1.1 Basis of Preparation of Financial Statements
The accompanying financial statements have been prepared under the
historical cost convention on an accrual basis. The financial
statements have been prepared in accordance with the generally accepted
accounting principles to comply in all material aspects with the
Accounting Standards (AS) prescribed in the Companies (Accounting
Standards) Rules 2006 and the provisions of the Companies Act, 1956
(The Act'''') issued by the Central Government, in consultation with the
National Advisory Committee on Accounting Standards, to the extent
The Ministry of Corporate Affairs revised Schedule VI to the Act for
the financial year commencing on or after April 1, 2011. The Balance
Sheet, Statement of Profit and Loss. Cash Flow and comparative
financial information for the previous year have accordingly been
prepared and presented with disclosures as required under the revised
1.2 Use of Estimates
The presentation of financial statements in conformity with the
generally accepted accounting principles requires 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 expense during the reporting period. Although
these estimates are based upon management''s best knowledge of current
events and actions, actual results could differ from these estimates.
Difference between the actual result and estimates are recognized in
the period in which the results are known / materialized.
1.3 Revenue Recognition
Revenue is recognized when it is earned and no significant uncertainty
exists of its ultimate realization/collection.
a. Issue Management fee is accounted on the basis of the terms of
agreement with the clients.
b. Placement fees, professional fees and other service charges are
accounted when there is reasonable certainty of its ultimate
realization / collection.
c Income from distribution is accounted when there is reasonable
certainty of its ultimate realization/collection.
d. Interest income is recognized on an accrual (time proportion)
e. Dividend income is recognized when the right to receive dividend is
1.4 Employee Benefits
a) Short Term Employee Benefits
Employee benefits such as salaries, allowances short term compensated
absences, estimated cost of bonus , excreta and employee benefits
under defined contribution plans such as provident fund and other funds
which fall due within twelve months of rendering the service are
classified as short term employee benefits and charged as expense to
the profit and loss account in the period in which the service is
b) Long Term Employee Benefits
Employee benefits under defined benefits plans like gratuity which fall
due for payment after a period of twelve months from rendering of
service or after completion of employment are determined base on
acturial valuation using the projected unit credit method.
The Company''s obligations recognized in the Balance Sheet represents
the present value of obligations as reduced by the fair value of plan
of assets, where applicable
1.5 Employee Stock Option Scheme.
The stock options granted by the Company are accounted for as per the
accounting treatment prescribed by SEBI (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) and the Guidance Note on Accounting
for Stock Options issued by The Institute of Chartered Accountants of
India, whereby the intrinsic value of the options are recognized as
deferred employee compensation. The deferred employee compensation, if
any, is charged to the profit and loss account on a straight line basis
over the vesting period of the options. The Employee Stock Option
outstanding account, net of unamortized deferred employee compensation,
if any is shown separately as part of reserves.
1.6 Tangible Fixed Assets
Tangible fixed assets are stated at cost of acquisition net of tax /
duty credits less accumulated depreciation and impairment losses, if
any. Cost of acquisition includes all expenses incurred to bring the
assets to their location and working conditions up to the date the
assets are put to use.
1.7 Intangible Fixed Assets
Intangible Assets are stated at cost of acquisition, net of tax / duty
credits availed less amortization and impairment losses, if any. An
asset recognized when it is probable that the future economic benefits
attributable to the assets will flow to the enterprise and where it is
cost can be reliably measured.
1.8 Depreciation and amortization
The Company provides for depreciation and amortization as under:
a. On written down value basis, in accordance with the rates
prescribed in schedule XIV to the Act.
b. On intangible assets, over a period of three years from the date of
acquisition on written down value basis, c On a pro-rata basis on
assets purchased / sold during the year.
d. On assets costing less than Rs.5,000 at hundred percent of the cost
of the asset in the year of purchase.
e. On leasehold improvements, over the primary period of the lease.
