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Accounting Policies of Margo Finance Ltd. Company
Mar 31, 2025
1. Com pany overview
Margo Finance Limited (''the Company'') is a public limited company and incorporated under the provisions of Companies
Act. The Company is a non-deposit accepting Non-Banking Financial Company (''NBFC-ND'') and is registered as a Non¬
Banking Financial Company with the Reserve Bank of India ("RBI"). The Company is engaged primarily in Investment
activities as the financing activities were discontinued during the previous year. The Company is domiciled in India and its
registered office is situated at Office No. 3, Plot No. 206, Village Alte, Kumbhoj Road, Taluka, Hatkanangale, Dist. Kolhapur,
416109, Maharashtra.
2. Basis of preparation
(i) Statement of compliance with Indian Accounting Standards (Ind AS)
These standalone financial statements (âthe Financial Statementsâ) have been prepared in accordance with the Indian
Accounting Standards (''Ind AS'') as notified by Ministry of Corporate Affairs (''MCA'') under Section 133 of the Companies Act,
2013 (''Act'') read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and other relevant provisions
of the Act. The Company has uniformly applied the accounting policies for all the periods presented in these financial
statements.
The financial statements for the year ended March 31,2025 were authorized and approved for issue by the Board of Directors
on 30th May, 2025.
(ii) Historical cost convention
The financial statements have been prepared on going concern basis in accordance with accounting principles generally
accepted in India. Further, the financial statements have been prepared on historical cost basis except for certain financial
assets and financial liabilities which are measured at fair values as explained in relevant accounting policies.
3. Summary of significant accounting policies
The financial statements have been prepared using the significant accounting policies and measurement bases summarised
as below. These policies are applied consistently for all the periods presented in the financial statements, except where the
Company has applied certain accounting policies and exemptions upon transition to Ind AS.
Property, plant and equipment
Recognition and initial measurement
Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if
capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use.
Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be
measured reliably. All other repair and maintenance costs are recognised in statement of profit and loss.
Subsequent measurement (depreciation method, useful lives and residual value)
Property, plant and equipment are subsequently measured at cost less accumulated depreciation and impairment losses.
Depreciation on property, plant and equipment is provided on the written-down method over the useful life of the assets as
prescribed under Part ''C'' of Schedule II of the Companies Act, 2013.
Depreciation is calculated on pro rata basis from the date on which the asset is ready for use or till the date the asset is sold
or disposed.
The residual values, useful lives and method of depreciation are reviewed at the end of each financial year.
De-recognition
An item of property, plant and equipment and any significant part initially recognised is de-recognised upon disposal or when
no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognized in the
statement of profit and loss, when the asset is de-recognised.
Transition to Ind AS
The Company has elected to measure all its property, plant and equipment at the previous GAAP carrying amount as its
deemed cost on the date of transition of Ind AS i.e. April 1, 2018.
a) Intangible assets
Recognition and initial measurement
Intangible assets are stated at their cost of acquisition. The cost comprises purchase price including any import duties and
other taxes (other than those subsequently recoverable from taxation authorities), borrowing cost if capitalization criteria are
met and directly attributable cost of bringing the asset to its working condition for the intended use.
Subsequent measurement (amortisation method, useful lives and residual value)
Intangible assets are amortised over a period of 5 years from the date when the assets are available for use. The estimated
useful life (amortisation period) of the intangible assets is arrived basis the expected pattern of consumption of economic
benefits and is reviewed at the end of each financial year and the amortisation period is revised to reflect the changed pattern,
if any.
Transition to Ind AS.
The Company elected to measure all its intangible assets at the previous GAAP carrying amount as its deemed cost on the
date of transition of Ind AS i.e. April 1, 2018.
b) Revenue recognition
Interest and processing fee income on loans
Interest and processing fee income is recorded on accrual basis using the effective interest rate (EIR) method. Additional
interest/overdue interest/penal charges, if any, are recognised only when it is reasonably certain that the ultimate collection
will be made.
Commission income
Income from business correspondent services is recognised as and when the services are rendered as per agreed terms
and conditions of the contract.
Dividend income
Dividend income is recognised at the time when the right to receive is established by the reporting date.
Miscellaneous income
All other income is recognized on an accrual basis, when there is no uncertainty in the ultimate realization/collection.
c) Borrowing costs
Borrowing costs that are directly attributable to the acquisition and/or construction of a qualifying asset, till the time such
qualifying assets become ready for its intended use, are capitalised. Borrowing costs consists of interest and other cost that
the Company incurred in connection with the borrowing of funds. A qualifying asset is one that necessarily takes substantial
period of time to get ready for its intended use. All other borrowing costs are charged to the Statement of Profit and Loss as
incurred basis the effective interest rate method.
d) Taxation
Tax expense recognized in Statement of Profit and Loss comprises the sum of deferred tax and current tax except to the
extent it recognized in other comprehensive income or directly in equity.
Current tax comprises the tax payable or receivable on taxable income or loss for the year and any adjustment to the tax
payable or receivable in respect of previous years. Current tax is computed in accordance with relevant tax regulations. The
amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received after
considering uncertainty related to income taxes, if any. Current tax relating to items recognised outside profit or loss is
recognised outside profit or loss (either in other comprehensive income or in equity).
Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it
is intended to realise the asset and settle the liability on a net basis or simultaneously.
Deferred tax is recognised in respect of temporary differences between carrying amount of assets and liabilities for financial
reporting purposes and corresponding amount used for taxation purposes. Deferred tax assets are recognised on unused
tax loss, unused tax credits and deductible temporary differences to the extent it is probable that the future taxable profits
will be available against which they can be used. This is assessed based on the Company''s forecast of future operating
results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss.
Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised 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
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the
reporting date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which
the Company expects, at the reporting date to recover or settle the carrying amount of its assets and liabilities. Deferred tax
assets and liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended
to realise the asset and settle the liability on a net basis or simultaneously. Deferred tax relating to items recognised outside
statement of profit and loss is recognised outside statement of profit or loss (either in other comprehensive income or in
equity).
e) Employee benefits
Short-term employee benefits
Short-term employee benefits including salaries, short term compensated absences (such as a paid annual leave) where the
absences are expected to occur within twelve months after the end of the period in which the employees render the related
service, profit sharing and bonuses payable within twelve months after the end of the period in which the employees render
the related services and non-monetary benefits for current employees are estimated and measured on an undiscounted
basis.
Post-employment benefit plans are classified into defined benefits plans and defined contribution plans as under:
Defined contribution plans
The Company has a defined contribution plans namely provident fund, pension fund and employees state insurance scheme.
