Intangible assets
Intangible assets include the value of Software. Intangible assets acquired are recorded at their acquisition cost and are amortised on straight line basis over its useful life.
The estimated useful lives are, as follows:
Computer Software - 5 years
2.8 Leases
Ind AS 11 6 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to Companyâs operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.
2.9 Borrowings
Borrowings are initially recognised at fair value, net of transaction cost incurred.
Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction cost) and the redemption amount is recognised in profit or loss over the period of the borrowings, using the effective interest method. Fees paid on the established loan facilities are recognised as transaction cost of the loan, to the extent that it is probable that some or all the facility will be drawn down.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other gain/(loss).
Finance charges are expensed in the period in which they are incurred.
2.10 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
General borrowing costs are capitalised at the weighted average of such borrowings outstanding during the year.
2.11 Earnings Per Share
The basic earnings per share is computed by dividing the net profit / (loss) attributable to the equity shareholders for the period by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving earnings per share, and also the weighted average number of equity shares, which could have been issued on the conversion of all dilutive potential shares. In computing dilutive earnings per share, only potential equity shares that are dilutive and that reduce profit per share are included.
2.12 Impairment of non financial assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assetâs carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assetâs fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
2.13 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
2.14 Provisions, Contingent Liabilities and Contingent Assets:
A Provision is recognised when the Company has present obligation (legal or constructive) as a result of past events, for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made for the amount of the obligation.
Contingent Liabilities are disclosed by way of notes to Financial Statements. Contingent assets are not recognised in the financial statements but are disclosed in the notes to the financial statements where an inflow of economic benefits is probable. Provisions and contingent liabilities are reviewed at each Balance Sheet date.
2.15 Fair value measurement
The Company measures financial instruments at fair value as per Ind AS 113 at each balance sheet date. All financial assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
? Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
? Level 2 â Inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly.
? Level 3 â Inputs for the asset or liability that are not based on observable market data (Unobservable inputs).
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
2.16 Financial instruments
Financial assets
(i) Classification
The Company classifies its financial assets in the following categories, those to be measured subsequently at:
1. Fair value through other comprehensive income (FVOCI),
2. Fair value through profit or loss (FVTPL), and
3. Amortised cost.
The classification depends on the entityâs business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.
Business model assessment
The Company makes an assessment of the objective of a business model in which an asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management.
Assessment of whether contractual cash flows are solely payments of principal and interest
For the purpose of this assessment, âprincipalâ is defined as the fair value of the financial asset on initial recognition. âInterestâ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as profit margin.
In assessing whether the contractual cash flows are SPPI, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition.
Reclassifications
Financial assets are not reclassified subsequent to their initial recognition, except in the period after the Company changes its business model for managing financial assets.
Financial liabilities
The Company classifies its financial liabilities as measured at amortised cost or fair value through profit or loss.
(ii) Measurement
At initial recognition, the Company measures a financial assets that are not at fair value through
profit or loss at its fair value plus / (minus), transaction costs / origination, Income that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Financial Assets :
Subsequent measurement of financial assets depends on the Companyâs business model for managing the asset and the cash flow characteristics of the asset. The Company classifies its debt instruments into following categories:
(1) Amortised cost:
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in revenue from operations using the effective interest rate method.
(2) Fair value through other comprehensive Income:
Assets that are held for collection of contractual cash flows and for sale and the contractual term of the financial assets give rise on specified dates to cash flows that are solely for the payment of principal and interest thereon.
(3) Fair value through profit or loss:
Assets that do not meet the criteria for amortised cost or Fair Value through Other Comprehensive Income (FVOCI) are measured at fair value through profit or loss.
Equity instruments:
The Company measures its equity investment at fair value through Other Comprehensive Income. However where the Companyâs management makes an irrevocable choice on initial recognition to present fair value gains and losses on specific equity investments in other comprehensive income (Currently no such choice made), there is no subsequent reclassification, on sale or otherwise, of fair value gains and losses to the Statement of profit or loss.
Financial liabilities
Financial liabilities are carried at amortised cost using effective interest rate method
(iii) Impairment of financial assets Overview of the ECL principles
The Company records allowance for expected credit losses for all loans. Equity instruments are not subject to impairment under Ind AS 109.
The ECL allowance is based on the credit losses expected to arise over the life of the asset (the lifetime expected credit loss), unless there has been no significant increase in credit risk since origination, in which case, the allowance is based on the 12 monthsâ expected credit loss as below
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 the portion of Lifetime ECL that represent the ECLs that result from default events on a financial instrument that are possible within the 12 months after the reporting date.
a) The Company has established a policy to perform an assessment, at the end of each reporting period, of whether a financial instrumentâs credit risk has increased significantly since initial recognition, by considering the change in the risk of default occurring over the remaining life of the financial instrument. The Company does the assessment of significant increase in credit risk at a borrower level.
