1. Basis of preparation
The financial statements have been prepared to comply in all material
aspects with the Accounting Standards notified by the Companies
(Accounting Standards) Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956 and the directives as prescribed
by the Reserve Bank of India for Non Banking Financial Companies. The
financial statements have been prepared under the historical cost
convention on an accrual basis. However, income is not recognized and
also provision is made in respect of non-performing assets as per the
prudential norms prescribed by the Reserve Bank of India. Except
otherwise mentioned, the accounting policies applied by the Company,
are consistent with those used in the previous year.
(a) Terms/Rights attached to the equity shares
The Company has only one class of equity shares having par value of Rs.
10 per share. Each holder of equity shares is entitled to one vote per
share. The Company declares and pays dividends in Indian Rupees. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting.
During the year ended March 31, 2012, the amount of per share dividend
recognised as distribution to equity share holders is Re. 1 (Re. 1).
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
As per records of the Company, including its register of
shareholders/members and other declarations received from shareholders
regarding beneficial interest, the above shareholding represents both
legal and beneficial ownership of shares.
2. Contingent Liabilities:
(a) The Company has provided Corporate Guarantee of Rs. 20,00,00,000
(Rs. 25,00,00,000) and has created equitable mortgage of Rs.
4,16,50,000 (Rs. 4,16,50,000) over its property at Kolkata as security
for the said guarantee for credit facility extended by a scheduled bank
to Microsec Capital Limited (a wholly owned subsidiary company).
Against the above, the credit facility availed and the bank guarantees
issued by the banks as on March 31, 2012 are Rs. Nil (Rs. 56,298) and
Rs. 20,00,00,000 (Rs. 25,00,00,000) respectively.
(b) The Company has provided Corporate Guarantee of Rs. 10,19,00,000
(Rs. 10,19,00,000) for credit facility extended by a scheduled bank to
Microsec Technologies Limited (an ultimate wholly owned subsidiary
company). Against the above, the credit facility availed as on 31st
March 2012 is Rs. 3,00,00,000 (Rs. 1,00,00,000).
(c) Bank Guarantee outstanding in favour of Bombay Stock Exchange - Rs.
73,75,000 (Rs. 73,75,000).
(d) Income Tax demand under appeal - Rs. 58,00,960 (Rs. Nil). The
management believe that the Company has a good case for success in this
matter and therefore no provision there against is considered necessary.
3. The Reserve Bank of India through notification no. DNBS 223/CGM
(US) - 2011 dated January 17, 2011 directed all Non Banking Financial
Companies to make a provision of 0.25% on Standard assets and
accordingly the Company has made a provision of Rs. 42,00,000 (Rs.
36,99,761) as at March 31, 2012.
4. The Reserve Bank of India vide notification no.
DNBS.PD/CC.N0.214/03.02.2002/2010-11 dated March 30, 2011 has issued a
direction that no Non Banking Financial Company shall contribute to the
capital of a partnership firm or become a partner of such firm.
Accordingly, the Company has retired from partnership in Microsec
Invictus Advisors LLP w.e.f. March 15, 2012. In accordance with the
terms and conditions of the limited liability partnership, the Company
has shared loss of Rs. 20,42,591 which has been debited to the
statement of profit and loss of the Company.
5. Till the last year, the Company was amortizing copyrights on a
straight line basis over a period of ten years from the date these
assets became available for use. In the current year, the Company has
re-assessed the estimated useful life of such intangible assets and has
written it off over the useful life of three years. Because of the
above change, the profit before tax for the year and carrying value of
copyrights is lower by Rs. 3,48,63,712.
6. The Company has submitted an application on December 16, 2011 to
the Regional Provident Fund Commissioner, West Bengal for registration
for provident fund which was allotted by the Provident Fund authorities
on January 31, 2012, with retrospective effect from October 1, 2011. On
registration, the Company has deposited all provident fund
contributions for the period from October 2011 to January 2012 on
February 13, 2012.
