SIGNIFICANT ACCOUNTING POLICIES a. Basis of brparation 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 specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies(Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act"), as applicable. The financial statements have been brpared as a going concern 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 the brvious year. b. Use of estimates In brparing the Company's financial statements in conformity with the accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods. c. Revenue Recognition i. Interest from Loans Interest income on the loans granted is recognised on accrual basis and when no significant uncertainly as to collectability exists. Income on non performing assets is recognized when realized as per the guidelines for prudential norms brscribed by the Reserve Bank of India. ii. lncome from Assignment ln case of assignment of receivables "at brmium", the assets are de-recognised since all the rights, title and future receivables are assigned to the purchaser. The interest sbrad arising on assignment is accounted over the residual tenor of the underlying assets. iii. Other Interest Income Other Interest Income is recognized on accrual basis. iv. Processing Fees Processing fees on processing of loans are recognized upfront as income. v. Late Payment Charges Income in case of late payment charges are recognized as and when realized. vi. Insurance Commission Insurance Commission is recognized when there is no uncertainty regarding its receipt. vii. Income from Investments Dividend from investments is accounted for as income when the right to receive dividend is established. d. Fixed Assets All the Fixed Assets are stated at cost less debrciation, after taking into consideration provision for NPA. The cost of assets includes other direct/indirect and incidental cost incurred to bring them into their working condition. When assets are disposed or retired, their cost is removed from the financial statements. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between sales proceeds and the carrying amount of the asset and is recognised in Statement of Profit and Loss for the relevant financial year. e. Debrciation The debrciation on assets for own use is provided on "Straight Line Method" on the basis of useful life of assets as specified in Schedule II to the Companies Act, 2013 on Pro-rata Basis. When assets are disposed or retired, their accumulated debrciation is removed from the financial statements. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between sales proceeds and the carrying amount of the asset and is recognised in Statement of Profit and Loss for the relevant financial year. f. Investments Long Term Investments are stated at cost. Provision is made for any diminution in the value of the Long Term Investments, if such decline is other than temporary. The Company does not have any Current Investments. g. Retirement Benefits a. The Employee and Company make monthly fixed Contribution to Government of India Employee's Provident Fund equal to a specified percentage of the Covered employee's salary. Provision for the same is made in the year in which services are rendered by the employee. b. The Liability for Gratuity to employees, which is a defined benefit plan, as at Balance Sheet date determined on the basis of actuarial Valuation based on Projected Unit Credit method is funded to a Gratuity fund administered by the trustees and managed H by Life Insurance Corporation of India and the contribution thereof paid/payable is absorbed in the accounts. c. The Company does not allow carry forward of unavailed leave and hence unavailed leaves are encashed in the current year itself. d. Short Term benefits are recognised as an expense at the undiscounted amounts in the Statement of Profit and Loss of the year in which the related service is rendered. h. Borrowing Cost Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost such assets, whenever applicable, till such assets are ready for their intended use. A qualifying asset is the one which necessarily takes substantial period to get ready for intended use. All other borrowing costs are charged to revenue accounts. Capitalization of borrowing cost is suspended when active development is interrupted. i. Segment Information In the opinion of the management, the Company is mainly engaged in the business of providing finance. All other activities of the Company revolve around the main business, and as such, there are no separate reportable segments as per Accounting Standard 17 -'Segment Reporting" brscribed by Companies (Accounting Standards) Rules, 2006. j. Lease The company's significant leasing arrangements are in respect of operating lease for brmises that are cancellable in nature. The lease rentals paid under such agreements are charged to the Statement of Profit and Loss k. Provision for Current and Deferred Tax Provision for current tax is made after taking into consideration benefits admissible under the provision of the Income Tax Act, 1961 Deferred Tax resulting from "timing difference" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or subsequently enacted as on the balance sheet date. Deferred tax asset is recognised and carried forward only to the extent that there is virtual certainty that the assets will be realized in future. l. Intangible Assets Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization. All costs, including financing costs till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets are capitalized. m. Earnings per Share Basic earnings per share is calculated by dividing net profit after tax for the year attributable to Equity Shareholders of the company by the weighted average number of Equity Shares issued during the year. Diluted earnings per share is calculated by dividing net profit attributable to equity Shareholders (after adjustment for diluted earnings) by average number of weighted equity shares outstanding during the year. n. Impairment The management periodically assesses, using external and internal sources whether there is an indication that an asset may be impaired. If an asset is impaired, the company recognizes an impairment loss as the excess of the carrying amount of the asset over the recoverable amount. o. Shares Issue Expenses Expenses incurred on issue of shares are charged to Statement of Profit and Loss. p. Provision, Contingent Liabilities and Contingent Assets A provision is recognized 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. A disclosure for a contingent liability is made when there is a possible or brsent obligation that may, but probably will not require an outflow of resources. Contingent Assets are neither recognized nor disclosed in the financial statements. q. Transfer and recourse obligation under Assignment The company assigns assets under securitisation transactions. The assigned loans / assets are derecognised and gains / losses are recorded on assignment of loan contracts. Recourse obligation with respect to Debt Securitisations with other financiers is provided in books as per past track records of delinquency / servicing of the loans of the Company. r. Classification and Provision Policy for Loan Portfolio (i) Classification of Loan Portfolio Provision for loans and advances are made as per directions issued by Reserve Bank of India for Non Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 as amended from time to time. (ii) Provisioning policy for loan portfolio Loans are provided for as per provisions required by Non Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 and as per RBI circular dated December 02, 2011, as amended from time to time. Loans are classified and the percentage of provision made on such loans is as under. Previous year's figures have been regrouped and rearranged wherever necessary, to make them comparable with those of current year. As per our report of even date attached For, J.T. Shah & Company For & on behalf of Board of Directors Chartered Accountants FRN No. 109616W J. J. Shah Jayendra Patel Partner Vice Chairman & Managing Director M.No. 45669 Amit Manakiwala Director Date: 14.05.2015 Place : Ahmedabad |