Accounting Policies of Haryana Financial Corporation Company

Mar 31, 2024

A SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Preparation of Financial Statements

The accompanying financial statements have been prepared under the historical cost convention and accrual basis of accounting, unless otherwise stated, in accordance with Indian Generally Accepted Accounting Principles (GAAP) and other accounting principles generally accepted in India, to the extent applicable and conform to the statutory requirements prescribed under the State Financial Corporation (SFCs) Act, 1951, circulars and guidelines issued by the Small Industries Development Bank of India.(SIDBI).

b) Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date financial statements and the reported amount of revenue and expenses during the reporting period. Any difference between the actual results and estimates are recognised in the financial statements in the period in which the results are known/materialized.

c) Fixed Assets

Fixed Assets are stated at written down value. Cost of acquisition or construction is inclusive of duties, taxes and other incidental.

d) Depreciation

Depreciation on fixed assets is provided on written down value method (WDV) at the rates prescribed under provisions of Income Tax Rules, 1962.

e) Revenue Recognition

All expenses and income to the extent ascertained as payable and receivable respectively, are accounted for on accrual basis except the matters as under:

- Additional demand raised upon completion of assessment under Sales Tax, Income Tax, ESIC and

EPF, etc are being debited in Profit & Loss a/c in the year of demand raised.

- Interest on NPA''s are accounted for on receipt basis as per RBI guidelines.

f) Appropriation

The amount received from the borrowers against loans and advances is appropriated in the following order:-

i. Miscellaneous Expenses.

ii. Interest.

iii. Principal.

g) As per policy in respect of mortgaged properties, the Auction Purchaser has to make the payment within 3 months from the date of sale confirmation. However, in some exceptional cases, the Managing Director may give extension in payment of sale consideration for a further period of 9 months with interest @ 13% p.a. compounded on monthly basis. The possession of the unit is handed over to the Auction Purchaser after receipt of full amount of bid.

h) The Corporation has introduced new settlement policies namely, “The Policy for Compromise Settlement of Chronic Non-Performing Assets (Doubtful Loan Accounts) of Haryana Financial Corporation-2021 ” and “The Policy for Compromise Settlement of Loss Accounts of Haryana Financial Corporation-2021” in the financial year 2021-22 which were valid upto 31.03.22 to reduce NPAs/written off portfolios. There is no settlement policy for settlement of NPA''s now.

i) Retirement Benefits

Gratuity to Staff is covered under the Group Gratuity Scheme of Life Insurance Corporation of India and Leave Encashment to staff is covered under the Group Leave Encashment Scheme of Life Insurance Corporation of India.

Post employment and other long term employee benefits viz. Contribution to Gratuity, Leave Encashment etc. are recognized as an expense in the Profit & Loss account in which the employee has been rendered services. The expense is recognized at the present value of the amount payable determining using actuarial valuation. Actuarial gains and losses in respect of post employment and other long-term benefits are charged to profit and loss account.

The basis of actuarial valuation for Gratuity and Leave Encashment considered by LIC are as under:

VALUATION METHOD	Projected Unit Credit Method
ACTUARIAL ASSUMPTIONS
Mortality Rate	LIC (2006-08) ultimate
Withdrawal Rate	1 % to 3% depending on age
Discount Rate	7% p.a.
Salary Escalation	7%

Monthly matching contribution towards Employees Provident Fund is remitted to the Regional Provident Fund Commissioner, Chandigarh as per provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and is charged to profit and loss account.

j Asset Classification and Provisioning

i) Loans and Advances have been categorised and provisioning has been made as per guidelines received from Small Industries Development Bank of India (SIDBI) which are as under :

Standard Assets
Asset Classification	Age of Default for Principal and/or Interest (in months)	Provisioning on Loans Outstanding (%age)
Standard	0 - 3	0.25
Standard Upgraded A/c and Restructured A/c	0 - 3	5.00
Non-Performing Assets
Asset Classification	Period as NPA	Provisioning on Loans Outstanding (%age)
Sub-standard	Up to 6 months	15.00
Sub-standard	6 months to 1 year	25.00
Doubtful-I	2nd year	40.00
Doubtful-II	3rd & 4th year	100.00
Doubtful-III	Above 5 year	100.00
Loss	No Security available	100.00

k Investments

As per guidelines issued by SIDBI in respect of investments in equity shares (available for sale ), valuation has been done as per market rate, which is the price of the script available from trades / quotes on the stock exchange. Those scripts for which current quotations are not available or where the shares are not quoted on stock exchange, have been valued at book value ascertained from their latest Balance Sheets.In case the latest Balance Sheet is not available, the shares have been valued at Rs. 1/- per company. In case of Investment in equity shares (held to maturity) valuation has been done at acquisition price.(Reference Annexure to Schedule -‘F'' & ‘H'') iii) The provisioning has been made without giving the effect of the amount lying in the Sundry Deposits under Schedule-‘C'' - Other Current Liabilities.

A Retirement Benefits

i) Gratuity to staff is covered under the Group Gratuity Scheme of Life Insurance Corporation of India. As per actuarial valuation of Life Insurance Corporation of India (LIC) as on 31.03.24 the amount payable is Rs.1.19 lakh (shown in Schedule ‘C'' - Other Current Liability) and fund value lying with LIC towards above gratuity fund is Rs.1,27,36,011/-..

Leave Encashment to staff is covered under the Group Leave Encashment Scheme of Life Insurance Corporation of India (LIC). As per books of accounts total liability towards Leave Encashment at the end of year is Rs.1,62,89,565/- shown in Schedule ‘C'' - Other Current Liability. Against this liability the fund size of Leave Encashment Policy with LIC is Rs.1,47,49,977/- shown in Schedule ‘J'' - Other Current Assets. The balance amount payable to LIC comes to Rs.15,39,588/- (Rs.1,62,89,565/- -Rs.1,47,49,977/-) As per actuarial valuation of LIC the amount payable to LIC at the end of the year is Rs.15,39,588/-.

At the time of retirement, the Corporation is paying Leave Encashment maximum upto 10 months of salary (last pay drawn plus applicable DA). Similarly Gratuity is also paid maximum upto 16.5 months to other staff (17.5 months in case of class IV employees) of salary (last pay drawn plus applicable DA).

ii) Monthly matching contribution towards Employees Provident Fund is remitted to the Regional

Provident Fund Commissioner, Chandigarh as per provisions of the Employees Provident Fund and Miscellaneous Provisions Ac, 1952 and is charged to profit and loss account.

b) Contingent liabilities

1 Liability in respect of units disposed off but in dispute - amount indeterminate.

2. Bank Guarantee earlier issued is not acknowledged as debt- Rs. 20,47,820/-

3. The contingent liabilities in respect of claims lodged against the Corporation by ex-employees/ pensioners (11 cases) are to the extent of Rs.1348.44 lakh (approx.) not acknowledged. In addition to above there are 16 court cases/appeals filed by the employees/ex-employees/pensioners against which amount is indeterminate.

Further, there is contingent liability amounting to Rs.125.88 lakh in respect of claims lodged by Loanees/ Auction purchasers. The corporation is generally unable to reasonably estimate possible loss for proceedings or disputes other than estimated, including where parties have not claimed an amount of damages. There is uncertainty as to the outcome of pending appeals or legal cases pending at any stage.

A sum of Rs.224.08 lakh Shown in Other Assets Schedule ‘J'' - Other Current Assets'' deposited with Income Tax Department against demand for Financial Years 1980-81 to 1982-83 and the Corporation has filed appeals before Hon''ble High Court against the orders of Income Tax department. Since the matter is sub-judice, no provision against this amount has been provided in the books of accounts.

The Income Tax Department has raised demand of Rs.5897 lakh u/s 271(1)(c) and 147 r.w.s. 144 in respect of assessment year 2013-14, 2014-15 and 2015-16.The Corporation has filed appeals against these demands and the same are pending with CIT(A)/ITAT. During the year the Corporation has deposited a sum of Rs. 40.00 lakh and Income Tax department adjusted Income Tax refund of Rs.85.75 lakh of FY 2021-22 and FY 2022-23 against the above demand.

4. The sale tax assessment for the financial year 2007-08 was also completed and an additional demand of Rs. 60.01 lakh was raised. The Corporation filed appeal before the Court of Jt. ETC(A), Ambala against the above demand. The case was remanded back to Assessing Authority, Panchkula for fresh decision vide orders dt.19.03.2013 of appellate authority. The fresh decision of sale tax department is still awaited. The Sale Tax number was surrendered on 05.12.2014 and the sale tax returns were filed till FY 2014-15 and no assessment is pending.

c) The Corporation has recommended to the State Government for its winding up/liquidation u/s 45 of SFCs Act 1951. The State Govt. has appointed Managing Director HSIIDC as Nodal Officer for completing the frmalities of winding up.

The Board of Directors of the Corporation in its meeting held on 22.07.2019 had constituted a Committee under the chairmanship of the Director of Industries & Commerce, Haryana to give its recommendations regarding steps/ modalities regarding winding up of the Corporation considering legal/ financial aspect and to give detailed modalities/ steps for liquidating all the assets (including loan assets) and liabilities (including court cases) of the Corporation. A total of three meetings of the Committee were held on 17.09.2019, 26.09.2019 & 14.10.2019.

