Accounting Policies of Lead Financial Services 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
financial statements. These policies have been consistently applied to all the years presented,
unless otherwise stated.

a. Revenue Recognition

(i) Under Ind AS 109, Interest Income is recorded using the Effective Interest Rate (EIR) method
for all financial instruments measured at amortised cost, debt instruments measured at fair value
through other comprehensive Income (FVOCI) and debt instruments designated at fair value
through profit & loss (FVTPL). The EIR is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial instrument or, when appropriate, a shorter
period, to the net carrying amount of the financial asset.

The EIR (and therefore, the amortised cost of the asset) is calculated by taking into account any
discount or premium on acquisition, fees and costs that are an integral part of the EIR. The
Company recognises interest income using a rate of return that represents the best estimate of a
constant rate of return over the expected life of the loan.

The Company calculates interest income by applying the EIR to the gross carrying amount of
financial assets other than credit-impaired assets.

(ii) Income from trading in securities comprises profit/ loss on sale of securities held as stock in
trade. Profit/ loss on sale of securities is determined based on the First-in-First-Out (‘FIFO’) cost
of the securities sold and are accounted for on the trade date of transaction.

(iii) Income from sale of services is accounted using cost plus mark-up as and when the service is
rendered, provided there is reasonable certainty of its ultimate realisation.

(iv) Dividend income (including from FVOCI investments) is recognised when the Company’s
right to receive the payment is established, it is probable that the economic benefits associated
with the dividend will flow to the entity and the amount of the dividend can be measured
reliably. This is generally when the shareholders approve the dividend.

(v) Other income and expenses are accounted for on accrual basis.

b. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another entity.

Financial assets

Initial recognition and measurement

All financial assets are recognised initially at fair value plus, in the case of financial assets not
recorded at fair value through profit or loss, transaction costs that are attributable to the
acquisition of the financial asset.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified into four categories:

• Debt instruments at amortised cost

• Debt instruments at fair value through other comprehensive income (FVTOCI)

• Debt instruments, derivatives and equity instruments at fair value through profit or loss
(FVTPL)

• Equity instruments measured at fair value through other comprehensive income (FVTOCI)

i. Debt instruments at amortised cost

A ‘debt instrument’ is measured at the amortised cost, if both the following conditions are
met:

a. The asset is held within a business model whose objective is to hold assets for collecting
contractual cash flows, and

b. Contractual terms of the asset that give rise on specified dates to cash flows that are solely
payments of principal and interest (SPPI) on the principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortised cost
using the effective interest rate (EIR) method. Amortised cost is calculated by taking into
account any discount or premium on acquisition and fees or costs that are an integral part of
the EIR. The EIR amortization is included in finance income in the statement of profit and
loss. The losses arising from impairment are recognised in the statement of profit and loss.

ii. Debt instruments at FVTOCI

A debt instrument’ is classified as at the FVTOCI if both of the following criteria are met:

a. The objective of the business model is achieved both by collecting contractual cash flows
and selling the financial assets, and

b. The asset’s contractual cash flows represent SPPI.

Debt instruments included within the FVTOCI category are measured initially as well as at
each reporting date at fair value. Fair value movements are recognized in the other
comprehensive income (OCI). However, the Company recognizes interest income,
impairment losses and reversals and foreign exchange gain or loss in the statement of profit
and loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI
is reclassified from the equity to statement of profit and loss. Interest earned whilst holding
FVTOCI debt instrument is reported as interest income using the EIR method.

iii. Debt instruments at FVTPL

FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet
the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.

Debt instruments included within the FVTPL category are measured at fair value with all
changes recognized in the statement of profit and loss.

iv. Equity investments

All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments
which are held for trading are classified as at FVTPL. For all other equity instruments, the

Company may make an irrevocable election to present in other comprehensive income
subsequent changes in the fair value. The Company makes such election on an instrument-by¬
instrument basis. The classification is made on initial recognition and is irrevocable.

If the Company decides to classify an equity instrument as at FVTOCI, then all fair value
changes on the instrument, excluding dividends, are recognized in the OCI. There is no
recycling of the amounts from OCI to statement of profit and loss, even on sale of investment.
However, the Company may transfer the cumulative gain or loss within equity.