Based on the above, the Company categorises its loans into Stage 1, Stage 2 and Stage 3 as described below:
Stage 1
All exposures where there has not been a significant increase in credit risk since initial recognition or that has low credit risk at the reporting date and that are not credit impaired upon origination are classified under this stage. The company classifies all standard advances and advances upto 30 days default under this category. Stage 1 loans also include facilities where the credit risk has improved and the loan has been reclassified from Stage 2.
Stage 2
All exposures where there has been a significant increase in credit risk since initial recognition but are not credit impaired are classified under this stage. 30 Days Past Due is considered as significant increase in credit risk.
Stage 3
All exposures assessed as credit impaired when one or more events that have a detrimental impact on the estimated future cash flows of that asset have occurred are classified in this stage. For exposures that have become credit impaired, a lifetime ECL is recognised and interest revenue is calculated by applying the effective interest rate to the amortised cost (net of provision) rather than the gross carrying amount. 90 Days Past Due is considered as default for classifying a financial instrument as credit impaired. If an event (for eg. any natural calamity) warrants a provision higher than as mandated under ECL methodology, the Company may classify the financial asset in Stage 3 accordingly.
The mechanics of ECL:
The Company calculates ECLs based on probability-weighted scenarios to measure the expected cash shortfalls, discounted at an approximation to the EIR. A cash shortfall is the difference between the cash flows that are due to the Company in accordance with the contract and the cash flows that the Company expects to receive.
The mechanics of the ECL calculations are outlined below and the key elements are, as follows:
Probability of Default (PD) - The Probability of Default is an estimate of the likelihood of default over a given time horizon. A default may only happen at a certain time over the assessed period, if the facility has not been previously derecognised and is still in the portfolio.
Exposure at Default(EAD) - The Exposure at Default is an estimate of the exposure at a future default date.
Loss Given Default (LGD) - The Loss Given Default is an estimate of the loss arising in the case where a default occurs at a given time. It is based on the difference between the contractual cash flows due and those that the Company would expect to receive, including from the realisation of any collateral.
The Company categorises loan assets into stages based on the Days Past Due status:
|
Stage |
Past due |
ECL |
|
Stage 1 |
30 Days Past Due |
12-Month ECL |
|
Stage 2 |
31-90 Days Past Due |
Life-time ECL |
|
Stage 3 |
More than 90 Days Past Due |
Life-time ECL |
Measurement of ECL
ECL are a probability-weighted estimate of credit losses. They are measured as follows:
⢠financial assets that are not credit-impaired at the reporting date: as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive);
⢠financial assets that are credit-impaired at the reporting date: as the difference between the
gross carrying amount and the present value of estimated future cash flows.
Collateral repossessed
In its normal course of business whenever default occurs, the Company may take possession of properties or other assets in its retail portfolio and generally disposes such assets through auction, to settle outstanding debt. As a result of this practice, assets under legal repossession processes are recorded on the balance sheet.
(iv) Write-off
Loans are written off when there is no reasonable expectation of recovering in its entirety or a portion thereof. This is generally the case when the Company determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. This assessment is carried out at the individual asset level.
Financial assets that are written off could still be subject to enforcement activities in order to comply with the Companyâs procedures for recovery of amounts due.
(V) De-recognition of financial assets and financial liabilities:
A financial asset is derecognised only when:
The Company has transferred the contractual rights to receive cash flows from the financial asset or the Company retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised, if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognised) and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognised in OCI is recognised in profit or loss except for the financial instrument that has been classified as fair value through other comprehensive income that will not be reclassified to profit or loss in subsequent periods.
A financial liability is derecognised when its contractual obligations are discharged or cancelled, or expires.
(VI) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
2.17 Cash flow statement
Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
2.18 Recent accounting pronouncements
For the year ended March 31, 2024, the Ministry of Corporate Affairs (âMCAâ) has not notified any new standards or amendments to the existing standards applicable to the Company.
Mar 31, 2023
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of Preparation of Financial Statements:
(i) Compliance with Ind-AS
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind-AS) notified under Section 133 of the Companies Act, 2013 (the Act) read with [Companies (Indian Accounting Standards) Rules, 2015] as amended by the Companies (Indian Accounting Standards) Rules, 2016 and other relevant provisions of the Act.
Further, the Company follows the statutory requirements, circulars and guidelines issued by the Reserve Bank of India (RBI) for Non-Banking Financial Companies (NBFC), from time to time.
(ii) Basis of measurement
The financial statements have been prepared on a historical cost basis, except for certain assets and liabilities which have been measured at the fair value amount:
a) Certain financial assets and liabilities (including derivative instruments),
b) Defined benefit plans - plan assets
Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
(iii) Functional and presentation currencies:
Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates (âthe functional currencyâ) i.e., in Indian rupees (INR) and all values are rounded off to nearest lakhs except where otherwise indicated.
