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TCI Finance

BSE: 501242|NSE: TCIFINANCE|ISIN: INE911B01018|SECTOR: Finance - Investments
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Accounting Policy Year : Mar '17

1 Corporate information

TCI Finance Limited (the Company) is a public company domiciled in India. Its shares are listed in Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Company is a Loan company engaged in the business of Non Banking Financial Institution as defined in section 45I(a) of the Reserve Bank of India Act , 1934.

2 Significant Accounting Policies

2.1 Basis of accounting and preparation of financial statements

The financial statements of the Company are prepared on accrual basis, under historical cost convention. The Financial Statements of the Company have been prepared in accordance with G.A.A.P in India (Indian GAAP) to comply with accounting standards specified under Section 133 of the Companies Act, 2013 (the Act) read with Rule 7 of the Companies (Accounts) Rules, 2014 and relevant provisions of the Act/ the Companies Act, 1956, as applicable. The accounting policies adopted in the preparation of financial statements are consistent with those of the preceding year.

2.2 Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

2.3 Cash Flow Statement

The Cash Flow Statement is prepared under Indirect method in accordance with Accounting Standard-3 on Cash Flow Statements notified in section 133 of the Companies Act, 2013. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

2.4 Revenue Recognition

2.4.1 Lease Income

(i) The income from lease transactions is recognized on accrual basis after netting off the lease equalization charges as recommended by the Institute of Chartered Accountants of India in its Guidance Note - Accounting for Leases.

(ii) The Lease Equalization charge (debit or credit as the case may be in any particular year) represent the difference between the Depreciation as per Schedule II and that which is chargeable so as to write off the asset over the primary lease period.

2.4.2 Interest Income

Interest income is recognized on accrual basis except in case of non-performing assets. Overdue interest is recognized as income on realization.

2.5 Fixed Assets:

2.5.1 Tangible Assets: Fixed assets are carried at cost of acquisition or construction less accumulated depreciation. The cost includes non-refundable taxes, duties, freight and other incidental expenses related to the acquisition and installation of the respective assets.

2.5.2 Intangible Assets: Intangible assets are carried at cost less accumulated amortization and impairment losses, if any.

2.6 Depreciation and Amortization

Depreciable amount of assets is the cost of an asset, or other amount substituted for cost less its estimated residual value. Depreciation on tangible fixed assets has been provided on the straight line method as per the useful lives prescribed in schedule II to the Companies Act, 2013 .

Intangible assets are amortized, on the straight line method on the useful lives prescribed in schedule II to the Companies Act, 2013 .

2.7 Investments

Investments are classified as Long term and Current. Long term Investments are carried at cost less provision for other than temporary diminution, if any, in value of such investments. Current investments are carried at lower of cost and fair value.

2.8 Employee Benefits

(i) Provident fund is a defined contribution plan and the contributions as required by the statute to Employees Provident Fund Organization are charged to Statement of Profit and Loss when due.

(ii) Gratuity liability is defined benefit obligation and is wholly funded. The Company accounts for liability for future gratuity benefits based on actuarial valuation. Actuarial gains / losses are immediately taken to the Statement of Profit and Loss and are not deferred.

(iii) Compensated Absences - The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by employee is recognized during the period when the employee renders the service.

2.9 Reserve Bank of India Prudential Norms

The Company follows the guidelines issued by the Reserve Bank of India, in respect of income recognition, asset classification and valuation of investments. Provision for standard assets is made in terms of the notification DNBS.222/CGM(US)-2011 dated January 17, 2011 issued by Reserve Bank of India.

2.10 Taxes:

2.10.1 Current Tax: Provision for current tax is made based on the taxable income computed for the year under the Income Tax Act, 1961.

2.10.2 Deferred Taxes: Deferred tax is recognized on timing differences, being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized only if there is a virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realize the assets. Deferred tax assets are reviewed at each balance sheet date for their reliability.

