NOTES FORMING PART OF THE FINANCIAL STATEMENTS Corporate Information "The company was incorporated as a private limited company on 11th March 1992 and was converted into public limited company U/s 44 of the Companies Act, 1956 on 29th March, 1994 with an object of carrying business as "Non - Banking Finance Company" having registered office at Kothari building, 4th Floor, No.114, Mahatama Gandhi Salai, Nungambakkam, Chennai -600 034. The Company has been registered with Reserve Bank of India as "Non - Banking Finance Company" on 5th May 1998 vide Registration No. B-07-00068. Formerly, the company was known as "Indus Finance Corporation Limited" and the name has been changed to "Indus Finance Limited" on 22nd January, 2015 for which RBI Approval is awaited. Significant accounting policies 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) including 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 financial statements have been brpared on accrual basis underthe historical cost convention. The accounting policies adopted in the brparation of the financial statements are consistent with those followed in the brvious year. Use of estimates The brparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in brparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialise. Cash and cash equivalents (for purposes of Cash Flow Statement) Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant riskof changes in value. Cash flow statement Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and 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. Debrciation and amortisation Debrciation/amortisation on fixed assets, including revaluation cost and the capitalisation of capital expenditure, are charged over the period of the remaining useful life of the asset, arrived at after considering the asset life as brscribed under Schedule-ll to the Companies Act, 2013, adopting straight line method of debrciation/amortisation. Revenue recognition-Income from Financing Activity (i) Interest income is recognised in the Profit and Loss Account as it accrues except in the case of non-performing assets where it is recognised upon realization as per the prudential norms of the Reserve Bank of India. Accrual of income is also suspended on certain other loans where in the opinion of the management, significant uncertainties exist as at the year end. All otherfees are recognised upfront on their becoming due. Revenue recognition-Income from Non-Financing Activity (i) Power income is recognised on accrual basis as they are earned or incurred. (ii) Dividend income is accounted for when the right to receive it is established. (iii) Income from other financing activities and services is recognised on accrual basis Tangible fixed assets Fixed assets are stated at historical cost less accumulated debrciation. Investments Long-term investments, are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fairvalue. Employee benefits The Company has not formulated any policy for employee benefits, including Provident Fund, ESI or Gratuity. Borrowing costs Borrowing costs include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Segment Reporting The company is operating in two business segment viz., Non-Banking Finance and Power Generation. Details of Segment-wise Assets and Profit & Loss Statement can be reffered in Note No. 21.7. Earnings Per Share Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Taxes on income "Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company. 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 substantially enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Impairment of assets The carrying values of assets are reviewed for impairment at each balance sheet date to ascertain impairment based on internal / external factors. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. The recoverale amount is higher of the netsellilng price of the assets and their value in use. Provisions Provisions are recognised when the Company has brsent legal or constructive obligations, as a result of past events, for which it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made forthe amount of the obligation. 18.8 Previous Year's Figures Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure. In terms of our report attached. For V. Ramaratnam & Co. Chartered Accountants FRN: 002956S R.Sundar Partner Membership No. 012339 For and on behalf of the Board of Directors BalaV.Kutti Chairman DIN- 00765036 T.S.Raghavan Director DIN-00446651 K.R.Shyamsundar Director DIN- 03560150 Alice Chhikara Director DIN - 00088920 K.K. Dinakar Company Secretary Place : Chennai. Date : 15th June 2015 |