The Company follows the directions prescribed by the Reserve Bank of
India for Non-Banking Financial Companies with respect to Income
Recognition, Asset Classification, Provisioning norms. The applicable
Accounting Standards issued by The Institute of Chartered Accountants
of India is followed in drafting the accounts of the company.
1.1 Income Recognition:
a. Income from Hire purchase and hypothecation loan transactions is
accounted on the basis of Internal Rate of Return method and followed
on accrual basis. Income is not recognized on contracts in which the
installments are due for more than 180 days.
b. Additional Finance Charges (AFC) is accounted on accrual basis at
18% p.a. AFC is not recognized on contracts in which the installments
are due for more than 180 days.
c. Cheque Bouncing Charges is accounted at Rs. 500 per occurrence.
d. Due date Missing charges are charged when instalments are not paid
on the due dates at Rs. 500 and is accounted on accrual basis.
1.2 Repossessed Assets:
Repossessed assets are valued at the settlement value and a provision
of 40 % is made uniformly on the settlement value.
1.3 Fixed Assets:
Fixed assets are stated at historical cost less accumulated
On Own assets (Tangible):
Depreciation on assets for own use is provided on Written down value
method at the rates prescribed in Schedule XIV to the Companies Act,
1956. Assets costing Rs. 5,000/- or less acquired during the year are
On Own assets (Intangible):
Intangible assets are depreciated on a straight-line basis over a
period of five years.
Investment in Subsidiary Company is shown at cost.
Company has invested an amount of Rs. 29.93 Lakhs in DFL Holdings and
Securities Limited (Subsidiary Company). Due to slump in the market the
subsidiary company has not entered into any income generating activity.
However, the subsidiary company has invested Rs. 96.38 Lakhs in DFL
Infrastructure Finance Limited as Unsecured Loan and also holds 274100
Equity shares in holding company which is valued at Rs. 23.71 Lakhs as
per market price as on 30th March, 2012. The company also informed that
the subsidiary company is taking necessary steps to generate income on
regular basis. In view of the above no provision is being made for
depreciation in value of shares.