1 The Company is primarily engaged in the business of promoting financial services such as finance, insurance, wealth management etc. through its investments in subsidiaries and joint ventures. The Company is also engaged in the business of generating power through wind tuRBInes, a renewable source of energy. The Company has been recognised as a Core Investment Company (CIC) by the Reserve Bank of India (RBI) in terms of the regulations governing Non-Banking Financial Companies and is no more required to be registered thereunder. 2 Summary of significant accounting policies followed by the Company Basis of brparation These financial statements have been brpared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. Pursuant to section 133 of the Companies Act, 2013 read with rule 7 of Companies (Accounts) Rules, 2014, till the standards of accounting or any addendum thereto are brscribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 shall continue to apply. Consequently, these financial statements have been brpared to comply in all material aspects with the Accounting Standards notified under section 211(3C) of the Companies Act, 1956 [Companies (Accounting Standards) Rules, 2006, as amended], other relevant provisions of the a Companies Act, 2013 and the RBI guidelines/regulations to the extent applicable. The Ministry of Corporate Affairs (MCA) has notified the Companies (Accounting Standards) Amendment Rules, 2016 vide its notification dated 30 March 2016. The said notification is applicable to accounting period commencing on or after the date of notification i.e. 1 April 2016. All assets and liabilities have been classified as current or non-current as per the criteria set out in the Schedule III to the Companies Act, 2013. 1) System of accounting i) The Company follows the mercantile system of accounting and recognises income and expenditure on an accrual basis except in case of significant uncertainties. ii) Financial statements are brpared under the historical cost convention. These costs are not adjusted to reflect the impact of changing value in the purchasing power of money. iii) Estimates and assumptions used in the brparation of the financial statements and disclosures are based upon Management's evaluation of the relevant facts and circumstances as of the date of the financial statements, which may differ from the actual results at a subsequent date. 2) Revenue recognition a) Income The Company recognises income (including rent etc.) on accrual basis. However, where the ultimate collection of the same lacks reasonable certainty, revenue recognition is postponed to the extent of uncertainty. (1) Income from debentures and bonds is accrued over the maturity of the security, net of amortisation of brmium/discount, thereby recognising the implicit yield to maturity, with reference to the coupon dates, where applicable. However, income is accrued only where interest is serviced regularly and is not in arrears, as per the guidelines framed by the Management. (2) Dividend is accrued in the year in which it is declared whereby a right to receive is established. (3) Profit/loss on sale of investments is recognised on the contract date. b) Wind farm income Income from windpower generation is recognised on acceptance by Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) of units generated and after giving allowance for wheeling and transmission losses. Simultaneously, relevant entitlements for generating green energy are recognised to the extent the ultimate collection is reasonably certain. 3) Fixed assets and debrciation A. Tangible assets i) Tangible assets except land are carried at cost of acquisition, construction or at manufacturing cost, as the case may be, less accumulated debrciation. Land is carried at cost of acquisition. Cost rebrsents all expenses directly attributable to bringing the asset to its working condition for its expected use. ii) Land and buildings acquired/constructed, not intended to be used in the operations of the Company are categorised as investment property under Investments and not as Fixed assets. B. Debrciation and amortisation (a) Leasehold land Premium on leasehold land is amortised over the period of lease. (b) On other tangible assets i. a. Debrciation is provided on a pro rata basis on the straight line method over the useful lives of the assets. b. Where a significant component (in terms of cost) of an asset has an economic useful life shorter than that of it's corresponding asset, the component is debrciated over it's shorter life. ___c. Useful life of assets are determined by the Management by internal technical assessments. ii. Assets which are debrciated over useful life/residual value different than those indicated by Schedule II are as under: Asset class having residual value at H 1 Computers Furniture Office equipment Electric fittings iii. Debrciation on additions is being provided on pro rata basis from the month of such additions. iv. Debrciation on assets sold, discarded or demolished during the year is being provided upto the month in which such assets are sold, discarded or demolished. C. Impairment of assets An assessment is done at each Balance Sheet date as to whether there are any indications that an asset may be impaired. If any such indication exists, an estimate of the recoverable amount of the asset/Cash Generating Unit (CGU) is made. Where the carrying value of the asset/CGU exceeds the recoverable amount, the carrying value is written down to the recoverable amount 4) Investments a) Current investments rebrsenting debt securities with a maturity less than 1 year and those intended to be held for a period less than 1 year from the date on which the investment is made are stated at cost adjusted for amortisation and diminution with reference to realisable value, as necessary. b) Debt securities, other than current, are carried at cost, less amortisation of brmium/discount, as the case may be, and provision for diminution, if any, as considered necessary. Debt securities maturing within 12 months from the close of the year (current maturities) are reclassified as current investments. c) Investments with maturity of less than 3 months from the date of acquisition are classified as cash and cash equivalents. d) Investments other than debt securities (Eg. equity, mutual funds etc.) are valued at cost of acquisition, less provision for diminution as considered necessary where they are intended to be held for a long-term, else current investments are valued at lower of cost or realisable value. e) Long-term investments are carried at cost. However, provision for diminution is made to recognise a decline, other than temporary, in the value of the investments. f) The Management has laid out guidelines for the purpose of assessing likely impairments in investments and for making provisions based on given criteria. Appropriate provisions are accordingly made, which in the opinion of the Management are considered adequate. 