1.1 Basis of accounting:
The financial statements are prepared under historical cost convention,
on an accrual basis and are in accordance with the requirements of the
Companies Act, 1956 and comply with the Accounting Standards referred
to in sub-section (3C) of section 211 of the said Act. 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. Management believes that the estimates used in
preparation of the financial statements are prudent and reasonable.
Future results could differ from these estimates.
1.2 Revenue Recognition:
(a) Interest on all lending such as inter corporate deposits and
finance against securities are accounted on time proportionate basis.
(b) Rental income is accrued on the basis of the agreement.
(c) Dividend is accounted when the right to receive payment is
established and known.
(d) Profit/Losses from share trading/investment activities is
determined on the basis of weighted average carrying amount of
investments and is recognised on the basis of contract notes.
(e) Equity Stock - Futures:
In accordance with Guidance Note on Accounting for Equity Index and
Equity Stock Futures and Options issued by The Institute of Chartered
Accountants of India.
1. Equity Stock Futures are marked-to-market on a daily basis. Debit
or credit balances, if any, are disclosed under Loans and Advances or
Current Liabilities respectively. The Mark-to-Market Margin Equity
Stock Futures Account, represents the net amount paid or received on
the basis of movement in the prices of Equity Stock Futures till the
Balance Sheet date.
2. As at the Balance Sheet date, the profit/ loss on open positions,
if any, in Equity Stock Futures are accounted for as follows:
- Credit balance in the Mark-to-Market Margin - Equity Stock Futures
Account, being anticipated profit, is ignored and no credit is taken
in the Statement of Profit and Loss.
- Debit balance in the Mark-to-Market Margin - Equity Stock Futures
Account, being anticipated loss, is recognised in the Statement of
Profit and Loss.
3. On final settlement or squaring-up of contracts for Equity Stock
Futures, the profit or loss is calculated as the difference between
settlement/ squaring-up price and contract price. Accordingly, debit or
credit balance pertaining to the settled/ squared-up contract in
Mark-to-Market Margin - Equity Stock Futures Account is recognised in
the Statement of Profit and Loss upon expiry of the contracts. When
more than one contract in respect of the relevant series of Equity
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 First
In First Out Method for calculating profit/ loss on squaring-up.
4. Initial Margin - Equity Stock Futures Account, representing the
initial margin and Margin Deposits representing additional margin
paid over and above the initial margin, for entering into contracts for
Equity Stock Futures, which are released on final settlement/
squaring-up of underlying contracts, are disclosed under Loans and
1.3 Fixed Assets:
Fixed assets are stated at cost of acquisition less accumulated
depreciation. Cost comprises of the purchase price and any other
attributable cost of bringing the asset to its working condition for
its intended use.
(a) Depreciation on fixed assets and investment in immovable property
is provided on the written down value basis at the rates prescribed in
Schedule XIV to the Companies Act, 1956.
(b) Depreciation on additions to fixed assets is provided for the full
year irrespective of the date of addition. No depreciation is provided
on deletions to fixed assets in the year of sale.
Long Term Investments (excluding investment property) are valued at
cost unless there is a diminution in value, other than temporary for
which provision is made.
Current Investments are stated at lower of cost and fair value.
Investment properties are carried individually at cost less accumulated
depreciation. Investment properties are capitalised and depreciated in
accordance with the policy stated for tangible fixed assets.
Tax expense comprises current and deferred tax. Current tax is measured
at the amount expected to be paid to the tax authorities in accordance
with the Income-tax Act, 1961. Deferred tax reflects the impact of
current year timing differences between taxable income and accounting
income for the year and reversal of timing differences of earlier
years. Deferred tax is measured based on the tax rate and tax laws
enacted or substantially enacted at the Balance Sheet date.
Deferred tax assets other than on carried forward losses and unabsorbed
depreciation are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised.
Deferred tax assets on account of carried forward losses and unabsorbed
depreciation are recognised only to the extent that there is virtual
certainty supported by convincing evidence that sufficient future
taxable income will be available against which such deferred tax assets
can be realised.
Minimum Alternative Tax (MAT) credit asset is recognised only when and
to the extent there is convincing evidence that the Company will pay
normal Income-tax during the specified period. The carrying amount of
MAT credit asset is reviewed at each Balance Sheet date.
A provision is recognised when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted
to their present values and are determined based on management estimate
required to settle the obligation at the Balance Sheet date. These are
reviewed at each Balance Sheet date and adjusted to reflect the current
1.8 Operating Lease:
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets, are classified as
operating leases. Operating lease payments are recognised as an expense
in the Statement of Profit and Loss on a straight-line basis over the
1.9 Employee benefits:
(a) Short term employee benefits:
Short term employee benefits are recognised as an expense at the
undiscounted amount in the Statement of Profit and Loss of the year in
which the related service is rendered.
(b) Long term employee benefits: