Accounting Policies of Photon Capital Advisors Ltd. Company

Mar 31, 2024

2. Material Accounting Policies

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

(I) Compliance with Ind AS

The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS)
notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended by the
Companies (Indian Accounting Standards) Amendment Rules, 2016 and Companies (Indian Ac¬
counting Standards) Amendment Rules, as amended, the relevant provisions of the Companies
Act, 2013 (''the Act'') and other relevant provisions of the Act.

These financial statements of the company as at and for the year ended 31st March,2024
(including comparatives), were duly approved and authorised for issue by the Board of Directors
of the Company on 30.05.2024.

(ii) Basis of Preparation of Financial Statements

The financial statements have been prepared on a historical cost basis, except for the following:

• Certain financial assets and liabilities that are measured at fair value;

• Employee defined benefit plans - plan assets measured at fair value less present value of
defined benefit obligation;

2.1 Significant Judgments, Estimates and Assumptions

The preparation of the Company''s financial statements requires management to make judg¬
ments, estimates and assumptions that affect the reported amounts of revenues, expenses, as¬
sets and liabilities, the accompanying disclosures, and the disclosure of contingent liabilities at
the date of the financial statements.

Estimates and assumptions are continuously evaluated and are based on management''s experi¬
ence and other factors, including expectations of future events that are believed to be reasona¬
ble under the circumstances. Uncertainty about these assumptions and estimates could result in
outcomes that require a material adjustment to the carrying amount of assets or liabilities affect¬
ed in future periods.

In particular, the Company has identified the following areas where significant judgments, esti¬
mates and assumptions are required. Further information on each of these areas and how they
impact the various accounting policies are described below and also in the relevant notes to the
financial statements. Changes in estimates are accounted for prospectively.

Judgments

In the process of applying the Company''s accounting policies, management has made the follow¬
ing judgments, which have the most significant effect on the amounts recognised in the financial
statements:

a) Contingencies

Contingent liabilities may arise from the ordinary course of business in relation to claims against
the Company including legal, contractor, land access and other claims. By their nature, contin¬
gencies will be resolved only when one or more uncertain future events occur or fail to occur.

The assessment of the existence and potential quantum of contingencies inherently involves the
exercise of significant judgments and the use of estimates regarding the outcome of future events.

b) Estimates and Assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the
reporting date that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, are described below. The Company
based its assumptions and estimates on parameters available when the financial statements were
prepared. Existing circumstances and assumptions about future developments, however, may
change due to market change or circumstances arising beyond the control of the Company. Such
changes are reflected in the assumptions when they occur.

c) Impairment of Non-financial Assets

The Company assesses at each 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 assets recoverable amount. An asset''s recoverable amount is the higher
of an asset''s or Cash Generating Unit (CGU''s) fair value less costs of disposal and its value in use.
It 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 no such transactions can be identified, an appropriate valu¬
ation model is used.

d) Estimation of Defined Benefit Obligations

The cost of the defined benefit plan and other post-employment benefits and the present value of
such obligation are determined using actuarial valuations. An actuarial valuation involves making
various assumptions that may differ from actual developments in the future. These include the
determination of the discount rate, future salary increases, mortality rates and attrition rate. Due
to the complexities involved in the valuation and its long term nature, a defined benefit obligation
is highly sensitive to changes in these assumptions. All assumptions are reviewed at each report¬
ing date.

e) Fair Value Measurement of Financial Instruments

When the fair values of financial assets and financial liabilities recorded in the Balance Sheet can¬
not be measured based on quoted prices in active market, their fair value is measured using valua¬
tion techniques including the Discounted Cash Flow (DCF) model. The inputs to these models are
taken from observable markets where possible, but where this is not feasible, a degree of judg¬
ment is required in establishing fair values. Judgements include considerations of inputs such as
liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the
reported fair value of financial instruments.

f) Estimation of Current Tax and Deferred Tax

Management judgment is required for the calculation of provision for income taxes and deferred
tax assets and liabilities. The Company reviews at each Balance Sheet date the carrying amount
of deferred tax assets. The factors used in estimates may differ from actual outcome which could
lead to adjustment to the amounts reported in the financial statements.

f) Impairment of Financial Assets

The impairment provisions for financial assets are based on assumptions about risk of default and
expected credit loss rates (ECL). The Company uses judgments in making these assumptions and
selecting the inputs to the impairment calculation, based on Company''s past history, existing mar¬
ket conditions as well as forward looking estimates at the end of each reporting period.