The Board of Directors of the Corporation in its meeting held on 11.02.2022 reconstituted the Committee for winding up as under :

1. Managing Director, HSIIDC Chairman

2. Director of I&C, Haryana Member

3. Nominee from Finance Deptt., Haryana Member

First meeting of Winding up Committee was held on 16.12.2022 at 12.30 P.M. in the Office of MD, HSIIDC, Sector- 6, Panchkula under the Chairmanship of MD, HSIIDC.

The State Govt., Haryana (being Promoter) has decided to delist the shares of the Corporation from BSE. In furtherance to that, a request for relaxation from detailed procedure of delisting pursuant to Regulation 42 of SEBI (Delisting of Equity Shares) Regulations, 2021 has been filed by Industries Deptt., Haryana with SEBI vide Letter dated 11.02.2022 which has been accepted by SEBI vide letter dt.27.09.2023 subject to fulfillment of certain conditions.

In furtherance to the decision of the Board in its 359th Meeting held on 16.02.2024; HSIIDC has appointed M/s VC Corporate Advisor, Kolkata, as Merchant Banker for the purpose of delisting of shares of Haryana Financial Corporation from BSE Ltd. as per the direction of the SEBI.

Further, the Board of Directors in its 359th meeting held on 16.02.2024 resolved to constitute a Committee of Directors comprising of Smt. Radhika Singh, Joint Secy/Finance, Shri Piyush Bhargava, GM/SIDBI, Shri M.K. Chopra and Managing Directors/HFC for finalizing the modalities for determination of the price of shares as well as the valuation of the Assets of the Corporation, as per the advice of the Merchant Banker appointed for delisting of the shares of the Corporation.

d) No amount towards deferred tax asset/liability is outstanding in the books of accounts of the Corporation. The Corporation has stopped fresh sanctions since May, 2010. In such circumstances it is not feasible to create any deferred tax asset/liability for the current financial year. The Corporation has recommended to the State Government for its winding up/liquidation u/s 45 of SFCs Act 1951 and their decision is awaited.

e) The value of primary and collateral securities of all the Loan & Advances as on the date of the balance sheet is not re-assessed. However, adequate provision against non-performing assets (NPAs) has been made in the books of accounts as on 31.03.2024 as per the provisioning norms of SIDBI.

g. As per guidelines issued by SIDBI, provision towards diminution in the value of investments in respect of listed & Un-listed shares is required to be made which is to the extent of Rs.423.17 lakh upto 31.03.2024 against which the Corporation has already made provision of Rs. 419.91 lakh upto 31.03.2023 and provision of Rs. 3.26 lakh has been made during the year as shown in Schedule ‘D''- Provisions

h. The State Government has appointed Corporation as agent for disbursement of its various subsidies, seed money and agency loans. Unutilized amount of Rs.23.28 lakh against various subsidies and balance amount of Seed Money Agency/RIS amounting to Rs.87.31 lakh has been shown under the sub head “(b) (1) & (2) State Govt. Funds (As an Agency)” of Schedule ‘C'' - Other Current Liabilities.

i. Sundry Deposits under Schedule ‘C'' - Other Current Liabilities amounting to Rs.1120.38 lakh includes a sum of Rs.1066.10 lakh in case of M/s Surendera Enterprises Pvt. Ltd., Rewari a joint financing case with Haryana State Industrial and Infrastructure Development Corporation Ltd. (HSIIDC). The unit was auctioned for Rs.1095 lakh on14.06.2012 to M/s Balaji Enterprises (AP) on deferred payment basis. Out of sale amountof Rs.1095 lakh, down payment of Rs. 273.75 lakh i.e. 25% received from auction purchaser ( AP ) and a new loan account of Rs. 821.25 lakh ( 75% of auction price) in the name of the AP under the head Loans and Advances was opened. The AP paid a sum of Rs.678.20 lakh (including interest and down payment) to the Corporation and defaulted in further repayment. Corporation repossessed the unit and decided to forfeit the above amount. Against the above action of the Corporation, the AP filed a suit against the Corporation in the Court of Civil Judge (JD), Rewari. The AP also raised the issue of shortage of land area. The suit of the AP was dismissed vide orders dated 04.07.2018. Now as per orders dt.18.08.2021 of Hon''ble Supreme Court of India, the case titled Balaji Enterprises V/s HFC has been restored to its original number in Distt. Court Rewari and is pending. Keeping in view the above circumstances, the proper accounting entries are yet to be passed and amount is still kept in Sundry Deposit A/c. Further, out of Rs.1095 lakh, a sum of Rs. 28.90 lakh was paid to HSIIDC being a joint financing case and the balance amount of Rs.1066.10 lakh is kept in sundry.

j. Earnest Money amounting to Rs.1,82,82,250/- (in three cases Rs.1,00,50,000/- Rs.74,16,250 Rs.8,16,000/-) shown under Schedule ‘C'' - Other Current Liabilities is the amount of earnest money received against e-auction of primary security held on 14.11.2019 in case of M/s Devi Dayal Castings Pvt. Ltd., Gurgaon. Principal and Misc. expenses outstanding in this case have been prudentially written off in financial year 2014 -15 with retaining the Recovery rights. The borrower has filed a contempt petition in the Hon''ble Supreme Court and also a stay application against e-auction. Vide orders dt.13.12.19, the Hon''ble Supreme Court of India has directed the Corporation not to take any coercive steps and the matter is pending in Hon''ble Supreme Court.

