1.  Method of Accounting
 
 The company follows accrual system of accounting and the financial
 statements are prepared on historical cost basis, in accordance with
 generally accepted accounting principles and Reserve Bank of India
 guidelines as applicable to the Primary Dealers.
 
 2.  Sales / Purchases of Treasury Bills (including Cash Management
 Bills) and Government Dated Securities, as disclosed in Profit & Loss
 Account does not includes repo transactions in accordance with revised
 RBI guidelines. In year prior to this, sale / purchase of Government
 dated securities includes repo transactions as well.
 
 3.  Revenue Recognition
 
 i) The difference between the acquisition cost and maturity value of
 Certificates of Deposit, Commercial Papers, Bills Re-discounted,
 Treasury Bills (including Cash Management Bills) and Zero Coupon Bonds
 is apportioned on time basis. The above is recognised as accrued income
 and included in the carrying cost of the securities.
 
 ii) Interest accrued on Government Dated Securities and Corporate Bonds
 and Debentures is recognised at its coupon rate and that of floating
 rate bonds is recognised on the yield of instruments to which these are
 linked.
 
 iii) Purchase and sale price of fixed income securities is bifurcated
 into cost and accrued interest paid or realised. Accrued interest paid
 on purchase & received on sale is netted and reckoned as
 expense/income.
 
 iv) Profit/loss on sale of securities is accounted on weighted average
 cost method and is recognised on settlement date.  Profit on sale of
 securities is netted with loss on sale of securities.
 
 v) Brokerage and front-end fee received on subscription of securities
 is deducted in arriving at the cost of relevant securities.
 Underwriting fee earned in respect of devolvement in respect of
 underwriting commitments is proportionately reduced from the cost of
 securities devolving and the remaining amount is directly recognised as
 income.
 
 vi) In case of Merchant Banking activities (Project Appraisal, Loan
 Syndication etc.) the fee is accrued only on the completion of the
 assignment/work. For continuing or long term duration activities (e.g.
 Mutual fund Distribution), the fee is accrued proportionately as per
 performance (Proportionate Completion Method). The revenue is
 recognized only if there is no significant uncertainty regarding the
 amount of consideration.
 
 vii) In case of Units of Mutual Fund, the company has invested in Daily
 Dividend Reinvestment Plan and the income (dividend) is accounted based
 on the dividend declaration by the Mutual Fund. Income on investment
 made in Mutual Funds with growth plan is accounted daily on the basis
 of closing NAV declared by mutual funds.
 
 4.  Expenses Recognition
 
 The brokerage paid in connection with acquisition of securities is
 added to the cost of acquisition and on sale of securities it is
 charged to Profit & Loss Account.
 
 5.  Valuation of Stock-in-Trade
 
 i) All securities in which the company deals are regarded as Current
 Assets (Stock-in-Trade) and grouped as hedge and non-hedge portfolio.
 
 ii) The stock of Central Government Securities, Treasury Bills
 (including Cash Management Bills), State Development Loans and
 PSU/Corporate Bonds & Debentures, Equity Shares are valued at weighted
 average cost or market value, whichever is lower (except securities
 under HTM category as per RBI circular). Market Value is determined by
 the prices declared by Fixed Income Money Market and Derivatives
 Association of India (FIMMDA) except for Equity Shares. Market value of
 Equity Shares is determined by the closing rates provided by the stock
 exchanges. For this purpose, the securities in each category are
 considered scrip-wise and the cost and market value aggregated for all
 securities in each category. Net diminution, if any, for each category
 of securities is provided for and charged to Profit and Loss Account.
 Net appreciation, if any, is ignored. The diminution in one category of
 securities is not set off against appreciation in another category.
 
 The securities under HTM category are valued as per the guidelines
 issued by RBI from time to time.
 
 iii) Certificates of Deposit, Commercial Papers, Bills Re-discounted
 and Zero Coupon Bonds held on the balance sheet date are valued at
 carrying cost.
 
 iv) In case of units of Mutual Fund valuation is done on the basis of
 closing NAV declared by the Mutual Fund.
 
 6.  Accounting for Repo Transactions
 
 In confirmation with RBI guidelines, securities sold under repo
 transactions are not excluded from stock-in-trade and the securities
 purchased under reverse repo are not included in the stock-in-trade.
 Contra heads are used to reflect the transfer of securities.
 
