1.1              Basis of brparation of financial statements

The accompanying financial statements are brpared and brsented under the historical cost convention, on the accrual basis of accounting and comply with the Accounting Standards brscribed by Companies (Accounting Standards) Rules, 2006 the relevant provisions of the Companies Act, 1956 ‘the Act’. The financial statements are brsented in Indian rupees.

1.2              Use of estimates

The brparation of the financial statements in conformity with the generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent liabilities on the date of the financial statement.  Actual results could differ from the estimates.  Any revision to accounting estimates is recognised prospectively in current and future periods.

1.3              Current and Non-current classification

All assets and liabilities are classified into current and non-current

Assets

An asset is classified as current when it satisfies any of the following criteria:

·         It is expected to be realized in, or is intended for sale or consumption in, the company’s normal operating cycle;

·         It is held primary for the purpose of being traded;

·         It is expected to be realized within 12 months after the reporting date; or

·         It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.

·         Current assets include the current portion of non-current financial assets.

All other assets are classified as non-current.

Liabilities

A liability is classified as current when it satisfies any of the following criteria:

·         It is expected to be settled in the company’s normal operating cycle.

·         It is held primarily for the purpose of being traded;

·         It is due to be settled within 12 months after the reporting date; or

·         The company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of the liability that could, at the option of the counterparty, results in its settlement by the issue of equity instruments do not affect its classification.

Current liabilities include current portion of non-current financial liabilities.

All other liabilities are classified as non-current

1.4              Revenue recognition

·        Brokerage income is recognised as per contracted rates on execution of transactions on behalf of the customers on the trade date and is net of related sub-brokerage expenses, service tax and stock exchange expenses.

·        Fee income is accounted for, on an accrual basis in accordance with the terms and contracts entered into between the Company and the counterparty.

·         Income from treasury operations comprises of profit/loss on sale of securities and profit/loss on equity and currency derivative instruments.

i)        Profit/ loss on sale of securities are determined based on the weighted average cost of the securities sold.

ii)      Realised profit/ loss on closed positions of all derivative instruments is recognised on final settlement on squaring-up of the contracts. All outstanding derivative contracts in the nature of forwards / futures / options are measured at fair value as at the balance sheet date. Fair value is determined using quoted market prices in an actively traded market, for the instrument, wherever available, as the best evidence of fair value. In the absence of quoted market prices in an actively traded market, a valuation technique is used to determine the fair value. In most cases the valuation techniques use observable market data as input parameters in order to ensure reliability of the fair value measure.

·        Commodity sales are accounted when the property in goods is transferred to the buyer.

·        Research services fee income is accounted when there is reasonable certainty as to its receipts. 

·        Interest income is recognised on accrual basis.

·        Dividend income is recognised when the right to receive payment is established.

·        Profit/loss earned on sale of investment is recognised on trade date basis. Profit/loss on sale of investments is determined based on the weighted average cost of the investments sold.

·        Warehouse charges have been netted off against warehouse expenses.

1.5              Fixed assets and debrciation

Tangible fixed assets

Fixed assets are stated at cost less accumulated debrciation.  The cost of fixed assets comprises purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

Debrciation is provided on a written down value basis from the date the asset is ready for its intended use or put to use whichever is earlier.  In respect of assets sold, debrciation is provided upto the date of disposal. 

Debrciation is charged at the rates brscribed in the Schedule XIV to the Act as given below:

Class of asset		Rate of debrciation
Computers		40.00%
Office equipment		13.91%
Furniture and fixtures		18.10%
Vehicles		25.89%
Building		5.00%

Leasehold improvements are amortized on a straight-line basis over the estimated useful lives of the assets or the period of lease whichever is earlier. 

1.5        Fixed assets and debrciation (Continued)

Intangible fixed assets

Intangibles such as software are amortised over a period of 3 years based on its estimated useful life.

MCX membership rights are amortised over a period of 3 years.

Goodwill is amortised over a period of 5 years.

All fixed assets, tangible and intangible, individually costing less than Rs. 5,000 are fully debrciated in the year of installation.

1.6        Impairment of assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired based on internal/external factors.  If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the statement of profit and loss. If at the balance sheet date there is an indication that a brviously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of the debrciable historical cost.

1.7       Stock-in-trade

a)            The securities acquired with the intention of trading are considered as stock-in-trade and disclosed as current assets.

b)            The securities, including from error trades, held as stock-in-trade are valued at lower of weighted average cost or market value.

c)            In case of units of mutual funds held as stock-in-trade, net asset value is considered as fair value.

d)            Debt instruments held as stock in trade are valued at weighted average cost or fair value whichever is lower. In case of debt instruments for which direct quotes are not available, they are valued at the lowest of the quotes as on valuation date as provided by market intermediaries.

