Accounting Policies of Gujarat State Financial Corporation Company

Mar 31, 2025

(01) These financial statements have been prepared on accrual basis, unless otherwise stated,
as a going concern under historic cost convention, in accordance with the requirements
of the State Financial Corporations Act, 1951; regulations framed thereunder and
generally accepted accounting principles.

(02) REVENUE RECOGNITION:

(a) The Corporation recognizes income by way of interest, penalty and other charges
after realization of cheques as intimated by banks. Interest income includes penal
interest received. The said income recognition is applicable only to interest earned
from operational activities and not on interest income earned through investing or
financing activities.

(b) In view of the prudential norms prescribed by SIDBI, no income is recognized in
respect of Non-Performing Assets (NPA). Income on such assets shall be
recognized as and when received. Provision for NPA has been made as per the
norms prescribed by SIDBI. All assets have been classified as doubtful for more
than three years or loss assets and accordingly 100% provision has been made.

(c) Amount received from the loanees are credited in the books in the following
order:

[1] Penalty & other charges

[2] Interest

[3] Principal

(d) Where the unit of the loanees or collateral security is sold, the amount realized is
first credited towards principal and if there is any surplus, it is credited towards
other dues. However, where the amount realized in respect of the units which
were written off in previous year/years and subsequently sold out, the amount is
credited to Bad Debts Recovery A/c under the group of “Other Income”.

(e) Prior to 1.4.2018, in case loanees opted for OTS, amount received from the loanee
is first apportioned as per normal practice as under:

[1] Penalty & other charges

[2] Interest

[3] Principal

At the time of issuance of No Due Certificate, the effect of OTS scheme is given
whereby amount credited to interest/penalty account during recovery period of OTS
which otherwise was principal recovery as per OTS scheme is being given effect. The
shortfall in principal account is compensated by crediting interest income and write off
of the same amount.

Keeping in view the fact that all loan assets are NPAs and 100% provision is
made, the aforesaid policy has been changed with effect from 1^st April, 2018 as under:

“In case of loanees opted for OTS, amount received from the loanee is
apportioned in the following order:-

1. Principal and capitalized expenses

2. Interest

3. Penalty and other charges

At the time of issuance of No Due Certificate, the shortfall in principal account, if
any, is compensated by write off of the same amount.”

The aforesaid policy has again been revisited by the Audit Committee and as
decided by the Board of Directors at their respective meetings held on December 19,
2022, it has been decided to change the Accounting Policy in case of OTS receipts with
effect from April 01, 2022 as under:-

“In case of loanees opted for OTS, amount received from loanee is first
apportioned as per normal practice as under:-

(1) Penalty

(2) Interest

(3) Principal and capitalized expenses”

Due to the above changes in Accounting Policy, ?48.53lakh (previous year
?331.05 lakh) received as recovery from OTS accounts pertaining to the NDC given
during the period under reference. ?6.55 lakh (previous year ?32.99 lakh) has been
recognized as interest income and balance amount of ?41.98 lakh (previous year
?298.06 lakh) has been credited towards principal. Therefore, during the year under
reference, interest income is reduced by ?41.98 lakh (previous year ?298.06 lakh) and
write-back of NPA provision increased by the same amount.

(03) FIXED ASSETS

Fixed assets including the assets given on lease are recorded at the cost of acquisition
including incidental expenses in connection thereto. All fixed assets are stated at cost less
depreciation and in case of leased assets, after taking into consideration the lease adjustments
account.

All leased assets are shown at Re.1/- book value since lease terms of all the assets have
expired.

(04) DEPRECIATION:

[a] Depreciation on assets is provided under Written Down Value Method in accordance
with rates prescribed under Income Tax Act, 1961 as under:-

Furniture & Fixtures : 10%

Office Equipment : 15%

Motor cars : 15%

Office Building : 10%

Residential building : 5%

Computers : 40%

In case of additions to fixed assets, depreciation is provided for full year where
additions are made on or before 30^th September and at 50% of the rates for assets
acquired after 30^th September. In respect of sale/disposal of fixed assets, no depreciation
in provided in the year of sale/disposal.

(05) EMPLOYEE BENEFITS:

^(a) Salaries and non-monetary benefits are accrued in the year in which the services are
rendered by the employees. Contribution to employees’ provident fund are recognized
as an expense and charged to Statement of Profit and Loss.

(b) For gratuity and leave encashment liabilities, Corporation took policies with Life
Insurance Corporation of India which takes care of liabilities on both the counts. The
entire premium paid to LIC is charged to Statement of Profit and Loss. Employee’s cost
for the year under reference includes ?18,242/- (previous year ?21,074/-) towards
premium for the gratuity liability and ?5,752/- (previous year ?8,631/-) towards leave
encashment remitted to LIC of India.

