1. Accounting Convention
The financial statements have been prepared under the historic cost
convention in accordance with applicable standards and relevant
presentational requirements of the Companies Act, 1956.
2. Fixed Assets .
Fixed Assets are stated at cost less accumulated depreciation. Cost is
inclusive of freight, duties and levies and other attributable cost of
bringing to their working condition. In case of lease assets, which are
repossessed/taken into custody, are removed from fixed assets and are
shown under “Other Current Assets.
Depreciation is provided as per written down value method as provided
in Schedule XIV of the Companies Act, 1956.
4. Lease Accounting
The Company applied the rate of depreciation as prescribed under
Schedule XIV under Companies Act. 1956 on its existing lease assets.
The difference between the applicable depreciation rate as stated above
and that stipulated in the lease agreement is provided for when the
primary lease period terminates.
Investments are bifurcated into “Current investments and “Long
Current investments are valued at the lower of cost and market value of
each investment individually. Long Term investments are valued at
cost. However, in case of Government approved Securities where the cost
price is higher than the face value, the premium is amortized over the
remaining period of maturity. Provision for diminution is made if there
is permanent decline in the value and such reduction are determined and
made for each investment individually.
Unquoted shares are valued at cost of break-up value of the shares as
per the last audited balance sheet of the Company concerned, whichever
Investments in Units of Mutual Funds which are not quoted in the market
are valued at lower of cost or latest NAV/repurchase price declared by
the Mutual Fund in respect of each particular scheme. Commercial
Papers and Treasury Bills are valued at carrying cost.
Unquoted debentures depending on the tenor are treated as long term
loans or other facilities for the purpose of income recognition and
6. Stock on Hire Purchase
Stock on hire purchase is valued at agreement value less amounts
received/receivable. The amounts receivable from the hirers are
reflected as Sundry Debtors. In case of stock on hire, which are
repossessed/taken into custody are shown under Other Current
7. Other Current Assets
The above include leased assets and stock on hire repossessed/taken
into custody/awarded and rights acquired which are shown as “Assets
and Rights acquired/repossessed/awarded in satisfaction of claims and
these are valued at lower of book value and estimated realisable value.
8. Revenue Recognition
[i] Hire purchase finance charges are accounted for on accrual basis
and are recognised so as to produce a constant percentage periodic
return on the hire pruchase outstanding install ments.
[ii] Lease rental, bill discounting charges and interest are accounted
for on accrual basis.
[iii] Income from non-performing assets is recognised in accordance
with the guidelines to Non-banking Financial Companies on prudential
norms for income etc. issued by the Reverse Bank of India as m odified
from time to time. Further, provisions for Hire Purchase & Lease
Assets, Loans and Advances and Other Current Assets are made in
accordance with such guidelines.
[ivj Art work, Insurance Agency Commission, Designing. Printing and
Scanning etc. are accounted for on completion of job.
9. Management Fees/Processing charges
Mangement fees / processing charges are considered as income in the
year the asset has been given on lease / hire purchase.
10. Advertisement, Printing & Stationery & Brokerage
Advertisement, Printing & Stationery & Brokerage, reimbursement of
expenses for mobilisation of public deposits are charged to Profit and
Loss Account in the year these are incurred asper guidelines provided
in Accounting Standard 26 (AS-26).
11. Share Isseu and Promotional Expenses
Share Issue and Promotional Expenses are charged to Profit and Loss
Account in the year these are incurred as per guidelines provided in
Accounting Standard 26 (AS-26).
12. Employees Benefits
Short term employee benefits (benefits which are payable within 12
months after the end of the period in which the employees rendered
service) are measured at cost. The company does not have any defined
obligation pertaining to post retirement medical benefits, pension and
superannuation for existing I surviving employees. As such medical
expenses are measured on cost to company basis.
Long term employee (benefits which are payable after the end of 12
months from the end of the period in which the employees renderd
service) and post employment benefits (benefits which are payable after
completion of employment i.e. gratuity and leave encashment) are
measured on a discounted basis by the projected unit credit method on
the basis of annual third party actuarial valuations.
Current tax is determined on tax payable in respect of taxable income
for the period. Deferred tax is recognized subject to the consideration
of prudence, on timing differences between taxable income and
accounting income that orginiate in one period and are capable of
reversal in one or more subsequent period. Deferred tax asset is
recognized on unabsorbed depreciation and carry forward losses only if
there is virtual certainity of realization in future. Deferred tax
assets/liabilities are reviewed at each balance sheet date based on
development during the year and available judicial pronouncements, to
reassess realisation I liability.