1.8       Investments

Investments are classified into long term investments and current investments. Investments which are intended to be held for one year or more are classified as long term investments and investments which are intended to be held for less than one year are classified as current investments.

Long term investments are carried at cost less diminution in value which is other than temporary, determined separately for each investment. 

Current investments are carried at lower of cost and fair value.  The comparison of cost and fair value is done separately in respect of each investment.  In case of investments in mutual funds, the net asset value of units declared by the mutual funds is considered as the fair value.

1.9        Foreign currency transactions

Foreign currency transactions are recorded at the rates of exchange brvailing on 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 of the year. 

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rates on that date.  The exchange differences, if any, are recognised in the statement of profit and loss and related assets and liabilities are accordingly restated in the balance sheet.

1.10      Employee benefits

The accounting policy followed by the Company in respect of its employee benefit schemes in accordance with Accounting Standard 15 (revised 2005), is set out below:

Provident fund

The Company contributes to a recognized provident fund which is a defined contribution scheme.  The contributions are accounted for on an accrual basis and recognized in the statement of profit and loss.

Gratuity

The Company’s gratuity scheme is a defined benefit plan. The Company’s net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that the employees have earned in return for their service in the current and prior periods. Such benefit is discounted to determine its brsent value, and the fair value of any plan assets, if any, is deducted. The brsent value of the obligation under such benefit plan is determined based on actuarial valuation using the Projected Unit Credit Method. The obligation is measured at brsent values of estimated future cash flows. The discounted rates used for determining the brsent value are based on the market yields on Government Securities as at the balance sheet date.

Benefits in respect of gratuity are funded with an Insurance Company approved by approved by Insurance Regulatory and Development Authority (IRDA). 

Actuarial gains and losses arising from experience adjustments and change in actuarial assumptions are recognised in the statement of statement of profit and loss in the period in which they arise.

Compensated Leave Absences

The eligible employees of the Company are permitted to carry forward certain number of their annual leave entitlement to subsequent years, subject to a ceiling. The Company recognises the charge to the statement of profit and loss and corresponding liability on account of such non-vesting accumulated leave entitlement based on a valuation by an independent actuary.

1.11      Taxation

Income-tax expense comprises income tax (i.e. amount of tax for the period determined in accordance with the Income Tax Act, 1961) and deferred tax charge or benefit (reflecting the tax effect of timing differences between accounting income and taxable income for the period).

Income tax

Provision for income tax is recognised based on estimated tax liability computed after adjusting for allowances, disallowances and exemptions in accordance with the Income Tax Act, 1961.

Deferred tax

The deferred tax charge or benefit and the corresponding deferred tax liabilities and assets are recognized using the tax rates that have been enacted or substantially enacted 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. 

Minimum Alternate Tax (MAT) Credit

MAT credit asset is recognized where there is convincing evidence that the asset can be realized in future.

1.12     Operating leases

Lease payments for assets taken on operating lease are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term. 

1.13     Earnings per share

The Company reports basic and diluted earnings per share in accordance with Accounting Standard 20 - Earnings Per Share brscribed by the Companies (Accounting Standards) Rules, 2006. Basic earnings per share is computed by dividing the net profit after tax attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue equity shares were exercised or converted during the year. Diluted earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares and dilutive potential equity shares outstanding at year end.

1.14      Provisions and contingences

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.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.

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 arise, the asset and related income are recognised in the period in which the change occurs.

1.15     Presentation of financial assets and liabilities

Financial assets and liabilities are offset and the net amounts are brsented in the Balance Sheet where the Company has a legal right to set off the recognised amounts and it intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. Such legal rights are by virtue of a binding legal contract or by an irrevocable undertaking executed by the Company. The aforesaid policy is generally applied to offset receivables from and payables to same counterparties; to offset fixed deposits specifically pledged with banks against the borrowings availed from them; to offset receivables against payables in the case of the same broking clients in multiple segments and other such similar qualifying arrangements.

The Company’s business is organised and management reviews the performance based on the business segments as mentioned below:

Segment		Activities covered
Agency business		Broking and advisory services
Capital based business		Income from treasury operations and income from investment and dividend

Income for each segment has been specifically identified. Expenditure, assets and liabilities are either specifically identifiable with individual segments or have been allocated to segments on a systematic basis.

Based on such allocations, segment disclosures relating to revenue, results, assets and liabilities have been brpared.

Since the business operations of the Company are primarily concentrated in India, the Company is considered to operate only in the domestic segment.

The following table gives information on segment assets and liabilities as at March 31, 2014 and the segment revenue, expenses and result for the year ended on that date: