1.  BASIS OF PREPARATION OF FINANCIAL STATEMENTS
 
 The accompanying financial statements have been prepared on historical
 basis and conform in all material aspects to Generally Accepted
 Accounting Principles in India which encompasses applicable statutory
 provisions, regulatory framework and Accounting Standards. The Company
 adopts the accrual concept in the preparation of accounts. 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. The Management believes that the estimates used
 in preparation of the financial statements are prudent and reasonable.
 Future results could differ from these estimates.
 
 2.  REVENUE RECOGNITION
 
 2(a) Income on Non-Performing Assets (NPAs) is recognized, as and when
 received.
 
 2(b) Front-end fee, Premium on pre-payment of loans/reduction in
 interest rates and LC Commission are accounted for on realization
 basis.
 
 2(c) Dividends declared by the respective companies till the close of
 the accounting period are accounted for as income, once the right to
 receive is established.
 
 2(d) Rental on leased assets is accounted for from the commencement
 date, as prescribed in the lease agreement entered with the lessees. In
 respect of lease transactions commenced on/or before 31.03.2001, income
 from leases (except in case of Non-Performing Assets) is recognized on
 the basis of implicit rate in the lease to the net investment
 outstanding on the lease over the primary lease period.
 
 2(e) The front-end fee/underwriting commission/commitment fee received
 in respect of devolvement of underwriting and direct subscription is
 reduced from the cost of related investments.
 
 2(f) Surplus on sale of investments is net of losses thereon.
 
 3.  INVESTMENTS
 
 3(a) Investments are classified under current and long term categories
 and valued in accordance with the Reserve Bank of India (RBI)
 Guidelines as applicable to Non- Banking Financial Companies (NBFCs)
 and Accounting Standard-13 on ''Accounting for Investments'' issued by
 The Institute of Chartered Accountants of India (ICAI).
 
 (i) ''Long term Investments'' are carried at acquisition cost. A
 provision is made for diminution other than temporary on an individual
 basis.
 
 (ii) ''Current Investments'' are carried at the lower of cost or fair
 value on an individual basis. However, appreciation if any, within the
 category, is available for set off.
 
 3(b) Security Receipts issued by an Asset Reconstruction Company (ARC)/
 Securitisation Company (SC) are valued in accordance with RBI
 guidelines.  Accordingly, the net asset value obtained from the ARC is
 reckoned for valuation of such investments. Appreciation in the value,
 if any, is ignored and depreciation is provided for.
 
 4.  DERIVATIVES
 
 4(a) Equity Index/Stock Futures are marked to market on daily basis.
 Debit or Credit Balances disclosed under Current Assets or Current
 liabilities respectively represent the net amount paid or received on
 the basis of movement of prices in the Index Stock Futures till the
 Balance Sheet date. Equity Index/Stock Options are recognized in the
 books to the extent of premium paid.
 
 4(b) As at the Balance Sheet date, the profit or loss on open positions
 are accounted for as follows:
 
 - The unrealized profit determined Scrip wise/Index wise, being
 anticipated profit, is ignored and no credit is taken in the profit and
 loss account.
 
 - The unrealized loss determined Scrip wise/Index wise, being
 anticipated loss, is recognized in the profit and loss account.
 
 - Equity Index/Stock Options are carried at cost where they are used as
 an instrument for hedging.
 
 4(c) On final settlement or squaring-up of contracts for Equity
 Index/Stock Futures, the profit or loss is calculated as difference
 between settlement/squaring-up price and contract price. Accordingly,
 debit or credit balance pertaining to the settled/ squared-up contract
 is recognized as profit or loss upon expiry/squaring-up of the
 contracts. When more than one contract in respect of the relevant
 series of Equity Index/Stock Futures contract to which the squared-up
 contract pertains is outstanding at the time of the squaring-up of the
 contract, the contract price of the contract so squared-up is
 determined using weighted average method for calculating profit/loss on
 squaring up.
 
 4(d) Initial and additional margin paid over and above initial margin,
 for entering into contracts for Equity Index/Stock Futures, which are
 released on final settlement/ squaring-up of underlying contracts, are
 disclosed under Current Assets.
 
 5.  FOREIGN EXCHANGE TRANSACTIONS
 
 5(a) The expenses and income in foreign exchange transactions are
 accounted for at the rates prevailing on the date of transactions/at
 the forward rate, if booked, for such transaction.
 
 5(b) Assets and liabilities held in foreign currencies and accrued
 income and expenditure in foreign currencies are translated into Indian
 Rupees at the rates advised by Foreign Exchange Dealers Association of
 India (FEDAI) prevailing towards the close of the accounting period.
 Gains/losses, if any, on valuation of various assets and liabilities
 are taken to Profit & Loss Account.
 
 6.  FIXED ASSETS AND DEPRECIATION
 
 6(a) Fixed Assets are carried at cost (including capitalized interest)
 less accumulated depreciation and impairment loss, if any. Accumulated
 depreciation on assets in respect of lease transactions commenced on or
 before 31.03.2001 is adjusted for the balance in the ''Accumulated Lease
 Equalization Account''.
 
 6(b) Depreciation on assets given on lease is provided on Straight Line
 Method (SLM) at the rates prescribed under Schedule XIV to the
 Companies Act, 1956 or over the primary period of lease of assets,
 whichever is higher.
 
 6(c) Depreciation in respect of Office Building and Plant & Machinery
 at Corporate Office is provided on SLM and on all other assets on the
 Written Down Value (WDV) method at the rates prescribed under Schedule
 XIV to the Companies Act, 1956. Assets having individual value of less
 than Rs. 5000/- are charged to the Profit & Loss Account in the year of
 purchase.
 
