1.1 Accounting Convention
 
 The financial statements are prepared under the historical cost
 convention in accordance with the generally accepted accounting
 principles in India including Accounting Standards notified by the
 Government of India / issued by the Institute of Chartered Accountants
 of India (ICAI), as applicable, and the relevant provisions of the
 Companies Act, 1956.
 
 The Company follows the prudential norms for income recognition, asset
 classification and provisioning as prescribed by Reserve Bank of India
 (RBI) for Non-deposit taking Non-Banking Finance Companies (NBFC-ND).
 
 1.2 use of Estimates
 
 The preparation of financial statements requires the Management to make
 estimates and assumptions considered in the reported amounts of assets
 and liabilities (including contingent liabilities) as of the date of
 the financial statements and the reported income and expenses during
 the reporting period like provision for employee benefits, provisioning
 for receivables, provision for credit enhancement for assets
 de-recognised, net realizable value of repossessed assets, useful lives
 of fixed assets, provision for diminution in value of investments,
 provisioning for taxation etc. Management believes that the estimates
 used in the preparation of the financial statements are prudent and
 reasonable. Future results may vary from these estimates.
 
 1.3 Revenue Recognition
 
 Loan Interest Charges are recognised under the Internal Rate of Return
 method to provide a constant periodic rate of return on net investment
 outstanding on the Loan contracts.
 
 In respect of bilateral assignment of receivables, the difference
 between the book value of the assets assigned and the sale
 consideration is taken to revenue after netting of incidental expenses
 to be incurred, provision for contingent losses arising from credit
 enhancements (if cash collateral is provided) and costs to be incurred
 in servicing the contracts.
 
 Service Charges are recognised on issue of delivery instruction to the
 dealer/ manufacturer in respect of the assets financed or on release of
 disbursement amount, whichever is earlier, and when there is no
 uncertainty in receiving the same.
 
 Additional Finance Charges (AFC) are recognized on accrual basis as per
 contractual terms and when there is no uncertainty in receiving the
 same.
 
 1.4 Fixed Assets and Depreciation
 
 Fixed Assets are stated at cost less accumulated depreciation. Cost
 includes taxes, duties, freight and incidental expenses related to the
 acquisition and installation of the asset.
 
 Depreciation on own fixed assets is provided pro-rata on the basis of
 the Straight Line Method over their estimated useful lives or at the
 rates specified in Schedule XIV of the Companies Act, 1956, whichever
 is higher.
 
 Assets individually costing less than or equal to Rs.5,000 are fully
 depreciated in the year of acquisition.
 
 1.5 Investments
 
 Investments which are long term in nature, are stated at cost.
 Provision is made for diminution in value if it is of nature other than
 temporary. Premium on acquisition of Government securities is amortised
 over the balance tenure.
 
 Current investments are valued at lower of cost and fair value.
 
 1.6 Receivables under Financing Activity
 
 All loan exposures to borrowers with installment structure are stated
 at the full agreement value after netting of
 
 (a) Unearned income
 
 (b) Installments appropriated up to the year-end.
 
 1.7 Retirement and Other Benefits
 
 (a) Defined Contribution Plan
 
 Provident Fund: Contributions to the Regional Provident Fund
 Commissioner to secure retiral benefits in respect of Employees
 Provident Fund and Employees Family Pension Fund, based on the
 Statutory provisions as per the Employee Provident Fund Scheme, are
 charged to revenue.
 
 Superannuation: The Company contributes a sum equivalent to 15% of
 eligible employees salary to a Superannuation Fund administered by
 trustees and managed by Life Insurance Corporation of India (LIC). The
 Company has no liability for future Superannuation Fund benefits other
 than its annual contribution and recognizes such contributions as an
 expense in the year incurred.
 
 (b) Defined Benefit Plan & Long Term Compensated Absences
 
 Expenditure for defined benefit gratuity plan and long term accumulated
 compensated absences is calculated as at the balance sheet date in a
 manner that distributes expenses over the employees working lives.
 These commitments are valued at the present value of expected future
 payments and with consideration for calculated future salary increases.
 