5) Employee benefits a) Privilege leave entitlements Privilege leave entitlements are recognised as a liability, in the calendar year of rendering of service, as per the rules of the Company. As accumulated leave can be availed and/or encashed at any time during the tenure of employment the liability is recognised on the basis of an independent actuarial valuation. b) Gratuity Payment for brsent liability of future payment of gratuity is being made to approved gratuity fund, which fully covers the same under Cash Accumulation Policy and Debt fund of the Life Insurance Corporation of India (LIC) and Bajaj Allianz Life Insurance Company Ltd. (BALIC). However, any deficit in plan assets managed by LIC and BALIC as compared to the liability on the basis of an independent actuarial valuation is recognised as a liability. c) Superannuation Defined contribution to superannuation fund is being made as per the scheme of the Company. d) Defined provident fund contribution is made to Government Provident Fund Authority. e) Defined contribution to Employees Pension Scheme 1995 is made to Government Provident Fund Authority. f) Long-term incentive plan The Company's liability towards long-term incentive plan being defined benefit plan is accounted for on the basis of an independent actuarial valuation. 6) Taxation a) Provision for tax is made for the current accounting period (reporting period) on the basis of the taxable profits computed in accordance with the Income-tax Act, 1961 and the Income Computation and Disclosure Standards brscribed therein. Excess/short provisions and interest thereon are recognised only on completion of assessment or where adjustments made by the Assessing Officer are disputed, on receiving the 'Order Giving Effect' to the tax determined by the CIT (Appeals) and thereafter on final settlement of further disputes. b) MAT is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income-tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal tax during the specified period. c) Deferred tax resulting from timing difference between book profits and taxable profits are accounted for to the extent deferred tax liabilities are expected to crystalise with reasonable certainty. However, in case of deferred tax assets (rebrsenting unabsorbed debrciation or carried forward losses) are recognised, if and only if there is virtual certainty that there would be adequate future taxable income against which such deferred tax assets can be realised. Deferred tax is recognised on adjustments to revenue reserves to the extent the adjustments are allowable as deductions in determination of taxable income and they would reverse out in future periods. 7) Provisions and contingent liabilities 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 amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a brsent obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a brsent obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. 8) Operating leases As a lessee Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight line basis over the period of the lease. As a lesser The Company has leased certain tangible assets and such leases where the Company has substantially retained all the risks and rewards of ownership are classified as operating leases. Lease income on such operating leases are recognised in the Statement of Profit and Loss on a straight line basis over the lease term which is rebrsentative of the time pattern in which benefit derived from the use of the leased asset is diminished. Initial direct costs are recognised as an expense in the Statement of Profit and Loss in the period in which they are incurred. 9) Earnings per share Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity ---a shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company's earnings per share is the net profit for the period. The weighted average number of equity shares outstanding during the period and all periods brsented is adjusted for events, such as bonus shares, other than the conversion of potential equity 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 is adjusted for the effects of all dilutive potential equity shares. 2 Since the Company is no longer registered with RBI under section 45IA of the Reserve Bank of India Act, 1934, the requirement of creating a Reserve fund in terms of section 45-IC(1) (called as 'Reserve fund' hereinafter) of the Reserve Bank of India Act, 1934/transferring 20% of the profit to the Reserve fund does not arise. Consequently, no amount has been transferred to the said Reserve fund during the year 2015-16 and balance in Reserve fund of H 120.10 crore has been transferred to Surplus in Statement of Profit and Loss. 3 The consolidated financial statements of the Company alongwith its subsidiaries and joint venture are attached to these standalone financial statements. The details of the group regarding the nature of relationship and the basis of consolidation can be referred to in note 1 to the said consolidated financial statements. 4 Previous year figures Previous year figures have been regrouped wherever necessary to make them comparable with those of the current year. 5 Miscellaneous a. Rs. 1 crore is equal to Rs. 10 million. b. Amounts less than Rs. 50,000 have been shown at actual against respective line items statutorily required to be disclosed. In terms of our report of even date For Dalal & Shah LLP Firm Registration Number: 102021W/W100110 Chartered Accountants Russell I Parera Partner Membership Number: 42190 S Sreenivasan Chief Financial Officer Sonal R Tiwari Company Secretary On behalf of the Board of Directors Rahul Bajaj Chairman Sanjiv Bajaj Managing Director Nanoo Pamnani Chairman - Audit Committee |