During the current financial year the Corporation has auctioned its building at Karnal for Rs.297 lakh. The auction purchaser has deposited 25% of the auctioned amount i.e Rs.74 lakh and the same is kept in Earnest Money account. The Corporation has also auctioned collateral security in case of M/s Panj Rattan Food, Sirsa situated at Sardulgarh, Distt. Mansa, Punjab for Rs. 33 lakh. Auction purchaser has deposited 25% of auctioned amount i.e Rs. 8 lakh which is kept in Earnest Money Account.

k. Borrowers'' Imprest amounting to Rs.10,42,950/- shown under Schedule ‘C'' - Other Current Liabilities is the amount received from the parties at the time adjustment of loan account for payment of pending bills ( legal fee, security charges etc. ) to be submitted by the respective agencies. The balance excess amount, if any after the adjustment of above expenses is refunded to the parties.

l. Claims Recoverable under Schedule ‘J''- Other Current Assets amounting to Rs.40,64,093/-, includes a sum of Rs.22,09,712/- recoverable in case of M/s S.K.Wood Products, Yamuna Nagar. In this case the collateral security was sold to Sh.S.K.Saini and Sh. Robin Saini (auction purchasers) for Rs. 24.30 lakh on 23.08.07 and credited to the loan account of the loanee. Later on Auction Purchasers filed writ petition in the Hon''ble Punjab & Haryana High Court, Chandigarh seeking relief that the property purchased by them had no access and the Corporation may provide the access to the auctioned land or refund the amount. The case was decided by Hon''ble Punjab & Haryana High Court, Chandigarh and the Hon''ble Court directed the Corporation to refund the amount along with interest. Accordingly the Corporation refunded a sum of Rs.38,01,285/- including interest to the auction purchaser by debiting Claim Recoverable Account as the loan account of loanee M/s S.K.Wood Products has already been adjusted.

The Corporation again auctioned the above property at a price of Rs.56.00 lakh. The auction purchaser deposited an amount of Rs.16.00 lakh and failed to deposit the remaining amount. The received amount of Rs.16.00 lakh was forfeited and credited to claims recoverable account. Auction purchaser filed a case against the Corporation which was decided in favour of auction purchaser. An appeal was filed against the above orders before the higher Court and same has been decided on 10.08.2023 in favour of the Corporation. Now the recoverable amount in the above case is Rs.22,09,712/- including Rs. 8,427/- debited subsequently towards expenses. The unit will be put to auction after taking legal opinion from the advocate.

Brief detail of Claims Recoverable is as under :
S.No.	Amt. (Rs.)	Particulars
1	2209712	As per detail given above in c/o S.K.Wood
2	1022546	Provision made shown in Schedule ‘D’- Provisions.
3	241458	Recoverable from HSIIDC against resumption of Plots at Sonipat.
4	567010	Recoverable from HSIIDC against settlement in c/o Bruno sante
5	23367	Recoverable from M/s Reliance Bulk Drugs
Total	4064093

m. The Corporation is maintaining Fixed Assets Purchase register where all items of fixed is

assets are entered with date, amount of purchase and its location. Mostly the fixed asset item purchased on the request of the particular division/branch and after the purchase of the item, the same is underthe control of that particular division/branch. As the purchases are of meager amount, no separate physical verification is being done by the Corporation.

n. The Corporate building of the Corporation at Panchkula was leased out to UHBVN, Panchkula in the financial year 2008-09. UHBVN, Panchkula shifted to its own premises and vacated the office building in the month of October, 2022. The Corporation leased out the Conference Room at First Floor, and complete 2nd and 3rd Floor of the said building to Haryana Parivar Pehchan Authority, Panchkula (HPPA) at a monthly rent of Rs.15,08,792/- plus GST extra w.e.f. December, 2022. The Corporation has issued demand of the rent from December, 2022 to December, 2023 amounting to Rs.2,31,44,873/- (Rs.1,96,14,296/- plus Rs.35,30,579/- as GST shown under the head Rent and GST due but not received in Schedule ‘J''- Other Current Assets) from HPPA, Panchkula. But no amount has been received from HPPA so far. The Corporation has shown above amount as rental income in the books of accounts of financial year 2023 - 24 as rent due but not received. The Corporation has already deposited GST amounting to Rs. 35,30,579/- with the GST Authorities as it was a statutory liability of the Corporation and would have attracted penalty from the GST Authorities.

o. The Board of Directors of the Corporation, in the year 2011 decided to transfer the Corporate Building to Haryana State Industrial Infrastructure Development Corporation ( HSIIDC ) at a price of Rs. 2750.88 lakh. This decision has been duly approved by the state government vide letter dated 13/ 05/2013.

