Accounting Policies of Intec Capital Ltd. Company

Mar 31, 2024

4. SUMMARY OF MATERIAL ACCOUNTING POLICIES

This note provides a list of the Material accounting
policies adopted in the preparation of these
standalone financial statements. These policies have
been consistently applied to all the years presented,
unless otherwise stated.

4.1 Revenue Recognition

(i) Interest Income

The Company recognises interest income
using Effective Interest Rate (EIR) on all
financial assets subsequently measured
at amortised cost or fair value through
other comprehensive income (FVOCI).
EIR is calculated by considering all costs
and incomes attributable to acquisition of a
financial asset or assumption of a financial
liability and it represents a rate that exactly
discounts estimated future cash payments
/ receipts through the expected life of the
financial asset / financial liability to the
gross carrying amount of a financial asset
or to the amortised cost of a financial
liability.

The Company recognises interest income
by applying the EIR to the gross carrying
amount of financial assets other than
credit-impaired assets after setting-off
of collateral amounts. In case of credit-
impaired financial assets regarded as
‘stage 3'', the Company recognises

interest income on the amortised cost net
of impairment loss of the financial asset
at EIR, to the extent of probability of its
recovery. If the financial asset is no longer
credit-impaired, the Company reverts to
calculating interest income on a gross
basis.

Interest on financial assets subsequently
measured at fair value through profit
and loss, is recognized on accrual basis
in accordance with the terms of the
respective contract.

(ii) Dividend Income

Dividend Income on investments is
recognized when the company''s right to
receive the payment is established, which
is generally when shareholders approve
the dividend.

(iii) Fees and Commission

Processing fees and other servicing
fees is recognized on accrual basis.
The Company recognizes service and
administration charges towards rendering
of additional services to its loan customers
on satisfactory completion of service
delivery. Fees on value added services
and products are recognized on rendering
of services and products to the customer.

(iv) Interest on Borrowings

Interest expense on borrowings
subsequently measured at amortized cost
is recognized using Effective Interest Rate
(EIR) method.

(v) Recoveries of Financial Assets written
off

The Company recognises income on
recoveries of financial assets written off
on realisation or when the right to receive
the same without any uncertainties of
recovery is established.

(vi) Sale of Loan Assets

Profit / loss on sale of loan assets through
direct assignment / securitization are
recognized over the residual life of loan
/ pass through certificates in terms of
RBI guidelines. Loss arising on account
of direct assignment / securitization is
recognized upfront.

(vii) Other Income / Revenue

Other income / revenue is recognized
to the extent that it is probable that the
economic benefit will flow to the Company
and it can be reliably measured.

4.2 Cash and Cash Equivalents

Cash and cash equivalents include cash on
hand, other short term, highly liquid investments
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.

4.3 Financial Instruments

A financial instrument is defined as any contract
that gives rise to a financial asset of one entity
and a financial liability or equity instrument of
another entity. Trade receivables and payables,
loan receivables, investments in subsidiaries
and associates, borrowings, cash and cash
equivalents, other bank balances etc. are some
examples of financial instruments.

All the financial instruments are recognised on
the date when the Company becomes party
to the contractual provisions of the financial
instruments.

(i) Financial assets

Financial assets include cash, or an
equity instrument of another entity, or
a contractual right to receive cash or
another financial asset from another
entity. Few examples of financial assets
are loan receivables, investment in equity
instruments, trade receivables and cash
and cash equivalents etc.

Initial measurement

All financial assets are recognised initially
at fair value including transaction costs
that are attributable to the acquisition
of financial assets except in the case of
financial assets recorded at FVTPL where
the transaction costs are charged to profit
or loss. However, trade receivables that
do not contain a significant financing
component are measured at transaction
price.

Subsequent measurement

(i) Classification and Measurement of
Financial assets (other than Equity
instruments)

For the purpose of subsequent

measurement, financial assets (other
than equity instruments) are classified into
three categories:

(a) Financial Assets at amortised cost

(b) Financial Assets at FVOCI

(c) Financial Assets at FVTPL

(a) Financial Assets at amortised cost

The Company measures its financial
assets at amortised cost if both the
following conditions are met:

• The asset is held within a business model
of collecting contractual cash flows; and

• Contractual terms of the asset give rise on
specified dates to cash flows that are Sole
Payments of Principal and Interest (SPPI)
on the principal amount outstanding.

To make the SPPI assessment, the
Company applies judgment and considers
relevant factors such as the nature of
portfolio and the period for which the
interest rate is set.

The Company determines its business
model at the level that best reflects how
it manages groups of financial assets
to achieve its business objective. The
Company''s business model is not
assessed on an instrument by instrument
basis, but at a higher level of aggregated
portfolios. If cash flows after initial
recognition are realised in a way that is
different from the Company''s original
expectations, the Company does not
change the classification of the remaining
financial assets held in that business
model, but incorporates such information
when assessing newly originated financial
assets going forward.

The business model of the Company
for assets subsequently measured at
amortised cost category is to hold and
collect contractual cash flows. However,
considering the economic viability of
carrying the delinquent portfolios in
the books of the Company, it may sell
these portfolios to banks and/or asset
reconstruction companies.

After initial measurement, such financial
assets are subsequently measured at
amortised cost on effective interest rate
(EIR) as given in para 4.1.(i) above.

(b) Financial Assets at FVOCI

The Company subsequently classifies its
financial assets as FVOCI, only if both of
the following criteria are met:

• The objective of the business model is
achieved both by collecting contractual
cash flows and selling the financial assets;
and

• Contractual terms of the asset give rise on
specified dates to cash flows that are Solely
Payments of Principal and Interest (SPPI)
on the principal amount outstanding.

Financial Assets included within the FVOCI
category are measured at each reporting
date at fair value with such changes
being recognised in other comprehensive
income (OCI). The interest income on
these assets is recognised in profit or
loss.

On de-recognition of the asset,
cumulative gain or loss previously
recognised in OCI is reclassified to profit
or loss.

(c) Financial Assets at FVTPL

The Company classifies financial assets
which are held for trading under FVTPL
category. Held for trading assets are
recorded and measured in the Balance
Sheet at fair value. Interest and dividend
incomes are recorded in interest income
and dividend income, respectively
according to the terms of the contract, or
when the right to receive the same has
been established. Gain and losses on
changes in fair value of financial assets
are recognised on net basis through profit
or loss.

Term / fixed deposits held by the Company
have been classified under this category

(ii) Classification and Measurement of
Equity instruments

All equity investments other than in
subsidiaries are measured at fair value.
Equity instruments which are held for
trading are classified as at FVTPL. For all
other equity instruments, the Company at
initial recognition makes an irrevocable
election to classify it as either FVTOCI
or FVTPL. The Company makes such
election on an instrument by instrument

basis. An equity investment classified as
FVTOCI is initially measured at fair value
plus transaction costs. Subsequently,
it is measured at fair value and, all fair
value changes are recognised in Other
Comprehensive Income (OCI) and
accumulated in Reserve. There is no
recycling of the amounts from OCI to
Statement of Profit and Loss, even on sale
of investment. However, the Company
transfers the same within equity.

(iii) De-recognition of Financial Assets

The Company derecognises a financial
asset (or, where applicable, a part of a
financial asset) when:

• The right to receive cash flows from the
asset have expired; or

• The Company has transferred its right to
receive cash flows from the asset or has
assumed an obligation to pay the received
cash flows in full without material delay
to a third party under an assignment
arrangement and the Company has
transferred substantially all the risks and
rewards of the asset. Once the asset is
derecognised, the Company does not
have any continuing involvement in the
same.

The Company transfers its financial assets
through the partial assignment route and
accordingly derecognises the transferred
portion as it neither has any continuing
involvement in the same nor does it retain
any control. If the Company retains the
right to service the financial asset for a fee,
it recognises either a servicing asset or a
servicing liability for that servicing contract.
A service liability in respect of a service is
recognised at fair value if the fee to be
received is not expected to compensate
the Company adequately for performing
the service. If the fees to be received
is expected to be more than adequate
compensation for the servicing, a service
asset is recognised for the servicing right
at an amount determined on the basis of
an allocation of the carrying amount of the
larger financial asset.

On de-recognition of a financial asset in its
entirety, the difference between:

• the carrying amount (measured at the date
of de-recognition) and

• the consideration received (including any
new asset obtained less any new liability
assumed) is recognised in profit or loss.

(iv) Impairment of financial assets

Expected Credit Loss (ECL) are
recognised for financial assets held under
amortised cost, measured at FVOCI, and
certain loan commitments.

Financial assets where no significant
increase in credit risk has been observed
are considered to be in ‘stage 1'' and for
which a 12-month ECL is recognised.
Financial assets that are considered to
have significant increase in credit risk are
considered to be in ‘stage 2'' and those
which are in default or for which there is
an objective evidence of impairment are
considered to be in ‘stage 3''. Lifetime
ECL is recognised for stage 2 and stage 3
financial assets.