2.2 Use of estimates, judgements and assumptions :
(i) Critical estimates and assumptions
The preparation of the financial statements in conformity with Ind AS requires the Management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. The management believes that the application of accounting policies require critical accounting estimates involving complex and subjective judgments and the use of assumptions. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in the current and future period.
This note provides an overview of the areas that involved a higher 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 judgement is included in the relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
(ii) Judgements
In the process of applying the Companyâs accounting policies, management has made judgements, which have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year.
The areas involving critical estimates and judgements are:
Estimation of Defined benefit obligation - refer note 2.4(i i)
Fair value of financial instruments - refer note 2.15 Effective Interest Rate (EIR) - refer note 2.3 Impairment on financial assets - refer note 2.16 Provision for tax expenses - refer note 2.4(iii)
Business model assessment - refer note below
Business model assessment
Classification and measurement of financial assets depends on the results of business model and the solely payments of principal and interest (âSPPIâ) test. The Company determines the business model at a level that reflects how groups of financial assets are managed together to achieve a particular business objective. This assessment includes judgement reflecting all relevant evidence including how the performance of the assets is evaluated and their performance measured, the risks that affect the performance of the assets and how these are managed and how the managers of the assets are compensated. The Company monitors financial assets measured at amortised cost or fair value through other comprehensive income that are derecognised prior to their maturity to understand the reason for their disposal and whether the reasons are consistent with the objective of the business for which the asset was held. Monitoring is part of the Companyâs continuous assessment of whether the business model for which the remaining financial assets are held continues to be appropriate and if it is not appropriate whether there has been a change in business model and so a prospective change to the classification of those assets.
2.3 Revenue recognition
Interest income
Interest income is recognised using the Effective Interest Rate (EIR) method for all financial assets measured at amortised cost. The EIR is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, to its gross carrying amount. The calculation of the effective interest rate includes transaction costs and transaction income that are directly attributable to the acquisition of a financial asset.
Income by way of additional interest on account of delayed payment by the customers is recognised on realisation basis, due to uncertainty in collection.
Other Revenue from Operations
Fee and commission income such as documentation charges, guarantee commission, servicer fee income that are not integral part of the effective interest rate on the financial asset are recognised as the performance obligations are performed.
Income in the nature of cheque bounce and other related charges are recognised on realisation basis, due to uncertainty in collection.
Dividends
Dividend income from investment is accounted for when the right to receive is established.
2.4 Expenses
(i) Finance costs
Finance costs represents Interest expense recognised by applying the Effective Interest Rate (EIR) to the gross carrying amount of financial liabilities other than financial liabilities classified as FVTPL.
The EIR in case of a financial liability is computed :
a. As the rate that exactly discounts estimated future cash payments through the expected life of the financial liability to the gross carrying amount of the amortised cost of a financial liability.
b. By considering all the contractual terms of the financial instrument in estimating the cash flows.
c. Including all fees paid between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts.
Interest expense includes issue costs that are initially recognized as part of the carrying value of the financial liability and amortized over the expected life using the effective interest method. These include fees and commissions payable to advisers and other expenses such as external legal costs, rating fee etc., provided these are incremental costs that are directly related to the issue of a financial liability.
(ii) Employee benefits
a) Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employeesâ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
b) The liabilities for earned leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of the expected future payments to be made in respect of services provided by employee up to the end of reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.
c) Post-employment obligation:
The Company operates the following post-employment schemes:
⢠Defined benefit plans such as gratuity for its eligible employees
⢠Defined contribution plans such as provident fund.
(i) Defined benefit obligation:
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation denominated is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on the government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
(ii) Provident fund:
Contributions to Provident Fund made to Regional Provident Fund Commissioner in respect of
Employeesâ Provident Fund based on the statutory provisions are charged to Statement of Profit and Loss on accrual basis.
(iii)Taxes
(a) The income tax expense or credit for the period is the tax payable on the current periodâs taxable income based on the applicable income tax rate for each jurisdiction adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted on substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax provided in full on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
(b) Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in the statement of profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
A deferred tax asset is recognised for unclaimed tax credits that are carried forward as deferred tax assets.
2.5 Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits with 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 the balance sheet.
2.6 Property, Plant and Equipment
Items of property, plant & equipment are stated at cost of acquisition or construction less accumulated depreciation and impairment, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All repairs and maintenance are charged to the statement of profit or loss during the reporting period in which they are incurred.
Depreciation is provided on straight-line basis over the estimated useful lives of the assets. Useful life estimated by the Company is in line with the useful life prescribed under Schedule II of the Companies Act, 2013.