The contribution made by the Company in respect of these plans are charged to the Statement of Profit and Loss.
Defined benefit plans
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. Under the
defined benefit plans, the amount that an employee will receive on retirement is defined by reference to the employee''s
length of service and last drawn salary. The legal obligation for any benefits remains with the Company, even if plan assets
for funding the defined benefit plan have been set aside. The liability recognized in the statement of financial position for
defined benefit plans is the present value of the Defined Benefit Obligation (DBO) at the reporting date less the fair value of
plan assets. Management estimates the DBO annually with the assistance of independent actuaries. Actuarial gains/losses
resulting from re-measurements of the liability/asset are included in other comprehensive income.
Other long-term employee benefits
The Company also provides the benefit of compensated absences to its employees which are in the nature of long-term
employee benefit plan. Liability in respect of compensated absences becoming due and expected to availed after one year
from the Balance Sheet date is estimated in the basis of an actuarial valuation performed by an independent actuary using
the projected unit credit method as on the reporting date. Actuarial gains and losses arising from past experience and
changes in actuarial assumptions are charged to Statement of Profit and Loss in the year in which such gains or losses are
determined.
f) Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication that an asset may be impaired. If any such
indication exists, the Company estimates the recoverable amount of the asset. Recoverable amount is higher of an asset''s
net selling price and its value in use. If such recoverable amount of the asset or the recoverable amount of the cash generating
unit to which the asset belongs is less than it carrying amount, the carrying amount is reduced to its recoverable amount.
The reduction is treated as an impairment loss and is recognised in the Statement of Profit and Loss. If at the reporting date
there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed
and the asset is reflected at the recoverable amount.
Compensation for impairment
Compensation from third parties for items of property, plant and equipment that were impaired, lost or given up are recognised
in statement of profit and loss when the compensation becomes receivable.
g) Impairment of financial assets
Loan assets
The Company follows a ''three-stage'' model for impairment based on changes in credit quality since initial recognition as
summarised below:
⢠Stage 1 (1-30 days) includes loan assets that have not had a significant increase in credit risk since initial recognition or
that have low credit risk at the reporting date.
⢠Stage 2 (31-60 days) includes loan assets that have had a significant increase in credit risk since initial recognition but
that do not have objective evidence of impairment.
⢠Stage 3 (more than 90 days) includes loan assets that have objective evidence of impairment at the reporting date.
The Expected Credit Loss (ECL) is measured at 12-month ECL for Stage 1 loan assets and at lifetime ECL for Stage 2 and
Stage 3 loan assets. ECL is the product of the Probability of Default, Exposure at Default and Loss Given Default, defined
as follows:
Probability of Default (PD) - The PD represents the likelihood of a borrower defaulting on its financial obligation, either over
the next 12 months (12 months PD), or over the remaining lifetime (Lifetime PD) of the obligation.
Loss Given Default (LGD) - LGD represents the Company''s expectation of the extent of loss on a defaulted exposure. LGD
varies by type of counterparty, type and preference of claim and availability of collateral or other credit support.
Exposure at Default (EAD) - EAD is based on the amounts the Company expects to be owed at the time of default.
Forward-looking economic information (including management overlay) is included in determining the 12-month and lifetime
PD, EAD and LGD. The assumptions underlying the expected credit loss are monitored and reviewed on an ongoing basis.
Trade receivables
In respect of trade receivables, the Company applies the simplified approach of Ind AS 109, which requires measurement of
loss allowance at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit
losses that result from all possible default events over the expected life of trade receivables.
Other financial assets
In respect of its other financial assets, the Company assesses if the credit risk on those financial assets has increased
significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the Company
measures the loss allowance at an amount equal to 12-month expected credit losses, else at an amount equal to the lifetime
expected credit losses.
When making this assessment, the Company uses the change in the risk of a default occurring over the expected life of the
financial asset. To make that assessment, the Company compares the risk of a default occurring on the financial asset as at
the balance sheet date with the risk of a default occurring on the financial asset as at the date of initial recognition and
considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant
increases in credit risk since initial recognition. The Company assumes that the credit risk on a financial asset has not
increased significantly since initial recognition if the financial asset is determined to have low credit risk at the balance sheet
date.
Write-offs
Financial assets are written off either partially or in their entirety to the extent that there is no realistic prospect of recovery.
Any subsequent recoveries are credited to impairment on financial instrument on statement of profit and loss.
h) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand (including imprest), demand deposits and short-term highly liquid
investments (certificate of deposits and commercial paper) that are readily convertible into known amount of cash and which
are subject to an insignificant risk of changes in value. The Company has netted off the balance of bank overdraft with cash
and cash equivalents for cash flow statement.
Mar 31, 2024
Summary of significant accounting policies and other explanatory information for the year ended 31st March, 2024.1. Com pany overview
Margo Finance Limited (''the Company'') is a public limited company and incorporated under the provisions of Companies Act. The Company is a non-deposit accepting Non-Banking Financial Company (''NBFC-ND'') and is registered as a NonBanking Financial Company with the Reserve Bank of India (âRBIâ). The Company is engaged primarily in Investment activities as the financing activities were discontinued during the previous year. The Company is domiciled in India and its registered office is situated at Office No. 3, Plot No. 206, Village Alte, Kumbhoj Road, Taluka, Hatkanangale, Dist. Kolhapur, 416109, Maharashtra
2. Basis of preparation(i) Statement of compliance with Indian Accounting Standards (Ind AS)
These standalone financial statements (âthe Financial Statementsâ) have been prepared in accordance with the Indian Accounting Standards (''Ind AS'') as notified by Ministry of Corporate Affairs (''MCA'') under Section 133 of the Companies Act, 2013 (''Act'') read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and other relevant provisions of the Act. The Company has uniformly applied the accounting policies for all the periods presented in these financial statements.
The financial statements for the year ended 31st March, 2024 were authorized and approved for issue by the Board of Directors on 29th May, 2024
(ii) Historical cost convention
The financial statements have been prepared on going concern basis in accordance with accounting principles generally accepted in India. Further, the financial statements have been prepared on historical cost basis except for certain financial assets and financial liabilities which are measured at fair values as explained in relevant accounting policies.
3. Summary of significant accounting policies
The financial statements have been prepared using the significant accounting policies and measurement bases summarised as below. These policies are applied consistently for all the periods presented in the financial statements, except where the Company has applied certain accounting policies and exemptions upon transition to Ind AS.
Recognition and initial measurement
Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repair and maintenance costs are recognised in statement of profit and loss.