At initial recognition, allowance (or
provision in the case of loan commitments)
is required for ECL towards default events
that are possible in the next 12 months, or
less, where the remaining life is less than
12 months.

In the event of a significant increase in
credit risk, allowance (or provision) is
required for ECL towards all possible
default events over the expected life of the
financial instrument (‘lifetime ECL'').

Financial assets (and the related
impairment loss allowances) are written off
in full, when there is no realistic prospect
of recovery.

Treatment of the different stages of
financial assets and the methodology
of determination of ECL

(a) Credit impaired (stage 3)

The Company recognises a financial asset
to be credit impaired and in stage 3 by
considering relevant objective evidence,
primarily whether:

• Contractual payments of either principal
or interest are past due for more than 180
days;

• The loan is otherwise considered to be in
default.

Restructured loans, where repayment
terms are renegotiated as compared
to the original contracted terms due to
significant credit distress of the borrower,
are classified as credit impaired. Such
loans continue to be in stage 3 until they
exhibit regular payment of renegotiated
principal and interest over a minimum
observation period, typically 12 months -
post renegotiation, and there are no other
indicators of impairment. Having satisfied
the conditions of timely payment over the
observation period these loans could be
transferred to stage 1 or 2 and a fresh
assessment of the risk of default be done
for such loans.

Interest income is recognised by applying
the EIR to the net amortised cost amount
i.e. gross carrying amount less ECL
allowance.

(b) Significant increase in credit risk (stage 2)

An assessment of whether credit risk
has increased significantly since initial
recognition is performed at each reporting
period by considering the change in
the risk of default of the loan exposure.
However, unless identified at an earlier
stage, 90 days past due is considered as
an indication of financial assets to have
suffered a significant increase in credit
risk.

The measurement of risk of defaults under
stage 2 is computed on homogenous
portfolios, generally by nature of loans,
tenors, underlying collateral, geographies
and borrower profiles. The default risk is
assessed using PD (probability of default)
derived from past behavioural trends of
default across the identified homogenous
portfolios. These past trends factor in the
past customer behavioural trends, credit
transition probabilities and macroeconomic
conditions. The assessed PDs are then
aligned considering future economic
conditions that are determined to have a
bearing on ECL.

(c) Without significant increase in credit risk
since initial recognition (stage 1)

ECL resulting from default events that

are possible in the next 12 months are
recognised for financial instruments in
stage 1. The Company has ascertained
default possibilities on past behavioural
trends witnessed for each homogenous
portfolio using application/behavioural
score cards and other performance
indicators, determined statistically.

(d) Measurement of ECL

The assessment of credit risk and
estimation of ECL are unbiased and
probability weighted. It incorporates all
information that is relevant including
information about past events, current
conditions and reasonable forecasts of
future events and economic conditions
at the reporting date. In addition, the
estimation of ECL takes into account the
time value of money. Forward looking
economic scenarios determined with
reference to external forecasts of economic
parameters that have demonstrated a
linkage to the performance of our portfolios
over a period of time have been applied
to determine impact of macro-economic
factors.

The Company has calculated ECL using
three main components: a probability of
default (PD), a loss given default (LGD)
and the exposure at default (EAD). ECL
is calculated by multiplying the PD, LGD
and EAD and adjusted for time value of
money using a rate which is a reasonable
approximation of EIR.

• Determination of PD is covered above for
each stage of ECL.

• EAD represents the expected balance at
default, taking into account the repayment
of principal and interest from the Balance
Sheet date to the date of default together
with any expected drawdowns of
committed facilities.

• LGD represents expected losses on the
EAD given the event of default, taking
into account, among other attributes, the
mitigating effect of collateral value at the
time it is expected to be realised and the
time value of money.

A more detailed description of the
methodology used for ECL is covered in
the ‘credit risk'' section of note no. 32.17.

(ii) Financial liabilities

Financial liabilities include liabilities that
represent a contractual obligation to
deliver cash or another financial assets
to another entity, or a contract that may
or will be settled in the entities own equity
instruments. Few examples of financial
liabilities are trade payables, borrowings
etc.

Initial measurement

All financial liabilities are recognised initially
at fair value and, in the case of borrowings
and payables, net of directly attributable
transaction costs. The Company''s
financial liabilities include trade payables,
borrowings and other payables.

Subsequent measurement

After initial recognition, all financial
liabilities are subsequently measured at
amortised cost using the EIR [Refer note
no. 4.1(i)]. Any gains or losses arising on
derecognition of liabilities are recognised
in the Statement of Profit and Loss.

Derecognition

The Company derecognises a financial
liability when the obligation under the
liability is discharged, cancelled or
expired.

(iii) Offsetting of financial instruments

Financial assets and financial liabilities
are offset and the net amount is reported
in the Balance Sheet only if there is
an enforceable legal right to offset the
recognised amounts with an intention to
settle on a net basis or to realise the assets
and settle the liabilities simultaneously.

4.4 Investment in subsidiary and associates

Investment in subsidiary is recognised at cost
and is not adjusted to fair value at the end of
each reporting period. Cost of investment
represents amount paid for acquisition of the
said investment.

The Company assesses at the end of each
reporting period, if there are any indications
that the said investment may be impaired. If
so, the Company estimates the recoverable
value / amount of the investment and provides
for impairment, if any i.e. the deficit in the
recoverable value over cost.

4.5 Property plant and equipment

(i) Property, plant and equipment are stated
at cost, net of accumulated depreciation
and accumulated impairment losses, if
any, consistent with the criteria specified in
Ind AS 16 ‘Property, Plant and Equipment''.
The cost comprises purchase price,
borrowing costs if capitalization criteria
are met and directly attributable cost of
bringing the asset to its working condition
for the intended use. Any trade discounts
and rebates are deducted in arriving at the
purchase price.

(ii) Subsequent expenditure related to an
item of property, plant and equipment
is added to its book value only if it
increases the future benefits from the
existing asset beyond its previously
assessed standard of performance. All
other expenses on existing property,
plant and equipment, including day-to¬
day repair and maintenance expenditure
and cost of replacing parts, are charged
to the Statement of Profit and Loss for the
period during which such expenses are
incurred.

(iii) An item of PPE and any significantly part
initially recognized is derecognized upon
disposal or when no future economic
benefits are expected from its use or
disposal. Any Gains or losses arising
from de-recognition of fixed assets are
measured as the difference between the
net disposal proceeds and the carrying
amount of the asset and are recognized in
the statement of profit and loss when the
asset is derecognized.

(iv) Depreciation on property, plant and
equipment is provided on straight-line
method over the useful life of the assets
estimated by the management, in the
manner prescribed in Schedule II of
the Companies Act, 2013. Immovable
assets at the leased premises including
civil works, fixtures and electrical
items etc. are capitalized as leasehold
improvements and are amortized over
the primary period of lease subject to
maximum of two years. The useful lives
in the following case are different from
those prescribed in Schedule II of the
Companies Act, 2013.

Based on usage pattern and internal
assessment, the management believes that the
useful lives as given above best represent the
period over which the management expects to
use these assets. Hence the useful lives of these
assets is different from the lives as prescribed in
Schedule II of the Companies Act, 2013

(v) Depreciation on addition or on sale /
discard of an asset is calculated pro-rata
from / up to the date of such addition or
sale/discard.

(vi) The residual values, useful lives and
methods of depreciation of Plant,
property and equipment are reviewed
at each financial year end and adjusted
prospectively, if appropriate.

4.6 Intangible Assets and amortization
thereof

(i) Intangible assets are recognized only if it is
probable that the future economic benefits
that are attributable to assets will flow to the
Company and the costs of the assets can
be measured reliably. Intangible assets
comprising computer software are carried
at cost less amortization and accumulated
impairment, if any. Computer software
including improvements are amortized
over the management''s estimate of the
useful life of such intangibles. Management
estimates for useful life of intangibles is 6
years.

(ii) An intangible asset is derecognized on
disposal, or when no future economic
benefits are expected from use or
disposal. Gains or losses arising from
de-recognition of an intangible asset,
measured as the difference between the
net disposal proceeds and the carrying
amount of the asset are recognized in the
Statement of Profit and Loss when the
asset is derecognized.

4.7 Employee Benefits:

(i) Short term employee benefits:

All employee benefits payable / available
within twelve months of rendering the
service are classified as short-term
employee benefits. Benefits such as

salaries, wages and bonus etc., are
recognized in the same period in which
the employee renders the related service.

(ii) Defined contribution plan:

Contributions towards Employees''
Provident Fund and State Insurance
Scheme are considered as defined
contribution plans and the contributions
are charged to the Statement of Profit and
Loss for the year when the expense is
actually incurred.