The estimated useful lives are, as follows:
Building - 60 years
Office Equipment - 5 years
Computers - 3 years
Furniture and Fixtures - 10 years
Vehicles - 6 to 10 years
Depreciation on property plant and equipment individually costing '' 5,000/- or less is provided 100% in the year of acquisition.
The cost of improvements made to rented property during the year and included under furniture and fixtures, is depreciated over the primary lease period.
An assetâs carrying amount is written down immediately to its estimated recoverable amount, if the assetâs carrying amount is greater than its estimated recoverable amount. Gain and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statement of profit or loss.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Depreciation on fixed assets added / disposed off during the year is calculated on pro-rata basis with reference to the date of addition / disposal.
2.7 Intangible assets
Intangible assets include the value of Software. Intangible assets acquired are recorded at their acquisition cost and are amortised on straight line basis over its useful life.
The estimated useful lives are, as follows:
Computer Software - 5 years
2.8 Leases
Ind AS 11 6 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to Companyâs operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.
2.9 Borrowings
Borrowings are initially recognised at fair value, net of transaction cost incurred.
Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction cost) and the redemption amount is recognised in profit or loss over the period of the borrowings, using the effective interest method. Fees paid on the established loan facilities are recognised as transaction cost of the loan, to the extent that it is probable that some or all the facility will be drawn down.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other gain/(loss).
Finance charges are expensed in the period in which they are incurred.
2.10 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
General borrowing costs are capitalised at the weighted average of such borrowings outstanding during the year.
2.11 Earnings Per Share
The basic earnings per share is computed by dividing the net profit / (loss) attributable to the equity shareholders for the period by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving earnings per share, and also the weighted average number of equity shares, which could have been issued on the conversion of all dilutive potential shares. In computing dilutive earnings per share, only potential equity shares that are dilutive and that reduce profit per share are included.
2.12 Impairment of non financial assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assetâs carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assetâs fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
2.13 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
Mar 31, 2018
1.1 Summary of Significant Accounting policies
a. REVENUE RECOGNITION:
a) Interest Income on Loan. On Accrual basis in line with prudential norms issued by Reserve Bank of India for N.B.F.C.
b) Overdue Interest Accounted on receipt basis.
c) Dividend Accounted on right to receive basis.
d) Bank charges recovered from the Accounted at the time of loan disbursement to the customers and brokerage paid to customer. dealers and franchisees for the total loan tenure
b. PROPERTY, PLANT & EQUIPMENT AND DEPRECIATION:
a) Property, Plant & Equipment are stated at the cost of acquisition and installation.
b) Depreciation on Property, Plant & Equipment is provided on Straight Line method in the manner prescribed in Schedule II of the Companies Act, 2013 (as amended).
c. IMPAIRMENT OF ASSETS
An asset is treated as impaired when the carrying cost of assets exceeds the recoverable value. An impairment loss is charged to the Profit and Loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
d. HYPOTHECATION LOAN STOCK:
Recoverable under Hypothecation Loan stock are exclusive of Unmatured Interest after deducting amount received / receivable during the year. Loans secured by Hypothecation of vehicles / Mortgage includes Rs.167.54 (P.Y. Rs.87.09) outstanding Portfolio on which NPA provision of Rs.18.06 (P.Y. Rs 8.56) has been made.
e. REPOSSESSED ASSETS
Repossessed assets represent assets taken back from customers but pending for realization and valued at termination value or estimated realizable value, whichever is lower.
f. INVESTMENTS:
Non Current Investments are stated at cost of acquisition less provision made_for the decline, other than temporary, in the value of investments.
Current Investments are stated at lower of cost of acquisition or fair value, determined by category of investment.
g. PROVISION FOR NON PERFORMING ASSETS:
(a) Provision / write off for Non Performing Assets is made as per the prudential norms issued by the Reserve Bank of India.
(b) Interest income to the extent remaining unrealized on assets classified as NPA is reversed in Profit & Loss account by debit / reducing âInterest on loan accountâ with corresponding credit to the customer account. Such reversal is credited to âInterest on loan accountâ to the extent of realization in the subsequent year.
h. EMPLOYEES BENEFIT:
Defined contribution plan: Provident fund contribution is charged to Profit and Loss Account as incurred.
Defined Benefit plan: The Company has an employee gratuity fund managed by LIC of India. The present value of the obligation under this plan is determined based on the actuarial valuation using the projected unit credit method. Actuarial gain or loss is charged to Profit and Loss account.
i. TAXES ON INCOME.
(a) Current tax is determined on the basis of taxable income computed in accordance with the provisions of the Income Tax Act, 1961.
(b) Deferred tax is recognized on timing differences, being the difference between taxable income and accounting income that originates in one period and is capable of reversal in one or more subsequent periods. Where there is unabsorbed depreciation or carried forward losses, Deferred Tax Assets are recognized only if there is virtual certainty of realization of such assets. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Such assets are reviewed at each Balance Sheet date to reassess realization.
