Note 2. Significant Accounting Policies:

2.1         Basis of accounting and brparation of financial statements:

The financial statements have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with all material aspects of the applicable Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956.  The financial statements have been brpared 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 by the Company.

2.2     Use of Estimates:

The brparation of financial statements in conformity with the generally accepted accounting principles which requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. The management believes that the estimates used in the brparation of financial statements are prudent and reasonable. Difference between the actual result and estimates are recognized in the period in which the results are known / materialized.

 2.3    Fixed Assets and Debrciation and Amortization:

Fixed assets are stated at cost of acquisition less accumulated debrciation and impairment loss, if any thereon. Debrciation is charged using the straight line method based on the useful life of fixed assets as estimated by the management as specified below, or the rates specified in accordance with the provision of schedule XIV of the Companies Act, 1956, whichever is higher.

Debrciation is charged from the month in which new assets are put to use. No debrciation is charged for the month in which assets are sold / transferred.

Individual assets / group of similar assets costing up to `5,000 has been debrciated in full in the year of purchase.

Estimated useful life of the assets is as under:

Class of assets	Useful life in years
Buildings	20
Computers	3
Electrical & office equipment	5
Furniture and fixtures	5
Vehicles	5
Software	3

2.4     Translation of foreign currency items:

Foreign currency transactions are recorded at the exchange rates brvailing on the date of the transaction. Exchange difference, if any, arising out of transactions settled during the year are recognized in the statement of Profit and Loss. Foreign currency monetary assets and liabilities are translated at the exchange rate brvailing on the Balance Sheet date. The exchange gains or losses, if any, are recognized in the statement of Profit and Loss and related assets and liabilities are accordingly restated in the Balance Sheet.

2.5     Revenue Recognition:

Revenue is recognized to the extent it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized.

(a)      Brokerage income earned on secondary market operations are accounted on trade dates.

(b)     Income related to depository and investments banking activities are accounted on accrual   basis.

(c)      Income from arbitrage comprises profit/loss on sale of securities held as stock-in-trade and profit / loss on equity derivative instruments is accounted as per following;

(i)            Profit / loss on sale of securities is determined based on the FIFO cost of the securities sold.

(ii)          Profit / loss on arbitrage transactions is accounted for as explained below:

Initial and additional margin paid over and above initial margin for entering into contracts for Equity Index / Stock Futures / Currency Futures and or Equity Index / Stock Options / Currency Options which are released on final settlement/squaring-up of underlying contracts are disclosed under other current assets. "Mark-to-market margin- Equity Index / Stock Futures / Currency Futures" rebrsenting the amounts paid in respect of mark to market margin is disclosed under other current assets.

"Equity Index / Stock Option / Currency Option Premium Account" rebrsents brmium paid or received for   buying or selling the Options, respectively.

On final settlement or squaring up of contracts for Equity Index / Stock Futures / Currency Future, the realized profit or loss after adjusting the unrealized loss already accounted, if any, is recognized in the Statement of Profit and Loss. On settlement or squaring up of Equity Index / Stock Options / Currency Option before expiry, the brmium  brvailing in "Equity Index / Stock Option / Currency Option Premium Account" on that date is recognized in the Statement of Profit and Loss.

As at the Balance Sheet date, the Mark to Market / Unrealised Profit / (Loss) on all outstanding arbitrage portfolio comprising of Securities and Equity/Currency Derivatives positions is determined on scrip basis (e.g. Nifty, SBI, HDFC etc.) with net unrealized losses on scrip basis being recognized in the Statement of Profit and Loss and the net unrealized gains on scrip basis are ignored

2.6      Other Income Recognition:

(a)        Interest Income is recognized on accrual basis

(b)        Dividend income is recognized when the right to receive payment is established.

2.7      Employee Benefits:

The company’s contribution towards Provident Fund and Family Pension Fund, which are defined contribution, are accounted for on an accrual basis and recognised in the Statement of Profit & loss.

The Company has provided “Compensated Absences” on the basis of actuarial valuation.

Gratuity is post employment benefit and is in the nature of defined benefit plan. The Liability recognized in the Balance Sheet in respect of gratuity is the brsent value of defined benefit obligation at the Balance Sheet date together with the adjustments for unrecognized actuarial gain or losses and the past service costs. The defined benefit obligation is calculated at or near the Balance Sheet date by an independent actuary using the projected unit credit method.