(iii) Other long-term employee benefits:

Entitlements to annual leave are recognized
when they accrue to employees. Leave
entitlements can be availed while in service
of employment subject to restriction on the
maximum number of accumulations. The
Company determines the liability for such
accumulated leave entitlements on the
basis of actuarial valuation carried out by
an independent actuary at the year end.

(iv) Defined benefit plan:

The Company''s gratuity scheme is a
defined benefit plan. The plan provides for
a lump sum payment to vested employees
on retirement, death while in employment
or on termination of employment.
Vesting occurs upon completion of five
years of service. The present value
of the obligation under such defined
benefit plans is determined based on
the actuarial valuation on projected unit
credit method as at the balance sheet
date. Re-measurement, comprising of
actuarial gains and losses, are recognized
immediately in the balance sheet with a
corresponding debit or credit to retained
earnings through OCI in the period in
which they occur. Re-measurements are
not reclassified to Statement of Profit
and Loss in subsequent periods. Liability
towards Gratuity is funded / managed by
Life Insurance Corporation of India (‘LIC'').
The short / excess of the Gratuity liability
as compared to the net fund held by LIC is
accounted for as liability/ assets as at the
year end

4.8 Taxation

Tax expense for the year comprises of Current

Tax and Deferred Tax.

a. Current Tax

Current income tax, assets and liabilities
are measured at the amount expected to
be paid to or recovered from the taxation
authorities in accordance with the tax
regime inserted by the Taxation Laws
(Amendment) Act, 2019 in the Income Tax
Act, 1961 and the Income Computation
and Disclosure Standards (ICDS) enacted
in India by using tax rates and the tax laws
that are enacted at the reporting date.

Current tax relating to items recognized
outside profit or loss is recognized in
correlation to the underlying transactions
either in OCI or directly in other equity.
Management periodically evaluates
positions taken in the tax returns with
respect to situations in which the
applicable tax regulations are subject to
interpretation and establishes provisions
where applicable.

b. Deferred Tax

Deferred tax is provided using the liability
method on temporary differences between
the tax bases of assets and liabilities and
theircarryingamountsforfinancialreporting
purposes at the reporting date. Deferred
tax assets and liabilities are recognized
for all deductible temporary differences,
the carry forward of unused tax credits
and any unused tax losses. Deferred tax
assets are recognized to the extent that
it is probable that taxable profit will be
available against which the deductible
temporary differences, and the carry
forward of unused tax credits and unused
tax losses can be utilized. The carrying
amount of deferred tax assets is reviewed
at each reporting date and reduced to the
extent that it is no longer probable that
sufficient taxable profit will be available to
allow all or part of the deferred tax asset
to be utilized. Unrecognized deferred tax
assets are re-assessed at each reporting
date and are recognized to the extent that
it has become probable that future taxable
profits will allow the deferred tax asset to
be recovered. Deferred tax assets and
liabilities are measured at the tax rates

that are expected to apply in the year
when the asset is realized or the liability is
settled, based on tax rates (and tax laws)
that have been enacted or substantively
enacted at the reporting date.

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Mar 31, 2018

1. Significant Accounting Policies

1.1 Basis of preparation of financial statements:

The financial statements have been prepared under the historical cost convention and on the accrual basis of accounting in accordance with the generally accepted accounting principles, unless otherwise specifically stated and in accordance with the Accounting Standards (‘AS’) notified under section 133 of the Companies Act, 2013 (the ‘Act’) read together with paragraph 7 of the Companies (Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules, 2016, and as per the directions and guidelines issued by Reserve Bank of India to the extent applicable to Systemically Important Non-Deposit taking NBFC (‘NBFC Regulation’). The notified Accounting Standards (AS) are followed by the Company insofar as they are not inconsistent with the NBFC Regulation.

1.2 Use of Estimates

The preparation of financial statements in conformity with GAAP in India requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates. On an ongoing basis, estimates are evaluated based on historical experience and on various other assumptions that are believed to be reasonable, the results of which forms the basis for making judgments about the carrying value of assets and liabilities. Actual results could differ from those estimates. Any revision to estimates or difference between the actual result and estimates are recognised in the period in which the results are known/ materialised.

1.3 Revenue Recognition

(i) Interest income on loans is accounted for by applying the Internal Rate of Return (IRR), implicit in the agreement, on the diminishing balance of the financed amount over the period of the agreement so as to maintain a constant periodic rate of return on the net amount.

(ii) Future accrual of interest is suspended for loan accounts that are contractually delinquent for more than 90 days, after setting-off of collateral amounts. Suspended income is recognized as and when collected.

(iii) Processing fees and other servicing fees is recognized on accrual basis.

(iv) Dividend income on investments is accounted for as and when the right to receive is established.

(v) Profit/ loss on sale of loan assets through direct assignment/ securitization are recognized over the residual life of loan/ pass through certificates in terms of RBI guidelines. Loss arising on account of direct assignment/ securitization is recognized upfront.

(vi) Interest income on fixed deposits is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

(vii) Income on account of overdue interest and bouncing, foreclosure and penal charges,and servicing fees on assignment of loans is recognized on receipt basis, as a consistent practice considering that the same are not material transactions.

1.4 Property Plant and Equipment

(i) Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

(ii) Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the Statement of Profit and Loss for the period during which such expenses are incurred.

(iii) Gains or losses arising from de-recognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

1.5 Depreciation

(i) Depreciation on property, plant and equipment is provided on straight-line method over the useful life of the assets estimated by the management, in the manner prescribed in Schedule II of the Companies Act, 2013. Immovable assets at the leased premises including civil works, fixtures and electrical items etc. are capitalized as leasehold improvements and are amortized over the primary period of lease subject to maximum of two years.

(ii) The useful lives in the following case is different from those prescribed in Schedule II of the Companies Act, 2013.

Based on usage pattern, internal assessment and technical evaluation carried out, the management believes that the useful lives as given above best represent the period over which the management expects to use these assets. Hence the useful lives of these assets is different from the lives as prescribed in Schedule II of the Companies Act, 2013.

(iii) Depreciation on addition or on sale / discard of an asset is calculated pro-rata from / up to the date of such addition or sale/discard.

1.6 Intangible Assets

Intangible assets are recognized only if it is probable that the future economic benefits that are attributable to assets will flow to the Company and the costs of the assets can be measured reliably. Intangible assets comprising computer software are carried at cost less amortization. Computer software including improvements are amortised over the management’s estimate of the useful life of such intangibles. Management estimates for useful life of intangibles is 6 years.

1.7 Investment

Investments that are readily realizable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as long-term investments. However, that part of long-term investments which is expected to be realized within 12 months after the reporting date is also presented under ‘current assets’ as “current portion of long-term investments”.

Long-term investments are stated at cost. Provision of diminution in the value of long-term investments is made, only if, such a decline is other than temporary in the opinion of the management. Current investments are carried at the lower of cost and quoted price / fair value. Any reductions in the carrying amount and any reversals of such reductions are charged or credited to the statement of profit and loss.

1.8 Loan

Loans are stated at the amount advanced, as reduced by the amount received / repaid and the loans assigned, up to the Balance Sheet date. Loan origination costs such as credit verification, agreement stamping, processing fee, ROC charges and valuation charges are charged to Statement of Profit and Loss.

1.9 Sale of asset portfolios by way of assignment / securitization

The Company undertakes sale of its loan portfolios by way of securitization / assignment out of its loan portfolio. The assigned / securitized portfolio is de-recognized from the books of the Company in situations where the Company relinquishes its contractual rights over the underlying loan receivables and all risks and rewards are transferred to assignee/ buyer.

1.10 Employee Benefits:

The Company has various schemes of retirement benefits, namely provident fund, gratuity and leave encashment.

(i) Short term employee benefits:

All employee benefits payable / available within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages and bonus etc., are recognized in the Statement of Profit and loss in the period in which the employee renders the related service.

(ii) Other long term employee benefits:

Entitlements to annual leave are recognized when they accrue to employees. Leave entitlements can be availed while in service of employment subject to restriction on the maximum number of accumulation. The Company determines the liability for such accumulated leave entitlements on the basis of actuarial valuation carried out by an independent actuary at the year end.

(iii) Defined contribution plan:

Contributions towards Provident Fund are considered as defined contribution plan and the contributions are charged to the Statement of Profit and Loss for the year when the expense is actually incurred.

(iv) Defined benefit plans:

The Company’s gratuity scheme is a defined benefit plan. The plan provides for a lump sum payment to vested employees on retirement, death while in employment or on termination of employment. Vesting occurs upon completion of five years of service. The Company’s contribution to gratuity fund in respect of its employees is managed by a trust, which invests the funds with Life Insurance Corporation of India (‘LIC’). The present value of obligations under such defined benefit plans are based on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at the present value of estimated future cash flows. The discount rate used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the Balance Sheet date, having maturity period approximating to the terms of related obligations. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss. Gains or losses on the curtailment or settlement of any defined benefit plan are recognized when the curtailment or settlement occurs.

1.11 Provision for standard, sub-standard and doubtful assets

The Company makes provision for standard and non-performing assets (sub-standard and doubtful assets) in accordance with the Non-Banking Financial Company - Systemically Important NonDeposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016. Further, specific provisions are also created based on the management’s best estimate of the recoverability of non-performing assets i.e. sub-standard and doubtful assets. In accordance with these Directions, the Company has separately shown the said provision under short term / long term provisions (as applicable) without netting off from loans.

1.12 Taxation

Provision for current taxes is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961. Deferred Tax resulting from “timing differences” between taxable and accounting income is accounted for using the tax rates and laws that have been substantially enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that these would be realized in future.

1.13 Provision, contingent liabilities and contingent assets

The Company recognizes a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed.

Contingent assets are not recognized in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognized in the period in which the change occurs.

1.14 Earnings per share

Basic earnings per equity share is computed by dividing net profit / loss attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding for the year. Diluted earnings per share is computed using the weighted average number of equity shares and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares except where results are anti-dilutive. The dilutive potential equity shares are adjusted for the proceeds receivable, had the shares been actually issued at the fair value.

1.15 Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased asset are classified as operating leases. Operating lease charges are recognized as an expense in the Statement of Profit and Loss on a straight line basis over the lease term.

1.16 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short-term fixed deposits / investments with an original maturity of three month or less.

1.17 Impairment of Assets

The management periodically assesses using, external and internal sources, whether there is an indication that an asset may be impaired. An impaired loss is recognized wherever the carrying value of an asset exceeds its recoverable amount. The recoverable amount is the higher of the asset’s net selling price and value in use, which means the present value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. An impairment loss for an asset is reversed, if and only if, the reversal can be related objectively to an event occurring after the impairment loss was recognized, the carrying amount of an asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss being recognized for the asset in prior year/s.

1.18 Current versus non-current classification

The Company has classified all its assets / liabilities into current / non- current portion based on the time frame of 12 months from the date of financial statements. Accordingly assets / liabilities expected to be realized / settled within 12 months from the date of financial statements are classified as current and other assets / liabilities are classified as non-current.

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Mar 31, 2016

1 Corporate information

Intec Capital Limited (‘the Company’) incorporated in India on 15 February 1994,is registered with the Reserve Bank of India (‘RBI’) as a Non-Banking Financial Company (‘NBFC’) vide Certificate No. B-14.00731 dated 4 May 1998 in the name of Intec Securities Limited. Subsequently, due to change in name of the Company, the Company received a revised Certificate of Registration (‘CoR’) in the name of Intec Capital Limited on 4 November 2009 under Section 45-1A of the Reserve Bank of India Act, 1934. It is a systemically important non-deposit taking Non-Banking Financial Company (NBFC-ND-SI). The Company is primarily engaged in the business of providing machinery loans to Small and Medium Enterprises (‘SME’) customers. During the financial year 2014-15, Company has been registered as an Asset Finance Company (‘AFC’), as defined by the RBI.

2 Significant accounting policies

(a) Basis of preparation of financial statements:

The financial statements have been prepared to comply in all material respects with the Accounting Standards (‘AS’) notified under section 133 of the Companies Act, 2013 (the ‘Act’) read together with paragraph 7 of the Companies (Accounts) Rules, 2014 and other accounting principles generally accepted in India (IGAAP) and as per the guidelines issued by Reserve Bank of India (‘RBI’) as applicable to a Non-Banking Financial (Non-deposit accepting or holding) Companies (‘NBFC Regulation’). The financial statements have been prepared on an accrual basis and under the historical cost convention. The notified Accounting Standards (AS) are followed by the Company insofar as they are not inconsistent with the NBFC Regulation.

The accounting policies adopted in the preparation of financial statements are consistent with those of the previous year except mentioned below.

(i) Change in Accounting Policy

The Company has changed the method of appropriating the cash collateral against its over-dues balances; previously cash collateral was applied towards the overdue principal whereas w.e.f. April 01, 2015, cash collateral is applied towards the overdue principal and interest for delinquent loans. The change has resulted in an increase in the profit before tax for the year ended March 31, 2016 by Rs..447.98 Lakhs

(b) Current / non-current classification of assets / liabilities

As required by Revised Schedule III, the Company has classified assets and liabilities into current and non- current based on the operating cycle. An operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. Since in case of non-banking financial Company normal operating cycle is not readily determinable, the operating cycle has been considered as 12 months.

(c) use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from the estimates used in preparing the accompanying financial statements. Any changes in estimates are recognized prospectively.

(i) Change in estimates

The RBI vide it’s notification no DNBR. 011/CGM (CDS)-2015 dt. March 27, 2015 has revised the asset classification norms for Non-performing assets and substandard assets under its prudential norms applicable to NBFCs in a phased manner commencing from financial year ending March 31, 2016 up to the financial year ending March 31, 2018 which would result in an additional provision. The Company follows prudential norms for income recognition, asset classification and provisioning for Non-performing assets as prescribed by RBI for NBFCs and has also been making additional provision on a prudential basis. Consequent of such change, the provision is higher by Rs.5.08 Lakhs for the year ended March 31, 2016.

(d) Revenue Recognition

(i) Interest income on loans is accounted for by applying the Internal Rate of Return (IRR), implicit in the agreement, on the diminishing balance of the financed amount, over the period of the agreement so as to provide a constant periodic rate of return on the net amount outstanding on the contracts.

(ii) Future accrual of interest is suspended for accounts that are contractually delinquent for more than 150 days, after setting-off of collateral amounts. Suspended income on such accounts is recognized as and when collected. Reversal of income not collected for these assets are being netted-off against income as required by the Prudential Norms.

(iii) Loan installments received are apportioned between interest income and principal portion. The principal amount is reduced from the loan outstanding, so as to achieve the constant rate of interest on the remaining balance.

(iv) Processing fees and other servicing fees is recognized as income on accrual basis and servicing fees on assignment of loans in respect of loans agreement is recognized as income on receipt basis.

(v) Dividend income on investments is accounted for as and when the right to receive the same is established.

(vi) Profit/ loss on sale of loan assets through direct assignment/ securitization are recognized over the residual life of loan/ pass through certificates in terms of RBI guidelines. Loss arising on account of direct assignment/ securitizations recognized upfront.

(vii) Interest income on fixed deposits recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

(viii) Income on account of overdue interest, bouncing charges received, foreclosure charges and penal charges is recognized on receipt basis.

(e) Fixed assets, intangibles and related depreciation/ amortization/ impairment

Tangible assets

(i) Fixed assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

(ii) Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

(iii) Gains or losses arising from de recognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

Intangible assets

(i) Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in an amalgamation in the nature of purchase is their fair value as at the date of amalgamation. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.

(ii) Intangible assets are amortized on a straight line basis over the estimated useful economic life. The Company uses a rebuttable presumption that the useful life of an intangible asset will not exceed ten years from the date when the asset is available for use. If the persuasive evidence exists to the affect that useful life of an intangible asset exceeds ten years, the Company amortizes the intangible asset over the best estimate of its useful life. Such intangible assets and intangible assets not yet available for use are tested for impairment annually, either individually or at the cash-generating unit level. All other intangible assets are assessed for impairment whenever there is an indication that the intangible asset may be impaired.

(iii) The amortization period and the amortization method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortization period is changed accordingly. If there has been a significant change in the expected pattern of economic benefits from the asset, the amortization method is changed to reflect the changed pattern. Such changes are accounted for in accordance with AS-5 Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies.

(iv) Gains or losses arising from recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

Depreciation on Tangible asset / Amortization of

Intangible asset

(i) The Company follows the straight-line method for computing the depreciation charge. Other fixed assets are depreciated on a straight line basis over their estimated economic useful lives as estimated by the management, except leasehold improvements, which are being amortized over the lease period. Such rates are higher than the corresponding depreciation rates prescribed in Schedule II of the Companies Act, 2013.

(iii) The Company has estimated the useful life of the following assets lower than the useful life given in the Schedule II of the Companies Act, 2013.The lower life is estimated on the basis of the usage of the assets in past.

(f) Investment

Investments that are readily realizable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as long-term investments. However, that part of long-term investments which is expected to be realized within 12 months after the reporting date is also presented under ‘current assets’ as “current portion of long-term investments” in consonance with the current/non-current classification.

Long-term investments are stated at cost. Provision of diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

Current investments are carried at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments i.e., equity shares, preference shares, convertible debentures, etc.

Any reductions in the carrying amount and any reversals of such reductions are charged or credited to the Statement of Profit and Loss.

(g) Commercial paper

Commercial paper is recognized at redemption value. The difference between redemption value and issue value is charged to profit and loss account on a Straight line method (SLM).