(c) Deferred Tax Assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantially enacted by the Balance Sheet date.
j. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.
k. USE OF ESTIMATES:
The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.
l. CASH & CASH EQUIVALENTS:
Cash & Cash Equivalents for the purposes of cash flow comprises of cash at bank & in hand and short term fixed deposits with an original maturity of three months or less.
Mar 31, 2015
A. REVENUE RECOGNITION:
a) Interest Income on Loan. On Accrual basis in line with
prudential norms
issued by Reserve Bank of India
for N.B.F.C.
b) Overdue Interest Accounted on receipt basis.
c) Dividend Accounted on right to receive basis.
d) Bank charges recovered from Accounted at the time of loan
the customers and brokerage disbursement to the customer.
paid to dealers and
franchisees for the total loan
tenure
b. FIXED ASSETS AND DEPRECIATION:
a) Fixed assets are stated at the cost of acquisition and installation.
b) Depreciation on Fixed Assets is provided on Straight Line method in
the manner prescribed in Schedule II of the Companies Act, 2013 (as
amended).
c) The Company has revised depreciation rate on fixed assets as per
useful lives specified in Schedule II of the Companies Act 2013. The
carrying value of fixed assets (net of deferred tax) whose useful life
has been completed on 31st March 2014, has been recognized in the
opening balance of retained earnings. The consequential impact on the
depreciation charged and on the results as above is not material
c. IMPAIRMENT OF ASSETS
An asset is treated as impaired when the carrying cost of assets
exceeds the recoverable value. An impairment loss is charged to the
Profit and Loss account in the year in which an asset is identified as
impaired. The impairment loss recognized in prior accounting period is
reversed if there has been a change in the estimate of recoverable
amount.
d. HYPOTHECATION LOAN STOCK:
Recoverable under Hypothecation Loan stock are exclusive of Unmatured
Interest after deducting amount received / receivable during the year.
e. REPOSSESSED ASSETS
Repossessed assets represent assets taken back from customers but
pending for realization and valued at termination value or estimated
realizable value, whichever is lower.
f. INVESTMENTS:
Non Current Investments are stated at cost of acquisition less
provision made for the decline, other than temporary, in the value of
investments.
Current Investments are stated at lower of cost of acquisition or fair
value, determined by category of investment.
Premium paid on purchase of Govt. securities to be held till maturity
for the purpose of SLR requirement is amortized in the year of
purchase.
g. PROVISION FOR NON PERFORMING ASSETS:
(a) Provision / write off for Non Performing Assets is made as per the
prudential norms issued by the Reserve Bank of India.
(b) Interest income to the extent remaining unrealized on assets
classified as NPA is reversed in Profit & Loss account by debit /
reducing 'Interest on loan account' with corresponding credit to the
customer account. Such reversal is credited to 'Interest on loan
account' to the extent of realization in the subsequent year.
h. EMPLOYEE BENEFITS:
Defined contribution plan: Provident fund contribution is charged to
Profit and Loss Account as incurred.
Defined Benefit plan: The Company has an employee gratuity fund managed
by LIC of India. The present value of the obligation under this plan is
determined based on the actuarial valuation using the projected unit
credit method. Actuarial gain or loss is charged to Profit and Loss
account.
i. TAXES ON INCOME.
(a) Current tax is determined on the basis of taxable income computed
in accordance with the provisions of the Income Tax Act, 1961.
(b) Deferred tax is recognized on timing differences, being the
difference between taxable income and accounting income that originates
in one period and is capable of reversal in one or more subsequent
periods. Where there is unabsorbed depreciation or carried forward
losses, Deferred Tax Assets are recognized only if there is virtual
certainty of realization of such assets. Other deferred tax assets are
recognized only to the extent there is reasonable certainty of
realization in future. Such assets are reviewed at each Balance Sheet
date to reassess realization.
(c) Deferred Tax Assets and liabilities are measured using the tax
rates and tax laws that have been enacted or substantially enacted by
the Balance Sheet date.
j. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent assets are neither recognized nor disclosed in the
financial statements.
k. USE OF ESTIMATES:
The presentation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known/ materialized.
l. CASH & CASH EQUIVALENTS:
Cash & Cash Equivalents for the purposes of cash flow comprises of cash
at bank & in hand and short term fixed deposits with an original
maturity of three months or less.