 The Company makes annual contribution to a Gratuity Fund administered
 by trustees and managed by LIC. The Company accounts its liability for
 future gratuity benefits based on actuarial valuation, as at the
 balance sheet date, determined every year by LIC using the Projected
 Unit Credit method.
 
 The Company accounts its liability for long term compensated absences
 based on actuarial valuation, as at the balance sheet date, determined
 every year by an independent actuary using the Projected Unit Credit
 method.
 
 Actuarial gains and losses are recognised in the profit and loss
 account in the year in which they occur.
 
 (c) Other Employee Benefits
 
 Other employee benefits include short term accumulated compensated
 absences which is recognized based on the eligible leave at credit on
 the balance sheet date and is estimated based on the terms of the
 employment contract.
 
 1.8 Foreign Currency Transactions
 
 Foreign Currency Transactions are accounted at the exchange rates
 ruling on the date of the transaction. Foreign currency monetary items
 as at the balance sheet date are restated at the closing exchange
 rates. Exchange deferences arising on actual payments/realisations and
 year-end restatements are dealt with in the profit and loss account.
 
 The Company enters into forward exchange contracts and other
 instruments that are in substance a forward exchange contract to hedge
 its risks associated with foreign currency fluctuations. The premium or
 discount arising at the inception of a forward exchange contract or
 similar instrument is amortised as expense or income over the life of
 the contract.  Exchange differences on such contract are recognised in
 the statement of profit and loss in the year in which the exchange
 rates change. Any profit or loss arising on cancellation of a forward
 exchange contract or similar instrument is recognised as income or
 expense for the year.
 
 1.9 Derivative Transactions
 
 The Company generally enters into derivative transactions for hedging
 purposes only. Income from derivative transactions is recognised on
 accrual basis. Such derivative instruments are marked to market
 wherever required as at the balance sheet date and provision for
 losses, if any, is dealt with in the profit and loss account.
 
 1.10 Lease Accounting
 
 Lease payments including cost escalation for assets taken on operating
 lease are recognised in the Profit and Loss Account over the lease term
 in accordance with AS-19, Leases issued by the Institute of Chartered
 Accountants of India.
 
 1.11 Service Tax Input Credit
 
 Service Tax Input Credit is accounted for in the books in the period
 when the underlying service received is accounted and when there is no
 uncertainty in availing / utilizing the same.
 
 1.12 Taxation
 
 Income Tax: Current tax is the amount of tax payable on the taxable
 income for the year and is determined in accordance with the provisions
 of the Income Tax Act, 1961.
 
 Deferred Tax: Deferred tax is recognised, on timing differences, being
 the difference between taxable income and accounting income that
 originate in one period and are capable of reversal in one or more
 subsequent periods.
 
 Deferred tax assets in respect of unabsorbed depreciation and carry
 forward losses are recognised if there is virtual certainty that there
 will be sufficient future taxable income available to realise such
 losses. Other deferred tax assets are recognised if there is reasonable
 certainty that there will be sufficient future taxable income available
 to realise such assets.
 
 1.13 Deferred Compensation Costs
 
 In respect of stock options granted pursuant to the companys Employee
 Stock Option Schemes, the company determines the compensated cost based
 on the intrinsic value method and the compensation cost is amortised on
 a straight line basis over the vesting period.
 
 1.14 Provisions, Contingent Liabilities and Contingent Assets
 
 Provisions are recognised only when the company has present or legal or
 constructive obligations as a result of past events, for which it is
 probable that an outflow of economic benefit will be required to settle
 the transaction and a reliable estimate can be made for the amount of
 the obligation. Contingent liability is disclosed for (i) Possible
 obligations which will be confirmed only by future events not wholly
 within the control of the Company or (ii) Present obligations arising
 from past events where it is not probable that an outflow of resources
 will be required to settle the obligation or a reliable estimate of the
 amount of the obligation cannot be made. Contingent assets are not
 recognised in the financial statements.
 
 1.15 Prepaid Finance Charges
 
 Prepaid Finance Charges represents ancillary costs incurred in
 connection with the arrangement of borrowings, including borrowings
 sanctioned but not availed, and is amortised on a straight line basis,
 over the tenure of the respective borrowings. Unamortised borrowing
 costs remaining, if any, is fully expensed of as and when the related
 borrowing is prepaid / cancelled.