(h) Borrowing Cost

Borrowing costs consists of interest and other ancillary cost that an entity incurs in connection with borrowing of funds. Ancillary costs incurred in connection with the arrangement of borrowings are amortized over the tenor of borrowings.

(i) Loan

Loans are stated at the amount advanced, as reduced by the amount received up to the balance sheet date and loans assigned and less collateral money received from borrowers.

(j) Loan origination cost

Loan origination costs such as credit verification, agreement stamping, processing fee, ROC charges and valuation charges are charged to statement of profit and loss account.

(k) Sale of asset portfolios by way of assignment/ securitization

The Company undertakes sale of its loan portfolios by way of securitization/ assignment out of its loan portfolio. The assigned/ securitized portfolio is derecognized from the books of the Company in situations where the Company relinquishes its contractual rights over the underlying loan receivables and all risks and rewards are transferred to assignee/ buyer.

(l) Employee Benefits:

The Company has various schemes of retirement benefits, namely provident fund, gratuity and leave encashment.

(i) Short term employee benefits:

All employee benefits payable/ available within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages and bonus etc., are recognized in the Statement of Profit and Loss in the period in which the employee renders the related service.

(ii) Other long term employee benefits:

Entitlements to annual leave are recognized when they accrue to employees. Leave entitlements can be availed while in service of employment subject to restriction on the maximum number of accumulation. The company determines the liability for such accumulated leave entitlements on the basis of actuarial valuation carried out by an independent actuary at the year end.

(iii) Defined contribution plan:

Contributions towards Provident Fund are considered as defined contribution plan and the contributions are charged to the Statement of Profit and Loss for the year when the expense is actually incurred.

(iv) Defined benefit plans:

The Company’s gratuity scheme is a defined benefit plan. The Company pays gratuity to employees who retire or resign after a minimum period of five years of continuous service. The Company’s contribution to gratuity fund in respect of its employees is managed by a trust, which invests the funds with Life Insurance Corporation of India (‘LIC’). The present value of obligations under such defined benefit plans are based on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at the present value of estimated future cash flows. The discount rate used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the Balance Sheet date, having maturity period approximating to the terms of related obligations. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognized when the curtailment or settlement occurs.

(m) Provision for standard, sub-standard and doubtful assets

Provision for standard and sub-standard and doubtful assets is recognized in accordance with prudential norms and guidelines issued by Reserve Bank of India from time to time. Further, specific provisions are also created based on the management’s best estimate of the recoverability of non-performing assets.

In accordance with the Prudential Norms, the Company has separately shown provision for loans under short term/ long term provisions (as applicable) without netting off from loans.

(n) Current and deferred tax

Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as “MAT Credit Entitlement.” The Company reviews the “MAT credit entitlement” asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.

(o) Provision, contingent liabilities and contingent assets

The Company recognizes a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed.

Contingent assets are not recognized in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognized in the period in which the change occurs.

(p) Earnings per share

Basic earnings per equity share is computed by dividing net profit/ loss attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding for the year. Diluted earnings per share is computed using the weighted average number of equity shares and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares except where results are anti-dilutive. The dilutive potential equity shares are adjusted for the proceeds receivable, had the shares been actually issued at the fair value.

(q) Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased asset are classified as operating leases. Operating lease charges are recognized as an expense in the Statement of Profit and Loss on a straight line basis over the lease term.

(r) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short-term fixed deposits/ investments with an original maturity of three month or less.

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Mar 31, 2015

Corporate information

Intec Capital Limited ('the Company') incorporated in India on 15 February 1994, is registered with the Reserve Bank of India ('RBI') as a Non-Banking Financial Company ('NBFC') vide Certificate No. B-14.00731 dated 4 May 1998 in the name of Intec Securities Limited. Subsequently, due to change in name of the Company, the Company received a revised Certificate of Registration ('CoR') in the name of Intec Capital Limited on 4 November 2009 under Section 45-1A of the Reserve Bank of India Act, 1934. It is a systemically important non-deposit taking Non-Banking Financial Company (NBFC-ND-SI). The Company is primarily engaged in the business of providing machinery loans to Small and Medium Enterprises ('SME') customers. During the financial year 2014- 15, Company has been registered as an Asset Finance Company ('AFC'), as defined by the RBI.

(a) Basis of preparation of financial statements:

The financial statements have been prepared to comply in all material respects with the Accounting Standards ('AS') notified under section 133 of the Companies Act, 2013 (the 'Act') read together with paragraph 7 of the Companies (Accounts) Rules, 2014 and other accounting principles generally accepted in India (IGAAP) and as per the guidelines issued by Reserve Bank of India ('RBI') as applicable to a Non-Banking Financial (Non-deposit accepting or holding) Companies ('NBFC Regulation'). The financial statements have been prepared on an accrual basis and under the historical cost convention. The notified Accounting Standards (AS) are followed by the Company insofar as they are not inconsistent with the NBFC Regulation.

The accounting policies adopted in the preparation of financial statements are consistent with those of the previous year.

(b) Current / non-current classification of assets / liabilities

As required by Revised Schedule III, the Company has classified assets and liabilities into current and non-current based on the operating cycle. An operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. Since in case of non-banking financial Company normal operating cycle is not readily determinable, the operating cycle has been considered as 12 months.

(c) Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from the estimates used in preparing the accompanying financial statements. Any changes in estimates are recognised prospectively.

I) Change in estimates

i) Provision on Loans

During the year ended March 31, 2015, the Company has changed its estimates related to provisioning for all loans in order to align the same in accordance with RBI Prudential norms on Non-Performing Assets (NPA). Consequent to the change in such estimates, provision and write off is lower by H1,525.99 Lakhs for the year ended March 31, 2015. The above mentioned change has been carried out in view of management re-assessment of recoverability of its NPA, considering the quality and quantum of primary and collateral security available with the Company.

ii) Depreciation on Fixed Assets

Pursuant to the Companies Act, 2013 (the "Act") becoming effective from April 01, 2014, the Company has recomputed the depreciation based on the useful life of the assets as prescribed in Schedule II of the Act. This has resulted in additional charge of depreciation of H48.58 Lakhs for the year ended March 31, 2015. Further, as per the transitional provision, the Company has adjusted H11.23 Lakhs (net of deferred tax) in the opening balance of Reserves and Surplus of Profit and Loss Account.

iii) Useful lives of Fixed Assets

Till the previous year, the Company was depreciating its assets in accordance with the rates as per Schedule XIV of the Companies Act. During the year ended March 31, 2015, the Company revised the estimated useful life of fixed assets. Accordingly, depreciation on fixed assets for the year has been provided on the basis of revised estimated useful lives.

The management's revised estimate of the useful lives of the various fixed assets is as follows:

(d) Revenue Recognition

(i) Interest income on loans is accounted for by applying the Internal Rate of Return (IRR), implicit in the agreement, on the diminishing balance of the financed amount, over the period of the agreement so as to provide a constant periodic rate of return on the net amount outstanding on the contracts.

(ii) Future accrual of interest is suspended for accounts that are contractually delinquent for more than 180 days, after setting-off of collateral amounts. Suspended income on such accounts is recognised as and when collected. Reversal of income not collected for these assets are being netted-off against income as required by the Prudential Norms.

(iii) Loan installments received are apportioned between interest income and principal portion. The principal amount is reduced from the loan outstanding, so as to achieve the constant rate of interest on the remaining balance.

(iv) Processing fees and other servicing fees and servicing fees on assignment of loans in respect of loans agreement is recognized as income on accrual basis.

(v) Dividend income on investments is accounted for as and when the right to receive the same is established.

(vi) Profit/ loss on sale of loan assets through direct assignment/ securitization are recognized over the residual life of loan/ pass through certificates in terms of RBI guidelines. Loss arising on account of direct assignment/ securitization is recognized upfront.

(vii) Interest income on fixed deposits recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

(viii) Income on account of overdue interest, bouncing charges received, foreclosure charges and penal charges is recognized on receipt basis.

(e) Fixed assets, intangibles and related depreciation/ amortisation/ impairment

a. Fixed assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

b. Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

c. Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

d. Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in an amalgamation in the nature of purchase is their fair value as at the date of amalgamation. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.

e. Intangible assets are amortized on a straight line basis over the estimated useful economic life. The Company uses a rebuttable presumption that the useful life of an intangible asset will not exceed ten years from the date when the asset is available for use. If the persuasive evidence exists to the affect that useful life of an intangible asset exceeds ten years, the Company amortizes the intangible asset over the best estimate of its useful life. Such intangible assets and intangible assets not yet available for use are tested for impairment annually, either individually or at the cash- generating unit level. All other intangible assets are assessed for impairment whenever there is an indication that the intangible asset may be impaired.

f. The amortization period and the amortization method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortization period is changed accordingly. If there has been a significant change in the expected pattern of economic benefits from the asset, the amortization method is changed to reflect the changed pattern. Such changes are accounted for in accordance with AS-5 Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies.

g. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

h. The Company follows the straight-line method for computing the depreciation charge. Other fixed assets are depreciated on a straight line basis over their estimated economic useful lives as estimated by the management, except leasehold improvements, which are being amortised over the lease period. Such rates are higher than the corresponding depreciation rates prescribed in Schedule II of the Companies Act, 2013. Depreciation is charged on a pro-rata basis for assets purchased/ sold during the year.