2.2 Property, Plant and Equipment

Property, plant and equipment are stated at historical cost less depreciation. Historical cost in¬
cludes expenditure that is directly attributable to the acquisition of the items. Subsequent costs
are included in the asset''s carrying amount, 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 relia¬
bly.

Derecognition

An item of Property, Plant and Equipment is derecognised upon disposal or when no future eco¬
nomic benefits are expected to arise from the continued use of assets.

Depreciation methods, estimated useful lives

Depreciation is calculated using the straight-line basis at the rates arrived at based on the useful
lives prescribed in Schedule II of the Companies Act, 2013. The company follows the policy of
charging depreciation on pro-rata basis on the assets acquired or disposed off during the year.
Leasehold assets are amortised over the period of lease.

Gains or losses on disposal are determined by comparing proceeds with carrying amount. Individu¬
al assets costing less than Rs. 5,000 are depreciated in full in the year of purchase.

2.3 Leases

(I) Assets acquired under lease where the Company has substantially all the risks and rewards of
ownership are classified as finance lease. Such leases are capitalized at the inception of lease at
lower of the fair value and present value of minimum lease payments.

(ii) Assets acquired under lease where the significant portion of risks and rewards of ownership are
retained by the lesser are classified as operating lease. Lease rentals are charged to profit and loss
account on accrual basis.

2.4 Impairment of assets

The company assesses at each 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) net selling price 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 dis¬
counted to their present value using a pre-tax discount rate that reflects current market assess¬
ments of the time value of money and the risks specific to the asset. In determining net selling
price, recent market transactions are taken into account, if available. If no such transactions can
be identified, an appropriate valuation model is used.

An assessment is made at each reporting date as to whether there is any indication that previously
recognized impairment losses may no longer exist or may have decreased. If such indication ex¬
ists, the company estimates the asset''s or cash-generating unit''s recoverable amount. A previously
recognized impairment loss is reversed only if there has been a change in the assumptions used to
determine the asset''s recoverable amount since the last impairment loss was recognized. The re¬
versal is limited so that the carrying amount of the asset does not exceed its recoverable amount,
nor exceed the carrying amount that would have been determined, net of depreciation, had no im¬
pairment loss been recognized for the asset in prior years. Such reversal is recognized in the state¬
ment of profit and loss unless the asset is carried at a revalued amount, in which case the reversal
is treated as a revaluation increase.

2.5 Investments

I) Classification : The Company classifies its financial assets in the following measurement catego¬
ry:

• measured subsequently at fair value.

For assets measured at fair value, gains and losses are recorded in other comprehensive income.

ii) Measurement: At initial recognition, the company measures a financial asset at its fair value
plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that
are directly attributable to the acquisition of the financial asset. Transaction costs of financial as¬
sets carried at fair value through profit or loss are expensed in profit or loss.

Debt instruments:

Subsequent measurement of debt instruments depends on the Company''s business model for
managing the asset and the cash flow characteristics of the asset.

(I) Long term investments are carried at cost. Diminution in the value of investments, other than
temporary, is provided for

(ii) Current investments are carried at fair value

(iii) Unlisted and not-actively traded investments are stated at their fair value

2.6 Fair Value Measurement

The Company measures financial instruments such as investments in shares at fair value at each
Balance Sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability at the
measurement date. All assets and liabilities for which fair value is measured or disclosed in the fi¬
nancial statements are categorised within the fair value hierarchy, described as follows, based on
the lowest level input that is significant to the fair value measurement as a whole.