Subsequent measurement (depreciation method, useful lives and residual value)
Property, plant and equipment are subsequently measured at cost less accumulated depreciation and impairment losses. Depreciation on property, plant and equipment is provided on the written-down method over the useful life of the assets as prescribed under Part ''C'' of Schedule II of the Companies Act, 2013.
|
Asset class |
Useful life |
|
Office equipment |
5 years |
|
Furniture and fixtures |
10 years |
|
Vehicles |
8 years |
|
Computers (Other than server) |
3 Years |
Depreciation is calculated on pro rata basis from the date on which the asset is ready for use or till the date the asset is sold or disposed.
The residual values, useful lives and method of depreciation are reviewed at the end of each financial year.
De-recognition
An item of property, plant and equipment and any significant part initially recognised is de-recognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognized in the statement of profit and loss, when the asset is de-recognised.
Transition to Ind AS
The Company has elected to measure all its property, plant and equipment at the previous GAAP carrying amount as its deemed cost on the date of transition of Ind AS i.e. April 1, 2018.
Recognition and initial measurement
Intangible assets are stated at their cost of acquisition. The cost comprises purchase price including any import duties and other taxes (other than those subsequently recoverable from taxation authorities), borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use.
Subsequent measurement (amortisation method, useful lives and residual value)
Intangible assets are amortised over a period of 5 years from the date when the assets are available for use. The estimated useful life (amortisation period) of the intangible assets is arrived basis the expected pattern of consumption of economic benefits and is reviewed at the end of each financial year and the amortisation period is revised to reflect the changed pattern, if any.
Transition to Ind AS.
The Company elected to measure all its intangible assets at the previous GAAP carrying amount as its deemed cost on the date of transition of Ind AS i.e. April 1, 2018.
Interest and processing fee income on loans
Interest and processing fee income is recorded on accrual basis using the effective interest rate (EIR) method. Additional interest/overdue interest/penal charges, if any, are recognised only when it is reasonably certain that the ultimate collection will be made.
Commission income
Income from business correspondent services is recognised as and when the services are rendered as per agreed terms and conditions of the contract.
Dividend income
Dividend income is recognised at the time when the right to receive is established by the reporting date.
Miscellaneous income
All other income is recognized on an accrual basis, when there is no uncertainty in the ultimate realization/collection.
Borrowing costs that are directly attributable to the acquisition and/or construction of a qualifying asset, till the time such qualifying assets become ready for its intended use, are capitalised. Borrowing cots consists of interest and other cost that the Company incurred in connection with the borrowing of funds. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to the Statement of Profit and Loss as incurred basis the effective interest rate method.
Tax expense recognized in Statement of Profit and Loss comprises the sum of deferred tax and current tax except to the extent it recognized in other comprehensive income or directly in equity.
Current tax comprises the tax payable or receivable on taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. Current tax is computed in accordance with relevant tax regulations. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received after considering uncertainty related to income taxes, if any. Current tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity).
Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
Deferred tax is recognised in respect of temporary differences between carrying amount of assets and liabilities for financial reporting purposes and corresponding amount used for taxation purposes. Deferred tax assets are recognised on unused tax loss, unused tax credits and deductible temporary differences to the extent it is probable that the future taxable profits will be available against which they can be used. This is assessed based on the Company''s forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised 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 realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously. Deferred tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit or loss (either in other comprehensive income or in equity).
e) Employee benefits Short-term employee benefits
Short-term employee benefits including salaries, short term compensated absences (such as a paid annual leave) where the absences are expected to occur within twelve months after the end of the period in which the employees render the related service, profit sharing and bonuses payable within twelve months after the end of the period in which the employees render the related services and non-monetary benefits for current employees are estimated and measured on an undiscounted basis.
Post-employment benefit plans are classified into defined benefits plans and defined contribution plans as under:Defined contribution plans
The Company has a defined contribution plans namely provident fund, pension fund and employees state insurance scheme. The contribution made by the Company in respect of these plans are charged to the Statement of Profit and Loss.
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. Under the defined benefit plans, the amount that an employee will receive on retirement is defined by reference to the employee''s length of service and last drawn salary. The legal obligation for any benefits remains with the Company, even if plan assets for funding the defined benefit plan have been set aside. The liability recognised in the statement of financial position for defined benefit plans is the present value of the Defined Benefit Obligation (DBO) at the reporting date less the fair value of plan assets. Management estimates the DBO annually with the assistance of independent actuaries. Actuarial gains/losses resulting from re-measurements of the liability/asset are included in other comprehensive income.
Other long-term employee benefits
The Company also provides the benefit of compensated absences to its employees which are in the nature of longterm employee benefit plan. Liability in respect of compensated absences becoming due and expected to availed after one year from the Balance Sheet date is estimated in the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method as on the reporting date. Actuarial gains and losses arising from past experience and changes in actuarial assumptions are charged to Statement of Profit and Loss in the year in which such gains or losses are determined.
f) Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. Recoverable amount is higher of an asset''s net selling price and its value in use. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Statement of Profit and Loss. If at the reporting date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.
Compensation for impairment
Compensation from third parties for items of property, plant and equipment that were impaired, lost or given up are recognised in statement of profit and loss when the compensation becomes receivable.
g) Impairment of financial assets
Loan assets
The Company follows a ''three-stage'' model for impairment based on changes in credit quality since initial recognition as summarised below:
⢠Stage 1 (1-30 days) includes loan assets that have not had a significant increase in credit risk since initial recognition or that have low credit risk at the reporting date.
⢠Stage 2 (31-60 days) includes loan assets that have had a significant increase in credit risk since initial recognition but that do not have objective evidence of impairment.
⢠Stage 3 (more than 90 days) includes loan assets that have objective evidence of impairment at the reporting date.
The Expected Credit Loss (ECL) is measured at 12-month ECL for Stage 1 loan assets and at lifetime ECL for Stage 2 and Stage 3 loan assets. ECL is the product of the Probability of Default, Exposure at Default and Loss Given Default, defined as follows:
Probability of Default (PD) - The PD represents the likelihood of a borrower defaulting on its financial obligation, either over the next 12 months (12 months PD), or over the remaining lifetime (Lifetime PD) of the obligation.
Loss Given Default (LGD) - LGD represents the Company''s expectation of the extent of loss on a defaulted exposure. LGD varies by type of counterparty, type and preference of claim and availability of collateral or other credit support.
Exposure at Default (EAD) - EAD is based on the amounts the Company expects to be owed at the time of default. Forward-looking economic information (including management overlay) is included in determining the 12-month and lifetime PD, EAD and LGD. The assumptions underlying the expected credit loss are monitored and reviewed on an ongoing basis.
