Corporate Information IL&FS Investment Managers Limited (IIML) is incorporated in India as a public limited company under the provisions of the Companies Act, 1956. IIML is one of India's largest domestic private equity fund management companies which manages funds on behalf of leading Indian and International Institutions 1) Significant Accounting Policies (a) Basis of accounting and brparation of Financial Statements The Financial Statements of the Company have been brpared in accordance with the Generally Accepted Accounting Principles in India ("Indian GAAP") to comply with the Accounting Standards, brscribed under Section 133 of the Companies Act, 2013 ("the CA 2013") as applicable. The Financial Statements have been brpared on accrual basis under the historical cost convention. The accounting policies adopted in the brparation of the financial statements are consistent with those followed in brvious year (b) Use of Estimates The brparation of Financial Statements in conformity with Indian GAAP requires the Management to make certain estimates and assumptions considered in the reported amounts of Assets and Liabilities (including Contingent Liabilities) as on the date of the Financial Statements and the reported Income and Expenses during the reporting period. The Management believes that the estimates used in brparation of the Financial Statements are prudent and reasonable. Actual results could differ from these estimates. Any changes in such estimates are recognised prospectively (c) Fixed Assets (Tangible and Intangible) and Debrciation/Amortisation Fixed Assets are carried at cost less accumulated debrciation/amortisation & impairment losses if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes and any directly attributable expenditure on making the asset ready for its intended use As per CA 2013, debrciation of fixed assets has to be provided based on estimated useful life as per Schedule II of the CA 2013. However, there are certain categories of assets in whose cases the life of assets have been assessed as under, taking into consideration the nature of the asset, the estimated usage of the asset , the operating conditions of the asset, the past history of replacement , anticipated technological changes etc. Pursuant to the foregoing, it is proposed to continue with the existing policy of accelerated debrciation on following category of assets: (i) Mobile Phones and Ipad / Tablets 100% debrciated during the year of capitlisation due to extensive usage and technological obsolescence (ii) Vehicles as per the current policy of 4 years as against the useful life of 8 years provided in the CA 2013 (iii) Furniture and Fixtures as per current policy of 5 years as against the useful life of 10 years provided in the CA 2013 (iv) Office Equipment as per current policy of 4 years as against the useful life of 5 years provided in the CA 2013 (v) Data Processing Equipment - Servers & Networking as per current policy of 4 years as against the useful life of 6 years provided in the CA 2013 (vi) Assets provided to Employees as perquisites would be debrciated over a period of 3 years in line with the rules set in the Employee Hand Book (EHB). (vii) Individual assets costing Rs. 5,000 or less in the year of capitlisation shall be debrciated 100% for all the categories of assets Residual value of all assets is retained at Rs. 1 Assets whose useful life has been completed as at March 31, 2014 are fully debrciated and such debrciation is routed through the Reserves & Surplus Account. All other assets outstanding in the books as at March 31, 2014 are debrciated over the balance useful life (d) Impairment of Assets The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their brsent value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss to the extent the amount was brviously charged to the Statement of Profit and Loss, except in case of revalued assets (e) Operating Leases Leases where the lessor effectively retains substantially all the risks and benefits of ownership over the lease term are classified as operating lease. Lease rental expenses in respect of operating leases is equated over the lease period (f) Investments (i) Investments are recognisedat actual cost including costs incidental to acquisition such as brokerage fees and duties (ii) Investments are classified as non-current or current at the time of acquisition of such investments (iii) Non current investments are individually valued at cost less provision for diminution, other than temporary (iv) Current investments are valued at lower of cost or fair value, computed scrip-wise (g) Foreign Currency Transactions and Translations (i) Initial recognition Foreign currency transactions are recorded at the rate brvailing on the date of transaction. Foreign currency monetary items outstanding as at the Balance Sheet date are restated at the closing rate Net investment in non-integral foreign operations is accounted at the exchange rates brvailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction (ii) Measurement at the balance sheet date Non-Monetary items which are carried in terms of historical cost denominated in foreign currency at the Balance Sheet date are