Mar 31, 2014
A. REVENUE RECOGNITION:
a) Hire Charges, Interest Income On Accrual basis in line with
on Loan. prudential norms issued by
Reserve Bank of India for
N.B.F.C.
b) Overdue Interest Accounted on receipt basis.
c) Dividend Accounted on right to receive
basis.
d) Bank charges recovered from Accounted at the time of loan
the customers and brokerage disbursement to the customer.
paid to dealers and franchisees
for the total loan tenure
b. FIXED ASSETS AND DEPRECIATION:
a) Fixed assets are stated at the cost of acquisition and installation.
b) Depreciation on Fixed Assets is provided on Straight Line method at
the rates and in the manner prescribed in Schedule XIV of the Companies
Act, 1956 (as amended).
c. IMPAIRMENT OF ASSETS:
An asset is treated as impaired when the carrying cost of assets
exceeds the recoverable value. An impairment loss is charged to the
Profit and Loss account in the year in which an asset is identified as
impaired. The impairment loss recognized in prior accounting period is
reversed if there has been a change in the estimate of recoverable
amount.
d. HYPOTHECATION LOAN STOCK:
Recoverable under Hypothecation Loan stock are exclusive of Unmatured
Interest after deducting amount received / receivable during the year.
e. REPOSSESSED ASSETS
Repossessed assets represent assets taken back from customers but
pending for realization and valued at termination value or estimated
realizable value, whichever is lower.
f. INVESTMENTS:
Non Current Investments are stated at cost of acquisition less
provision made_for the decline, other than temporary, in the value of
investments.
Current Investments are stated at lower of cost of acquisition or fair
value, determined by category of investment.
Premium paid on purchase of Govt. securities to be held till maturity
for the purpose of SLR requirement is amortized in the year of
purchase.
g. PROVISION FOR NON PERFORMING ASSETS:
(a) Provision / write off for Non Performing Assets is made as per the
prudential norms issued by the Reserve Bank of India.
(b) Interest income to the extent remaining unrealized on assets
classified as NPA is reversed in Profit & Loss account by debit /
reducing ''Interest on loan account'' with corresponding credit to the
customer account. Such reversal is credited to ''Interest on loan
account'' to the extent of realization in the subsequent year.
h. EMPLOYEE BENEFITS:
Defined contribution plan: Provident fund contribution is charged to
Profit and Loss Account as incurred. Defined Benefit plan: The Company
has an employee gratuity fund managed by LIC of India. The present
value of the obligation under this plan is determined based on the
actuarial valuation using the projected unit credit method. Actuarial
gain or loss is charged to Profit and Loss account.
i. TAXES ON INCOME.
(a) Current tax is determined on the basis of taxable income computed
in accordance with the provisions of the Income Tax Act, 1961.
(b) Deferred tax is recognized on timing differences, being the
difference between taxable income and accounting income that originates
in one period and is capable of reversal in one or more subsequent
periods. Where there is unabsorbed depreciation or carried forward
losses, Deferred Tax Assets are recognized only if there is virtual
certainty of realization of such assets. Other deferred tax assets are
recognized only to the extent there is reasonable certainty of
realization in future. Such assets are reviewed at each Balance Sheet
date to reassess realization.
(c) Deferred Tax Assets and liabilities are measured using the tax
rates and tax laws that have been enacted or substantially enacted by
the Balance Sheet date.
j. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent assets are neither recognized nor disclosed in the
financial statements.
k. USE OF ESTIMATES:
The presentation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known/ materialized.
l. CASH & CASH EQUIVALENTS:
Cash & Cash Equivalents for the purposes of cash flow comprises of cash
at bank & in hand and short term fixed deposits with an original
maturity of three months or less.
Mar 31, 2013
A. REVENUE RECOGNITION:
a) Hire Charges, Interest Income on Loan. On Accrual basis in line
with prudential norms issued by Reserve Bank of India for N.B.F.C.
b) Overdue Interest Accounted on receipt basis.
c) Dividend Accounted on right to receive basis.
d) Bank charges recovered from the Accounted at the time of loan
customers and brokerage paid to dealers disbursement to the customer.
and franchisees for the total loan tenure
b. FIXED ASSETS AND DEPRECIATION:
a) Fixed assets are stated at the cost of acquisition and installation.
b) Depreciation on Fixed Assets is provided on Straight Line method at
the rates and in the manner prescribed in Schedule XIV of the Companies
Act, 1956 (as amended).
c. IMPAIRMENT OF ASSETS
An asset is treated as impaired when the carrying cost of assets
exceeds the recoverable value. An impairment loss is charged to the
Profit and Loss account in the year in which an asset is identified as
impaired. The impairment loss recognized in prior accounting period is
reversed if there has been a change in the estimate of recoverable
amount
d. HYPOTHECATION LOAN STOCK:
Recoverable under Hypothecation Loan stock are exclusive of Unmatured
Interest after deducting amount received / receivable during the year.
e. REPOSSED ASSETS
Repossessed assets represent assets taken back from customers but
pending for hypothecation business or outright sale, and valued at
termination value or estimated realizable value, whichever is lower.
f. INVESTMENTS:
Non Current Investments are stated at cost of acquisition less
provision madejor the decline, other than temporary, in the value of
investments.
Current Investments are stated at lower of cost of acquisition or fair
value, determined by category of investment.