2.8   Provisions, Contingent Liabilities and Contingent Assets:

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 neither recognized nor disclosed in the financial statements.

2.9   Taxes on Income:

Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. Provision for current tax is computed based on estimated tax liability computed after adjusting for allowance, disallowance and exemptions in accordance with the applicable tax laws.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rate and the tax laws enacted or substantively enacted at the Balance Sheet date. The deferred tax asset is recognised or unrecognised, to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. At each reporting date, the Company re-assesses unrecognized deferred tax assets. Deferred tax liability is recognised as and when arisen.

2.10   Operating Leases:

Lease rentals in respect of operating lease arrangements are charged to the Statement of Profit & loss in accordance with Accounting Standard 19 – Leases, issued by the Institute of Chartered Accountants of India.

2.11   Investments:

Investments, which are readily realizable and intended to be 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 non – current investments. Current investments are stated at lower of cost or fair value. Non – current investments are carried at cost. Provision for diminution in value of non – current investments is made, if in the opinion of the management such diminution is other than temporary. For investment in mutual funds, the net assets value (NAV) declared by the mutual funds at the Balance Sheet date is considered as the fair value.

2.12   Inventories:

Closing stock is valued at cost or market value whichever is lower. Cost is computed on FIFO basis.The comparison of cost and market value for arbitrage portfolio is done separately for each scrip.

2.13   Earnings Per Share:

Basic earnings per share for equity shareholders have been calculated by dividing the Net Profit after Tax or loss by the weighted average number of equity shares outstanding during the period.

The diluted earnings per share for equity shareholders have been computed by dividing the Net Profit after Tax or loss by the weighted average number of shares after giving dilutive effect of  all potential equity shares.

Note 1. Corporate Information:

India Infoline Limited was incorporated on March 21, 1996 and is subsidiary of IIFL Holdings Limited. The Company is in the financial services space offering equity/ currency broking in NSE/BSE and MCX-SX, Depository Participant services, merchant banking, portfolio management services, distribution of mutual fund, bonds & other saving products. The Company is one of the leading players in the financial services space.

Note 1.1In order to achieve simplified business structure, focused management, strengthen core competencies and enhance value creation for the group, the Board of Directors of your Company had approved purchased of broking, Depository Participant, Portfolio Management, Mutual Fund Distribution and Investment Banking businesses (“Financial  Services  Undertaking”) of IIFL Holdings Limited (the “holding company”) through a scheme of arrangement in terms of Section 391 to 394 of the Companies Act, 1956 in April, 2013. In this regard, Hon’ble High Court of Bombay vide its Order dated December 20, 2013, issued on January 16, 2014 (“Order”), approved the Scheme of Arrangement (“Scheme”) between IIFL Holdings limited (formerly India Infoline Limited) (‘Transferor Company’ or ‘IIFLHL’) and India Infoline Limited (formerly India Infoline Distribution Company Limited)(‘Transferee Company’ or ‘IIDCL’ or ‘the Company’) and their respective shareholders under sections 391 to 394 of the Companies Act, 1956, and the same is effected upon filing of Order with the Registrar of Companies vide its acknowledgement dated February 13, 2014 and receipt of other regulatory approvals. The Scheme is effective from April 1, 2013.

Pursuant to the Scheme approved by the High Court, the following have been effected:

The “Financial Services Undertaking” consisting of capital market Broking, Depository Participant, Portfolio Management, Mutual Fund Distribution and Investment Banking business stands transferred from IIFL Holdings limited (formerly India Infoline Limited) to the Company, on a going concern basis and accordingly, the businesses/services stands continued by the Company.  

The name of the Transferor Company is changed to “IIFL Holdings Limited” in terms of Fresh Certificate of incorporation dated February 18, 2014, issued by Registrar of Companies, Maharashtra, Mumbai.

The name of the Company i.e. India Infoline Distribution Company Limited is changed to “India Infoline Limited” in terms of Fresh Certificate of Incorporation dated February 27, 2014, issued by the Registrar of Companies, Maharashtra, Mumbai.”

