1. Significant accounting policies 1.1 Basis of brparation of financial statements The financial statements of the Company have been brpared on accrual basis under the historical cost convention and in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, ("the Act") read with paragraph 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Act to the extent applicable and the brvalent accounting practices in India. Further the Company follows the directions issued by the Reserve Bank of India (RBI) for Core Investment Companies (CIC). 1.2 Use of estimates The brparation of financial statements is in conformity with Indian GAAP, which require the management to make estimates and assumptions, that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and differences between actual results and estimates are recognised in the periods in which the results are known/ materialized. 1.3 Revenue recognition • Dividend income is recognised when the right to receive the dividend is established. • Interest income is recognised on accrual basis. • Fees and lease rental income is recognised on accrual basis in accordance with agreements/arrangements. • In respect of lease assets, where lease rentals are overdue for more than 12 months, the income is recognised only when lease rentals are actually received (as per income recognition norms of "Non Banking Financial (Non-Deposit Accepting or holding) Companies Prudential Norms (Reserve Bank) Directions, 2007" by the Reserve Bank of India (the RBI). • Income from bonds and debentures of corporate bodies and from Government securities/bonds are accounted on accrual basis. 1.4 Provision for Non-Performing Assets (NPA) and Standard Assets (SA) All loans and other credit exposures, where the installments are overdue for a period of six months or more are classified as NPA. Provision is made in respect of NPA and SA in accordance with the stipulations of Prudential Norms brscribed in the "Non-Banking Financial (Non-Deposit Accepting or holding) Companies Prudential Norms (Reserve Bank) Directions, 2007" by the RBI. 1.5 Fixed assets and debrciation Owned tangible assets Tangible fixed assets are stated at original cost of acquisition less accumulated debrciation and impairment losses. Cost comprises all costs incurred to bring the assets to their brsent location and working condition. Debrciation on tangible fixed assets is provided, on a pro-rata basis for the period of use, on the Straight Line Method (SLM), based on useful life of the fixed assets, as brscribed in Schedule II to the Act or as per the assessment of the useful life done by the management Owned intangible assets Intangible fixed assets are stated at cost of acquisition or internal generation, less accumulated amortisation and impairment losses. An intangible asset is recognised, where it is probable that the future economic benefits attributable to the assets will flow to the enterprise and where its cost can be reliably measured. The debrciable amount of the intangible assets is allocated over the best estimate of its useful life on a straight line basis. The Company capitalises software and related implementation costs where it is reasonably estimated that the software has an enduring useful life. Software is debrciated over management estimate of its useful life not exceeding 5 years. Leased assets Assets acquired under finance lease are capitalised at the inception of lease at the fair value of the assets or brsent value of minimum lease payments whichever is lower. These assets are fully debrciated on a straight line basis over the lease term or its useful life whichever is shorter. 1.6 Impairment of assets An asset is considered as impaired when on the balance sheet date there are indications of impairment in the carrying amount of the assets, or where applicable the cash generating unit to which the asset belongs, exceeds its recoverable amount (i.e. the higher of the assets net selling price and value in use). The carrying amount is reduced to the level of recoverable amount and the reduction is recognised as an impairment loss in the statement of profit and loss. 1.7 Investments Investments are classified as non-current (long term) or current. Non-current investments are carried at cost, however, provision for diminution in the value of non-current investments is made to recognise a decline, other than temporary, in the value of investments, at lower of cost or market value, determined on the basis of the quoted prices of individual investment in case of quoted investments and as per the management's estimate of fair value in case of non-quoted investments. Current investments are carried at lower of cost or fair value. 1.8 Employee benefits Defined contribution plan The Company makes defined contribution to the provident fund, which is recognised in the statement of profit and loss on an accrual basis. Defined benefit plan The Company's liability under the Payment of Gratuity Act, 1972 are determined on the basis of actuarial valuation made at the end of each financial year using the projected unit credit method. Actuarial gains and losses are recognized in the statement of profit and loss as income or expense respectively. Obligation is measured at the brsent value of estimated future cash flows using a discounted rate that is determined by reference to market yields on the date of balance sheet on government bonds where the currency and terms of the government bonds are consistent with the currency and estimated terms of the defined benefit obligation. Short term employee benefits Short term employee benefits are recognised as expense at the undiscounted amount in the statement of profit and loss for the year in which the related services are rendered. 1.9 Taxation Tax expense comprises current tax and deferred tax. Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the provisions of the Income Tax Act, 1961. Deferred tax for timing difference between the book and tax profits for the year is accounted for, using the tax rates and laws that apply substantively as on the date of balance sheet. Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that these would be realized in future. Deferred tax assets, in case of unabsorbed losses and unabsorbed debrciation, are recognized only if there is virtual certainty that such deferred tax asset can be realized against future taxable profits. At each balance sheet date, the Company re-assesses unrecognized deferred tax assets. It recognises unrecognized deferred tax assets to the extent that it has become reasonably or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realised. Any such write-down is reversed to the extent that it becomes reasonably or virtually certain, as the case may be, that sufficient future taxable income will be available. 1.10 Operating leases Leases, where significant portion of risk and reward of ownership are retained by the lessor, are classified as operating leases and lease rentals thereon are charged to the statement of profit and loss. 1.11 Employee stock option scheme The stock options granted are accounted for as per the accounting treatment brscribed by the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 whereby the intrinsic value of the option is recognised as deferred employee compensation. The deferred employee compensation is charged to the statement of profit and loss over the period of vesting. The employee stock option outstanding account, net of any unamortised deferred employee compensation, is shown separately as part of Reserves. 1.12 Foreign currency transactions Transactions in foreign currency are recorded at rates of exchange brvailing on the date of transaction. Foreign currency monetary items are reported using closing rate of exchange at the end of the year. The resulting exchange gain/loss is reflected in the statement of profit and loss. Other non-monetary items, like fixed assets, investments in equity shares, are carried in terms of historical cost using the exchange rate at the date of transaction. 1.13 Provisions, contingent liabilities and contingent assets Contingent liabilities are possible but not probable obligations as on the balance sheet date, based on the available evidence. Provisions are recognised when there is a brsent obligation as a result of past event; and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based on best estimate required to settle the obligation at the balance sheet date. Contingent assets are not recognised in the financial statements. 2 CONTINGENT LIABILITY Contingent liability in respect of income tax demands for various years disputed in appeal is Rs. 1,522.09 Lakh (brvious year Rs. 1,272.05 Lakh). CAPITAL COMMITMENTS Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs. 94.84 Lakh (brvious year Rs.65.42 Lakh). 3. EMPLOYEE STOCK OPTION SCHEME (ESOS) The Employee Stock Option Scheme ('the Scheme') provides for grant of stock options to the eligible employees and/or directors ("the Employees") of the Company and/or its subsidiaries. The Stock Options are granted at an exercise price, which is either equal to the fair market price, or at a brmium, or at a discount to market price as may be determined by the Nomination and Remuneration Committee (erstwhile Compensation Committee) of the Board of the Company. During the financial year 2015-16, the Nomination and Remuneration Committee of the Board has granted stock options under Series 8, to the Employees that will vest in a graded manner and which can be exercised within a specified period. The Committee granted 14,44,440 Options (brvious year 44,85,267 Options) at an exercise price of Rs. 1/- per option to the Employees. 4. LEASE TRANSACTION a) Finance lease The Company has acquired vehicles under the finance lease agreement. The tenure of the lease agreements ranges between 36 and 48 months with an option for brpayments/foreclosure. iii Previous year's figures have been regrouped and rearranged wherever necessary. As per our attached report of even date For and on behalf of Khimji Kunverji & Co. Chartered Accountants Registration No. 105146W Shivji K Vikamsey Partner Membership No. F-2242 For and on behalf of the Board of Directors Nimesh Kampani Chairman & Managing Director DIN - 00009071 E A Kshirsagar Director DIN - 00121824 P K Choksi Company Secretary Manish Sheth Chief Financial Officer Place: Mumbai Date: May 13, 2016 |