Premium paid on purchase of Govt, securities to be held till maturity
for the purpose of SLR requirement is amortized in the year of
purchase.
g. PROVISION FOR NON PERFORMING ASSETS:
(a) Provision / write off for Non Performing Assets is made as per the
prudential norms issued by the Reserve Bank of India.
(b) Interest income to the extent remaining unrealized on assets
classified as NPA is reversed in Profit & Loss account by debit /
reducing ''Interest on loan account'' with corresponding credit to the
customer account. Such reversal is credited to ''Interest on loan
account'' to the extent of realization in the subsequent year.
h. EMPLOYEE BENEFITS:
Defined contribution plan: Provident fund contribution is charged to
Profit and Loss Account as incurred.
Defined Benefit plan: The Company has an employee gratuity fund managed
by LIC of India. The present value of the obligation under this plan is
determined based on the actuarial valuation using the projected unit
credit method. Actuarial gain or loss is charged to Profit and Loss
account.
i. TAXES ON INCOME.
(a) Current tax is determined on the basis of taxable income computed
in accordance with the provisions of the Income Tax Act, 1961.
(b) Deferred tax is recognized on timing differences, being the
difference between taxable income and accounting income that originates
in one period and is capable of reversal in one or more subsequent
periods. Where there is unabsorbed depreciation or carried forward
losses, Deferred Tax Assets are recognized only if there is virtual
certainty of realization of such assets. Other deferred tax assets are
recognized only to the extent there is reasonable certainty of
realization in future. Such assets are reviewed at each Balance Sheet
date to reassess realization.
c) Deferred Tax Assets and liabilities are measured using the tax rates
and tax laws that have been enacted or substantially enacted by the
Balance Sheet date.
j. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events ar 1 it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent assets are neither recognized nor disclosed in the
financial statements.
k. USE OF ESTIMATES:
The presentation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known/ materialized.
I. CASH & CASH EQUIVALENTS:
Cash & Cash Equivalents for the purposes of cash flow comprises of cash
at bank & in hand and short term fixed deposits with an original
maturity of three months or less.
Mar 31, 2012
A. REVENUE RECOGNITION:
a) Hire Charges, Interest Income on Loan and Income from Lease
transactions.
On Accrual basis in line with prudential norms issued by Reserve Bank
of India for N.B.F.C.
b) Overdue Interest Accounted on receipt basis.
c) Dividend Accounted on right to receive basis.
d) Bank charges recovered from the customers and brokerage paid to
dealers and franchisees for the total loan tenure
Accounted at the time of loan disbursement to the customer.
b. FIXED ASSETS AND DEPRECIATION:
a) Fixed assets are stated at the cost of acquisition and installation.
b) Depreciation on Fixed Assets is provided on Straight Line method at
the rates and in the manner prescribed in Schedule XIV of the Companies
Act, 1956 (as amended).
c. IMPAIRMENT OF ASSETS
An asset is treated as impaired when the carrying cost of assets
exceeds the recoverable value. An impairment loss is charged to the
Profit and Loss account in the year in which an asset is identified as
impaired. The impairment loss recognized in prior accounting period is
reversed if there has been a change in the estimate of recoverable
amount
d. HYPOTHECATION LOAN STOCK:
Recoverable under Hypothecation Loan stock are exclusive of Unmatured
Interest after deducting amount received / receivable during the year.
e. REPOSSED ASSETS
Repossessed assets represent assets taken back from customers but
pending for hypothecation business or outright sale, and valued at
termination value or estimated realizable value, whichever is lower.
f. INVESTMENTS:
Non Current Investments are stated at cost of acquisition less
provision madefor the decline, other than temporary, in the value of
investments.
Current Investments are stated at lower of cost of acquisition or fair
value, determined by category of investment.
Premium paid on purchase of Govt. securities to be held till maturity
for the purpose of SLR requirement is amortized in the year of
purchase.
g. PROVISION FOR NON PERFORMING ASSETS:
(a) Provision / write off for Non Performing Assets is made as per the
prudential norms issued by the Reserve Bank of India.
(b) Interest income to the extent remaining unrealized on assets
classified as NPA is reversed in Profit & Loss account by debit /
reducing 'Interest on loan account' with corresponding credit to
the customer account. Such reversal is credited to 'Interest on loan
account' to the extent of realization in the subsequent year.
h. EMPLOYEE BENEFITS:
Defined contribution plan: Provident fund contribution is charged to
Profit and Loss Account as incurred.
Defined Benefit plan: The Company has an employee gratuity fund managed
by LIC of India. The present value of the obligation under this plan is
determined based on the actuarial valuation using the projected unit
credit method. Actuarial gain or loss is charged to Profit and Loss
account.
i. TAXES ON INCOME.