The effect of the said Scheme is reflected in the books of accounts for the year ended March 31, 2014. Accordingly, the brvious period figures are not comparable.

Note 2. Significant Accounting Policies:

2.1         Basis of accounting and brparation of financial statements:

The financial statements have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with all material aspects of the applicable Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956.  The financial statements have been brpared 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 by the Company.

2.2     Use of Estimates:

The brparation of financial statements in conformity with the generally accepted accounting principles which requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. The management believes that the estimates used in the brparation of financial statements are prudent and reasonable. Difference between the actual result and estimates are recognized in the period in which the results are known / materialized.

 2.3    Fixed Assets and Debrciation and Amortization:

Fixed assets are stated at cost of acquisition less accumulated debrciation and impairment loss, if any thereon. Debrciation is charged using the straight line method based on the useful life of fixed assets as estimated by the management as specified below, or the rates specified in accordance with the provision of schedule XIV of the Companies Act, 1956, whichever is higher.

Debrciation is charged from the month in which new assets are put to use. No debrciation is charged for the month in which assets are sold / transferred.

Individual assets / group of similar assets costing up to `5,000 has been debrciated in full in the year of purchase.

Estimated useful life of the assets is as under:

Class of assets	Useful life in years
Buildings	20
Computers	3
Electrical & office equipment	5
Furniture and fixtures	5
Vehicles	5
Software	3

2.4     Translation of foreign currency items:

Foreign currency transactions are recorded at the exchange rates brvailing on the date of the transaction. Exchange difference, if any, arising out of transactions settled during the year are recognized in the statement of Profit and Loss. Foreign currency monetary assets and liabilities are translated at the exchange rate brvailing on the Balance Sheet date. The exchange gains or losses, if any, are recognized in the statement of Profit and Loss and related assets and liabilities are accordingly restated in the Balance Sheet.

2.5     Revenue Recognition:

Revenue is recognized to the extent it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized.

(a)      Brokerage income earned on secondary market operations are accounted on trade dates.

(b)     Income related to depository and investments banking activities are accounted on accrual   basis.

(c)      Income from arbitrage comprises profit/loss on sale of securities held as stock-in-trade and profit / loss on equity derivative instruments is accounted as per following;

(i)            Profit / loss on sale of securities is determined based on the FIFO cost of the securities sold.

(ii)          Profit / loss on arbitrage transactions is accounted for as explained below:

Initial and additional margin paid over and above initial margin for entering into contracts for Equity Index / Stock Futures / Currency Futures and or Equity Index / Stock Options / Currency Options which are released on final settlement/squaring-up of underlying contracts are disclosed under other current assets. "Mark-to-market margin- Equity Index / Stock Futures / Currency Futures" rebrsenting the amounts paid in respect of mark to market margin is disclosed under other current assets.

"Equity Index / Stock Option / Currency Option Premium Account" rebrsents brmium paid or received for   buying or selling the Options, respectively.

On final settlement or squaring up of contracts for Equity Index / Stock Futures / Currency Future, the realized profit or loss after adjusting the unrealized loss already accounted, if any, is recognized in the Statement of Profit and Loss. On settlement or squaring up of Equity Index / Stock Options / Currency Option before expiry, the brmium  brvailing in "Equity Index / Stock Option / Currency Option Premium Account" on that date is recognized in the Statement of Profit and Loss.

As at the Balance Sheet date, the Mark to Market / Unrealised Profit / (Loss) on all outstanding arbitrage portfolio comprising of Securities and Equity/Currency Derivatives positions is determined on scrip basis (e.g. Nifty, SBI, HDFC etc.) with net unrealized losses on scrip basis being recognized in the Statement of Profit and Loss and the net unrealized gains on scrip basis are ignored

2.6      Other Income Recognition:

(a)        Interest Income is recognized on accrual basis

(b)        Dividend income is recognized when the right to receive payment is established.

2.7      Employee Benefits:

The company’s contribution towards Provident Fund and Family Pension Fund, which are defined contribution, are accounted for on an accrual basis and recognised in the Statement of Profit & loss.

The Company has provided “Compensated Absences” on the basis of actuarial valuation.