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable.

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabili¬
ties on the basis of the nature, characteristics and risks of the asset or liability and the level of the
fair value hierarchy as explained above.

2.7 Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
company and the revenue can be reliably measured. The following specific recognition criteria
must also be met before revenue is recognized:

Income from services

Revenues from maintenance contracts are recognized pro-rata over the period of the contract as
and when services are rendered. The company collects Goods & Services Tax on behalf of the
government and, therefore, it is not an economic benefit flowing to the company. Hence, it is ex¬
cluded from revenue.

Interest

Interest income is recognized on a time proportion basis taking into account the amount outstand¬
ing and the applicable interest rate. Interest income is included under the head "other income" in
the statement of profit and loss.

On sale of investments:

Revenue from sale of investments is recognised in the year of sale net of expenses.

Dividends

Dividend income is recognized when the company''s right to receive dividend is established by the
reporting date.

2.8 Retirement and other employee benefits
Short-term employee benefits

The undiscounted amount of short term employee benefits expected to be paid in exchange for the
services rendered by employees are recognised during the year when the employees render the
service. These benefits include salaries, social security contributions and short term compensated
absences which are expected to occur within twelve months after the end of the period in which
the employee renders the related service. The cost of such compensated absences is accounted as
under:

(a) in case of accumulated compensated absences, when employees render the services that in¬
crease their entitlement of future compensated absences; and

(b) in case of non-accumulating compensated absences, when the absences occur.

Long-term Employee Benefits

Compensated absences and other benefits like gratuity which are allowed to be carried forward
over a period in excess of 12 months after the end of the period in which the employee renders the
related service are recognised as a non-current liability at the present value of the defined benefit
obligation as at the Balance Sheet date out of which the obligations are expected to be settled.

Defined contribution plans

Company''s contributions paid/payable during the year are recognized in the Profit and Loss Ac¬
count.

Defined benefit plans

For defined benefit plans in the form of gratuity, the cost of providing benefits is determined using
''the Projected Unit Credit method, with actuarial valuations being carried out at each Balance
Sheet date. Remeasurements, comprising of actuarial gains and losses, the effect of the asset
ceiling, excluding amounts included in net interest on the net defined benefit liability and the re¬
turn on plan assets (excluding amounts included in net interest on the net defined benefit liability),
are recognised immediately in the Balance Sheet with a corresponding debit or credit to retained
earnings through other comprehensive income in the period in which they occur. The retirement
benefit obligation recognised in the Balance Sheet represents the present value of the defined ben¬
efit obligation as adjusted for unrecognised past service cost.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial
assumptions are recognized in the period in which they occur, directly in other comprehensive in¬
come.

2.9 Taxes on Income
Income tax

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

Deferred tax

Deferred tax liabilities are provided using the liability method on temporary differences between
the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at
the reporting date.

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of
unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent
that it is probable that taxable profit will be available against which the deductible temporary dif¬
ferences, and the carry forward of unused tax credits and unused tax losses can be utilised. De¬
ferred tax liabilities are generally recognised in full.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the
period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the Balance Sheet date. Tax relating to items rec¬
ognised directly in equity/ other comprehensive income is recognised in respective head and not in
the Statement of Profit &Loss.

The carrying amount of deferred tax assets is reviewed at each Balance Sheet date and is adjusted
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all
or part of the asset to be recovered.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to
set off current tax assets against current tax liabilities and the deferred taxes relate to the same
taxable entity and the same taxation authority.

2.10 Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable
to equity shareholders (after deducting preference dividends and attributable taxes) by the
weighted average number of equity shares outstanding during the period. Partly paid equity shares
are treated as a fraction of an equity share to the extent that they are entitled to participate in divi¬
dends relative to a fully paid equity share during the reporting period.

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Mar 31, 2014

1 Basis of preparation

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards issued by the Institute of Chartered Accountants of India.