The Corporation had previously received an advance amounting to Rs 2224.45 lakh upto 31st March, 2015. Now during the current financial year ( 2023 - 24 ), the HSIIDC transferred the balance amount of Rs. 498.92 lakh after deducting TDS of Rs.27.51 lakh at the rate of 1% as per Provisions of Income Tax Act during the current year.

The corporation has handed over physical possession of the property i.e Land & Building to HSIIDC on 03.01.2024 after receipt of full amount and has been accounted for as Sale of Land & Building in the books of account, resulting in a profit of Rs 2642.56 lakhs during the current year. The Corporation has deposited capital gain tax of Rs. 164.51 lakh with the income Tax Deapartment.

Although a letter has been issued to HSIIDC on 1st March 2024, but Sale deed is yet to be executed for the same.

q. Figures have been rounded off to the nearest rupee and wherever necessary figures for the previous year have been rearranged/regrouped in order to make it in conformity with current year''s figures.

r. Schedules ''A'' to ''Q'' alongwith Cash Flow statement form integral part of the Balance Sheet and Profit and Loss Account.

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Mar 31, 2015

1 The Financial Statements of the Corporation are prepared on Accrual basis except for Interest c NPAs which has been accounted for on receipt basis as per RBI guidelines.

2 The amount received from the borrowers against bans and advances is appropriated in the folbwing orders

i) Miscellaneous Expenses

ii) Interest

iii) Principal

3 In the past, when the Corporation used to sell borrowers' assets on deferred payment basis,respecti' borrowers' loan accounts was credited by the full amount of the sale proceeds after execution of agreeme to sell. The deferred part of sale proceeds used to be treated as fresh loan to the auction purchasers ai recovered as per the terms of the sale agreements. The possession of the property was also used to be hand' over after execution of Agreement to Sell to the Auction Purchaser. The Corporation has modified its policy 1 sale of mortgaged property and as per the new policy approved by the BoD in its meeting held on 19.12.201 the units will be sold on the terms of payments by the auction purchaser within 3 months. However, in sor exceptional cases, the Managing Director may give extension in payment of sale consideration for a furtf period of 9 months @ 13% with compounding on monthly basis. As per new policy the possession of the u will be handed over to the auction purchaser only after receipt of full amount of bid.

4 The Corporation introduced settlement policies namely, the policy for Compromise Settlement Chronic Non-Performing Assets (Doubtful Loan Accounts) of Haryana Financial Corporation-2011 and the pol for Compromise Settlement of Loss Accounts of Haryana Financial Corporation - 2011 in the financial y( 2011-12 extended upto 30.09.2015 to reduce NPAs/written off portfolios.

In the normal course, the recoveries are adjusted first against the actual misc. expenses and th against the outstanding interest and thereafter, the balance amount is adjusted against outstanding princii amount. However, as per parameters of OTS Policies, the accounts are recast by appropriating the amoi realized by way of sale of mortgaged assets by the Corporation or sale by promoters/guarantors/mortgage with the permission of the Corporation or by order of any court, on the date of sale, first against actual mi expenses, then against the principal amount balance if any against the outstanding interest.

5 Retirement Benefits

i) Gratuity to employees of the Corporation is governed by u Punjab Financial Corporal Employees Group Gratuity Regulations, 1964 as applicable to employees of the Haryana Finan Corporation". The fund is being maintained by Life Insurance Corporation of India. Provision for grat liability for the existing staff as on 31.03.2015 amounting to Rs. 0.15 crore as per actuarial valuatioi Life Insurance Corporation of India ( LIC ) has been duly provided for in the books of accounts an< provision of Rs. 0.65 crore in case of retirees whose gratuity has not been released upto 31.03.2' has been made in the books of accounts.Provision for Leave Encashment liability payable to s amounting to Rs. 4.16 crore has been made in the books of accounts.

ii) Provision of Compassionate Assistance liability amounting to Rs. 0.64 crore payable to 1 legal heirs of the deceased employees on the pattern of Govt, of Haryana has been made in the be of accounts.

ii) Monthly matching contribution towards employees provident fund is remitted to the Regii Provident Fund Commissioner, Chandigarh as per provisions of the Employees Provident F and Miscellaneous Provisions Act, 1952 and is charged to profit and loss account.