(f) Investment

Investments that are readily realisable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as long-term investments. However, that part of long- term investments which is expected to be realised within 12 months after the reporting date is also presented under 'current assets' as "current portion of long-term investments" in consonance with the current/non-current classification.

Long-term investments are stated at cost. Provision of diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

Current investments are carried at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments i.e., equity shares, preference shares, convertible debentures, etc.

Any reductions in the carrying amount and any reversals of such reductions are charged or credited to the Statement of Profit and Loss.

(g) Commercial Paper

Commercial paper is recognized at redemption value. The difference between redemption value and issue value is charged to profit and loss account on a Straight line method (SLM).

(h) Borrowing Cost

Borrowing costs consists of interest and other ancillary cost that an entity incurs in connection with borrowing of funds. Ancillary costs incurred in connection with the arrangement of borrowings are amortized over the tenor of borrowings.

(i) Loan origination cost

Loan origination costs such as credit verification, agreement stamping, processing fee, ROC charges and valuation charges are charged to statement of profit and loss account.

(j) Sale of asset portfolios by way of assignment/ securitization

The Company undertakes sale of its loan portfolios by way of securitization/ assignment out of its loan portfolio. The assigned/ securitized portfolio is de-recognised from the books of the Company in situations where the Company relinquishes its contractual rights over the underlying loan receivables and all risks and rewards are transferred to assignee/ buyer.

(k) Employee Benefits:

The Company has various schemes of retirement benefits, namely provident fund, gratuity and leave encashment.

(a) Short term employee benefits: All employee benefits payable/ available within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages and bonus etc., are recognised in the Statement of Profit and Loss in the period in which the employee renders the related service.

(b) Other long term employee benefits: Entitlements to annual leave are recognized when they accrue to employees. Leave entitlements can be availed while in service or en-cashed at the time or retirement / termination of employment subject to restriction on the maximum number of accumulation. The company determines the liability for such accumulated leave entitlements on the basis of actuarial valuation carried out by an independent actuary at the year end.

(c) Defined contribution plan: Contributions towards Provident Fund are considered as defined contribution plan and the contributions are charged to the Statement of Profit and Loss for the year when the expense is actually incurred.

(d) Defined benefit plans: The Company's gratuity scheme is a defined benefit plan. The Company pays gratuity to employees who retire or resign after a minimum period of five years of continuous service. The Company's contribution to gratuity fund in respect of its employees is managed by a trust, which invests the funds with Life Insurance Corporation of India ('LIC'). The present value of obligations under such defined benefit plans are based on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at the present value of estimated future cash flows. The discount rate used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the Balance Sheet date, having maturity period approximating to the terms of related obligations. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss. Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs.

(l) Provision for standard, sub-standard and doubtful assets

Provision for standard and sub-standard and doubtful assets is recognised in accordance with prudential norms and guidelines issued by Reserve Bank of India from time to time. Further, specific provisions are also created based on the management's best estimate of the recoverability of non-performing assets.

In accordance with Para 10 of Prudential Norms, the Company has separately shown provision for loans under short term/ long term provisions (as applicable) without netting off from loans.

(m) Current and deferred tax

Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as "MAT Credit Entitlement." The Company reviews the "MAT credit entitlement" asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.

(n) Provision, contingent liabilities and contingent assets

The Company recognises a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed.

Contingent assets are not recognised in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised in the period in which the change occurs.

(o) Earnings per share

Basic earnings per equity share is computed by dividing net profit/ loss attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding for the year. Diluted earnings per share is computed using the weighted average number of equity shares and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares except where results are anti-dilutive. The dilutive potential equity shares are adjusted for the proceeds receivable, had the shares been actually issued at the fair value.

(p) Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased asset are classified as operating leases. Operating lease charges are recognised as an expense in the Statement of Profit and Loss on a straight line basis over the lease term.

(q) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short-term fixed deposits/ investments with an original maturity of three month or less.

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Mar 31, 2014

(a) Basis of preparation of financial statements:

The financial statements have been prepared and presented under the historical cost convention on a going concern basis, on the accrual basis of accounting, in accordance with the Indian Generally Accepted Accounting Principles (''GAAP''), Accounting Standards prescribed under the Companies (Accounting Standards) Rules, 2006, relevant pronouncements of the Institute of Chartered Accountants of India (''ICAI'') and the presentation requirements of the Companies Act, 1956 as adopted consistently by the Company and guidelines issued by the RBI, as applicable to the Company.

The Company complies with the prudential norms relating to income recognition, accounting principles, asset classification and the minimum provisioning for standard, Substandard and doubtful debts, specified in the directions issued by the RBI in terms of Non- Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 (''Prudential Norms''), as applicable to it.

(b) Current / non-current classification of assets / liabilities

All assets and liabilities are classified into current and non-current.

Assets

An asset is classified as current when it satisfies any of the following criteria:

i) it is expected to be realised in, or is intended for sale or consumption in, the Company''s normal operating cycle;

ii) it is held primarily for the purpose of being traded;

iii) it is expected to be realised within 12 months after the reporting date; or

iv) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.

Current assets include the current portion of non- current financial assets. All other assets are classified as non-current.

Liabilities

A liability is classified as current when it satisfies any of the following criteria:

i) it is expected to be settled in the Company''s normal operating cycle;

ii) it is held primarily for the purpose of being traded;

iii) it is due to be settled within 12 months after the reporting date; or

iv) the company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

Current liabilities include current portion of non- current financial liabilities. All other liabilities are classified as non-current.

Operating cycle

Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents.

(c) Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from the estimates used in preparing the accompanying financial statements. Any changes in estimates are recognised prospectively.

(d) Revenue Recognition

(i) Interest income on loans is accounted for by applying the Internal Rate of Return (IRR), implicit in the agreement, on the diminishing balance of the financed amount, over the period of the agreement so as to provide a constant periodic rate of return on the net amount outstanding on the contracts.

(ii) Future accrual of interest is suspended for accounts that are contractually delinquent for more than 180 days, after setting-off of collateral amounts. Suspended income on such accounts is recognised as and when collected. Reversal of income not collected for these assets are being netted-off against income as required by the Prudential Norms.

(iii) Loan installments received are apportioned between interest income and principal portion. The principal amount is reduced from the loan outstanding, so as to achieve the constant rate of interest on the remaining balance of the liability.

(iv) Processing fees and other servicing fees and servicing fees on assignment of loans in respect of loans agreement is recognized as income on accrual basis.

(v) Dividend income on investments is accounted for as and when the right to receive the same is established.

(vi) Profit/ loss on sale of loan assets through direct assignment/ securitization are recognized over the residual life of loan/ pass through certificates in terms of RBI guidelines. Loss arising on account of direct assignment/ securitisation is recognized upfront.

(vii) Interest income on fixed deposits recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

(viii) Income on account of overdue interest, bouncing charges received, foreclosure charges and penal charges is recognized on receipt basis.

(e) Fixed assets, intangibles and related depreciation/ amortisation/ impairment

a. Fixed assets are stated at cost less accumulated depreciation. Cost of acquisition is inclusive of freight, taxes and other incidental expenses incurred to put the asset to the intended use.

b. Acquired intangible assets are recorded at the consideration paid for their acquisition. In respect of internally generated assets, the expenditure incurred by the Company in form of salaries of full time employees and professional services billings from outsourced vendors which are directly attributed or allocated on a reasonable and consistent basis, for creating, producing and making the asset ready for its intended use, being enduring in nature, is capitalised.

c. The Company follows the straight-line method for computing the depreciation charge. Assets costing Rs. 5,000 or less are depreciated fully in the year of purchase. Other fixed assets are depreciated on a straight line basis over their estimated economic useful lives as estimated by the management, except leasehold improvements, which are being amortised over the lease period. Such rates are higher than the corresponding depreciation rates prescribed in Schedule XIV of the Companies Act, 1956. Depreciation is charged on a pro-rata basis for assets purchased/ sold during the year.

Till the previous year, the Company was depreciating its assets in accordance with the rates as per Schedule XIV of the Companies Act. During the year ended 31stMarch, 2014, the Company revised the estimated useful life of fixed assets. Accordingly, depreciation on fixed assets for the year has been provided on the basis of revised estimated useful lives.

The management''s revised estimate of the useful lives of the various fixed assets are as follows:

Asset description Useful life (in years)

Computers and peripherals 6

Furniture and Fixtures 16

Vehicles 11

Air conditioners 10

Office equipment 10

Electrical installations 8

As a result of the change in estimated useful lives, depreciation for the year is higher by Rs.18.67 lacs and consequently, profit before tax for the year and reserves and surplus and net fixed assets as at the year-end are lower by that amount.

d. Management periodically assesses using external and internal sources whether there is an indication that an asset may be impaired. Impairment occurs where the carrying value exceeds its recoverable amount. The impairment loss to be expensed is determined as the excess of the carrying value over the higher of the asset''s net sales price or the present value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset''s carrying value does not exceed the carrying value that would have been determined net of depreciation or amortisation, if no impairment loss had been recognised.

(f) Investment

Investments that are readily realisable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as long-term investments. However, that part of long-term investments which is expected to be realised within 12 months after the reporting date is also presented under ''current assets'' as "current portion of long-term investments " in consonance with the current/non- current classification scheme of revised Schedule VI.

Long-term investments are stated at cost. Provision of diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

Current investments are carried at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments i.e., equity shares, preference shares, convertible debentures, etc.

Any reductions in the carrying amount and any reversals of such reductions are charged or credited to the Statement of Profit and Loss.

(g) Sale of asset portfolios by way of assignment/ securitization

The Company undertakes sale of its loan portfolios by way of securitization/ assignment out of its loan portfolio. The assigned/ securitized portfolio is de- recognised from the books of the Company in situations where the Company relinquishes its contractual rights over the underlying loan receivables and all risks and rewards are transferred to assignee/ buyer.

The Company is maintaining minimum holding period criteria and minimum retention requirements as prescribed by RBI vide its circular number RBI/2012- 13/170/DNBS.PD.No.301/3.10.01/2012-13, issued on 21st August, 2012.

(h) Employee Benefits

The Company has various schemes of retirement benefits, namely provident fund, gratuity and leave encashment.

(a) Short term employee benefits:

All employee benefits payable/ available within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages and bonus etc., are recognised in the Statement of Profit and Loss in the period in which the employee renders the related service.

(b) Other long term employee benefits:

Entitlements to annual leave are recognized when they accrue to employees. Leave entitlements can be availed while in service or en-cashed at the time or retirement / termination of employment subject to restriction on the maximum number of accumulation. The company determines the liability for such accumulated leave entitlements on the basis of actuarial valuation carried out by an independent actuary at the year end.

(c) Defined contribution plan:

Contributions towards Provident Fund are considered as defined contribution plan and the contributions are charged to the Statement of Profit and Loss for the year when the expense is actually incurred.

(d) Defined benefit plans:

The Company''s gratuity scheme is a defined benefit plan. The Company pays gratuity to employees who retire or resign after a minimum period of five years of continuous service. The Company''s contribution to gratuity fund in respect of its employees is managed by a trust, which invests the funds with Life Insurance Corporation of India (''LIC''). The present value of obligations under such defined benefit plans are based on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at the present value of estimated future cash flows. The discount rate used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the Balance Sheet date, having maturity period approximating to the terms of related obligations. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss. Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs.

(i) Provision for standard, sub-standard and doubtful assets

Provision for standard and sub-standard and doubtful assets is recognised in accordance with prudential norms and guidelines issued by Reserve Bank of India from time to time. Further, specific provisions are also created based on the management''s best estimate of the recoverability of non-performing assets.

In accordance with Para 10 of Prudential Norms, the Company has separately shown provision for loans under short term/ long term provisions (as applicable) without netting off from loans.

During the current year, the Company re-evaluated the percentages at which provision for standard and non-performing assets was being recognised hitherto. As a result, the Board of Directors considered it appropriate to make provisions at higher percentages of loan assets depending on the outstanding age, as compared to the percentages being used hitherto. Such change has resulted in an incremental provision of Rs. 1,519.13 lacs, and consequently, profit before tax for the year and reserves and surplus are lower by that amount.

(j) Current and deferred tax

Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the Income-tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period). The current charge for income tax is based on estimated tax liability as computed after taking credit for allowances and exemptions in accordance with the Income-tax laws applicable for the period. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the notified tax rates. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed at each Balance Sheet date and written down or written up to represent the amount that is reasonably/ virtually certain to be realised.

(k) Provision, contingent liabilities and contingent assets

The Company recognises a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed.

Contingent assets are not recognised in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised in the period in which the change occurs.

(l) Earnings per share

Basic earnings per equity share is computed by dividing net profit/ loss attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding for the year. Diluted earnings per share is computed using the weighted average number of equity shares and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares except where results are anti-dilutive. The dilutive potential equity shares are adjusted for the proceeds receivable, had the shares been actually issued at the fair value.

(m) Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased asset are classified as operating leases. Operating lease charges are recognised as an expense in the Statement of Profit and Loss on a straight line basis over the lease term.

(n) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and inhandandshort-termfixeddeposits/investmentswithan original maturity of three month or less.

Terms/ rights, preferences and restrictions attached to each class of shares

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Mar 31, 2012

(a) Basis for Preparation of Accounts:

The financial statements have been prepared in conformity with generally accepted accounting principles to comply in all material respects with the notified Accounting Standards (AS') under Companies Accounting Standard Rules, 2006, as amended, the relevant provisions of the Companies Act, 1956 ('the Act') and the guidelines issued by the Reserve Bank of India ('RBI') as applicable to a Non Banking Finance Company ('NBFC'). The financial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. The company adopts accrual system of accounting unless otherwise stated.

(b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year end. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates. Any revisions to the accounting estimates are recognized prospectively in the current and future years.

(c) Fixed Assets:

Fixed assets are stated at cost less accumulated depreciation. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

Intangible Assets expected to provide future enduring economic benefits are carried at cost less accumulated amortization and impairment losses, if any. Cost comprises of purchase price and directly attributable expenditure on making the asset ready for its intended use.

(d) Depreciation & Impairment of Assets:

Depreciation on fixed assets is provided on straight-line method, which reflects the management's estimate of the useful lives of the respective fixed assets, at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

The carrying amounts of assets are reviewed at each balance sheet date to ascertain impairment based on internal or external factors. Impairment is recognized if the carrying value exceeds the higher of net selling price of the assets and its value in use.

Goodwill arose on account of merger of Unitel Credit Private Limited is to be written off in Five years. However, nothing is written off in the current financial year. Goodwill arose on account of takeover of M/s Amulet Technologies Private Limited is written off during the current financial year.

(e) Investment:

Long-term investments are stated at cost. Provision of diminution in the value of long-term investments is made only if; such a decline is other than temporary in the opinion of the management.

(f) Employee Benefits:

(i) Defined Contribution Scheme

Employees benefits in the form of Provident Fund are considered as defined contribution plan and the contributions are charged to the profit & Loss Account for the year when the expense is actually incurred.

Provision for provident fund is made as per 'The Employees Provident Fund and Miscellaneous Provisions Act, 1952' as applicable to the company.

(ii) Defined Benefit Scheme

Retirement benefits in the form of Gratuity and leave encashment are considered as defined obligations scheme.

Provision for gratuity has been made as per the calculation received from Life Insurance Corporation under the Gratuity Scheme taken by the company.

Leave encashment benefits are paid / provided in it's entirety in the accounts for the year.

(iii) Other employee benefits are accounted for on accrual basis.

(g) Revenue Recognition:

(i) Loan Income

In respect of loan agreements, the income is accrued by applying the implicit rate in the transaction on declining balance on the amount financed for the period of the agreement.

(ii) Loan installments received are apportioned between interest income and principal portion. The principal amount is reduced from the loan outstanding, so as to achieve the constant rate of interest on the remaining balance of the Liability.

(iii) Dividend income on investments is accounted for as and when the right to receive the same is established.

(iv) No income is recognized in respect of Non-Performing assets, if any, as per the prudential norms for income recognition introduced for Non Banking Financial Corporation by Reserve Bank of India vide its notification o.DFC.No.119/DG/ (SPT)- 98 date 31-01-1998 and revised notification no. DNBS.192/DG (VL)-2007 dated 22/02/2007.

(v) Gains arising on direct assignment of assets are recognized over the tenure of agreements and loss, if any is recognized upfront.

(vi) Interest income on fixed deposits recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

(h) Expense Accounting:

All expenditures including the interest costs are accounted for on accrual basis.

(i) Loan Assets:

Loan Assets include loans advanced by the Company, secured by collateral offered by the customers, if applicable. These are shown net of assets directly assigned.

(j) Provisioning of Assets:

The Company makes provision for Standard and Non-Performing Assets as per the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms Reserve Bank) Directions, 2007, as amended from time to time. The Company also makes additional provision towards loan assets, to the extent considered necessary, based on the management's best estimate.

Loan assets which as per the management are not likely to be recovered, are considered as bad debts and written off.

Provision on standard assets is made as per the notification DNBS.PD.CC.No.207/03.02.002 /2010-11 issued by Reserve Bank of India.

(k) Provision, Contingent Liabilities and Contingent Assets:

(i) A provision is recognised when the company has a present obligation as a result of past event and it is probable that outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

(ii) Contingent Liabilities are disclosed separately by way of note to financial statement after careful evaluation by the management of the facts and legal aspects of the matter involved in case of :

(a) a present obligation arising from the past event, when it is not probable that an outflow of resources will be required to settle the obligation.

(b) a possible obligation, unless the probability of outflow of resources is remote.

(iii) Contingent Assets are neither recognized, nor disclosed in the financial statements.

(I) Taxation:

(i) Provision for current tax is made in accordance with and at the rates specified under the Income-Tax Act, 1961.

(ii) In accordance with Accounting Standard 22 -Accounting for taxes on Income', issued by the Institute of Chartered Accountants of India, the deferred tax for timing differences between the book and tax profits for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date. Tax Effect of the timing difference of the current period is included in the profit & loss account as a part of the tax expense and as deferred tax liability in the balance sheet.

(iii) Deferred tax assets arising from the timing differences are recognized to the extent there is reasonable certainty that the assets can be realized in future.

(m) Earnings per share:

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year.

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

(n) Assets under Management

Contract assigned are de-recognised from the books of accounts. Contingent liabilities, if any, thereof are disclosed separately.

(o) Cash and cash equivalents

Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand and highly liquid investments that are readily convertible into known amount of cash.

(p) Borrowing Cost

Borrowing costs relating to the acquisition / construction of qualifying assets are capitalised until the time all substantial activities necessary to prepare the qualifying assets for their intended use are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.

The ancillary costs incurred in connection with the arrangement of borrowings are amortised over the life of underlying borrowings. Premium payable on redemption of bonds is amortised over the tenure of the bonds.

All other costs related to borrowings are recognised as expense in the period in which they are incurred.

(b) Terms/Rights attached to Equity Shares

The Company has only one class of equity shares having par value of Rs. 10 per share. All these Shares have same rights & preferences with respect to payment of dividend, repayment of capital and voting. The dividend proposed by the board of directors is subject to approval of the shareholders in the ensuing Annual General Meeting.

Security:

(i) Working Capital facility from banks are secured by

(a) Primary Security- first pari passu charge on present and future Receivables of the Company,

(b) Collateral Security-Fixed deposits lien marked to banks, Immovable properties & quoted securities- Belonging to promoter and promoters group,

(c) Personal guarantees of directors and others.

(ii) Term Loan from Banks and Financial Institutions are secured by

(a) Primary Security -First pari passu charge on specific Receivables of the Company,

(b) Collateral Security- Fixed Deposit lien marked to banks.

(c) Personal guarantees of directors and others.

Note: There is no default, continuing or otherwise, as at the balance sheet date, in repayment of any of the above loans.

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Mar 31, 2010

A) Basis for Preparation of Accounts:

The financial statement has been prepared on the historical cost convention on accrual basis of accounting in accordance with applicable accounting standards in India. A summary of important accounting policies applied consistently is set out below. The financial statements have also been, prepared with relevant presentational requirement of the Companies Act, 1956.

b) Fixed Assets:

Fixed assets are stated at their original cost of acquisition including taxes, duties, freight and other incidental expenses related to acquisition, construction and installation of the assets concerned.

c) Depreciation:

Depreciation on fixed assets is provided on straight-line method at the rates and in the manner prescribed in ScheduleXIV to the Companies Act, 1956.

d) Investment:

Long-term investments are stated at cost. Provision of diminution in the value of long-term investments is made only if; such a decline is other than temporary in the opinion of the management. The market value of investment is Rs NIL/- (Previous year 2,19,702/-).

e) Employee Benefits:

(I) Gratuity:

Provision for gratuity has been made as per Provision of Gratuity Act, 1972 calculated on the basis of last salary drawn and completed years of service of eligible employees in the absence of actuarial valuation on the basis of past behavior of employees turnover.

(ii) Leave encashment:

Leave encashment benefits are paid / provided in its entirely in the accounts for the year.

(iii) Provident Fund:

Provision for provident fund is made as The Employees Provident Fund and Miscellaneous Provisions Act, 1952as applicable to the company. Other employee benefits are accounted for on accrual basis.

f) Revenue Recognition:

(i) Loan Income

In respect of loan agreements, the income is accrued by applying the implicit rate in the transaction on declining balance on the amount financed for the period of the agreement.

(ii) Loan installments received are apportioned between interest income and principal portion. The principal amount is reduced from the loan outstanding, so as to achieve the constant rate of interest on the remaining balance of the Liability.

(iii) Dividend income on investments is accounted for as and when the right to receive the same is established.

(iv) No income is recognized in respect of Non-Performing assets, if any, as per the prudential norms for income recognition introduced for Non Banking Financial Corporation by Reserve Bank of India vide its notification no.DFC.No.119/DG/(SPT)-98 date 31-01-1998 and revised notification no. DNBS.192/DG (VD-2007 dated 22/02/2007.

g) Expense Accounting:

(i) The Company follows the policy of paying Interest on Collateral Money to customers on due basis.

(ii) All other expenditures are accounted for on accrual basis.

h) Provisioning:

Provisioning in the case of Non-Performing assets is made in accordance with the guidelines of the prudential norms prescribed by the Reserve Bankof India.

i) Taxation:

(i) Provision for current tax is made in accordance with and at the rates specified under the Income-Tax Act, 1961. (ii) In accordance with Accounting Standard 22 -Accounting for taxes on Income, issued by the Institute of Chartered Accountants of India, the deferred tax for timing differences between the book and tax profits for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date.

(iii)Deferred tax assets arising from the timing differences are recognized to the extent there is reasonable certainty that the assets can be realized in future.

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Mar 31, 2009

A) Basis for Preparation of Accounts:

The financial statement has been prepared on the historical cost convention on accrual basis of accounting in accordance with applicable accounting standards in India. A summary of important accounting policies applied consistently is set out below. The financial statements have also been prepared with relevant presentational requirement of the Companies Act, 1956.

b) Fixed Assets:

Fixed assets are stated at their original cost of acquisition including taxes, duties, freight and other incidental expenses related to acquisition, construction and installation of the assets concerned.

c) Depreciation:

Depreciation on fixed assets is provided on straight-line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

d) Investment:

Long-term investments are stated at cost. Provision of diminution in the value of long-term investments is made only if, such a decline is other than temporary in the opinion of the management. The market value of investment is Rs 2,19,702/- (Previous year 3,02,528/-).

e) Employee Benefits:

(i) Gratuity:

Provision for gratuity has been made as perProvision of Gratuity Act, 1972 calculated on the basis of last salary drawn and completed years of service of eligible employees in the absence of actuarial valuation on the basis of past behavior of employees turnover.

(ii) Leave encashment:

Leave encashment benefits are paid / provided in its entirely in the accounts forthe year.

(iii) Provident Fund:

Provision for provident fund is not made as The Employees Provident Fund and Miscellaneous Provisions Act, 1952 is not applicable to the company.

Other employee benefits are accounted for on accrual basis.

f) Revenue Recognition:

(i) Loan Income

In respect of loan agreements, the income is accrued by applying the implicit rate in the transaction on declining balance on the amount financed for the period of the agreement.

(ii) Loan installments received are apportioned between interest income and principal portion. The principal amount is reduced from the loan outstanding, so as to achieve the constant rate of interest on the remaining balance of the Liability.

(iii) Dividend income on investments is accounted for as and when the right to receive the same is established.

(iv)No income is recognized in respect of Non-Performing assets, if any, as per the prudential norms for income recognition introduced for Non Banking Financial Corporation by Reserve Bank of India vide its notification no.DFC.No.119/DG/(SPT)-98 date 31-01-1998 and revised notification no. DNBS.192/DG (VL)-2007 dated 22/02/2007.

g) ExpenseAccounting:

(i) The Company follows the policy of paying Interest on Collateral Money to customers on due basis. (ii) All other expenditures are accounted for on accrual basis.

h) Provisioning:

Provisioning in the case of Non-Performing assets is made in accordance with the guidelines of the prudential norms prescribed by the Reserve Bank of India.

i) Taxation:

(i) Provision for current tax is made in accordance with and at the rates specified under the Income-Tax Act, 1961.

(ii) In accordance with Accounting Standard 22 Accounting for taxes on Income, issued by the Institute of Chartered Accountants of India, the deferred tax for timing differences between the book and tax profits for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date.

(iii) Deferred tax assets arising from the timing differences are recognized to the extent there is reasonable certainty that the assets can be realized in future.