reported using the exchange rate at the date of the transaction (iii) Treatment of exchange differences Exchange differences arising on settlement / restatement of short-term foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss (h) Forward Contract Transactions The Company enters into forward contracts to hedge its assets and liabilities The brmium or discount arising at the inception of a Forward Contract is amortised as income or expense over the life of such Contract At the reporting date, Forward contracts are revalued and gains/losses if any, are recognised in the Statement of Profit and Loss Any profit or loss arising on cancellation or renewal of such a forward contract is recognised as income or expense in the period in which such cancellation or renewal is made (i) Revenue Recognition (i) Management fee income on Private Equity Funds (PEF) under management and advisory fee income are recognised based on contractual arrangements (ii) Income from Investment in Units of PEF is recognised on the basis of income distributed by the respective PEFs (iii) Dividend income is recognised once the unconditional right to receive dividend is established (iv) Interest income on fixed deposits/inter corporate deposits is accrued proportionately based on period for which the same is placed (j) Employee Benefits (i) The Company's contribution to Provident Fund, Superannuation Fund are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees (ii) The Company has taken a Group Gratuity cum life assurance scheme with Life Insurance Corporation of India for gratuity payable to the employees. Incremental liability based on actuarial valuation as per the projected unit credit method as at the reporting date, is charged as expenses in the Statement of Profit and Loss (iii) The leave balance is classified as short term and long term based on the leave policy. The compensated absence liability for the expected leave to be encashed has been measured on actual components eligible for leave encashment and expected leave to be availed is valued based on the total cost to the Company. The Short term and Long term leave have been valued on actuarial basis as per the projected unit credit method k) Placement Fees Expense Placement Fees paid to the Arranger of PEF are recognised over period of 5 years l) Taxation Tax Expense comprises of Current Tax and net changes in Deferred Tax Assets or Liability during the year. Current Tax is the amount of tax payable on taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income tax Act, 1961 and other applicable tax laws Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed debrciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed debrciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their reliability Current and deferred tax relating to items directly recognised in reserves are recognised in reserves and not in the Statement of Profit and Loss m) Provisions, Contingent Liabilities and Contingent Assets A provision is recognised when the Company has a brsent legal or constructive obligation as a result of a past event and it is probable that the outflow of resources would be required to settle the obligation, and in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted at their brsent value and are determined based on the best estimate required to settle the obligation at the balance sheet date. A Contingent Liability is disclosed unless the possibility of an outflow of resources embodying the economic benefits is remote. Contingent Assets are neither recognised nor disclosed in the financial statements n) Cash flow Statements (i) Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information (ii) Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value 0) Earnings Per Share In determining earnings per share, the Company considers the net profit after tax. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the year. The number of shares used in computing diluted earnings per share comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless issued at a later date p) Service tax input credit Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is reasonable certainty in availing the credits 2) Segment Reporting: The Company is in the business of providing asset management and other related service. As such, there are no separate reportable business segment or geographical segment as per Accounting Standard 17 on "Segment Reporting". It is considered appropriate by the Management to have a single segment i.e. "Asset Management and other related service" 3) At its board meeting dated August 11, 2015, the Company had decided to acquire 86.61% stake of IL&FS Infra Asset Management Ltd and 100% stake of IL&FS AMC Trustee Limited subject to necessary approvals of the Securities and Exchange Board of India which are still awaited 4) Figures for the brvious year have been regrouped / reclassified wherever considered necessary to conform to the current year's classification / disclosure For and on behalf of the Board Chairman Chief Executive Officer & Executive Director DIN: 00028037 DIN: 00032812 Chief Financial Officer Company Secretary DIN:00060698 DIN:00030836 Place: Mumbai Date: May 3, 2016 |