 6(d) Leasehold land is amortized over the lease period.
 
 6(e) Depreciation on increase in value of Leasehold Land & Building due
 to revaluation is provided on straight-line basis over the balance
 useful life of asset and adjusted out of revaluation reserve.
 
 6(f) Mobile phones are fully depreciated in the year of acquisition
 itself.
 
 6(g) Art works capitalized under Furniture and Fixtures are not being
 depreciated.
 
 7.  IMPAIRMENT OF ASSETS
 
 Impairment loss is provided to the extent the carrying amount of assets
 exceeds their recoverable amounts. Recoverable amount is the higher of
 an asset''s net selling price and its value in use. Value in use is the
 present value of estimated future cash flows expected to arise from the
 continuing use of the asset and from its disposal at the end of its
 useful life. Net selling price is the amount obtainable from sale of
 the asset in an arm''s length transaction between knowledgeable, willing
 parties, less the costs of disposal. If at the balance sheet date there
 is an indication that a previously assessed impairment loss no longer
 exits, then such loss is reversed and the asset is restated to the
 extent of the carrying value of the asset that would have been
 determined (net of amortization/depreciation), had no impairment loss
 been recognized.
 
 8.  PROVISIONS/WRITE OFF AGAINST LOANS AND OTHER CREDIT FACILITIES
 
 8(a) All credit exposures are classified into performing and
 non-performing assets (NPAs) as per the RBI Guidelines. Further, NPAs
 are classified into sub-standard, doubtful and loss assets based on the
 criteria stipulated by RBI. Provisions are made on standard,
 sub-standard and doubtful assets at rates prescribed by RBI.  Loss
 assets and unsecured portion of doubtful assets are provided/written
 off as per the extant RBI guidelines. Additional provisions are made
 against specific non-performing assets over and above what is stated
 above, if in the opinion of the management, increased provisions are
 necessary.
 
 8(b) For restructured/rescheduled assets, provision is made in
 accordance with the guidelines issued by RBI.
 
 8(c) Recovery against debts written off/provided for is credited to
 revenue. Income is recognized where amounts are either recovered and/
 or adjusted against securities/ properties or advances there-against or
 are considered recoverable in terms of RBI Guidelines.
 
 8(d) Provision in respect of purchase and sale of NPAs is accounted as
 per guidelines prescribed by RBI.
 
 9.  GRANTS RECEIVED FROM GOVERNMENT OF INDIA UNDER INTEREST
 DIFFERENTIAL FUND (IDF)
 
 Grants received from Government of India under Interest Differential
 Fund (IDF) is of a capital nature and to be utilized for specified
 purposes for promotional activities of Industrial Development.
 Accordingly, the money so received, net of expenditure for the approved
 purposes is shown under ''Reserves and Surplus'' in the Balance Sheet.
 The amounts invested and loans made out of the fund for approved
 purposes are shown under ''Investments'' and ''Loans'' respectively.
 
 10.  BORROWING COST
 
 Borrowing costs that are attributable to the acquisition or
 construction of qualifying assets are capitalized as part of the cost
 of such assets.
 
 A qualifying asset is one that necessarily takes a substantial period
 of time to get ready for its intended use. All other borrowing costs
 are charged to revenue.
 
 11.  MISCELLANEOUS EXPENDITURE
 
 11(a) Expenses on issue of Shares and Bonds are charged as per
 guidelines contained in Accounting Standard 26 - Intangible Assets.
 
 11(b) Voluntary Retirement Scheme (VRS) expenses are charged off as and
 when incurred.
 
 12.  EMPLOYEE BENEFITS
 
 12(a) Monthly contributions to the Retirement Funds viz. Provident Fund
 and Pension Fund being in the nature of defined contribution is charged
 against revenue.  The Provident Fund is administered through duly
 constituted and approved administrators. The administration of Pension
 Fund in respect of existing employees opting for the same has been
 entrusted by Trustees to Life Insurance Corporation of India (LIC) by
 entering into a Group Superannuation Cash Accumulation Scheme. The
 existing pension optees, however, continue to be governed by the
 provisions of the scheme in operation at the time of their retirement
 and are accordingly entitled to DA relief and family pension as and
 when due. The contribution made on account of same is charged to
 Accounts as and when due.
 
 12(b) The Company has a defined benefit employees scheme in the form of
 Gratuity.  The Trustees of the scheme have entrusted the administration
 of related fund to LIC. Expense for the year is determined on the basis
 of actuarial valuation of the Company''s year-end obligation in this
 regard and the value of year end assets of the scheme. Contribution is
 deposited with LIC based on intimation received by the Company.
 
 12(c) The Company has a post retirement medical benefit scheme for
 employees and their dependants subject to certain limits for
 hospitalization and normal medical treatment. The same is charged
 against revenue as and when incurred.
 
 13.  TAXATION
 
 Tax Expense comprises of current & deferred income tax. Current income
 tax is measured at the amount expected to be paid to the tax
 authorities in accordance with the Income Tax Act. Deferred Tax is
 recognized, subject to consideration of prudence, on timing
 differences, being difference between taxable income and accounting
 income/ expenditure that originate in one period and are capable of
 reversal in one or more subsequent year(s). Deferred taxes are reviewed
 for their carrying values at each balance sheet date.
 
 14.  PROVISIONS AND CONTINGENCIES
 
 Provisions are recognized when the Company has a legal and constructive
 obligation as a result of a past event, for which it is probable that
 cash outflow will be required and a reliable estimate can be made of
 the amount of the obligation. Contingent liabilities are disclosed when
 the Company has a possible or present obligation where it is not
 probable that an outflow of resources will be required to settle it.
 Contingent assets are neither recognized nor disclosed.