(06) INVESTMENTS:

Investment is classified as “Available for sale” for the purpose of valuation and
provision for net diminution in value of investment is made as per the guidelines issued by
SIDBI.

(07) BORROWING COST:

Borrowing cost is recognized as expense and charged to Statement of Profit and Loss.

(08) WRITE OFFS :

While writing off loans, the Corporation takes into consideration the following where

A] Assets of the loanees are lost

B] Loanees are not in existence

C] To the extent of deficit on sale of loanee assets

D] The units are closed and no recovery is forthcoming

E] Waiver/sacrifice on account of One Time Settlement/any other settlement.

(09) TAXATION:

Deferred Tax Asset is not recognized in view of Corporation not being virtually certain of
realizing adequate profits in the foreseeable future.

(10) IMPAIRMENT OF ASSETS:

A substantial portion of Corporation’s assets comprise of ''financial assets’ to which
Accounting Standard-28 “Impairment of assets” is not applicable. In respect of assets to
which Standard applies, in the opinion of the management, there are no indications, internal or
external, which could have the effect of impairing the value of the assets to any material
extent as at 31^st March, 2025 requiring recognition in terms of the said standard.

(11) EVENTS OCCURING AFTER THE BALANCE SHEET DATE:

Material adjusting events (that provides evidence of condition that existed at the balance sheet
date) occurring after the balance sheet date are recognized in the financial statements. Non
adjusting events (that are indicative of conditions that arose subsequent to the balance sheet
date) occurring after the balance sheet date that represents material change and commitment
affecting the financial position are disclosed in the report of the Board of Directors.

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Mar 31, 2024

A ACCOUNTING POLICIES AND METHOD OF ACCOUNTING:

(01) These financial statements have been prepared on accrual basis, unless otherwise stated, as a going concern under historic cost convention, in accordance with the requirements of the State Financial Corporations Act, 1951; regulations framed thereunder and generally accepted accounting principles.

(02) REVENUE RECOGNITION:

(a) The Corporation recognizes income by way of interest, penalty and other charges after realization of cheques as intimated by banks. Interest income includes penal interest received. The said income recognition is applicable only to interest earned from operational activities and not on interest income earned through investing or financing activities.

(b) In view of the prudential norms prescribed by SIDBI, no income is recognized in respect of Non-Performing Assets (NPA). Income on such assets shall be recognized as and when received. Provision for NPA has been made as per the norms prescribed by SIDBI. All assets have been classified as doubtful for more than three years or loss assets and accordingly 100% provision has been made.

(c) Amount received from the loanees are credited in the books in the following order :

[1] Penalty & other charges

[2] Interest

[3] Principal

(d) Where the unit of the loanees or collateral security is sold, the amount realized is first credited towards principal and if there is any surplus, it is credited towards other dues. However, where the amount realized in respect of the units which were written off in previous year/years and subsequently sold out, the amount is credited to Bad Debts Recovery A/c under the group of “Other Income”.

(e) Prior to 1.4.2018, in case loanees opted for OTS, amount received from the loanee is first apportioned as per normal practice as under:

[1] Penalty & other charges

[2] Interest

[3] Principal

At the time of issuance of No Due Certificate, the effect of OTS scheme is given whereby amount credited to interest/penalty account during recovery period of OTS which otherwise was principal recovery as per OTS scheme is being given effect. The shortfall in principal account is compensated by crediting interest income and write off of the same amount.

Keeping in view the fact that all loan assets are NPAs and 100% provision is made, the aforesaid policy has been changed with effect from 1^stApril, 2018 as under:

“In case of loanees opted for OTS, amount received from the loanee is apportioned in the following order:-

1. Principal and capitalized expenses

2. Interest

3. Penalty and other charges

At the time of issuance of No Due Certificate, the shortfall in principal account, if any, is compensated by write off of the same amount.”

The aforesaid policy has again been revisited by the Audit Committee and as decided by the Board of Directors at their respective meetings held on December 19, 2022, it has been decided to change the Accounting Policy in case of OTS receipts with effect from April 01, 2022 as under:-

“In case of loanees opted for OTS, amount received from loanee is first apportioned as per normal practice as under:-

(1) Penalty

(2) Interest

(3) Principal and capitalized expenses”

Due to the above changes in Accounting Policy, ? 331.05 lakh (previous year ? 13.11 lakh) received as recovery from OTS accounts pertaining to the NDC given during the period under reference, ? 32.99 lakh (previous year ? 10.74 lakh) has been recognized as interest income and balance amount of ? 298.06 (previous year ? 2.37 lakh) has been credited towards principal. Therefore, during the year under reference, interest income is reduced by ? 298.06 lakh (previous year ? 2.37 lakh) and write-back of NPA provision increased by the same amount.