 Repo seller continues to accrue coupon/ discount on securities, as the
 case may be, even during the repo period while the repo buyer shall not
 accrue the same. The above said rules are applicable from this
 financial year onwards (2010-11) as per RBI guidelines.
 
 7.  Interest Rate Swaps (IRS)
 
 Assets and Liabilities in respect of notional principal amount of IRS
 are nullified. The related interest is recognized on accrual basis.
 
 i) Trading Swaps
 
 Trading Interest Rate Swaps outstanding at Balance Sheet date are
 marked to market and the resultant loss, if any, is recorded in Profit
 and Loss Account. Any other charges relating to Trading Interest Rate
 Swaps are charged to Profit and Loss Account.
 
 ii) Hedge Swaps
 
 Hedge Swaps are accounted for on accrual basis. A Hedge Swap designated
 to an asset/liability is carried at market value. The resulting
 mark-to-market loss/gain on swap is recorded as an adjustment to the
 market value of designated asset/liability. Gains or losses on the
 termination / redesignation of hedge swaps is recognized against the
 offsetting gain or loss recognized on the designated asset or
 liability.
 
 On redesignation of a Hedge Swap from one item of asset/liability to
 another item of asset/liability, the mark-to-market profit/loss of the
 Hedge Swap on the day of redesignation is amortized over the shorter of
 the remaining life of the swap or the remaining life of the
 asset/liability
 
 8.  Accounting for Future and Options Transactions
 
 i) Initial Margin payable at the time of entering into future
 contract/sale of option is adjusted against the deposits with the
 exchanges in the form of fixed deposits, cash deposits and securities.
 
 ii) Transactions in Future contracts are accounted as Purchases and
 Sales at the notional trade value of the contract.  The open interest
 in futures as at the Balance Sheet date is netted by its notional
 value.
 
 iii) The difference in the settlement price or exchange closing price
 of the previous day and exchange closing price of the subsequent day,
 paid to or received from the exchange is treated as Mark to Market
 Margin. The balance in the Mark to Market Margin Account represents the
 net amount paid or received on the basis of movement in the prices of
 open interest in futures contracts till the Balance Sheet date. Net
 debit balance in the Mark to Market Margin Account is charged off to
 revenue whereas net credit balance is shown under current liabilities.
 
 iv) Premium paid or received on purchase and sale of options and the
 difference paid or received on exercise of options is accounted as
 Purchases or Sales. In case of open interest in options sold as on the
 Balance Sheet date, provision is made for the amount by which premium
 prevailing on the Balance Sheet date exceeds the premium received for
 those options. The excess of premium received over the premium
 prevailing on the Balance Sheet date is not recognized. Similarly, in
 case of options bought, provision is made for the amount by which the
 premium paid for the option exceeds the premium prevailing on the
 Balance Sheet date and the excess of premium prevailing on the Balance
 Sheet date over the premium paid is ignored. In case of multiple open
 positions, provision is made or excess premiums are ignored after
 netting off the balance in buy as well as sell positions.
 
 9.  Investment
 
 Long Term Investment in debt is valued at carrying cost. However,
 provision for diminution is made, when there is a decline other than
 temporary in the value of long-term investment.
 
 10.  Deferred Tax
 
 Deferred tax is recognized in accordance with the provisions of
 Accounting Standard 22 issued by The Institute of Chartered Accountants
 of India on “Accounting for Taxes on Income”.
 
 11.  Depreciation
 
 Depreciation on fixed assets is charged on written down value method in
 accordance with the rates specified in Schedule XIV to the Companies
 Act, 1956. Intangible Assets comprise of software acquired by the
 company to facilitate its operations and these are depreciated @40 per
 cent on WDV basis.
 
 12.  Preliminary Expenses
 
 Preliminary expenses are written off in the year in which these are
 incurred.
 
 13.  Share Issue Expenses
 
 Share issue expenditure is charged to Profit and Loss account in the
 year of occurrence.
 
 14.  Tax on Dividend
 
 Dividend Distribution Tax payable on dividend declared in terms of
 Section 115-O of the Income Tax Act, 1961, is accounted for in the year
 to which the dividend relates.
 
 15.  Retirement Benefits – Provident Fund, Gratuity & Leave Encashment
 (As per Accounting Standard 15)
 
 i.  Gratuity contribution made under the Employee Group Gratuity cum
 life insurance scheme of LIC is charged to revenue.
 
 ii.  Leave Encashment is accounted for on actuarial valuation carried
 at year-end.
 
 iii.  Contribution to recognised provident fund is charged to revenue.