Equity instruments included within the FVTPL category are measured at fair value with all
changes recognized in the statement of profit and loss.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognised (i.e. removed from the Company’s combined balance
sheet) when:

• The rights to receive cash flows from the asset have expired, or

• The Company has transferred its rights 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 a
‘pass-through’ arrangement and either (a) the Company has transferred substantially all the
risks and rewards of the asset, or (b) the Company has neither transferred nor retained
substantially all the risks and rewards of the asset, but has transferred control of the asset.

Impairment of financial assets

The Company recognises loss allowances for ECLs on the following financial instruments that
are not measured at FVTPL:

• Loans and advances to customers;

• Debt investment securities; and

• Trade and other receivables.

ECLs are required to be measured through a loss allowance at an amount equal to:

• 12-month ECL, i.e. that result from those default events on the financial instrument that are
possible within 12 months after the reporting date, (referred to as Stage 1); or

• full lifetime ECL, i.e. lifetime ECL that result from all possible default events over the life of
the financial instrument, (referred to as Stage 2 and Stage 3).

A loss allowance for full lifetime ECL is required for a financial instrument if the credit risk on
that financial instrument has increased significantly since initial recognition (and consequently
for credit impaired financial assets). For all other financial instruments, ECLs are measured at an
amount equal to the 12-month ECL.

ECLs are a probability-weighted estimate of the present value of credit losses. These are
measured as the present value of the difference between the cash flows due to the Company
under the contract and the cash flows that the Company expects to receive arising from the
weighting of multiple future economic scenarios, discounted at the asset’s EIR.

The Company measures ECL on an individual basis, or on a collective basis for portfolios of
loans that share similar economic risk characteristics. The measurement of the loss allowance is
based on the present value of the asset’s expected cash flows using the asset’s original EIR,
regardless of whether it is measured on an individual basis or a collective basis.

Financial liabilities

Initial recognition and measurement

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

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

i. Financial liabilities at FVTPL

Financial liabilities at fair value through profit or loss include financial liabilities held for
trading and financial liabilities designated upon initial recognition as at fair value through
profit or loss. Financial liabilities are classified as held for trading if they are incurred for the
purpose of repurchasing in the near term.

ii. Loans and borrowings

This is the category most relevant to the Company. After initial recognition, interest-bearing
loans and borrowings are subsequently measured at amortised cost using the EIR method.
Gains and losses are recognised in profit or loss when the liabilities are derecognised as well
as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition
and fees or costs that are an integral part of the EIR. The EIR amortisation is included as
finance costs in the statement of profit and loss.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or
cancelled or expires.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance
sheet if there is a currently enforceable legal right to offset the recognised amounts and there is
an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

c. Property, Plant & Equipment

Property plant and equipment are stated at cost less accumulated depreciation and accumulated
impairment losses, if any. Subsequent costs are included in the asset’s carrying amount.

All property, plant and equipment are initially recorded at cost. Cost comprises acquisition cost,
borrowing cost if capitalization criteria are met, and directly attributable cost of bringing the
asset to its working condition for the intended use.

Subsequent expenditure relating to property, plant and equipment is capitalized only when it is
probable that future economic benefit associated with these will flow with the Company and the
cost of the item can be measured reliably.

Depreciation on property, plant and equipment is provided on written down value basis over the
estimated useful life as prescribed in Schedule II of the Companies Act, 2013.The residual
values, useful lives and methods of depreciation of property, plant and equipment are reviewed at
each reporting date and adjusted prospectively, if appropriate.

The carrying amount of an item of property, plant and equipment is derecognized on disposal or
when no future economic benefits are expected from its use or disposal. The gain or loss arising
from the derecognition of an item of property, plant and equipment is measured as the difference
between the net disposal proceeds and the carrying amount of the item and is recognized in the
Statement of Profit and Loss when the item is derecognized.

d. Investment property

Property that is held for long-term rental yields or for capital appreciation or both, and that is not
occupied by the Company, is classified as investment property. Investment property is measured
initially at its cost, including related transaction costs and wherever applicable borrowing costs.
Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that
future economic benefits associated with the expenditure will flow to the Company and the cost
of the item can be measured reliably. All other repair and maintenance costs are expensed when
incurred. When part of an investment property is replaced, the carrying amount of the replaced
part is derecognised.

Depreciation on investment properties is calculated using the straight-line method to allocate
their cost, net of their residual values, over their estimated useful lives, as per the useful life
prescribed in Schedule II to the Companies Act, 2013.