Gratuity is post employment benefit and is in the nature of defined benefit plan. The Liability recognized in the Balance Sheet in respect of gratuity is the brsent value of defined benefit obligation at the Balance Sheet date together with the adjustments for unrecognized actuarial gain or losses and the past service costs. The defined benefit obligation is calculated at or near the Balance Sheet date by an independent actuary using the projected unit credit method.

2.8   Provisions, Contingent Liabilities and Contingent Assets:

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 neither recognized nor disclosed in the financial statements.

2.9   Taxes on Income:

Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. Provision for current tax is computed based on estimated tax liability computed after adjusting for allowance, disallowance and exemptions in accordance with the applicable tax laws.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rate and the tax laws enacted or substantively enacted at the Balance Sheet date. The deferred tax asset is recognised or unrecognised, to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. At each reporting date, the Company re-assesses unrecognized deferred tax assets. Deferred tax liability is recognised as and when arisen.

2.10   Operating Leases:

Lease rentals in respect of operating lease arrangements are charged to the Statement of Profit & loss in accordance with Accounting Standard 19 – Leases, issued by the Institute of Chartered Accountants of India.

2.11   Investments:

Investments, which are readily realizable and intended to be 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 non – current investments. Current investments are stated at lower of cost or fair value. Non – current investments are carried at cost. Provision for diminution in value of non – current investments is made, if in the opinion of the management such diminution is other than temporary. For investment in mutual funds, the net assets value (NAV) declared by the mutual funds at the Balance Sheet date is considered as the fair value.

2.12   Inventories:

Closing stock is valued at cost or market value whichever is lower. Cost is computed on FIFO basis.The comparison of cost and market value for arbitrage portfolio is done separately for each scrip.

2.13   Earnings Per Share:

Basic earnings per share for equity shareholders have been calculated by dividing the Net Profit after Tax or loss by the weighted average number of equity shares outstanding during the period.

The diluted earnings per share for equity shareholders have been computed by dividing the Net Profit after Tax or loss by the weighted average number of shares after giving dilutive effect of  all potential equity shares.

Note 21. Employee Benefit expenses                                                                                                       (Amount in `)

Particulars	2013-14	2012-13
Salaries and bonus	1,57,23,81,117	-
Contribution to provident and other funds	2,17,14,888	-
Gratuity	(56,98,942)	-
Staff Welfare Expenses	1,67,52,338	-
Leave Encashment	30,76,301	-
Total	1,60,82,25,702	-

*The Company is recognising and accruing the employee benefit as per accounting standard (AS) – 15 on “Employee Benefits” the disclosures of which are as under.                      

                                   

Assumptions	2013-14	2012-13
Discount rate brvious year	8.00%	-
Salary Escalation brvious year	5.00%	-
Discount rate current year	9.14%	-
Salary Escalation Current year	5.00%	-
Change in Benefit Obligation	2013-14	2012-13
Liability at the beginning of the year	9,92,12859	-
Interest Cost	79,37,029	-
Current Service Cost	1,95,75,340	-
Benefit paid	(2,29,56,842)	-
Actuarial (gain)/ Loss on obligations	(1,59,79,108)	-
Libility Transferred in/(out)	(93,69,110)	-
Liability at the end of the year	7,84,20,168	-
Amount Recognised in the Balance Sheet	2013-14	2012-13
Liability at the end of the year	6,69,86,736	-
Fair value of plan Assets at the end of the year	(7,84,20,168)	-
Differences	(114,33,432)	-
Amount of liability Recognised in the Balance Sheet	(114,33,432)	-
Expenses Recognised in the Income statement	2013-14	2012-13
Current Service cost	1,95,75,340	-
Interest Cost	79,37,029	-
Expected return on plan assets	(71,41,002)	-
Actuarial Gain or Loss	(103,82,804)	-
Expense Recognised in P&L	99,88,563	-
Balance Sheet reconciliation	2013-14	2012-13
Opening Net liability	1,71,32,373	-
Expense as above	99,88,563	-
Net Transfer in	(1,56,81,964)	-
Employers contribution	(5,540)	-
Amount Recognised in Balance Sheet	1,14,33,432	-

*Defined Contribution Plans:

The Company has also recognised the following amounts as an expense.                               (Amount in `)

Particulars	2013-14	2012-13
Contribution to provident & other fund	1,64,92,932	-