(03) FIXED ASSETS

Fixed assets including the assets given on lease are recorded at the cost of acquisition including incidental expenses in connection thereto. All fixed assets are stated at cost less depreciation and in case of leased assets, after taking into consideration the lease adjustments account.

All leased assets are shown at Re.1/- book value since lease terms of all the assets have expired.

In case of additions to fixed assets, depreciation is provided for full year where additions are made on or before 30^th September and at 50% of the rates for assets acquired after 30^th September. In respect of sale/disposal of fixed assets, no depreciation in provided in the year of sale/disposal.

(05) EMPLOYEE BENEFITS:

(a) Salaries and non-monetary benefits are accrued in the year in which the services are rendered by the employees. Contribution to employees’ provident fund are recognized as an expense and charged to Statement of Profit and Loss.

(b) For gratuity and leave encashment liabilities, Corporation took policies with Life Insurance Corporation of India which takes care of liabilities on both the counts. The entire premium paid to LIC is charged to Statement of Profit and Loss. Employee’s cost for the year under reference includes ? 21,074/- (previous year ? 12,90,596/-) towards premium for the gratuity liability and ? 8,631/- (previous year ? 13,517/-) towards leave encashment remitted to LIC of India.

(06) INVESTMENTS:

Investment is classified as “Available for sale” for the purpose of valuation and provision for net diminution in value of investment is made as per the guidelines issued by SIDBI.

(07) BORROWING COST:

Borrowing cost is recognized as expense and charged to Statement of Profit and Loss.

(08) WRITE OFFS :

While writing off loans, the Corporation takes into consideration the following where

A] Assets of the loanees are lost

B] Loanees are not in existence

C] To the extent of deficit on sale of loanee assets

D] The units are closed and no recovery is forthcoming

E] Waiver/sacrifice on account of One Time Settlement/ any other settlement.

(09) TAXATION:

Deferred Tax Asset is not recognized in view of Corporation not being virtually certain of realizing adequate profits in the foreseeable future.

(10) IMPAIRMENT OF ASSETS:

A substantial portion of Corporation’s assets comprise of ''financial assets’ to which Accounting Standard-28 “Impairment of assets” is not applicable. In respect of assets to which Standard applies, in the opinion of the management, there are no indications, internal or external, which could have the effect of impairing the value of the assets to any material extent as at 31^st March, 2024 requiring recognition in terms of the said standard.

(11) EVENTS OCCURING AFTER THE BALANCE SHEET DATE:

Material adjusting events (that provides evidence of condition that existed at the balance sheet date) occurring after the balance sheet date are recognized in the financial statements. Non adjusting events (that are indicative of conditions that arose subsequent to the balance sheet date) occurring after the balance sheet date that represents material change and commitment affecting the financial position are disclosed in the report of the Board of

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Mar 31, 2014

A. ACCOUNTING POLICIES AND METHOD OF ACCOUNTING :

(01) Accounts are prepared on accrual basis as a going concern under historic cost convention, in accordance with the requirements of the State Financial Corporations Act, 1951 and the rules framed thereunder and generally accepted accounting principle.

(02) REVENUE RECOGNITION :

(a) The Corporation recognizes income by way of interest, penalty and other charges after realization of cheques as intimated by banks. Adequate provision is made in the year end in respect of income to be recognized on mercantile basis on all standard assets. The provisions are reversed on frst day of the new financial year. Interest income includes penal interest received.

(b) In view of the prudential norms prescribed by RBI/SIDBI, no income is recognized in respect of Non Performing Assets (NPA). Income on such assets shall be recognized as and when received. Provision for NPA has been made as per the norms prescribed by SIDBI.

(c) Amount received from the loanees are credited in the books in the following order :

[1] Penalty & other charges

[2] Interest

[3] Principal

(d) Where the unit of the loanee is sold or collateral security is sold, the amount realized is frst credited towards principal and if there is any surplus, it is credited towards other dues. However, where the amount realized in respect of the units which were written off in previous year/years and subsequently sold, the amount is credited to Bad Debts Recovery A/c. under the group of Other Income.

(e) In case of loanees under OTS, amount received from the loanee is frst apportioned as per normal practice as under :

[1] Penalty & other charges

[2] Interest

[3] Principal

At the time of issuance of No Due Certifcate, the effect of OTS scheme is given whereby amount credited to interest/penalty account during recovery period of OTS which otherwise was principal recovery as per OTS scheme is being given effect. The shortfall in principal account is compensated by crediting interest income and write off of the same amount.

(03) FIXED ASSETS :

Fixed assets including the assets given on lease are recorded at the cost of acquisition including incidental expenses in connection thereto. All fixed assets are stated at cost less depreciation and in case of leased assets, after taking into consideration the lease adjustments account.

All leased assets are shown at Rs. 1/- book value since lease terms of all the assets have expired.

(04) DEPRECIATION :

Depreciation of all assets is provided under Written Down Value Method in accordance with rates prescribed under Income Tax Act 1961.

Furniture & Fixtures : 10%

office Equipments : 15%

Motor cars : 15%

office Building : 10%

Residential building : 5%

Computers : 60%

In case of additions to fixed assets, depreciation is provided for full year where additions are made on or before 30th September and depreciation is provided@50% of the rates for assets acquired after this date during the year.

(05) EMPLOYEE BENEFITS :

(a) Salaries and non monetary benefits are accrued in the year in which the services are rendered by the employees.

(b) For gratuity and leave encashment liabilities, Corporation took policies with Life Insurance Corporation of India, which takes care of liabilities on both the counts. The entire premium paid to LIC is charged to Statement of Profit & Loss.

(06) INVESTMENTS :

Investment is valued in accordance with SIDBI guidelines (investment classification & valuation). All investments are classified in one category viz. "Available for sale" for the purpose of valuation and accordingly provision has been made for permanent diminution in the value wherever applicable and temporary diminution in value if any, is not considered for the purpose of provisioning.

(07) BORROWING COST :

Borrowing cost is recognized as expense and charged to Statement of Profit & Loss.

(08) WRITE OFFS :

While writing off loans, the Corporation takes into consideration the following where

A] Assets of the loanees are lost

B] Loanees are not in existence

C] To the extent of defcit on sale of loanee assets

D] The units are closed and no recovery is forthcoming

E] Waiver/sacrifce on account of One Time Settlement/any other settlement.

(09) TAXATION :

Deferred Tax Asset is not recognized in view of Corporation not being virtually certain of realizing adequate Profits in the foreseeable future.

(10) IMPAIRMENT OF ASSETS :

A substantial portion of Corporation''s assets comprise of ''financial assets'' to which Accounting Standard-28 "Impairment of assets" is not applicable. In respect of assets to which Standard applies, in the opinion of the management, there are no indications, internal or external, which could have the effect of impairing the value of the assets to any material extent as at 31st March, 2014 requiring recognition in terms of the said standard.

(11) EVENTS OCCURING AFTER THE BALANCE SHEET DATE :

Material adjusting events (that provides evidence of condition that existed at the balance sheet date) occurring after the balance sheet date are recognized in the financial statements. Non adjusting events (that are indicative of conditions that arose subsequent to the balance sheet date) occurring after the balance sheet date that represents material change and commitment affecting the financial position are disclosed in the report of the Board of Directors.

(12) PROVISION :

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 even though the amount cannot be determined with certainty and represents only a best estimate in the light of available information. 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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Mar 31, 2013

(01) Accounts are prepared on accrual basis as a going concern under historic cost convention, in accordance with the requirements of the State Financial Corporations Act, 1951 and the rules framed there under and generally accepted accounting principle.

(02) REVENUE RECOGNITION :

(a) The Corporation recognizes income by way of interest, penalty and other charges after realization of cheques as intimated by banks. Adequate provision is made _ in the year end in respect of income to be recognized on mercantile basis on all standard assets. The provisions are reversed on first day of the new financial year. Interest income includes penal interest received.

(b) In view of the prudential norms prescribed by RBI/SIDBI, no income is recognized in respect of Non Performing Assets (NPA). Income on such assets shall be recognized as and when received. Provision for NPA has been made as per the norms prescribed by SIDBI.

(c) Amount received from the loanees are credited in the books in the following order:

[1] Penalty & other charges

[2] Interest

[3] Principal

(d) Where the unit of the loanee is sold or collateral security is sold, the amount realized is first credited towards principal and if there is any surplus, it is credited towards other dues. However, where the amount realized in. respect of the units which were written off in previous year/years and subsequently sold, the amount is credited to Bad Debts Recovery A/c. under the group of Other Income.

(e) In case of loanees under OTS, amount received from the loanee is first apportioned as per normal practice as under:

[1] Penalty & other charges

[2] Interest

[3] Principal

At the time of issuance of No Due Certificate, the effect of OTS scheme is given whereby amount credited to interest/penalty account during recovery period of OTS which otherwise was principal recovery as per OTS scheme is being given effect. The shortfall in principal account is compensated by crediting interest income and write off of the same amount.