2.11 Earnings Per Share:

Basic earnings per equity share is computed by dividing the net profit for the year attributable to the Equity Shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the net profit for the year, adjusted for the effects of dilutive potential equity shares, attributable to the Equity Shareholders by the weighted average number of the equity shares and dilutive potential equity shares outstanding during the year except where the results are anti-dilutive.

2.12 Provisions, Contingent liabilities and Contingent Assets:

The Company recognizes provisions when there is present obligation as a result of past event and it is probable that there will be an outflow of resources and reliable estimate can be made of the amount of the obligation. A disclosure for Contingent liabilities is made when there is a possible obligation or present obligations that may, but probably will not, require an outflow of resources. Contingent assets are neither recognized nor disclosed in the financial statements.

(ii) Rights, Preferences and Restrictions attached to equity shares

The Company has one class of equity shares having a par value of '' 10/- per share. Each shareholder is eligible for one vote per share held.

In the event of liquidation of the Company, the equity shareholders are eligible to receive remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(i) Current maturities of Long Term Borrowings have been disclosed under the head Other Current Liabilities (Refer Note No. 9)

(ii) Term Loans from Others

Term loan from Others carries interest at a variable rate based on the lender Retail Prime Lending Rate (RPLR), of 13.90% p.a and is repayable in 180 installments from date of loan viz., April 28, 2013. Presently, the loan carriers rate of interest of 13.65%. The loan is secured by pledge of Gati Ltd Shares 650,000 investments of the Company, personal guarantee of a director, pledge of property and Investments of a director and pledge of third party investments property.

8.1 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

Trade payable other than acceptances include certain dues to Micro and Small Enterprises, under the Micro, Small and Medium Enterprises Development Act, 2006 that have been determined based on the information available with the company and the required disclosures are given below:

12.1. 4,603,900 (March 31, 2016: 5,615,246) Equity Shares pledged with lenders as security for Long and Short Term Borrowings (Refer Note No.5 (ii) and 7.1), 805,000 (Previous year: 805,000) (Shares pledged with IFCI Venture capital limited towards loan availed by M/s Amrit Jal Ventures Private Limited and Nil (Previous year : 1,580,000) shares pledged with IDFC Bank Limited for loan availed by Gati Infrastructure Private Limited.)

12.2. During the previous year, the Company took a loan of Rs.5 Crores from Godavari Commercial Services Private Limited (Godavari) on the security of 10 Lakh equity shares of Gati Limited and at the request of Godavari the said shares were pledged with a third party. The said shares were invoked by the third party on default by Godavari without there being any default by the Company. The Company took necessary legal recourse for restoration of the pledged shares and in terms of the settlement arrived at, Godavari agreed to restore the said invoked shares. In view of the above, the said 10 Lakh equity shares in Gati Limited have been continued to be disclosed as long term investments.

12.3. During the previous year, the Company has pledged 15.80 Lakh shares of Gati Limited in favour of IDFC Bank Limited (IDFC) for facilities availed by M/ s Gati Infrastructure Private Limited (GIPL) on receipt of Letter of Comfort from M/s Amrit Jal Ventures Private Limited (AJVPL) being the holding company of GIPL. The said shares were invoked by IDFC due to default made by GIPL. As per the Letter of Comfort from AJVPL, it would restore such invoked shares to the Company. The company has taken necessary legal recourse for the restoration of the invoked shares. In view of the above, the invoked 15.80 Lakh equity shares in Gati Limited have been continued to be disclosed as long term investments.

12.4. Amrit Jal Ventures Private Limited (AJVPL), through its SPV''s is executing three power projects aggregating to 243 MW in Sikkim which are under various stages of construction and completion. Considering the stage of the projects and also the development towards entering into Power Purchase Agreement for 110MW Chuzhachen Project with State Discoms which is at the final stage, any diminution in the value of investment in AJVPL is temporary and no provision is considered necessary by the management.

12.5 Book value has been taken in the absence of Stock Exchange quotations

Source : Dion Global Solutions Limited
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