Investment properties are derecognised either when they have been disposed of or when they are
permanently withdrawn from use and no future economic benefit is expected from their disposal.
The difference between the net disposal proceeds and the carrying amount of the asset is
recognised in the statement of profit and loss in the period of derecognition.

e. Impairment of Non-Financial Assets

The Company assesses at the reporting date whether there is an indication that an asset may be
impaired. If any indication exists, or when annual impairment testing for an asset is required, the
Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher
of an asset’s or cash-generating unit’s (“CGU”) fair value less costs of disposal and its value in
use. The recoverable amount is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset.
In determining fair value less costs of disposal, recent market transactions are taken into account,

if available. If no such transactions can be identified, an appropriate valuation model is used.
Impairment losses are recognised in statement of profit and loss.

f. Tax Expenses
Income Taxes

The income tax expense comprises current and deferred tax incurred by the Company. Income
tax expense is recognized in the income statement except to the extent that it relates to items
recognized directly in equity or OCI, in which case the tax effect is recognized in equity or OCI.
Income tax payable on profits is based on the applicable tax laws in each tax jurisdiction and is
recognized as an expense in the period in which profit arises.

Current Income Tax

Current tax is the expected tax payable/receivable on the taxable income/ loss for the year using
applicable tax rates at the Balance Sheet date, and any adjustment to taxes in respect of previous
years.

Deferred Tax

Deferred tax is recognized in respect of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purpose and the amounts for tax purposes.

Deferred tax liabilities are generally recognized for all taxable temporary differences and
deferred tax assets are recognized, for all deductible temporary differences, to the extent it is
probable that future taxable profits will be available against which deductible temporary
differences can be utilized. Deferred tax is measured at the tax rates that are expected to be
applied to the temporary differences when they reverse, based on the laws that have been enacted
or substantively enacted by the reporting date. Deferred tax assets are reviewed at each reporting
date and are reduced to the extent that it is no longer probable that the related tax benefit will be
realized.

The tax effects of income tax losses, available for carry forward, are recognized as deferred tax
asset, when it is probable that future taxable profits will be available against which these losses
can be set-off.

g. Operating Leases

The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if
the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration.

As a Lessee

The Company applies the short-term lease recognition exemption to its short-term leases of
office spaces (i.e., those leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option). Lease payments on short-term leases
are recognised as expense over the lease term.

As a lessor

Leases in which the Company does not transfer substantially all the risks and rewards incidental
to ownership of an asset are classified as operating leases. Rental income arising is accounted for
on a straight-line basis over the lease terms.

h. Securities for trade

Securities for trade are classified as financial assets in accordance with Ind AS on Financial
Instruments, hence recognized and measured at fair value (FVTPL) with the corresponding debit/
credit in Statement of Profit & Loss.

i. Borrowings

Borrowings are initially recognized at net of transaction costs incurred and measured at
amortized cost. Any difference between the proceeds (net of transaction costs) and the
redemption amount is recognized in the Statement of Profit and Loss over the period of the
borrowings using the Effective Interest Rate (EIR) method.

j. Borrowing Costs

Borrowing costs include interest expense as per the EIR and other costs incurred by the Company
in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or
construction of those property, plant & equipment which necessarily take a substantial period of
time to get ready for their intended use are capitalized. Other borrowing costs are recognized as
an expense in the year in which they are incurred.

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Mar 31, 2014

The financial statements have been prepared in accordance with applicable Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant requirements of the Companies Act, 1956. Significant accounting policies applied in preparing and presenting these financial statements are set out below:

1.1 Basis of Accounting

Financial statements have been prepared under historical cost convention and on the basis of going concern.

1.2 Revenue Recognition

Income from operations which comprises sale of shares, interest income, hire charges, lease rentals, etc. are all accounted for on an accrual basis except for dividend income which is considered on receipt basis. Advisory service charges are accounted for on accrual basis.

1.3 Fixed Assets

Fixed Assets are recorded at cost of acquisition. They are stated at historical cost less accumulated depreciation.

1.4 Depreciation

Depreciation is provided as per Written Down Value Method in accordance with the provisions of Schedule XIV of the Companies Act, 1956 on assets put to use. Depreciation is charged on prorata basis for assets purchased/ sold during the year.

1.5 Impairment

Impairment is recognized at each balance sheet date in respect of the company''s fixed assets. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and the value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value, based on an appropriate discount factor.

1.6 Investments

Investments are classified into Current Investments and Non-Current/ Long Term Investments. Current Investments are carried at the lower of cost and fair value and provisions are made to recognize the decline in the carrying value. Non-Current/ Long Term investments are stated at cost. Provision for diminution in the value of Non-Current/ Long- Term Investments is made only if such decline is other than temporary, in the opinion of the management.

1.7 Inventories

Stock in trade is valued at cost or market value, whichever is lower.

1.8 Employee Benefits

Gratuity is charged to the Statement of Profit and Loss through a provision of accruing liability based on assumption that such benefits are payable to all the eligible employees at the end of accounting year.

1.9 Taxation

Current Tax: Provision for Income Tax is made in accordance with the provisions of the Income Tax Act, 1961.

Deferred Tax: Deferred Tax is recognized on timing difference between taxable and accounting income that originates in one period and is capable of reversal in one or more subsequent periods. The deferred tax asset is recognized and carried forward only to the extent there is reasonable certainty of its realization.

1.10 Contingent Liabilities

Contingent Liabilities are not provided for and generally disclosed by way of Notes to Accounts, if any.

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Mar 31, 2013

The financial statements have been prepared in accordance with applicable Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant requirements of the Companies Act, 1 9,56. Significant accounting policies applied in preparing and presenting these financial statements are set out below:

1.1 Basis of Accounting

Financial statements have been prepared under historical cost convention and on the basis of going concern.

1.2 Revenue Recognition

Income from operations which comprises sale of shares, interest income, hire charges, lease rentals, etc. are all accounted for on an accrual basis except for dividend income which is considered on receipt basis. Advisory service charges are accounted for on accrual basis.

1.3 Fixed Assets

Fixed Assets are recorded at cost of acquisition. They are stated at historical cost less accumulated depreciation.

1.4 Depreciation

Depreciation is provided as per Written Down Value Method in accordance with the provisions of Schedule XIV of the Companies Act, 1956 on assets put to use. Depreciation is charged on prorata basis for assets purchased/ sold during the year.

1.5 Impairment

Impairment is recognized at each balance sheet date in respect of the company''s fixed assets. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and the value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value, based on an appropriate discount factor.

1.6 Investments

Investments are classified into Current Investments and Non-Current/ Long Term Investments. Current Investments are carried at the lower of cost and fair value and provisions are made to recognize the decline in the carrying value. Non-Current/ Long Term investments are stated at cost. Provision for diminution in the value of Non-Current/ Long- Term Investments is made only if such decline is other than temporary, in the opinion of the management.

1.7 Inventories

Stock in trade is valued at cost or market value, whichever is lower.

1.8 Employee Benefits

Gratuity is charged to the Statement of Profit and Loss Account through a provision of accruing liability based on assumption that such benefits are payable to all the eligible employees at the end of accounting year.

1.9 Taxation

Current Tax: Provision for Income Tax is made in accordance with the provisions of the Income Tax Act, 1961.

Deferred Tax: Deferred Tax is recognized on timing difference between taxable and accounting income that originates in one period and is capable of reversal in one or more subsequent periods. The deferred tax asset is recognized and carried forward only to the extent there is reasonable certainty of its realization.

1.10 Contingent Liabilities

Contingent Liabilities are not provided for and generally disclosed by way of Notes to Accounts, if any.

(AMOUNT IN RS.) PARTICULARS AS AT AS AT 31.03.13 31.03.12

2. Share Capital Authorised Capital 35,00,000 (31 March, 2012: 35,00,000) Equity Shares of Rs.10/-each 3,50,00,000 3,50,00,000

Issued, Subscribed and Paid up 33,00,000 (31 March, 2012: 33,00,000) Equity Shares of Rs.10/- each, fully paid-up 3,30,00,000 3,30,00,000

3,30,00,000 3,30,00,000

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Mar 31, 2010

1. Basis of Accounting

Financial statement are prepared under historical cost convention and on the basis of a going concern.

2. Revenue Recognition

3. Fixed Assets

Fixed Assets are recorded at cost of acquisition. They are stated at historical cost less depreciation.

4. Depreciation

5. Investments

Investments are valued as . cost. Shares, debentures and securities which the management intends to hold on long term basis are

6. Inventories

Stock in trade is valued at cost or market value whichever is low.

7. Employee Benefits

Gratuity is charged to profit a loss account through a provision of accruing liability based on assumption that such benefits are

8. TAXATION

Current Tax : Provision for Income Tax is made in accordance with the provision of Income Tax Act, 1961.

9. Contingent is Liabilities

Contingent Liabilities are not provided for and generally disclosed by way of Notes to accounts, if any.