(03) FIXED ASSETS :

Fixed assets including the assets given on lease are recorded at the cost of acquisition including incidental expenses in connection thereto. All fixed assets are stated at cost less depreciation and in case of leased assets, after taking into consideration the lease adjustments account.

All leased assets are shown at Re.1/- book value since lease terms of all the assets have expired.

In case of additions to fixed assets, depreciation is provided for full year in case all additions are made on or before 30th September and depreciation is provided @ 50% of the rates for assets acquired after this date during the year. In case of sale of fixed assets, profit or loss on fixed assets is recognized on the same lines.

(05) EMPLOYEE BENEFITS :

(a) Salaries and non monetary benefits are accrued in the year in which the services are rendered by the employees.

(b) For gratuity and leave encashment liabilities, Corporation took policies with Life Insurance Corporation of India, which takes care of liabilities of both the accounts. The entire premium paid to LIC is charged to Statement of Profit & Loss.

(06) INVESTMENTS :

Investment is valued in accordance with SIDBI guidelines (investment classification & valuation). All investments are classified in one category viz. "Available for sale" for the purpose of valuation and accordingly provision has been made for diminution in the value wherever applicable.

(07) BORROWING COST :

Borrowing cost is recognized as expense and charged to Statement of Profit & Loss.

(08) WRITE OFFS :

While writing off loans, the Corporation takes into consideration the following where

A] Assets of the loanees are lost

B] Loanees are not in existence

C] To the extent of deficit on sale of loanee assets

D] The units are closed and no recovery is forthcoming

E] Waiver/sacrifice on account of One Time Settlement/any other settlement.

(09) TAXATION :

Deferred Tax Asset is not recognized in view of Corporation not being virtually certain of realizing adequate profits in the foreseeable future.

(10) IMPAIRMENT OF ASSETS :

A substantial portion of Corporation''s assets comprise of ''financial assets'' to which Accounting Standard-28 "Impairment of assets" is not applicable. In respect of assets to which Standard applies, in the opinion of the management, there are no indications, internal or external, which could have the effect of impairing the value of the assets to any material extent as at 31st March, 2013 requiring recognition in terms of the said standard.

(11) EVENTS OCCURING AFTER THE BALANCE SHEET DATE :

Material adjusting events (that provides evidence of condition that existed at the balance sheet date) occurring after the balance sheet date are recognized in the financial statements. Non adjusting events (that are indicative of conditions that arose subsequent to the balance sheet date) occurring after the balance sheet date that represents material change and commitment affecting the financial position are disclosed in the report of the Board of Directors.

(12) PROVISION :

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 even though the amount cannot be determined with certainty and represents only a best estimate in the light of available information. 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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Mar 31, 2012

(01) Accounts are prepared on accrual basis as a going concern under historic cost convention, in accordance with the requirements of the State Financial Corporations Act, 1951 and the rules framed thereunder and generally accepted accounting principle.

(02) REVENUE RECOGNITION :

(a) The Corporation recognizes income by way of interest, penalty and other charges after realization of cheques as intimated by banks. Adequate provision is made in the year end in respect of income to be recognized on mercantile basis on all standard assets. The provisions are reversed on frst day of the new fnancial year. Interest income includes penal interest received.

(b) In view of the prudential norms prescribed by RBI/SIDBI, no income is recognized in respect of Non Performing Assets (NPA). Income on such assets shall be recognized as and when received. Provision for NPA has been made as per the above norms.

(c) Amount received from the loanees are credited in the books in the following order :

[1] Penalty & other charges [2] Interest [3] Principal

(d) Where the unit of the loanee is sold or collateral security is sold, the amount realized is frst credited towards principal and if there is any surplus, it is credited towards other dues. However, where the amount realized in respect of the units which were written off in previous year/years and subsequently sold, the amount is credited to Bad Debts Recovery A/c. under the group of Other Income.

(e) In case of loanees under OTS, amount received from the loanee is frst apportioned as per normal practice as under :

[1] Penalty & other charges [2] Interest [3] Principal

At the time of issuance of No Due Certifcate, the effect of OTS scheme is given whereby amount credited to interest/penalty account during recovery period of OTS which otherwise was principal recovery as per OTS scheme is being given effect. The shortfall in principal account is compensated by crediting interest income and write off of the same amount.

(03) FIXED ASSETS :

Fixed assets including the assets given on lease are recorded at the cost of acquisition including incidental expenses in connection thereto. All fxed assets are stated at cost less depreciation and in case of leased assets, after taking into consideration the lease adjustments account.

All leased assets are shown at Re.1/ book value since lease terms of all the assets have expired.

(04) DEPRECIATION :

(a) Depreciation of all assets is provided on Written Down Value Method as per rates prescribed in the Income Tax Act 1961.