6) Asset Classification and Provisioning

i) Loans and Advances have been categorised and provisioning has been made as per guidel received from Small Industries Development Bank of India (SIDBI) which are as under:

ii) As per guidelines issued by SIDBI in respect of investments in equity shares (available for sale ), evaluation has been done as per market rate, which is the price of the script available from trades / quotes on the stock exchange. Those scripts for which current quotations are not available or where the shares are not quoted on stock exchange, have been valued at book value as certained from their latest Balance Sheets. In case the latest Balance Sheet is not available, the shares have been valued at Rs. 1/- per company. In case of Investment in equity shares ( held to maturity) evaluation has been done at acquisition price.

The shares which are held to maturity are shown as non current investments. The shares which are quoted on the stock exchanges have been shown as quoted investment. Rest of the shares listed ( at the time of acquisition but now not quoted ) and un-listed have been shown as unquoted current investment.

iii) Entire lease rentals in respect of Equipment Leasing, Vehicle Leasing and Special Vehicle Leasing cases have fallen due for payment before the date of balance sheet, hence provisioning equivalent to the entire amount outstanding on this account as on 31.03.2015 has been made.

iv) The provisioning has been made without giving the effect of the amount lying in the Sundry Deposits under schedule 'D' - Other Liabilities.

7 Fixed Assets/Depreciation

The Corporation is maintaining Fixed Assets purchase register where all items of fixed assets are entered with date, amount of purchase and its location. In terms of Accounting Standard ( AS-10 ), it is required to give the gross block, addition/deletion, depreciation, and written down value of each block in the schedule attached to the balance sheet Since the Corporation has has not maintained the fixed assets register on this pattern since inception, so due to non-availability of required details, the Corporation is not in a position to maintain the fixed assets register as per the provision of AS-10. Depreciation on fixed assets has been provided on written down value method at the rates prescribed under provisions of Income Tax Rules 1962. Depreciation in respect respect of leasing portfolio is charged equivalent to principal amount out of lease rentals recovered on the basis of Capital Recovery Method. However, amount received in settled cases has been appropriated as per terms of settlement.

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Mar 31, 2013

1 The Financial Statements of the Corporation are prepared on Accrual basis except for Interest on NPAs which has been accounted for on receipt basis as per RBI guidelines.

2 The amount received from the borrowers against loans and advances is appropriated in the following orders: i) Miscellaneous Expenses.

ii) Interest.

iii) Principal.

3 In cases, where the Corporation sells borrowers'' assets on deferred payment basis, respective borrowers'' loan accounts are credited by the full amount of the sale proceeds after execution of agreement to sell. The deferred part of sale proceeds is treated as fresh loans to the auction purchasers and recovered as per the terms of the sale agreements.

4 The Corporation introduced settlement policies namely, the policy for Compromise Settlement of Chronic Non-Performing Assets (Doubtful Loan Accounts) of Haryana Financial Corporation-2011 and the policy for Compromise Settlement of Loss Accounts of Haryana Financial Corporation - 2011 in the financial year 2011-12 for prompt recovery of NPAs. The Corporation has approved settlement in 194 accounts under above OTS policies upto 31-03-2013.

In the normal course, the recoveries are adjusted first against the actual misc. expenses and then against the outstanding interest and thereafter the balance amount is adjusted against outstanding principal amount. However, at the time of settlement in terms of the above policies, the accounts are recast by appropriating the amount realized by way of sale of mortgaged assets by the Corporation or sale by promoters / guarantors /mortgagers with the permission of the Corporation or by order of any court, on the date of sale, first against actual misc. expenses, then against the principal amount balance if any against the outstanding ineterst.

5 Retirement Benefits

i) Gratuity to staff is covered under the Group Gratuity Scheme of Life Insurance Corporation of

India. The Board of Directors in its meeting held on 22.12.2011 has approved the enhancement of gratuity limit payable to staff (w.e.f. 01.04.09) from Rs. 3.50 lakh to Rs. 10.00 lakh. The State Government has approved the same and issued necessary Gazette notification. Provision for gratuity for the existing staff as per revised limit amounting to Rs.3.97crore as per actuarial valuation of Life Insurance Corporation of India (LIC) has been provided in the books of account and a provision of Rs. 2.37 crore in case of retirees as on 31.03.2013 who are eligible for the enhanced gratuity has also been made. Provision for leave Encashment payable to staff amounting to Rs.4.79 crore has been provided in the books of accounts

ii) Monthly matching contribution towards employees provident fund is remitted to the Regional Provident Fund Commissioner, Chandigarh as per provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and is charged to profit and loss account.

