1. SIGNIFICANT ACCOUNTING POLICIES 1.1 Basis of brparation The financial statements of the company have been brpared in accordance with 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 and guidelines issued by the Reserve Bank of India ('RBI') as applicable to a Non Banking Finance Company. The financial statements have been brpared on an accrual basis and under the historical cost convention. The accounting policies adopted in the brparation of financial statements are consistent with those of brvious year, except for the change in accounting policy explained below. 1.2 Change in accounting Policy Provisioning in Standard Assets The Reserve Bank of India (RBI) vide Notification No. DNBS 223/CGM (US) -2011 dated January 17,2011 has isued directions to all NBFCs to make provision of 0.25% on standard assets. However, the Company is making provision @ 0.50% on Standard Assets from FY 2012-13. Further, from the current Financial Year, the company has decided to make additional Floating Provision on Standard Assets @ 1.50% which will be available for adjustment against Provision on Non Performing Assets. 1.3 Use of Estimates Presentation and Disclosure of Financial Statement The brparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. 1.4 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 are met before revenue is recognized: a) Sale of Traded Goods Revenue from sale of traded goods is recognized when all the significant risks and rewards of ownership of the traded goods have been passed to the buyer. b) Income from Advisory Services Income from Advisory Services are accounted for as and when the relevant services are rendered and revenue is recognised using completed service contract method except where the recovery is uncertain in which case it is accounted for on receipt. c) 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 "Revenue from Operations" in the statement of profit and loss. Delayed Payment charges, Penal Interest, Other Penal Charges, etc., are recognised on receipt basis on account of uncertainty of the ultimate collection of the same. Further, in accordance with the guidelines issued by the Reserve Bank of India for Non-Banking Finance Companies, income on business assets classified as Non-performing Assets, is also recognised on receipt basis. e) Dividends Dividend income is recognized when the company's right to receive dividend is established on the reporting date. 1.5 Inventories The inventories held as stock-in-trade under current assets are valued at lower of cost or market value. In case of units of mutual fund, net asset value of units declared by the mutual funds is considered as market value. 1.6 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, as per Accounting Standard 3 "Cash Flows". 1.7 Tangible Fixed Assets Tangible Fixed Assets are stated at cost less accumulated debrciation and impairment losses, if any. The cost of fixed assets comprises purchase price and any attributable cost of bringing the asset to it's working condition for it's intended use. 1.8 Debrciation on Tangible Fixed Assets Consequent to the enactment of the Companies Act, 2013 ("the Act") and its applicability for accounitng period commencing on or after April 1, 2014, the Company has reworked debrciation with reference to the Useful life of Fixed Assets brscribed by the PART C of Schedule II to the Act. Where the remaining useful life of the Assets is Nil, the carrying amount of the asset after retaining the residual value (Net of Deferred Tax), as on April 1, 2014 has been adjusted to the Retained Earnings. In other cases, the carrying values have been debrciated over the remaining useful life of the Asset using Written Down Value Method and the same is recognised in the Statement of Profit and Loss. 1.9 Intangible Assets Intangible Assets are stated at cost less accumulated amortisation and impairment losses, if any. The cost of intangible assets comprises purchase price and any attributable cost of bringing the asset to it's working condition for it's intended use. Intangible assets are amortized over the useful life on prorata basis under the straight line method as estimated by the management, which is generally between three to five years. 1.10 Impairment of Tangible and Intangible Assets The carrying amount of assets is reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets, net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their brsent value at the weighted average cost of capital. After impairment, debrciation is provided on the revised carrying amount of the asset over its remaining useful life. A brviously recognized impairment loss is increased or reversed depending on changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have brvailed by charging usual debrciation if there was no impairment. 1.11 Foreign Currency Translation Foreign Currency Transactions and Balances (i) Initial recognition Foreign Currency Transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Exchange differences, if any, arising out of transactions settled during the year are recognised in the statement of profit and loss. (ii) Conversion Monetory assets and liabilities denominated in the foreign currencies as at the Balance Sheet date are translated at the closing exchange rates on that date. The exchange differences, if any, are recognized in the statement of profit & loss and related assets and liabilities are accordingly restated in the Balance Sheet. 1.12 Investments Investments which are readily realizable and intended to the 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. Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long Term Investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. In case of investments in mutual funds, the net asset value of units declared by the mutual funds is considered as the fair value. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss. 1.13 Retirement and other employee benefits The Company has adopted the revised Accounting Standard 15 - Accounting for Employee Benefits. The accounting policy followed by the Company in respect of its employee benefit schemes is set out below: Gratuity The Company has funded Defined Benefit Obligation Plan for gratuity to its employees, who have completed five years or more of service, under the group gratuity scheme of Life Insurance Corporation (LIC) of India & to HDFC Standard Life Insurance Company. The Company has created planned assets by contribution to the gratuity fund with LIC of India & HDFC Standard Life Insurance Company Limited. Leave Encashment Unutilised leave of staff is paid as at the end of the year. Accordingly, no provision is required to be made for compensated absences. 1.14 Employee stock Compensation Cost Measurement and disclosure of the employee share-based payment plans is done in accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting for Employee Share-based Payments, issued by ICAI. The Company measures compensation cost relating to employee stock options using the intrinsic value method. Compensation expense is amortized over the vesting period of the option on a straight line basis 1.15 Leases Where the Company is lessee Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight line basis over the lease term. 1.16 Earnings Per Share The Company reports basic and diluted earnings per share in accordance with Accounting Standard 20 -Earning per Share. Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting brference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as 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. The Weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a rights issue, share spilit, and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss 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. 1.17 Taxes on Income I ncome tax expenses comprises of current tax (i.e. amount of tax for the period determined in accordance with the income-tax law) & the deferred tax charge or benefit (reflecting the tax effect of timing differences between accounting income and taxable income for the period). Deferred Taxation The deferred tax charge or benefit and the corresponding deferred tax liabilities and assets are recognised using the tax rates that have been enacted or substantially enacted as at the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the asset can be realised in future; however, where there is unabsorbed debrciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of the assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonable/virtually certain (as the case may be) to be realised. 1.18 Provisions The company creates a provision when there is brsent obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amounts of the obligation. Provisions are not discounted to their brsent 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. If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed. 1.19 Contingent Liabilities / Assets A contingent liabilities is a possible obligation that arise from past events whose existence will be confirmed by the occurence or non occurrence of one or more uncertain future events beyond the control of the company or a brsent 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 existence in the financial statements. Contingent assets are not recognised in the financial statements. However contingent assets are assessed continually and if it is virtually certain that an economic benefit will rise, asset and related income are recognised in the period in which the change occurs. 37. The Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007, require the Company to make provision for standard assets at 0.25 percent of the Standard Assets. However, as a prudent practice from FY 2012-13, the Company has adopted to make provision of 0.50 percent. Consequently, during the current financial year 2014-15, the profits of the company are lower by Rs. 55.03 Lacs. Further, during the year, the Company has decided to make Additional Floating Provision on standard asset of 1.50 Percent which will be available for adjustment towards provision for Sub-standard Assets. Accordingly an amount of Rs. 1374.42 Lacs is provided as Additional Floating Provision, which has been partially utilised towards the Provision for Non Performing Assets to the extent of Rs. 92.68 Lacs. 1. The Board of Directors in their meeting held on December 17, 2014 have approved the Scheme of Amalgamation of Capri Global Distribution Company Private Limited, Capri Global Finance Private Limited, Capri Global Investment Advisors Private Limited and Capri Global Research Private Limited with Capri Global Capital Limited and their respective shareholders and creditors under sections 391 to 394. The Appointed Date for the merger is April 1, 2015. The Company has filed the Application with the Hon'ble Bombay High Court and awaiting further instructions from the Hon'ble Court. The Scheme is subject to various regulatory approvals including the Bombay High Court. 2. In the opinion of the Board, the Current Assets, Loans & Advances are realizable in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet. The provision for all known liabilities is adequate and not in excess of the amount reasonably necessary. 3. Previous year figures Previous year figures have been regrouped and reclassified wherever necessary to confirm to current year's brsentation. As per our report of even date attached For and on behalf of KARNAVAT & CO. Chartered Accountants Firm Regn. No. 104863W (Viral Joshi) Partner Membership No. 137686 For and on behalf of the Board of Directors (sunil Kapoor) Executive Director DIN 01436404 (Gaurang shah) Associate Director Finance & Accounts (Rajesh sharma) Director DIN 00020037 (Harish Agrawal) Senior Vice President & Company Secretary Place : Mumbai Date : 9th May, 2015 |