Trade receivables
In respect of trade receivables, the Company applies the simplified approach of Ind AS 109, which requires measurement of loss allowance at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of trade receivables.
Other financial assets
In respect of its other financial assets, the Company assesses if the credit risk on those financial assets has increased significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the Company measures the loss allowance at an amount equal to 12-month expected credit losses, else at an amount equal to the lifetime expected credit losses.
When making this assessment, the Company uses the change in the risk of a default occurring over the expected life of the financial asset. To make that assessment, the Company compares the risk of a default occurring on the financial asset as at the balance sheet date with the risk of a default occurring on the financial asset as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition. The Company assumes that the credit risk on a financial asset has not increased significantly since initial recognition if the financial asset is determined to have low credit risk at the balance sheet date.
Write-offs
Financial assets are written off either partially or in their entirety to the extent that there is no realistic prospect of recovery. Any subsequent recoveries are credited to impairment on financial instrument on statement of profit and loss.
Cash and cash equivalents comprise cash on hand (including imprest), demand deposits and short-term highly liquid investments (certificate of deposits and commercial paper) that are readily convertible into known amount of cash and which are subject to an insignificant risk of changes in value. The Company has netted off the balance of bank overdraft with cash and cash equivalents for cash flow statement.
i) Provisions, contingent assets and contingent liabilities
Provisions are recognized only when there is a present obligation, as a result of past events, and when a reliable estimate of the amount of obligation can be made at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. Provisions are discounted to their present values, where the time value of money is material.
Contingent liability is disclosed for:
⢠Possible obligations which will be confirmed only by future events not wholly within the control of the Company or
⢠Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are neither recognised nor disclosed except when realisation of income is virtually certain, related asset is disclosed.
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.
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs. Subsequent measurement of financial assets and financial liabilities is described below.
Non-derivative financial assets
Subsequent measurement
i. Financial assets carried at amortised cost - a financial asset is measured at the amortised cost if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, 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.
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 amortisation is included in interest income in the Statement of Profit and Loss.
ii. Investments in equity instruments - Investments in equity instruments which are held for trading are classified as at fair value through profit or loss (FVTPL). For all other equity instruments, the Company makes an irrevocable choice upon initial recognition, on an instrument by instrument basis, to classify the same either as at fair value through other comprehensive income (FVOCI). Amounts presented in other comprehensive income are not subsequently transferred to profit or loss. However, the Company transfers the cumulative gain or loss within equity. Dividends on such investments are recognised in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.
iii. Investments in mutual funds - Investments in mutual funds are measured at fair value through profit and loss (FVTPL).
De-recognition of financial assets
Financial assets (or where applicable, a part of financial asset or part of a group of similar financial assets) are derecognised (i.e. removed from the Company''s balance sheet) when the contractual rights to receive the cash flows from the financial asset have expired, or when the financial asset and substantially all the risks and rewards are transferred. Further, if the Company has not retained control, it shall also de-recognise the financial asset and recognise separately as assets or liabilities any rights and obligations created or retained in the transfer.
Non-derivative financial liabilities
Subsequent measurement
Subsequent to initial recognition, all non-derivative financial liabilities are measured at amortised cost using the effective interest method.
De-recognition of financial liabilities
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
First loss default guarantee contracts are contracts that require the Company to make specified payments to reimburse the bank and financial institution for a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of a agreement. Such financial guarantees are given to banks and financial institutions, for whom the Company acts as ''Business Correspondent''.
These contracts are initially measured at fair value and subsequently measure at higher of:
⢠The amount of loss allowance (calculated as described in policy for impairment of financial assets)
⢠Maximum amount payable as on the reporting date to the respective bank/financial institution which is based on the amount of loans overdue for more than 75-90 days in respect to agreements with banks and financial institutions.
Further, the maximum liability is restricted to the cash outflow agreed in the agreement.
Compound financial instruments
Optionally convertible instruments are separated into liability and equity components based on the terms of the contract. On issuance of the said instruments, the liability component is arrived by discounting the gross sum (including redemption premium, if any) at a market rate for an equivalent non-convertible instrument. This amount is classified as a financial liability measured at amortised cost until it is extinguished on conversion or redemption. The remainder of the proceeds is recognised as equity component of compound financial instrument. This is recognised and included in shareholders'' equity, net of income tax effects, and not subsequently re-measured.
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.
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue.
For the purpose of calculating diluted earnings per share, the net profit or loss (interest and other finance cost associated) for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
The Company identifies segment basis of the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are regularly reviewed by the CODM (''chief operating decision maker'') and in assessing performance. The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship with the operating activities of the segment.
Functional and presentation currency
Items included in the financial statement of the Company are measured using the currency of the primary economic environment in which the entity operates (''the functional currency''). The financial statements have been prepared and presented in Indian Rupees (?), which is the Company''s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency, by applying the exchange rates on the foreign currency amounts at the date of the transaction. Foreign currency monetary items outstanding at the balance sheet date are converted to functional currency using the closing rate. Non-monetary items denominated in a foreign currency which are carried at historical cost are reported using the exchange rate at the date of the transaction.
Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates different from those at which they were initially recorded, are recognized in the Statement of Profit and Loss in the year in which they arise.
Transition to Ind AS
The Company has elected to exercise the option for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP.
n) Significant management judgement in applying accounting policies and estimation uncertainty
The preparation of the Company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the related disclosures. Actual results may differ from these estimates.
Significant management judgements
Recognition of deferred tax assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilized.
Business model assessment - The Company determines the business model at a level that reflects how groups of financial assets are managed together to achieve a particular business objective. This assessment includes judgement reflecting all relevant evidence including how the performance of the assets is evaluated and their performance measured, the risks that affect the performance of the assets and how these are managed and how the managers of the assets are compensated. The Company monitors financial assets measured at amortised cost that are derecognised prior to their maturity to understand the reason for their disposal and whether the reasons are consistent with the objective of the business for which the asset was held. Monitoring is part of the Company''s continuous assessment of whether the business model for which the remaining financial assets are held continues to be appropriate and if it is not appropriate whether there has been a change in business model and accordingly prospective change to the classification of those assets are made.
Evaluation of indicators for impairment of assets - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Expected credit loss (âECL'') - The measurement of expected credit loss allowance for financial assets measured at amortised cost requires use of complex models and significant assumptions about future economic conditions and credit behaviour (e.g. likelihood of customers defaulting and resulting losses). The Company makes significant judgements with regard to the following while assessing expected credit loss:
⢠Determining criteria for significant increase in credit risk;
⢠Establishing the number and relative weightings of forward-looking scenarios for each type of product/market and the associated ECL; and
⢠Establishing groups of similar financial assets for the purposes of measuring ECL.