2 Use of estimates

The preparation of financial statements, in conformity with GAAP, requires that the management makes estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

3 Tangible fixed assets

Fixed assets are stated at their original cost less accumulated depreciation and impairment losses. Cost comprises the purchase price and any other attributable cost of bringing the asset to its working condition for its intended use. Capital work in progress includes advances paid to acquire fixed assets and cost of assets not ready for intended use before the balance sheet date.

4 Intangible assets

Portfolio Management Fees are amortized on straight line basis over their expected useful life in line with Accounting Standard 26 "Intangible Assets" issued by the Institute of Chartered Accountants of India.

5 Depreciation on tangible fixed assets

Depreciation on assets is provided on straight-line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956 except for lease hold improvement which are depreciated over the period of lease.

Depreciation on fixed assets added / disposed off during the year is provided on pro-rata basis with reference to the month of addition / disposal. Individual assets costing less than Rs. 5,000 are depreciated in full in the year of purchase.

6 Leases

(i) Assets acquired under lease where the Company has substantially all the risks and rewards of ownership are classified as finance lease. Such leases are capitalized at the inception of lease at lower of the fair value and present value of minimum lease payments.

(ii) Assets acquired under lease where the significant portion of risks and rewards of ownership are retained by the lesser are classified as operating lease. Lease rentals are charged to profit and loss account on accrual basis.

7 Impairment of tangible and intangible assets

The company assesses at each 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) net selling price 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 net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.

An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the company estimates the asset''s or cash- generating unit''s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of profit and loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.

8 Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.

(i) Long term investments are carried at cost. Diminution in the value of investments, other than temporary, is provided

(ii) Current investments are carried at lower of cost and fair value

(iii) Unlisted and not-actively traded investments are stated at their cost of acquisition less provision for diminution in the value.

9 Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized:

a Income from services

Revenues from maintenance contracts are recognized pro-rata over the period of the contract as and when services are rendered. The company collects service tax on behalf of the government and, therefore, it is not an economic benefit flowing to the company. Hence, it is excluded from revenue.

b Interest

Interest income is recognized on a time proportion basis taking in to account the amount outstanding and the applicable interest rate. Interest income is included under the head "other income" in the statement of profit and loss.

c Dividends

Dividend income is recognized when the company''s right to receive dividend is established by the reporting date.

10 Foreign currency transactions

The transactions in foreign currency are accounted at the exchange rate prevailing on the date of transaction. Foreign currency monetary assets and monetary liabilities at the balance sheet date are translated at the rate of exchange prevailing on that date. The exchange difference arising from foreign currency transactions and premium on forward contracts are amortized as expenses or income over the life of the contract.

11 Retirement and other employee benefits

a Short-term employee benefits

Short-term employee benefits including salaries, social security contributions, short term compensated absences (such as 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 employee 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 (such as medical care) for current employees are estimated and measured on an undiscounted basis.

b Defined contribution plans

Company''s contributions paid/payable during the year are recognized in the Profit and Loss Account.

c Defined benefit plans

The Company provides for gratuity in accordance with the Payment of Gratuity Act, 1972, a defined benefit retirement plan (the Plan) covering all employees. The plan, subject to the provisions of the above Act, provides a lump sum payment to eligible employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment. Gratuity liability is accrued and provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year. Actuarial gains/losses are immediately taken to profit and loss account and are not deferred.

12 Income taxes

a Income tax

Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax ratesand the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

b Deferred tax

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

13 Segment reporting

Identification of segments

The Company''s business is organized in two segments - Financial services and Investment services. Accordingly, these divisions comprise the primary basis of segment information. The Company caters to Indian markets and as such there are no reportable geographical segments. All the assets are also located in India.

The generally accepted accounting principles used in the preparation of the financial statements are applied to record revenue and expenditure in individual segments Revenue and direct expenses in relation to segments are categorized based on items that are individually identifiable to that segment, while other costs, wherever allocable, is apportioned to the segments on an appropriate basis. Certain expenses are not specifically allocable to individual segments as the underlying services are used inter changeably. The Company believes that it is not practicable to provide segment disclosures relating to such expenses, and accordingly such expenses are separately disclosed as ''unallocated'' and directly charged to total income.

14 Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting period.

15 Provisions

A provision is recognized when the company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

16 Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The company does not recognize a contingent liability but discloses its existence in the financial statements.

17 Cash and cash equivalents

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

18 Derivative instruments

In accordance with the ICAI announcement, derivative contracts, other than foreign currency forward contracts covered under AS 11, are marked to market on a portfolio basis, and the net loss, if any, after considering the offsetting effect of gain on the underlying hedged item, is charged to the statement of profit and loss. Net gain, if any, after considering the offsetting effect of loss on the underlying hedged item, is ignored.

19 Measurement of EBITDA

As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the company has elected to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. The company measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the company does not include depreciation and amortization expense, finance costs and tax expense.

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Mar 31, 2012

1. Basis of preparation

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting stand

2. Use of estimates

The preparation of financial statements, in conformity with GAAP, requires that the management makes estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

3. Tangible fixed assets

Fixed assets are stated at their original cost less accumulated depreciation and impairment losses. Cost comprises the purchase price and any other attributable cost of bringing the asset to its working condition for its intended use. Capital work in progress includes advances paid to acquire fixed assets and cost of assets not ready for intended use before the balance sheet date.

4. Intangible assets

Portfolio Management Fees are amortized on straight line basis over their expected useful life in line with Accounting Standard 26 "Intangible Assets" issued by the Institute of Chartered Accountants of India.

5. Depreciation on tangible fixed assets

Depreciation on assets is provided on straight-line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956 except for lease hold improvement which are depreciated over the period of lease.

Depreciation on fixed assets added / disposed off during the year is provided on pro-rata basis with reference to the month of addition / disposal. Individual assets costing less than Rs. 5,000 are depreciated in full in the year of purchase.

6. Leases

(i) Assets acquired under lease where the Company has substantially all the risks and rewards of ownership are classified as finance lease. Such leases are capitalized at the inception of lease at lower of the fair value and present value of minimum lease payments.

(ii) Assets acquired under lease where the significant portion of risks and rewards of ownership are retained by the lessor are classified as operating lease. Lease rentals are charged to Statement of profit and loss on accrual basis.

7. Impairment of tangible and intangible assets

The company assesses at each 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) net selling price 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 net selling price, recent market transactions are taken into account, if available. If no suchtransactions can be identified, an appropriate valuation model is used.

An assessment is made at each reporting date as to whether there is any indication that previously recognized impairmentlosses may no longer exist or may have decreased. If such indication exists, the company estimates the asset's or cash- generating unit's recoverable amount. A previously recognized impairment loss is reversed only if there has been a changein the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognized. Thereversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed thecarrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for theasset in prior years. Such reversal is recognized in the statement of profit and loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.

8. Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.

(i) Long term investments are carried at cost. Diminution in the value of investments, other than temporary, is provided for

(ii) Current investments are carried at lower of cost and fair value

(iii) Unlisted and not-actively traded investments are stated at their cost of acquisition less provision for diminution in the value.

9. Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized:

a) Income from services

Revenues from maintenance contracts are recognized pro-rata over the period of the contract as and when services are rendered. The company collects service tax on behalf of the government and, therefore, it is not an economic benefit flowing to the company. Hence, it is excluded from revenue.

b) Interest

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "other income" in the statement of profit and loss.

c) Dividends

Dividend income is recognized when the company's right to receive dividend is established by the reporting date.

10. Foreign currency transactions

The transactions in foreign currency are accounted at the exchange rate prevailing on the date of transaction. Foreign currency monetary assets and monetary liabilities at the balance sheet date are translated at the rate of exchange prevailing on that date. The exchange difference arising from foreign currency transactions and premium on forward contracts are amortized as expenses or income over the life of the contract.

11. Retirement and other employee benefits

a) Short-term employee benefits

Short-term employee benefits including salaries, social security contributions, short term compensated absences (such as 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 employee 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 (such as medical care) for current employees are estimated and measured on an undiscounted basis.

b) Defined contribution plans

Company's contributions paid/payable during the year are recognized in the Statement of Profit and Loss.

c) Defined benefit plans

The Company provides for gratuity in accordance with the Payment of Gratuity Act, 1972, a defined benefit retirement plan (the Plan) covering all employees. The plan, subject to the provisions of the above Act, provides a lump sum payment to eligible employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of employment. Gratuity liability is accrued and provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year. Actuarial gains/losses are immediately taken to Statement of profit and loss and are not deferred.

12. Income taxes

a) Income tax

Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equityis recognized in equity and not in the statement of profit and loss.Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax ratesand the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

b) Deferred tax

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

c) Fringe benefit tax

Fringe benefit tax is determined at current applicable rates on expense falling within the ambit of 'Fringe benefit' as defined under the Income Tax Act, 1961.

13. Segment reporting Identification of segments

The Company's business is organized in two segments - Financial services and Investment services. Accordingly, these divisions comprise the primary basis of segment information. The Company caters to Indian markets and as such there are no reportable geographical segments. All the assets are also located in India.

The generally accepted accounting principles used in the preparation of the financial statements are applied to record revenue and expenditure in individual segments

Revenue and direct expenses in relation to segments are categorized based on items that are individually identifiable to that segment, while other costs, wherever allocable, is apportioned to the segments on an appropriate basis. Certain expenses are not specifically allocable to individual segments as the underlying services are used interchangeably. The Company believes that it is not practicable to provide segment disclosures relating to such expenses, and accordingly such expenses are separately disclosed as 'unallocated' and directly charged to total income.

14. Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that theyare entitled to participate in dividends relative to a fully paid equity share during the reporting period.

15. Provisions

A provision is recognized when the company has a present obligation as a result of past event, it is probable that outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can bemade of the amount of the obligation. Provisions are not discounted to their present value and are determined based onthe best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

16. Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by theoccurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be

measured reliably. The company does not recognize a contingent liability but discloses its existencein the financial statements.

17. Cash and cash equivalents

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

18. Derivative instruments

In accordance with the ICAI announcement, derivative contracts, other than foreign currency forward contracts covered under AS 11, are marked to market on a portfolio basis, and the net loss, if any, after considering the offsetting effect of gain on the underlying hedged item, is charged to the statement of profit and loss. Net gain, if any, after considering the offsetting effect of loss on the underlying hedged item, is ignored.

19. Measurement of EBITDA

As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the company has elected to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. The company measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the company does not include depreciation and amortization expense, finance costs and tax expense.

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Mar 31, 2010

(a) Basis of accounting and preparation of financial statements

The Company adopts the historical cost concept and accrual basis in accordance with Generally Accepted Accounting Principles (GAAP) for the preparation of its accounts and complies with accounting standards issued by the Institute of Chartered Accountants of India and relevant provisions of the Companies Act, 1956.

(b) Use of estimates

The preparation of financial statements, in conformity with GAAP, requires that the management makes estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

(c) Fixed assets and capital work in progress

Fixed assets are stated at their original cost less accumulated depreciation and impairment losses. Cost comprises the purchase price and any other attributable cost of bringing the asset to its working condition for its intended use. Capital work in progress includes advances paid to acquire fixed assets and cost of assets not ready for intended use before the balance sheet date.

(d) Intangibles

Portfolio Management Fees are amortized on straight line basis over their expected useful life in line with Accounting Standard 26 "Intangible Assets" issued by the Institute of Chartered Accountants of India.

(e) Depreciation

Depreciation on assets is provided on straight-line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956 except for lease hold improvement which are depreciated over the period of lease.

Depreciation on fixed assets added / disposed off during the year is provided on pro-rata basis with reference to the month of addition / disposal. Individual assets costing less than Rs. 5,000 are depreciated in full in the year of purchase.

(f) Impairment of assets

The Company assesses at each balance sheet date whether there is any indication that an asset, including intangible, may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. 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 recognized in the profit and loss account.

(g) Leases

(i) Assets acquired under lease where the Company has substantially all the risks and rewards of ownership are classified as finance lease. Such leases are capitalized at the inception of lease at lower of the fair value and present value of minimum lease payments.

(ii) Assets acquired under lease where the significant portion of risks and rewards of ownership are retained by the lessor are classified as operating lease. Lease rentals are charged to profit and loss account on accrual basis.

(h) Investments

(i) Long term investments are carried at cost. Diminution in the value of investments, other than temporary, is provided for

(ii) Current investments are carried at lower of cost and fair value

(iii) Unlisted and not-actively traded investments are stated at their cost of acquisition less provision for diminution in the value

(i) Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured

(i) Revenue from services

Revenue from services rendered is recognized as the service is performed based on terms of agreements / arrangements with the concerned parties

(ii) Interest

Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

(iii) Dividends

Dividend income is recognized when the right to receive payment is established

(j) Foreign currency transactions

The transactions in foreign currency are accounted at the exchange rate prevailing on the date of transaction. Foreign currency monetary assets and monetary liabilities at the balance sheet date are translated at the rate of exchange prevailing on that date. The exchange difference arising from foreign currency transactions and premium on forward contracts are amortized as expenses or income over the life of the contract.

(k) Taxes on income

(i) Current taxation

Provision for current tax is made based on the tax liability computed after considering tax allowances and exemptions.

(ii) Fringe benefit tax

Fringe benefit tax is determined at current applicable rates on expense falling within the ambit of Fringe benefit as defined under the Income Tax Act, 1961.

(iii) Deferred taxation

Deferred income tax is provided on all timing differences at the balance sheet date between the tax basis of assets and liabilities and their carrying amount for financial reporting purpose.

Deferred tax assets are recognized only if there is a reasonable or virtual certainty, as may be applicable, that sufficient future taxable income will be available, against which they can be realized. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred tax asset to be utilized.

(l) Retirement benefits

(i) Short-term employee benefits

Short-term employee benefits including salaries, social security contributions, short term compensated absences (such as 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 employee 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 (such as medical care) for current employees are estimated and measured on an undiscounted basis.

(ii) Defined contribution plans

Companys contributions paid/payable during the year are recognized in the Profit and Loss Account.

(iii) Defined benefit plans

The Company provides for gratuity in accordance with the Payment of Gratuity Act, 1972, a defined benefit retirement plan (the Plan) covering all employees. The plan, subject to the provisions of the above Act, provides a lump sum payment to eligible employees at retirement, death, incapacitation or termination of

employment, of an amount based on the respective employees salary and the tenure of employment. Gratuity liability is accrued and provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year. Actuarial gains/losses are immediately taken to profit and loss account and are not deferred.

(m) Provisions and contingent liabilities

A provision is recognized when the Company has a present obligation as a result of past events, for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made. Provisions are reviewed regularly and are adjusted where necessary to reflect the current best estimate of the obligation. When the Company expects a provision to be reimbursed, the reimbursement is recognized as a separate asset only when reimbursement is virtually certain.

A disclosure for contingent liabilities is made where there is a possible obligation or a present obligation that may probably not require an outflow of resources. When there is a possible or a present obligation where the likelihood of outflow of resources is remote, no provision or disclosure is made.

Operating leases

In respect of buildings occupied as tenant, the aggregate lease rental is charged as rent in the profit and loss account. There are no minimum lease payments.

Defined benefit plan

The following tables summaries the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective plans

The fund is administered by Life Insurance Corporation of India ("LIC"). The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled. The information on the allocation of the fund into major asset classes and expected return on each major class are not readily available. We understand that LICs overall portfolio of assets is well diversified and as such, the long-term return on the policy is expected to be higher than the rate of return on Central Government bonds.