(a) Current tax is determined on the basis of taxable income computed
in accordance with the provisions of the Income Tax Act, 1961.
(b) Deferred tax is recognized on timing differences, being the
difference between taxable income and accounting income that originates
in one period and is capable of reversal in one or more subsequent
periods. Where there is unabsorbed depreciation or carried forward
losses, Deferred Tax Assets are recognized only if there is virtual
certainty of realization of such assets. Other deferred tax assets are
recognized only to the extent there is reasonable certainty of
realization in future. Such assets are reviewed at each Balance Sheet
date to reassess realization.
(c) Deferred Tax Assets and liabilities are measured using the tax
rates and tax laws that have been enacted or substantially enacted by
the Balance Sheet date.
j. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent assets are neither recognized nor disclosed in the
financial statements.
k. USE OF ESTIMATES:
The presentation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known/ materialized.
l. CASH & CASH EQUIVALENT
Cash & cash Equivalent for the purposes of cash flow comprises of cash
at bank & in hand and Short term fixed deposits with an original
maturity of three months or less.
Mar 31, 2010
1) The Financial Statements have been prepared to comply with all
material aspects of the relevant provisions of the Companies Act, 1956
and the Companies (Accounting Standards) Rules 2006 issued by the
Central Government, and are based on the historical cost convention.
2) REVENUE RECOGNITION:
a) Hire Charges, Interest Income on On Accrual basis in line with
prudential norms Loan and Income
from Lease transactions. issued by Reserve Bank of India
for N.B.F.C.
b) Overdue Interest Accounted on receipt basis.
c) Dividend Accounted on right to receive
basis.
d) Bank charges recovered
from the customers Accounted at the time of loan
disbursement to
and brokerage paid to dealers
and the customer.
franchisees tor the total
loan tenure
3) FIXED ASSETS AND DEPRECIATION:
a) Fixed assets are stated at the cost of acquisition and installation.
b) Depreciation on Fixed Assets is provided on Straight Line method at
the rates and in the manner prescribed in Schedule XIV of the Companies
Act, 1956 (as amended).
4) IMPAIRMENT OF ASSETS:
An asset is treated as impaired when the carrying cost of assets
exceeds the recoverable value. An impairment loss is charged to the
Profit and Loss account in the year in which an asset is identified as
impaired. The impairment loss recognized in prior accounting period is
reversed if there has been a change in the estimate of recoverable
amount
5) HYPOTHECATION / LOAN STOCK:
Recoverable under Hypothecation / Loan stock are exclusive of Unmatured
Interest after deducting amount received / receivable during the year.
6) STOCK ON HAND:
Stock on hand represents assets re-possessed but pending for
hypothecation business or outright sale, and valued at termination
value or estimated realizable value, whichever is lower.
7) INVESTMENTS:
Long Term Investments are stated at cost of acquisition less provision
made_for the decline, other than temporary, in the value of
investments.
Current Investments are stated at lower of cost of acquisition or fair
value, determined by category of investment.
Premium paid on purchase of Govt, securities to be held till maturity
for the purpose of SLR requirement is amortized in the year of
purchase.
8) PROVISION FOR NON PERFORMING ASSETS:
(a) Provision / write off for Non Performing Assets is made as per the
prudential norms issued by the Reserve Bank of India.
(b) Interest income to the extent remaining unrealized on assets
classified as NPA is reversed in Profit & Loss account by debit /
reducing Interest on loan account with corresponding credit to the
customer account. Such reversal is credited to Interest on loan
account to the extent of realization in the subsequent year.
(c) Bad Debts / Hypo. Loans written off and short receipt on seized
assets are net of provision for NPA made there against in the previous
year/s.
9) EMPLOYEE BENEFITS:
Defined contribution plan: Provident fund contribution is charged to
Profit and Loss Account as incurred.
Defined Benefit plan: The Company has an employee gratuity fund managed
by LIC of India. The present value of the obligation under this plan is
determined based on the actuarial valuation using the projected unit
credit method. Actuarial gain or loss is charged to Profit and Loss
account.
10) TAXES ON INCOME.
(a) Current tax is determined on the basis of taxable income computed
in accordance with the provisions of the Income Tax Act, 1961.
(b) Deferred tax is recognized on timing differences, being the
difference between taxable income and accounting income that originates
in one period and is capable of reversal in one or more subsequent
periods. Where there is unabsorbed depreciation or carried forward
losses, Deferred Tax Assets are recognized only if there is virtual
certainty of realization of such assets. Other deferred tax assets are
recognized only to the extent there is reasonable certainty of
realization in future. Such assets are reviewed at each Balance Sheet
date to reassess realization.
(c) Deferred Tax Assets and liabilities are measured using the tax
rates and tax laws that have been enacted or substantially enacted by
the Balance Sheet date.
11) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent assets are neither recognized nor disclosed in the
financial statements.
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