Provisions - At each balance sheet date basis of the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding contingent liabilities. However, the actual future outcome may be different from this judgement.
Significant estimates
Useful lives of depreciable/amortisable assets - Management reviews its estimate of the useful lives of depreciable/amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of assets.
Defined benefit obligation (DBO) - Management''s estimate of the DBO is based on a number of underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Fair value measurements - Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available). This involves developing estimates and assumptions consistent with how market participants would price the instrument.
Mar 31, 2015
1. System of Accounting:
a. The Company follows the mercantile system of accounting and
recognises income and expenditure on accrual basis except accounting
for income from non-performing assets as defined in the guidelines of
the Reserve Bank of India on prudential norms for income recognition of
Non Banking Financial Companies, penal interest on delayed payments on
lease & finance installments and dividend which have been accounted for
on cash basis.
b. The Company follows the prudential norms for Asset classification,
Income Recognition, Provisioning for bad and doubtful debts as
prescribed by the Reserve Bank of India for Non-Banking Finance
Companies.
c. The accounting policies are consistently applied by the Company
with those applied in the previous year except otherwise stated. All
assets and liabilities have been classified as current or non-current
as per the Company's normal operating cycle. Based on the nature of
services and the time between the acquisition of assets for processing
and their realization in cash and cash equivalents, the Company has
ascertained its operating cycle as twelve months for the purpose of
current / non-current classification of its assets and liabilities.
2. Use of Estimates:
The preparation of Financial Statements in generally accepted
accounting principles requires management to make estimates and
assumptions that affects the reported amounts of assets and liabilities
at the date of the financials and the results of operations during the
reported period end. Although these estimates are based upon the
management's best knowledge of current events and actions, actual
results could differ from these estimates. Adjustments as a result of
differences between actual and estimates are made prospectively.
3. Fixed Assets :
Tangible Assets : Tangible assets are stated at acquisition cost plus
directly attributable costs of bringing the asset to its working
condition for its intended use, less accumulated depreciation and
impairment losses, if any.
Intangible Assets : Intangible assets are stated at cost and amortized
over the period the Company expects to derive economic benefits from
their use.
Advances paid towards acquisition of fixed assets and cost of assets
not ready for use before the year end, are disclosed as capital work in
progress.
4. Impairment:
The carrying amounts of assets are reviewed at each balance sheet date
to determine whether there is any indication of impairment. If any such
indication exists, the recoverable amount of the asset is estimated.
For assets that are not yet available for use, the recoverable is
estimated at each balance sheet date. An impairment loss is recognized
whenever the carrying amount of an asset or cash generating unit
exceeds its recoverable amount. Impairment losses are recognized in the
statement of profit and loss. 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 amount does not exceed the carrying amount that would
have been determined net of depreciation or amortization loss had been
recognized.
5. Investments:
Investments are classified into long-term investments and current
investments based on intent of the management at the time of making the
investment. Investments intended to be held for more than one year are
classified as long-term investments.
Long-term investments, including investments in subsidiaries, if any,
are stated at cost price. Any diminution of permanent nature in the
value of the long-term investments is suitably provided for by charging
off to revenue. Diminution is considered to be permanent based on the
criteria that include the extent to which cost exceeds the market value,
the duration of the market value, decline and the financial health of
and specific prospects of the issuer.
The investments intended to be held for less than one year are
classified as current investments are stated at lower of cost or fair
value, computed category-wise.
6. Revenue Recognition :
Income / revenue is generally accounted on accrual as they are earned
except income from non-performing assets as defined in the guidelines
of the Reserve Bank of India on prudential norms for income recognition
of Non Banking Financial Companies & penal interest on delayed payments
which are accounted for on cash basis.
The income is deemed as earned :
a. Interest is recognized as earned on day to day basis.
b. Dividend income is recognized when the right to receive the income
is established.
c. In respect of other heads of income, the Company follows the
practice of recognising income on accrual basis.
In case of uncertainties as to the risks & rewards, the conservative
accounting policy is adopted by way of making suitable provisions for
expenses and deferring the recognition of revenues.
7. Expenditure:
Expenses are recognized on accrual basis and provisions are made for
all known losses and liabilities.
8. Borrowing Cost:
Borrowing cost that are directly attributable to the acquisition,
construction or production of qualifying assets is capitalized as part
of the cost of such assets. A qualifying asset is an asset that
necessarily requires a substantial period of time to get ready for
intended use or sale.
All other borrowing costs are recognized as expense for the period in
which they are incurred calculated taking into account the amount
outstanding and the rate applicable on the borrowing.
9. Depreciation:
i) In respect of tangible assets acquired during the year, depreciation
is charged on straight line basis so as to right off the cost of assets
over the useful lives and for the assets acquired prior to April 1,
2014 the carrying amount as on April 1, 2014 is depreciated over
remaining useful lives. The useful life of assets is taken as prescibed
in Schedule II to the Companies Act, 2013.
ii) Intangible Assets are amortized over the period, the Company
expects to derive economic benefits from their use.
iii) Leasehold improvements are amortized over the lease period as
stated in the lease agreement or over the estimated useful life of the
assets, whichever is shorter.
10. Earnings per share :
Basic earning per share is computed using the weighted average number
of equity shares out- standing during the year. Diluted earnings per
share is computed using the weighted average number of equity and
dilutive potential shares outstanding during the year, except where the
results would be anti-dilutive.
11. Taxation :
Tax expense comprises current tax and deferred tax. Current tax is the
amount of tax for the year determined in accordance with the provisions
of income tax laws based on the estimated taxable income, as the case
may be, after taking into consideration, estimates of benefits /
deductions admissible under the provisions of Income Tax Act, 1961.
Deferred Tax charge or credit reflects the tax effects or impact of
timing differences between taxable income and accounting income for the
year and reversal of timing difference of earlier years. Any major
deficiency or reversal in relation to the estimate of preceding year(s)
is shown separately as relating to earlier years.
The deferred tax charge or credit and the corresponding deferred tax
liabilities or assets are recognized based on the tax rates and the tax
laws enacted or substantively enacted at the balance sheet date.
Deferred tax assets are recognized 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. If
the Company has carry forward of unabsorbed depreciation and tax losses
deferred tax are recognized only if there is virtual certainty that
such deferred tax assets can be realized against future taxable
profits.
At each balance sheet date the Company reassesses unrecognized deferred
tax assets. It recognizes deferred tax assets to the extent 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.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes down the carrying amount of a 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.
12. Retirement Benefits:
The Company's obligations towards various employees' benefits have been
recognized as follows :
a) Short term 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 services.
b) Provident Fund (Defined contribution plan) : Provident fund is a
defined contribution plan. The contribution towards provident fund
which are being deposited with the Regional Provident Fund,
Commissioner and are charged to the statement of profit and loss.
c) Gratuity (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 has taken a policy from LIC to meet
such liability. The contribution to the policy is accounted for on
accrual basis.
Mar 31, 2014
1.01 System of Accounting :
a. The Company follows the mercantile system of accounting and
recognises income and expenditure on accrual basis except accounting
for income from non-performing assets as defined in the guidelines of
the Reserve Bank of India on prudential norms for income recognition of
Non Banking Financial Companies, penal interest on deiayed payments on
lease & finance installments and dividend which have been accounted for
on cash basis.
b. The Company follows the prudential norms for Asset classification,
Income Recognition, Provisioning for bad and doubtful debts as
prescribed by the Reserve Bank of India for Non- Banking Finance
Companies.
c. The accounting polices are consistently applied by the company with
those applied in the previous year except otherwise stated. All assets
and liabilities have been classified as current or non- current as per
the Company''s normal operating cycle and other criteria set out in the
Revised Schedule VI of the Companies Act, 1956. Based on the nature of
services and the time between the acquisition of assets for processing
and their realization in cash and cash equivalents, the Company has
ascertained its operating cycle as twelve months for the purpose of
current / non- current classification of its assets and liabilities.
1.02 Use of Estimates :
The preparation of Financial Statements in generally accepted
accounting principles requires manage- ment to make estimates and
assumptions that affects the reported amounts of assets and liabilities
at the date of the financials and the results of operations during the
reported period end. Although these estimates are based upon the
management''s best knowledge of current events and actions, actual
results could differ from these estimates. Adjustments as a result of
differences between actual and estimates are made prospectively.
1.03 Fixed Assets :
Tangible Assets : Tangible assets are stated at acquisition cost plus
directly attributable costs of bringing the asset to its working
condition for its intended use, less accumulated depreciation and
impairment losses, if any.
Intangible Assets : Intangible assets are stated at cost and amortized
over the period the Company expects to derive economic benefits from
their use.
Advances paid towards acquisition of fixed assets and cost of assets
not ready for use before the year end, are disclosed as capital work in
progress.
1.04 Impairment:
The carrying amounts of assets are reviewed at each balance sheet date
to determine whether there is any indication of impairment. If any such
indication exists, the recoverable amount of the asset is estimated.
For assets that are not yet available for use, the recoverable is
estimated at each balance sheet date. An impairment loss is recognized
whenever the carrying amount of an asset or cash generating unit
exceeds its recoverable amount. Impairment losses are recognized in the
statement of profit and loss. 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 amount does not exceed the carrying amount that would
have been determined net of depreciation or amortization loss had been
recognized.
1.05 Investments:
Investment are classified into long-term investments and current
investments based on intent of the management at the time of making the
investment. Investment intended to be held for more than one year are
classified as long-term investments.
Long-term investments, including investments in subsidiaries, if any,
are stated at cost price. Any diminution of permanent nature in the
value of the long-term investments is suitably provided for by charging
off to revenue. Diminution is considered to be permanent based on the
criteria that include the extent to which cost exceeds the market
value, the duration of the market value, decline and the financial
health of and specific prospects of the issuer.
The investments intended to be held for less than one year are
classified as current investments are stated at lower of cost or fair
value, computed category-wise.
1.06 Inventories:
Stock under finance agreements is valued at full agreement value less
amounts received / receivable upto the close of the financial year.
1.07 Revenue Recognition:
Income / revenue is generally accounted on accrual as they are earned
except income from non- performing assets as defined in the guidelines
of the Reserve Bank of India on prudential norms for income recognition
of Non Banking Financial Companies & penal interest on delayed payments
which are accounted for on cash basis. The income is deemed as earned
:
a. Finance charges, are accounted for over the finance period on the
basis of sum of digit method. They are recognized as income on due
basis as per the terms of agreement.
b. Interest is recognized as earned on day to day basis.
c. Dividend income is recognized when the right to receive the income
is established.
d. In respect of other heads of income, the Company follows the
practice of recognising income on accrual basis.
In case of uncertainties as to the risks & rewards, the conservative
accounting policy is adopted by way of making suitable provisions for
expenses and deferring the recognition of revenues.
1.08 Expenditure:
Expenses are recognized on accrual basis and provisions are made for
all known losses and liabilities.
1.09 Borrowing Cost:
Borrowing cost that are directly attributable to the acquisition,
construction or production of qualifying assets is capitalized as part
of the cost of such assets. A qualifying asset is an asset that
necessarily requires a substantial period of time to get ready for
intended use or sale.
All other borrowing costs are recognized as expense for the period in
which they are incurred calculated taking into account the amount
outstanding and the rate applicable on the borrowing.
1.10 Depreciation:
i) Tangible Assets are depreciated on Straight Line Method (SLM) at
rates specified in Schedule XIV to the Companies Act, 1956 from the
date of put to use until the date of sale.
ii) Intangible Assets are amortized over the period, the company
expects to derive economic benefits from their use.
iii) Leasehold improvements are amortized over the lease period as
stated in the lease agreement or over the estimated useful life of the
assets, whichever is shorter.
iv) Depreciation on assets costing up to Rs. 5,000/- is calculated at
the rate of 100% on pro-rata basis.
v) Depreciation on additions to assets or on sale / adjustment is
calculated pro-rata from the date of such addition or up to the date of
such sale / adjustment.
1.11 Earnings per share :
Basic earning per share is computed using the weighted average number
of equity shares out- standing during the year. Diluted earnings per
share is computed using the weighted average number of equity and
dilutive potential shares outstanding during the year, except where the
results would be anti-dilutive.
1.12 Taxation:
Tax expense comprises current tax and deferred tax. Current tax is the
amount of tax for the year determined in accordance with the provisions
of income tax laws based on the estimated taxable income, as the case
may be, after taking into consideration, estimates of benefits /
deductions admissible under the provisions of Income Tax Act, 1961.
Deferred Tax charge or credit reflects the tax effects of impact of
timing differences between taxable income and accounting income for the
year and reversal of timing difference of earlier years. Any major
deficiency or reversal in relation to the estimate of preceding year(s)
is shown separately as relating to earlier years.
The deferred tax charge or credit and the corresponding deferred tax
liabilities or assets are recognized based on the tax rates and the tax
laws enacted or substantively enacted at the balance sheet date.
Deferred tax assets are recognized 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. If
the company has carry forward of unabsorbed depreciation and tax losses
deferred tax are recognized only if there is virtual certainty that
such deferred tax assets can be realized against future taxable
profits.
At each balance sheet date the company reassesses unrecognized deferred
tax assets. It recognizes deferred tax assets to the extent it has
become reasonable 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.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonable 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,
1.13 Retirement Benefits :
The company''s obligations towards various employees'' benefits have been
recognized as follows :
a) Short term 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 services.
b) Provident Fund (Defined contribution plan)
Provident fund is a defined contribution plan. The contribution towards
provident fund which are being deposited with the Regional Provident
Fund, Commissioner and are charged to the statement of profit and loss.
c) Gratuity (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 has
taken a policy from LIC to meet such liability. The contribution to the
policy is accounted for on accrual basis.
Mar 31, 2012
1.1 System of Accounting :
a. The Company follows the mercantile system of accounting and
recognizes income and expenditure on accrual basis except accounting
for income from non-performing assets as defined in the guidelines of
the Reserve Bank of India on prudential norms for income recognition of
Non Banking Financial Companies, penal interest on delayed payments on
installments and dividend which have been accounted for on cash basis.
b. The Company follows the prudential norms for Asset classification,
Income Recognition, Provisioning for bad and doubtful debts as
prescribed by the Reserve Bank of India for Non-Banking Finance
Companies.
c. The accounting policies are consistently applied by the company
with those applied in the previous year except otherwise stated. All
assets and liabilities have been classified as current or non-current
as per the Companys normal operating cycle and other criteria set out
in the Revised Schedule VI of the Companies Act, 1956. Based on the
nature of services and the time between the acquisition of assets for
processing and their realization in cash and cash equivalents, the
Company has ascertained its operating cycle as twelve months for the
purpose of current/ non-current classification of its assets and
liabilities.
1.2 Use of estimates :
The preparation of Financial Statements in generally accepted
accounting principles requires management to make estimates and
assumptions that affects the reported amounts of assets and liabilities
at the date of the financials and the results of operations during the
reported period end. Although these estimates are based upon the
managements best knowledge of current events and actions, actual
results could differ from these estimates. Adjustments as a result of
differences between actual and estimates are made prospectively.
1.3 Fixed Assets:
Tangible Assets : Tangible assets are stated at acquisition cost plus
directly attributable costs of bringing the asset to its working
condition for its intended use, less accumulated depreciation and
impairment losses, if any.
Intangible Assets : Intangible assets are stated at cost and amortised
over the period the Company expects to derive economic benefits from
their use.
Advances paid towards acquisition of fixed assets and cost of assets
not ready for use before the year end, are disclosed as capital work in
progress.
1.4 Impairment:
The carrying amounts of assets are reviewed at each balance sheet date
to determine whether there is any indication of impairment. If any such
indication exists, the recoverable amount of the asset is estimated.
For assets that are not yet available for use, the recoverable is
estimated at each balance sheet date. An impairment loss is recognized
whenever the carrying amount of an asset or cash generating unit
exceeds its recoverable amount. Impairment losses are recognized in the
statement of profit and loss. 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 amount does not exceed the carrying amount that would
have been determined net of depreciation or amortization loss had been
recognized.
1.5 Investments:
Investment are classified into long-term investments and current
investments based on intent of the management at the time of making the
investment. Investment intended to be held for more than one year are
classified as long-term investments.
Long-term investments, including investments in subsidiaries, if any,
are stated at cost price. Any diminution of permanent nature in the
value of the long-term investments is suitably provided for by charging
off to revenue. Diminution is considered to be permanent based on the
criteria that include the extent to which cost exceeds the market
value, the duration of the market value, decline and the financial
health of and specific prospects of the issuer.
The investments intended to be held for less than one year are
classified as current investments are stated at lower of cost or fair
value, computed category-wise.
Investments, which are held as stock in trade as part of the business
operations are valued in the same manner as are relatable to Current
Investments.
i) The Cost is arrived at FIFO method and is inclusive of brokerage,
transfer expenses & Demat Charges, if any. The fair value is arrived at
with reference to the market value, if available, quotation in any
stock exchange or any other available information to indicate a
transaction between un-related willing buyer & willing seller at arms
length price.
ii) In case of unquoted investments, the fair value is arrived on the
basis of break up value as per latest available audited balance sheet
of the investee company.
iii) Interest accrued and/or broken period interest paid on unsold
securities is recognized as "Interest Accrued on Investment" under
Other Current Assets.
1.6 Inventories:
Stock under finance agreements is valued at full agreement value less
amounts received/receivable up to the close of the financial year.
1.7 Revenue Recognition :
Income /' revenue is generally accounted on accrual as they are earned
except income from non-performing assets as defined in the guidelines
of the Reserve Bank of India on prudential norms for income recognition
of Non Banking Financial Companies & penal interest on delayed payments
which are accounted for on cash basis.
The income is deemed as earned :
a. Finance charges are accounted for over the finance period on the
basis of sum of digit method. They are recognised as income on due
basis as per the terms of agreement.
b. Interest is recognized as earned on day to day basis.
In case of uncertainties as to the risks & rewards, the conservative
accounting policy is adopted by way of making suitable provisions for
expenses and deferring the recognition of revenues.
1.8 Expenditure:
Expenses are recognized on accrual basis and provisions are made for
all known losses and liabilities. Expenses incurred on behalf of other
companies, in India, for sharing personnel, common services and
facilities like premises, telephones, etc. are allocated to them at
cost and reduced from expenses. Expenses allocation received from other
companies is included within respective expense classifications.
1.9 Borrowing Cost:
Borrowing cost that are directly attributable to the acquisition,
construction or production of qualifying assets is capitalized as part
of the cost of such assets. A qualifying asset is an asset that
necessarily requires a substantial period of time to get ready for
intended use or sale.
All other borrowing costs are recognized as expense for the period in
which they are incurred calculated taking into account the amount
outstanding and the rate applicable on the borrowing.
1.10 Depreciation :
i) Tangible Assets are depreciated on Straight Line Method (SLM) at
rates specified in Schedule XIV to the Companies Act, 1956 from the
date of put to use until the date of sale.
ii) Intangible Assets are amortised over the period, the company
expects to derive economic benefits from their use.
iii) Leasehold improvements are amortised over the lease period as
stated in the lease agreement or over the estimated useful life of the
assets, whichever is shorter.
iv) Depreciation on assets costing up to Rs.5.000/- is calculated at
the rate of 100% on pro-rata basis,
v) Depreciation on additions to assets or on sale/adjustment is
calculated pro-rata from the date of such addition or up to the date of
such sale / adjustment.
1.11 Earnings per share :
Basic earning per share is computed using the weighted average number
of equity shares outstanding during the year. Diluted earnings per
share is computed using the weighted average number of equity and
dilutive potential shares outstanding during the year, except where the
results would be anti-dilutive.
1.12 Taxation :
Tax expense comprises current tax and deferred tax. Current tax is the
amount of tax for the year determined in accordance with the provisions
of income tax laws based on the estimated taxable income, as the case
may be, after taking into consideration, estimates of benefits/'
deductions admissible under the provisions of Income Tax, 1961.
Deferred Tax charge or credit reflects the tax effects of impact of
timing differences between taxable income and accounting income for the
year and reversal of timing difference of earlier years. Any major
deficiency or reversal in relation to the estimate of preceding year(s)
is shown separately as relating to earlier years.
The deferred tax charge or credit and the corresponding deferred tax
liabilities or assets are recognized based on the tax rates and the tax
laws enacted or substantively enacted at the balance sheet date.
Deferred tax assets are recognized 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. If
the company has carry forward of un absorbed depreciation and tax
losses deferred tax are recognized only if there is virtual certainty
that such deferred tax assets can be realized against future taxable
profits.
At each balance sheet date the company reassesses unrecognized deferred
tax assets. It recognizes deferred tax assets to the extent it has
become reasonable 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.
The carrying amount of deferred tax assets are review at each balance
sheet date. The company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonable 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.
1.13 Retirement Benefits :
The company's obligations towards various employees' benefits have been
recognized as follows :
a) Short term 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 services.
b) Provident Fund (Defined contribution plan)
Provident fund is a defined contribution plan. The contribution towards
provident fund which are being deposited with the Regional Provident
Fund, Commissioner and are charged to the statement of profit and loss.
c) Gratuity (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 has
taken a policy from LIC to meet such liability. The contribution to the
policy is accounted for on accrual basis.
Each holder of equity shares is entitled to one vote per share with a
right to receive per share dividend declared by the Company. In the
event of liquidation, the equity shareholders are entitled to receive
remaining assets of the Company (after distribution of all preferential
amounts) in the proportion of equity shares held by the shareholders.
During the year ended 31 March 2012, the Company has recorded per share
dividend of Rs. Nil (previous year: Rs.Nil) to equity shareholders.
Mar 31, 2011
(i) System of Accounting :
a) The Company follows the mercantile system of accounting and
recognises income and expenditure on accrual basis except accounting
for income from non-performing assets as defined in the guidelines of
the Reserve Bank of India on prudential norms for income recognition of
Non Banking Financial Companies, penal interest on delayed payments on
lease & finance installments and dividend which have been accounted for
on cash basis.
b) The Company follows the prudential norms for Asset Classification,
Income Recognition, Provisioning for bad and doubtful debts as
prescribed by the Reserve Bank of India for Non-Banking Finance
Companies.
(ii) Fixed Assets:
Fixed Assets are stated at cost of acquisition, less accumulated
depreciation.
(iii) Depreciation:
Depreciation is provided on straight line method in accordance with the
rates and in the manner prescribed under Schedule XIV of the Companies
Act, 1956.
(iv) Investments :
Long term Investments are valued at cost and any diminution in value
wherever considered permanent by the management are provided for.
Unquoted Equity Shares are valued at cost or break-up value whichever
is lower. Unquoted Preference Shares are valued at cost or face value
whichever is lower.
(v) Inventories :
Stock under finance agreements is valued at full agreement value less
amounts received / receivable upto the close of the financial year.
(vi) Revenue Recognition :
a) Finance charges are accounted for over the finance period on the
basis of sum of digit method. They are recognised as income on due
basis as per the terms of agreement.
b) Interest is recognized as earned on day to day basis.
(vii) Retirement Benefits :
Company's contribution to Provident Fund, Gratuity and Leave encashment
are charged to Profit & Loss Account on accrual basis.
(viii) Taxation :
Provision for the tax for the year comprises current income tax
determined to be payable in respect of taxable income and deferred tax
being the tax effect of timing differences representing the difference
between taxable income and the accounting income that originate in one
period and are capable of reversal in one or more subsequent period(s).
(ix) Contingent Liabilities:
Unprovided contingent liabilities are disclosed in the accounts by way
of notes giving nature and quantum of such liabilities.
Mar 31, 2010
(i) System of Accounting:
a) The Company follows the mercantile system of accounting and
recognises income and expenditure on accrual basis except accounting
for income from non-performing assets as defined in the guidelines of
the Reserve Bank of India on prudential norms for income recognition of
Non Banking Financial Companies, penal interest on delayed payments on
lease & finance installments and dividend which have been accounted for
on cash basis.
b) The Company follows the prudential norms for Asset Classification,
Income Recognition, Provisioning for bad and doubtful debts as
prescribed by the Reserve Bank of India for Non-Banking Finance
Companies.
(ii) Fixed Assets:
Fixed Assets are stated at cost of acquisition, less accumulated
depreciation.
(iii) Depreciation:
Depreciation is provided on straight line method in accordance with the
rates and in the manner prescribed under Schedule XIV of the Companies
Act, 1956.
(iv) Investments:
Long term Investments are valued at cost and any diminution in value
wherever considered permanent by the management are provided for.
Unquoted Equity Shares are valued at cost or break-up value whichever
is lower. Unquoted Preference Shares are valued at cost or face value
whichever is lower.
(v) Inventories:
Stock under finance agreements is valued at full agreement value less
amounts received / receivable upto the close of the financial year.
(vi) Revenue Recognition:
a) Finance charges are accounted for over the finance period on the
basis of sum of digit method. They are recognised as income on due
basis as per the terms of agreement.
b) Interest is recognized as earned on day to day basis.
(vii) Retirement Benefits:
Companys contribution to Provident Fund, Gratuity and Leave encashment
are charged to Profit & Loss Account on accrual basis.
(viii) Taxation:
Provision for the tax for the year comprises current income tax
determined to be payable in respect of taxable income and deferred tax
being the tax effect of timing differences representing the difference
between taxable income and the accounting income that originate in one
period and are capable of reversal in one or more subsequent period(s).
(ix) Contingent Liabilities:
Unprovided contingent liabilities are disclosed in the accounts by way
of notes giving nature and quantum of such liabilities.
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