1.9 Impairment of Assets
An asset is treated as impaired when the carrying amount of the assets
exceeds its recoverable amount. An impairment loss is charged to the
profit and loss account in the year in which an asset is identified as
impaired. The impairment loss recognized in prior accounting period is
reversed if there is a change in the estimate of its recoverable
Provision for tax comprises current tax and deferred tax charge or
Current taxes are measured on the basis of the taxes expected to be
paid on the taxable income determined in accordance with the prevailing
tax rates and laws.
Deferred tax is the tax effect of the timing differences between the
accounting income and taxable income and are capable of reversal in one
or more subsequent periods. Deferred tax charge or benefit and the
corresponding deferred tax liabilities and assets are recognized using
the rates that have been enacted or substantially enacted as at the
balance sheet date.
Deferred tax assets are recognized only to the extent there is a
reasonable certainty that there will be sufficient taxable income
against which it can be realized; however, where there is unabsorbed
depreciation or carried forward loss under taxation laws, deferred tax
assets are recognized only if there is virtual certainty of realization
of assets. Deferred tax assets, if any, are re-assessed periodically.
All Investments are stated at cost. Investments are classified as
current or long term in accordance with Accounting Standard 13 on
Accounting for Investments. Provision for diminution in value of
current investments is made if the fair value of investments is less
than its cost. Provision for diminution in the value of long-term
investment is made only if such a decline is other than temporary.
Provision for diminution in value of current investments is made during
the year is charged to the statement of profit and loss.
1.12 Derivative Instruments
Daily mark-to-market margins on the derivative trades are accounted
separately as against the initial margin payments under Current Assets.
The profit/loss on the final settlement of the derivative contracts,
calculated as the difference between the final settlement price and the
contract price of all the contracts in the series, is recognized on the
expiry/ square-up of the series of equity index/stock futures by
transfer from the mark-to-market margin account.
As on the date of the Balance Sheet, provision for anticipated loss is
made for the debit balance if any, in the mark- to-market margin
account (maintained scrip wise /index wise) on open futures contracts,
credit balances if any, in the account attributable to anticipated
income being ignored keeping in view the consideration of prudence.
1.13 Earnings Per Share
The basic earnings per share is computed and disclosed by dividing the
net profit after tax attributable to equity shareholders for the year
by the weighted average number of equity shares outstanding during the
Diluted earnings per share is computed and disclosed using the weighted
average number of equity shares outstanding during the year, adjusted
for the effects of all dilutive potential equity shares, if any.
1.14 Miscellaneous Expenditure
Preliminary expenditure and expenditure in connection with the raising
of capital is amortized over a period of ten years from the year of
commencement of business operations or from the year of raising of
1.15 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when there is a present obligation as a
result of past events for which a probable outflow of resources is
expected to settle the obligation and the amount of the obligation can
be reliably estimated.
Contingent liabilities are not recognized but are disclosed in the
notes in case of:
a) a present obligation arising from a past event, when it is not
probable that an outflow of resources will be required to settle the
b) a possible obligation, unless the probability of outflow of
resources is remote.
Contingent Assets are neither recognized, nor disclosed.
Provisions, contingent liabilities and contingent assets are reviewed
at each balance sheet date.
Lease payments for assets taken under operating leases are charged off
to the Profit and Loss Account as and when incurred.
1.17 Cash and Cash Equivalents
Cash and cash equivalents comprise of cash on hand and deposits with
bank. The Company considers all highly liquid investments/ bank
deposits with a remaining maturity on the date of purchase of three
months or less and that are readily convertible to known amounts of
cash to be cash equivalents.
1.18 Cash flow Statements
Cash flows is prepared using the indirect method set out in Accounting
Standard 3 on Cash flow Statement and presents the cash flow by
operating, investing and financing activities of the Company.
1.19 Foreign currency transactions
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of transaction. Realized gains and losses on
foreign currency transactions during the year are recognized in the
statement of profit and loss. Monetary items denominated in a foreign
currency are restated using the closing exchange rate on the date of
balance sheet and resulting net exchange difference is recognized in the
Statement of Profit and Loss.