6) Asset Classification and Provisioning

i) Loans and Advances have been categorised and provisioning has been made there against as per guidelines received from Small Industries Development Bank of India (SIDBI) which are as under:

Provision of 2.75% has been made on the standard assets which are upgraded from NPAs for the first year from the date of upgradation and on restructured accounts classified as standard assets in the first two years from the date of restructuring. In cases of moratorium of payment of interest/principal after restructuring, such advances will attract a provision of 2.75% for the period covering moratorium and two years thereafter.

ii) As per guidelines issued by SIDBI in respect of investments in equity shares (available for

sale), evaluation has been done as per market rate, which is the price of the script available from trades / quotes on the stock exchange. Those scripts for which current quotations are not available or where the shares are not quoted on stock exchange, have been valued at book value ascertained from their latest Balance Sheets. In case the latest Balance Sheet is not available, the shares have been valued at Rs. 1/- per company. In case of Investment in equity shares (held to maturity) evaluation has been done at acquisition price.

iii) Entire lease rentals in respect of Equipment Leasing, Vehicle Leasing and Special Vehicle

Leasing cases have fallen due for payment before the date of balance sheet, hence provisioning equivalent to the entire amount outstanding on this account as on 31.03.2013 has been made. Lease finance in respect of Loans for Leasing Equipments ( advance ) and Vehicle Sub Leasing cases are treated as loans, for the purpose of provisioning.

iv) The provisioning has been made without giving the effect of the amount lying in the

Sundry Deposits under schedule ''E'' - Other Liabilities.

7 Depreciation

Depreciation on fixed assets has been provided on written down value method at the rates prescribed under provisions of Income Tax Rules 1962. Depreciation in respect of leasing portfolio is charged equivalent to principal amount out of lease rentals recovered on the basis of Capital Recovery Method. However, amount received in settled cases has been appropriated as per terms of settlement.

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Mar 31, 2012

A) The Financial Statements of the Corporation are prepared on Accrual basis except for Interest on NPAs which has been accounted for on receipt basis as per RBI guidelines.

b) The amount received from the borrowers against loans and advances is appropriated in the following orders :

i) Miscellaneous Expenses.

ii) Interest.

iii) Principal.

c) In cases, where the Corporation sells borrower''s assets on deferred payment basis, respective borrowers'' loan accounts are credited by the full amount of the sale proceeds. The deferred part of sale proceeds is treated as fresh loans to the auction purchasers and recovered as per the terms of the sale agreements.

d) During the year, the Corporation introduced settlement policies namely, the policy for Compromise Settlement of Chronic Non-Performing Assets (Doubtful Loan Accounts) of Haryana Financial Corporation - 2011 and the policy for Compromise Settlement of Loss Accounts of Haryana Financial Corporation-2011 for prompt recovery of NPAs. The Corporation has approved 125 cases of settlement under above policy upto 31-07-2012.

In the normal course, the recoveries are adjusted first against the actual misc. expenses and then against the outstanding interest and thereafter the balance amount is adjusted against outstanding principal amount. However, at the time of settlement in terms of the above policies, the account are recasted by appropriating the amount realized by way of sale of mortgaged assets by the Corporation or sale by promoters/guarantors/mortgagers with the permission of the Corporation or by order of any court, on the date of sa]e, first against actual misc. expenses, then against the principal amount balance if any against the outstanding ineterst.

e) Retirement Benefits

i) Gratuity to staff is covered under the Group Gratuity Scheme of Life Insurance Corporation of India. The Board of Directors in its meeting held on 22.12.2011 has approved the enhancement of gratuity limit payable to staff (w.e.f. 01.04.09) from Rs.3.50 lakh toRs.10.00 lakh. However provision for shortfall on account of enhanced gratuity limit amounting to Rs.3.11 crore as per actuarial valuation of Life Insurance Corporation of India (LIC) has not been provided in the books of account, as the same is yet to be approved by State Government. The Corporation is regularly paying the gratuity premium to LIC (on basis of present gratuity limit of Rs.3.50 lakh) and as per LIC letter dated 25.04.12, the present value of gratuity liability is Rs.4.30 crore and the fund size towards gratuity of Corporation with LIC is Rs.4.65 crore. The excess amount Rs.0.35 crore has been appropriated to relevant head and shown in balance sheet under the head ''Other Assets''. Provision for leave Encashment payable to staff amounting to Rs.5.08 crore is made in the books of accounts

ii) Monthly matching contribution towards employees provident fund is remitted to the Regional Provident Fund Commissioner, Chandigarh as per provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and is charged to profit and loss account.

Provision of 2% has been made on the standard assets which are upgraded from NPAs for the first year from the date of upgradation and on restructured accounts classified as standard assets in the first two years from the date of restructuring.

ii) As per guidelines issued by SIDBI in respect of investments in equity shares (available for sale), evaluation has been done as per market rate, which is the price of the script available from trades /quotes on the stock exchange. Those scripts for which current quotations are not available or where the shares are not quoted on stock exchange, have been valued at book value ascertained from the latest balance sheet. In case the latest balance sheet is not available, the shares have been valued at Rs. 1/- per company. In case of Investment in equity shares (held to maturity) evaluation has been done at acquisition price. ''

iii) Entire lease rentals in respect of Equipment Leasing, Vehicle Leasing and Special Vehicle Leasing cases have fallen due for payment before the date of balance sheet, hence provisioning equivalent to the entire amount outstanding on this account as on 31.03.2012 has been made. Lease finance in respect of Loans for Leasing Equipments (advance) and Vehicle Sub Leasing cases are treated as loans, for the purpose of provisioning.

iv) The provisioning has been made without giving the effect of the amount lying in the Sundry Deposits under schedule ‘E'' - Other Liabilities.

g) Depreciation

Depreciation on fixed assets has been provided on written down value method at the rates prescribed under provisions of Income Tax Rules 1962. Depreciation in respect of leasing portfolio is charged equivalent to principal amount out of lease rentals recovered on the basis of Capital Recovery Method. However, amount received in settled cases has been appropriated as per terms of settlement.

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Mar 31, 2010

A) The Financial Statements of the Corporation are prepared on Accrual basis except for Interest on NPAs which has been accounted for on receipt basis as per RBI guidelines.

b) The amount received from the borrowers against loans and advances is appropriated in the following orders :

i) Miscellaneous Expenses.

ii) Interest.

iii) Principal.

c) In cases, where the Corporation sells borrowers assets on deferred payment basis, respective borrowers loan accounts are credited by the full amount of the sale proceeds. The deferred part of sale proceeds is treated as fresh loans to the auction purchasers and recovered as per the terms of the sale agreements.

d) Retirement Benefits

i) Provision for Gratuity amounting to Rs. 2.42 crore being the shortfall amount as per actuarial valuation of Life Insurance Corporation of India (LIC) and Rs. 4.72 crore being the amount of Leave Encashment payable to staff have been made in the books of accounts.

ii) Monthly matching contribution towards employees provident fund is remitted to the Regional Provident Fund Commissioner, Chandigarh as per provisions of the Employees Provident and Miscellaneous Provisions Act, 1952 and is charged to profit and loss account.

e) Asset Classification and Provisioning

ii) As per guidelines issued by SIDBI in respect of investments in equity shares (available for sale), evaluation has been done as per market rate, which is the price of the script available from trades / quotes on the stock exchange. Those scripts for which current quotations are not available or where the shares are not quoted on stock exchange, have been valued at value ascertained from the latest balance sheet. In case the latest balance sheet is not available.the shares have been valued at Rea- per company. In case of Investment in equity shares (held to maturity) evaluation has been done at acquisition price.

iii) Entire lease rentals in respect of Equipment Leasing, Vehicle Leasing and Special Vehicle leasing (except Employees Vehicle Leasing) cases have fallen due for payment before the date of balance sheet, hence provisioning equivalent to the entire amount outstanding on this account as on 31.03.2010 has been made. Since lease rentals in the case of Employees Vehicle Leasing are being recovered on due dates, hence no provisioning has beem made against the same. Lease finance in respect of Loans for Leasing Equipments (advance) and Vehicle Sub Leasing cases are treated as loans, for the purpose of provisioning.

iv) The provisioning has been made without giving the effect of the amount lying in the Sundry Deposits under Schedule E - Other Liabilities.

f) Depreciation

Depreciation on fixed assets has been provided on written down value method at the rates prescribed under provisions of Income Tax Rules 1962. Depreciation in respect leasing portfolio is charged equivalent to principal amount out of lease rentals recovered on the basis of Capital Recovery Method. However, amount received in settled cases has been appropriated as per terms of settlement.

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Mar 31, 2000

1. From Its April 1983, Corporation changed its method of accounting from accrual (Mercantile) basis to cash basis. Accordingly, the Balance Sheet & Profit & Loss Account have been prepared on cash basis except.

i) Provision for Taxation

ii) Provision for Non-Performing Assets

iii) Depreciation on Assets

iv) Adjustments against/relating to balance of accounts receivable and payable as on 31st March, 1983 upto which date the system of accounting was on Mercantile Basis.

v) Public issue expenses being deferred revenue expenditure.

vi) Provision for dividend

2. Amount received in respect of loan cases, where security has been liquidated due to sale has been appropriated first towards Principal amount and balance towards interest.

3. In respect of default cases, other than the cases where legal action has been initiated, the amount recovered during the year has been first appropriated towards interest accrued and due and thereafter against principal amount due.

4. Depreciation on fixed assets has been charged at the rates prescribed under the provision of the Income Tax Act on written down value method except on leased assets where depreciation has been charged on the Capital Recovery method.