Furniture & Fixtures : 10%

Offce Equipments : 15%

Motor cars : 15%

Land & Building : 10%

Computers : 60%

In case of additions to fxed assets, depreciation is provided for full year in case all additions are made on or before 30th September and depreciation is provided @ 50% of the rates for assets acquired after this date. In case of sale of fxed assets, proft or loss on fxed assets is recognized on the same lines.

(05) EMPLOYEE BENEFITS :

(a) Salaries and non monetary benefts are accrued in the year in which the services are rendered by the employees.

(b) For gratuity and leave encashment liabilities, Corporation took policies with Life Insurance Corporation of India, which takes care of liabilities of both the accounts. The entire premium paid to LIC is charged to Statement of Revenue.

Corporation has charged to Revenue an amount of Rs. 5,68,00,000/ pertaining to earlier years which was hitherto shown as Current Assets.

(06) INVESTMENTS :

Investment are valued in accordance with SIDBI guidelines (investment classifcation & valuation). All investments are classifed in one category viz. "Available for sale" for the purpose of valuation and accordingly provision has been made for diminution in the value wherever applicable.

(07) BORROWING COST :

Borrowing cost is recognized as expense and charged to Proft & Loss account. Interest on non guaranteed priority sector bonds amounting Rs. 12,65,000/ is not provided as concerned bondholders are still persuaded to agree the restructuring accepted by other bondholders.

(08) WRITE OFFS :

While writing off loans, the Corporation takes into consideration the following where

A] Assets of the loanees are lost

B] Loanees are not in existence

C] To the extent of defcit on sale of loanee assets

D] The units are closed and no recovery is forthcoming

E] Waiver/sacrifce on account of One Time Settlement/any other settlement.

(09) TAXATION :

Deferred Tax Asset is not recognized in view of Corporation not being virtually certain of realizing adequate profts in the foreseeable future.

(10) IMPAIRMENT OF ASSETS :

A substantial portion of Corporation's assets comprise of Rs.fnancial assets' to which Accounting Standard 28 "Impairment of assets" is not applicable. In respect of assets to which Standard applies, in the opinion of the management, there are no indications, internal or external, which could have the effect of impairing the value of the assets to any material extent as at 31st March, 2012 requiring recognition in terms of the said standard.

(11) EVENTS OCCURING AFTER THE BALANCE SHEET DATE :

Material adjusting events (that provides evidence of condition that existed at the balance sheet date) occurring after the balance sheet date are recognized in the fnancial statements. Non adjusting events (that are indicative of conditions that arose subsequent to the balance sheet date) occurring after the balance sheet date that represents material change and commitment affecting the fnancial position are disclosed in the report of the Board of Directors.

(12) PROVISION :

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 outfow of resources even though the amount cannot be determined with certainty and represents only a best estimate in the light of available information. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the fnancial statements.

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Mar 31, 2010

[01] Accounts are prepared on accrual basis as a going concern under historic cost convention, in accordance with the requirements of the State Financial Corporations Act, 1951 and the rules framed there under, and generally accepted accounting principle.

[02] REVENUE RECOGNITION :

[a] The Corporation recognises income by way of interest, penalty and other charges after realisation of cheques as intimated by banks. Adequate provision is made in the year end in respect of income to be recognised on mercantile basis on all standard assets. The provisions are reversed on first day of the new financial year. Interest income includes penal interest received.

[b] In view of the prudential norms prescribed by RBI/SIDBI, no income is recognised in respect of Non Performing Assets (NPA). Income on such assets shall be recognised as and when received. Provision for NPA has been made as per the above norms.

[c] Amount received from the loanees are credited in the books in the following order:-

[1] Penalty & other charges [2] Interest [3] Principal

[d] Where the unit of the loanee is sold or collateral security is sold, the amount realised is first credited towards principal and if there is any surplus, it is credited towards other dues. However, where the amount realised in respect of the units which were written off in previous year/years and subsequently sold, the amount is credited to Bad Debts Recovery A/c. under the group of Other Income.

[e] In case of loanees under OTS, amount received from the loanees is first apportioned as per normal practice as under:

[I] Penalty & other charges [ii] Interest [iii] Principal

At the time of issuance of No Due Certificate , the effect of OTS scheme is given, whereby amount credited to interest/penalty account during recovery period of OTS which otherwise was principal recovery as per OTS scheme is being given effect. The shortfall in principal account is compensated by crediting interest income and write off of the same amount.

[03] FIXED ASSETS:

Fixed assets including the assets given on lease are recorded at the cost of acquisition including incidental expenses in connection thereto. All fixed assets are stated at cost less depreciation and in case of leased assets after taking into consideration the lease adjustments account.

All leased assets are shown at Re. 1/- book value since lease terms of all the assets have expired

[04] DEPRECIATION:

[a] Depreciation of all assets is provided in accordance with the Written Down Value Method as per following rates

Furniture & Fixtures 15%

Office Equipments 25%

Motor Cars 20%

Land & Building 10%

Computers 60%

In case of additions to fixed assets, depreciation is provided for full year in case all additions are made on or before 30th September and depreciation is provided @ 50% of the rates for assets acquired after this date. In case of sale of fixed assets, profit or loss on fixed assets is recognized.

[05] EMPLOYEE BENEFITS :

(A) Salaries and non monetary benefits are accrued in the year in which the services are rendered by the employees.

(B) The Corporation has taken a policy under Group Gratuity Scheme with Life Insurance Corporation of India for payment of gratuity to its employees and the premium thereof is charged to Profit and Loss account. Besides, the shortfall between gratuity amount received from LIC and actual amount paid to the employees is also charged to Profit and Loss Account. However Corporation has not made provision for gratuity as per Project Unit Credit Method, loss to that extent are understated.

As per the practice consistently followed leave encashment is accounted for on payment basis and no provision for the same is made which is not in accordance with AS15" Employee benefits" issued by ICAI, Loss to that extent are understated.

[06] INVESTMENTS:

Investments are valued in accordance with SIDBI guidelines (investment classification & valuation). All investments are classified in one category viz. "Available for sale" for the purpose of valuation and accordingly provision has been made.

[07] BORROWING COST :

Borrowing cost are recognised as expenses and charged to Profit & Loss account. Interest on non-guaranteed priority sector bonds amounting Rs. 13.46 lacs is not provided as concerned bondholders are still persuaded to agree to restructuring accepted by other bondholders.

[08] WRITE OFFS :

While writing off loans, the Corporation takes into consideration the following where

A] Assets of the loanees are lost

B] Loanees are not in existence

C] To the extent of deficit on sales of loanee assets

D] The units are closed and no recovery is forthcoming

E] Waiver/sacrifice on account of One Time Settlement

[09] RELATED PARTY DISCLOSURE :

There are no transactions under the said clause except remuneration paid to key management personnel as under:

Shri Arvind Agrawal, Managing Director

Remuneration paid Rs. 24304.00

Travelling and other allowance Rs. 118127.00

Medical Expenses Rs. 11319.00

During the year under reference, arrears of pay was paid to following ex-chairpersons and ex Managing Director as under:

1. Smt. Netra Shenoy, IAS, Ex-Chairperson Rs. 2,83,710=00

2. Ms S K Sekhon, IAS, Ex-Chairperson Rs. 97,120=00

3. Shri PVTrivedi, IAS, ex-Managing Director Rs. 2,65,604=00

[10] TAXATION :

Deferred Tax Assets is not recognized in view of the Corporation not being virtually certain of realizing adequate profits in the foreseeable near future.

[11] Impairment of Assets :

A substantial portion of the Corporations assets comprise of financial assets to which Accounting standard 28 "Impairment of assets" is not applicable. In respect of assets to which Standard applies, in the opinion of the management, there are no indications, internal or external, which could have the effect of impairing the value of the assets to any material extent as at 31st March,2010 requiring recognition in terms of the said standard.

[12] EVENTS OCCURING AFTER THE BALANCE SHEET DATE :

Material adjusting events (that provides evidence of condition that existed at the balance sheet date) occurring after the balance sheet date are recognized in the financial statements. Non adjusting events (that are indicative of conditions that arose subsequent to the balance sheet date) occurring after the balance sheet date that represents material change and commitment affecting the financial position are disclosed in the reports of the Board of Directors.

[13] PROVISION :

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 even though the amount cannot be determined with certainty and represents only a best estimate in the light of available information. 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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Mar 31, 2009

[01] Accounts are prepared on accrual basis as a going concern under historic cost convention, in accordance with the requirements of the State Financial Corporations Act, 1951 and the rules framed there under, and generally accepted accounting principle.

[02] REVENUE RECOGNITION :

[a] The Corporation recognises income by way of interest, penalty and other charges after realisation of cheques as intimated by banks. Adequate provision is made in the year end in respect of income to be recognised on mercantile basis on all standard assets. The provisions are reversed on first day of the new financial year. Interest income includes penal interest received.

[b] In view of the prudential norms prescribed by RBI/SIDBI, no income is recognised in respect of Non Performing Assets (NPA). Income on such assets shall be recognised as and when received. Provision for NPA has been made as per the above norms.

[c] Amount received from the loanees are credited in the books in the following order:- [1] Penalty & other charges

[2] Interest [3] Principal

[d] Where the unit of the loanee is sold or collateral security is sold, the amount realised is first credited towards principal and if there is any surplus, it is credited towards other dues. However, where the amount realised in respect of the units which were written off in previous year/years and subsequently sold, the amount is credited to Bad Debts Recovery A/c. under the group of Other Income.

[e] In case of loanees under OTS, amount received from the loanees is first apportioned as per normal practice as under:

[I] Penalty & other charges [ii] Interest [iii] Principal

At the time of issuance of No Due Certificate , the effect of OTS scheme is given whereby amount credited to interest/penalty account during recovery period of OTS which otherwise was principal recovery as per OTS scheme is being given effect. The shortfall in principal account is compensated by crediting interest income and write off of the same amount.

[03] FIXED ASSETS :

Fixed assets including the assets given on lease are recorded at the cost of acquisition including incidental expenses in connection thereto. All fixed assets are stated at cost less depreciation and in case of leased assets after taking into consideration the lease adjustments account.

All leased assets are shown at Re. 1/- book value since lease terms of all the assets have expired

[04] DEPRECIATION:

[a] Depreciation of all assets is provided for in accordance with the Written Down Value Method as per following rates

Furniture & Fixtures 15%

Office Equipments 25%

Motor Cars 20%

Land & Building 10%

Computers 60%

In case of additions to fixed assets, depreciation is provided for full year in case of all additions on or before 30th September and depreciation is provided @ 50% of the rates for assets acquired after this date. In case of sale of fixed assets, profit or loss on fixed assets is recognized.

[05] EMPLOYEE BENEFITS :

(A) Salaries and non monetary benefits are accrued in the year in which the services are rendered by the employees.

(B) The Corporation has taken a policy under Group Gratuity Scheme with Life Insurance Corporation of India for payment of gratuity to its employees and the premium thereof is charged to profit and loss account. Besides, the shortfall between gratuity amount received from LIC and actual amount paid to the employees is also charged to profit and loss account. However, Corporation has not made provision for gratuity as per Project Unit Credit Method, loss to that extent are understated

As per the practice consistently followed leave encashment is accounted for on payment basis and no provision for the same is made which is not in accordance with AS15 "Employee benefits" issued by ICAI, Loss to that extent are understated.

(C) During the current financial year Corporation has introduced a scheme of voluntary retirement for its permanent employees effictive from 12/05/2008 to 11/08/2008. The Voluntary retirement benefit of Rs. 10.29 crores was given to the employees of the corporation. The entire expenditure is fully written off during this year.

[06] INVESTMENTS :

Investments are valued in accordance with SIDBI guidelines (investment classification & valuation). All investments are classified in one category viz. Available for sale for the purpose of valuation and accordingly provision has been made.

[07] BORROWING COST :

Borrowing cost are recognised as expenses and charged to Profit & Loss account. Interest on non-guaranteed priority sector bonds amounting Rs. 229.53 lacs is not provided as restructuring of said bonds is in process.

[08] WRITE OFFS :

While writing off loans, the Corporation takes into consideration the following where

A] Assets of the loanees are lost

B] Loanees are not in existence

C] To the extent of deficit on sales of loanee assets

D] The units are closed and no recovery is forthcoming

E] Waiver/sacrifice on account of One Time Settlement

[09] RELATED PARTY DISCLOSURE :

There are no transactions under the said clause except remuneration paid to key management personnel as under:

Shri Arvind Agrawal, Managing Director

Remuneration Paid Rs. 635456/-

Travelling and other allowance Rs. 224682/- Medical Expense Rs. 145385/-

[10] TAXATION:

Deferred Tax Assets is not recognized in view of the Corporation not being virtually certain of realizing adequate profits in the foreseeable near future.

Provision for fringe benefit tax is made in accordance with the provisions of the Income Tax act 1961.

(11) Impairment of Assets:

A substantial portion of the banks assets comprise of financial assets to which Accounting standard 28 "Impairment of assets" is not applicable. In respect of assets to which Standard applies, in the opinion of the management, there are no indications, internal or external, which could have the effect of impairing the value of the assets to any material extent as at 31s March,2009 requiring recognition in terms of the said standard.

(12) EVENTS OCCURING AFTER THE BALANCE SHEET DATE :

Material adjusting events (that provides evidence of condition that existed at the balance sheet date) occurring after the balance sheet date are recognized in the financial statements. Non adjusting events (that are indicative of conditions that arose subsequent to the balance sheet date) occurring after the balance sheet date that represents material change and commitment affecting the financial position are disclosed in the reports of the Board of Directors.

(13) PROVISION :

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 even though the amount cannot be determined with certainty and represents only a best estimate in the light of available information. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.