Note 1: Significant Accounting Policies a) Corporate Information Khandwala Financial Services Limited (KFSL) incorporated under the provisions of the Companies Act, 1956 on March 29, 1995 (CIN: L67990GJ1995PLC025234) is a Non Banking Financial Company registered with the Reserve bank of India (RBI) under the provisions of section 45-IA of the RBI Act, 1934 as a Loan Company (RBI Registration No. 01.00007 dated February 18, 1998). KFSL is a Public Limited Company and is listed on the Bombay Stock Exchange Ltd. It offers capital market products like Margin Trading, Loan against shares (LAS) and Funding Primary Market issues for the retail investors. It is proposing to enter into the business of Investment Adviser and has obtained Registration with SEBI as "Investment Adviser" under SEBI (Investment Advisers) Regulations, 2013 vide registration no. INA000001852 dated June 13, 2014. b) Basis of Preparation of Financial Statements These financial statements are brpared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis. The financial statements are brpared in accordance with the accounting standards notified by the Central Government, in terms of Section 133 of the Companies Act, 2013 read with Rule 7 and guidelines issued by the Securities and Exchange Board of India (SEBI) and the guidelines issued by the Reserve Bank of India ('RBI') as applicable to a Non Banking Finance Company (NBFC). The accounting policies have been consistently applied by the Company and are consistent with those used in the brvious year. c) Use of Estimates The brparation of financial statements in conformity with the India GAAP requires the management of the Company to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and 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 difference between the actual result and estimates are recognized in the period in which the results are known / materialized. d) Revenue Recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and revenue can be reliably measured. Income from operations which comprises interest income, advisory fees and other income are all accounted for on accrual basis. e) Expenses The Company provides for all expenses comprising of Employee Benefits Expenses, Financial Cost and Other Expenses on accrual basis. f) Cash & Cash Equivalents (for the purpose of Cash Flow Statement) Cash comprises cash in hand. Cash equivalents are cash at bank that are readily available for convertible into known amounts of cash and which are subject to insignificant risk of changes in value. Cash Flow Statement Cash flow are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flow from operation, investing and financing activities of the Company are segregated based on the available information. Fixed Assets & Debrciation Fixed assets are stated at cost of acquisition. Cost includes attributable cost incurred for bringing the assets to its working condition for its intended use. They are stated at historical cost less accumulated debrciation. Capital Assets under erection / installation are reflected in the Balance Sheet as "Capital Work in Progress". Debrciation on assets is provided on written down value basis (WDV) on the basis of useful lives of assets as specified in schedule II of the Companies Act, 2013. Debrciation on fix assets purchased / acquired during the year is provided on pro-rata basis according to the period each asset was put to use during the year. Investment The investments made by the Company are categorized as long term investment and are stated at cost. Impairment of Assets The Carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of Impairment based on internal / external factors. An impairment loss is recognized whenever the carrying amount of assets exceeds its recoverable amount. After impairment debrciation is provided on the revised carrying amount of the assets over its remaining useful life. During the year there was no impairment of assets of the Company. Borrowing Cost All Borrowing costs are expensed in the period they occur. Borrowing cost consists of interest and other cost that an entity incur in the connection with the borrowing of the funds. Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. All other borrowing costs are charged to revenue. Taxes on Income Tax on income for the current period is determined on the basis of the Income Tax Act, 1961. Deferred tax is recognized on timing differences between the accounting income and taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. m) Contingent Liabilities and Contingent Assets Provision is made for all known liabilities. Contingent Liabilities, if any are disclosed in the account by way of a note. Contingent assets are neither recognized nor disclosed in the financial statements. n) Retirement and Other Employee Benefits Gratuity liability is a defined obligation. But it has not been provided for on the basis of an actuarial valuation of projected unit credit method. The same shall be accounted for on cash basis as and when the need so arise. o) Earning Per Shares The Company reports basic and diluted earnings per share (EPS) in accordance with Accounting Standard - 20 on Earnings Per Share. Basic EPS is computed by dividing the net profit or loss for the year by the weighted average number of equity shares outstanding during the year. Note 1 Notes on Accounts 1. Previous year figures have been re-grouped / re-classified whenever necessary to correspond with the current year classification / disclosure. 2. Balance of receivables, payables and loans and advances parties are subject to their confirmations. These balances are therefore, subject to adjustments, if any, as may be required on settlement of these balances with the parties. . In the opinion of the board, current assets, loans & advances are approximately of the value stated if realized in the ordinary course of business. 5. Disclosure required for Employee Benefit (Revised 2005) as per Accounting Standard 15 of ICAI is not given as it is not applicable to the Company for the financial year under report. 6. There are no dues to Micro, Small and Medium Enterprise as at March 31, 2016. This information is required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. 10. Segment Reporting The Company is engaged in the finance activity having mainly the interest income and there are no separate reportable segments as per Accounting Standard 17-"Segment Reporting" issued by the Institute of Chartered Accountants of India. 11. Leases Lease payments made under cancellable operating lease amounting to Rs. 60,000/- (Previous year Rs. 67,416/-) disclosed as rent and the same has been recognized as an expenses in the Statement of Profit and Loss. 12. Impairment of Assets Adoption of Accounting Standard 28 on Impairment, as mentioned in the note on accounting policies does not have any impact on either profit for the year or on the net assets of the Company at the year end. 13. Contingent Liability No contingent liability existed as at the date of the Balance Sheet. 14. Disclosure regarding Debrciation During the year, pursuant to the notification of Schedule II to the Companies Act, 2013 with effect from April 1, 2014, the Company revised the estimated useful life of its assets to align the useful life with those specified in Schedule II. 15. Related Party Disclosure As per the Accounting Standard on "Related Party Disclosures" (AS-18) issued by the Institute of Chartered Accountants of India, the related parties and the details of transactions with them are as follows: 15.1 List of Related Parties and Relationships: Holding Company: KIFS Securities Private Limited (Up to December 28, 2015) Khandwala Commercial Private Limited (From December 29, 2015) Associate Company: Aristo Traders Private Limited Khandwala Enterprise Private Limited Khandwala Finstock Private Limited Mink Tradecom Private Limited KIFS Trading LLP KIFS Motors Private Limited KIFS Reality Private Limited KIFS Commodities Private Limited KIFS International LLP KIFS Trade Capital Private Limited KIFS Housing Finance Private Limited |