7. The Company has submitted an application on December 30, 2011 to
the Regional Employees'' State Insurance Corporation, West Bengal for
registration for Employees'' State Insurance which was allotted by the
Employees'' State Insurance authorities on January 10, 2012, with
retrospective effect from October 1, 2011. On registration, the Company
has deposited all Employees'' State Insurance contributions for the
period from October 2011 to December 2011 on January 18, 2012.
8. The Company has a defined benefit gratuity plan. Every employee,
who has completed five years or more of services, is entitled to
gratuity on terms not less favorable than the provisions of the payment
of Gratuity Act, 1972. The scheme is funded with Life Insurance
Corporation of India.
The following tables summarise the components of gratuity expenses
recognised in the Statement of Profit and Loss and the funded status
and amounts recognized in the balance sheet for the plan.
(ix) The estimates of future salary increases considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
(x) The overall expected rate of return on assets is determined based
on the market prices prevailing on that date, applicable to the period
over which the obligation is to be settled.
(xi) The Company expects to contribute Rs. 2,00,000 (Rs. 5,00,000) to
Gratuity Fund during April, 2012 to March, 2013.
9. Minimum Alternate Tax (MAT) credit entitlement of Rs. 27,98,703
related to financial year 2010-11 although available as tax credit for
set off in future years as per Income Tax Act, 1961, has not been
accounted for in view of accounting policy specified in Note 2(xii)
10. Capital Commitments
Estimated amount of contracts remaining to be executed on capital
account and not provided for (net of advances)
- Rs. 25,66,863 (Rs. Nil).
11. In terms of Accounting Standard 18, notified by the Companies
Accounting Standard Rules, 2006, the related party disclosures are
given below :
Name of related parties & description of relationship Subsidiary
Companies (Enterprise where control exists)
Microsec Capital Limited (MCap)
Microsec Insurance Brokers Limited Microsec Commerze Limited
PRP Technologies Limited Microsec Resources Private Limited
Microsec Technologies Limited Associate Company
Myjoy Fun and Food Private Limited (w.e.f. August 16, 2011)
Limited Liability Partnership (Entity over which control is exercised)
Microsec Invictus Advisors LLP (up to March 15, 2012)
Key Management Personnel
Mr. Banwari Lal Mittal (Chairman and Managing Director)
Mr. Ravi Kant Sharma (Director) (up to August 4, 2011)
Mr. Ravi Kant Sharma (Managing Director & CEO) (w.e.f. August 5, 2011)
Mr. Giridhar Dhelia (Chief Financial Officer) (w.e.f. November 9, 2010)
Mr. Pankaj Kumar Kedia (Chief Financial Officer) (up to October 20,
Enterprises in which Key Management Personnel Exercise Significant
Influence Luv-Kush Projects Limited
I. Business Segments : The business segment has been identified on the
basis of the services of the Company. Accordingly, the Company has
identified Financing & Investment and Investment Banking & related
Services as business segments.
a) Financing & Investment - Consists of financing of loans and
investments in shares & securities and Income from Royalty.
b) Investment Banking & related Services - Consists of financial
consultancy and debt syndication.
II. Geographical Segments : The Company operates in only one
geographical segment i.e. ''Within India'' and no separate information
for geographical segment has been given.
12. Pursuant to the provision of section 61 of the Companies Act,
1956, the shareholders of the Company in the Annual General Meeting
held on August 4, 2011, have approved the variation in the utilisation
of the Issue Proceeds from Initial Public Offer (IPO), arising out
of the issue of equity shares allotted pursuant to the prospectus dated
September 24, 2010.
* Represents the amount invested in equity shares of Microsec Capital
Limited (MCap) which is lying unutilized by MCap and thus invested in
fixed deposits and bonds.
13. Additional information as per guidelines issued by the Reserve
Bank of India in respect of Non - Banking Financial (Non Deposit
Accepting or Holding) systemically important (NBFC-ND-SI) are given in
Annexure -1 attached herewith.
14. Previous year''s figures including those in brackets have been
regrouped and/or rearranged wherever necessary.