Mukunda Industrial Finance Ltd. कंपली की लेखा नीति

Mar 31, 2011

1. Basis of Accounting :

The financial statements are prepared on the historical cost convention and on the Going Concern

Concept and as per applicable mandatory Accounting Standards.

2. Recognition of Income :

a. Hire Purchase Finance Charges are accounted for, on the basis of average of time lapsed.

b. Income from Lease transactions prior to 1-4-2001 are accounted for, over the period of lease as per agreements. Income from Lease transactions on or after 1-4-2001 are accounted as per AS-19 : Leases, issued by the Institute of Chartered Accountants of India.

c. Overdue Compensatory Charges on delayed receipts of Lease / Hire-Purchase Instalments and ICDs are accounted for, at contracted rates based on prudent estimation, in accordance with the prevailing business practices.

d. Interest on Investments and Deposits are accounted for on accrual basis. However, interest on ICDs amounting to Rs. 45 lacs has not been recognized as the same is more than 36 months old and overdue.

e. Dividend Income is accounted on receipt basis.

f. All other Incomes are accounted for on accrual basis.

3. Depreciation :

Depreciation has been calculated and provided in the accounts on pro-rata basis with reference to the period of use and efflux of time as follows :

a. In respect of assets acquired up to March 31, 1995, at the rates as prescribed under Schedule XIV of the Companies Act, 1956, on Straight Line Basis.

b. In respect of assets acquired after March 31, 1995, at the rates as prescribed under Schedule XIV of the Companies Act, 1956, on Written Down Value basis.

c. In respect of time-share units, over the period of share as per the agreement.

d. In respect of extended leases over the specified period, in the manner laid down u/ s.205(5)(a) of the Companies Act, 1956 and in the event of the assets sold/transferred/ discarded in any financial year, written down value of such asset will be written off in full after duly adjusting for accumulated lease equalization.

4. Deferred Revenue Expenditure:

Project Development- Franchisee of Rs.52 lacs, included in the Fixed assets till the year 2007- 08 is treated as Deferred Revenue Expenditure from the year 2008-09. This amount is being written off over a period of 5 years in equal instalments commencing from the year 2008-09.

5. Fixed Assets :

Fixed Assets are stated at historical cost less accumulated depreciation. Assets leased up to 2000-2001 are further adjusted for balance in Lease Equalization Account as per the Guidance Note (Revised) issued by the Institute of Chartered Accountants of India.

6. Investments :

a. Long Term Quoted Investments are stated at Cost in accordance with the AS-13 : Accounting for Investments.

b. Unquoted Investments are valued at Lower of Cost or Break-up Value.

c. Investment in Government Securities are treated as Long Term Investments and are valued at Carrying Cost.

7. Employee Benefits :

The Company accounts for gratuity and earned leave liability equivalent to the premium amount payable to LIC of India every year for the schemes in accordance with the AS-15R (Revised) :

Accounting for Retirement Benefits and compensated absences

The Company has not quantified and provided for Gratuity and earned leave and bonus for the years 2009-10 and 2010-11.

8. The company has not obtained the Certificate on compliance of conditions of corporate governance.

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Mar 31, 2010

1. Basis of Accounting :

The financial statements are prepared on the historical cost convention and on the Going Concern Concept and as per applicable mandatory Accounting Standards.

2. Recognition of Income:

a. Hire Purchase Finance Charges are accounted for, on the basis of average of time lapsed.

b. Income from Lease transactions prior to 1-4-2001 are accounted for, over the period of lease as per agreements. Income from Lease transactions on or after 1-4-2001 are accounted as per AS-19 : Leases, issued by the Institute of Chartered Accountants of India.

c. Overdue Compensatory Charges on delayed receipts of Lease / Hire-Purchase Instalments and ICDs are accounted for, at contracted rates based on prudent estimation, in accordance with the prevailing business practices.

d. Interest on Investments and Deposits are accounted for on accrual basis.

e. Dividend Income is accounted on receipt basis.

f. All other Incomes are accounted for on accrual basis.

3. Depreciation:

Depreciation has been calculated and provided in the accounts on pro-rata basis with reference to the period of use and efflux of time as follows:

a. In respect of assets acquired upto March 31, 1995, at the rates as prescribed under Schedule XIV of the Companies Act, 1956, on Straight Line Basis.

b. In respect of assets acquired afte> March 31, 1995, at the rates as prescribed under Schedule XIV of the Companies Act, 1956, on Written Down Value basis.

c. In respect of time-share units, over the period of share as per the agreement.

d. in respect of extended leases over the specified period, in the manner laid down u/s.205(5)(a) of the Companies Act, 1956 and in the event of the assets sold/transferred/discarded in any financial year, written down value of such asset will be written off in full after duly adjusting for accumulated lease equalization.

4. Deferred Revenue Expenditure:

Project Development- Franchisee of Rs.52 lacs, included in the Fixed assets till the year 2007-08 is treated as Deferred Revenue Expenditure from the year 2008-09. This amount is being written off over a period of 5 years in equal instalments commencing from the year 2008-09.

5. Fixed Assets:

Fixed Assets are stated at historical cost less accumulated depreciation. Assets leased upto 2000-2001 are further adjusted for balance in Lease Equalization Account as per the Guidance Note (Revised) issued by the Institute of Chartered Accountants of India.

6. Investments:

a. Long Term Quoted Investments are stated at Cost in accordance with the AS-13 : Accounting for investments.

b. Unquoted Investments are valued at Lower of Cost or Break-up Value.

c. Investment in Government Securities are treated as Long Term Investments and are valued at Carrying Cost.

7. Employee Benefits:

The Company accounts for gratuity and earned leave liability equivalent to the premium amount payable to LIC of ¦ India every year for the schemes in accordance with the AS-15: Accounting for Retirement Benefits.

The Company has not provided for Gratuity, earned leave and bonus for year 2009-10.

8. The company has not obtained the Certificate on compliance of conditions of corporate governance.

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Mar 31, 2009

1. Basis of Accounting:

The financial statements are prepared on the historical cost convention and on the Going Concern Concept and as per applicable mandatory Accounting Standards.

2. Recognition of Income:

a. Hire Purchase Finance Charges are accounted for, on the basis of average of time lapsed.

b. Income from Lease transactions prior to 1-4-2001 are accounted for, over the period of lease as per agreements. Income from Lease transactions on or after 1 -4-2001 is accounted as per AS-19: Leases, issued by the Institute of Chartered Accountants of India.

c. Overdue Compensatory Charges on delayed receipts of Lease / Hire-Purchase Installments and ICDs are accounted for, at contracted rates based on prudent estimation, in accordance with the prevailing business practices.

d. Interest on Investments and Deposits are accounted for on accrual basis.

e. Dividend Income is accounted on receipt basis.

f. Ail other Incomes are accounted for on accrual basis.

3. Depreciation:

Depreciation has been calculated and provided in the accounts on pro-rata basis with reference to the period of use and efflux of time as follows:

a. In respect of assets acquired upto March 31,1995, at the rates as prescribed under Schedule XIV of the Companies Act, 1956, on Straight Line Basis.

b. In respect of assets acquired after March 31,1995, at the rates as prescribed under Schedule XIV of the Companies Act, 1956, on Written Down Value basis.

c. In respect of time-share units, over the period of share as per the agreement.

d. In respect of extended leases over the specified period, in the manner laid down u/s.205 (5)(a) of the Companies Act, 1956 and in the event of the assets sold/transferred/discarded in any financial year, written down value of such asset will be written off in full after duly adjusting for accumulated lease equalization.

4. Deferred Revenue Expenditure:

Project Development - Franchisee of Rs. 52 lacs, included in the Fixed Assets in the previous year is treated as Deferred Revenue Expenditure. The same will be written off over a period of 5 years in equal instalments commencing from the year 2008-09.

5. Fixed Assets:

Fixed Assets are stated at historical cost less accumulated depreciation. Assets leased upto 2000-2001 are further adjusted for balance in Lease Equalization Account as per the Guidance Note (Revised) issued by the Institute of Chartered Accountants of India.

6. Investments:

a. Long Term Quoted Investments are stated at Cost in accordance with the AS-13: Accounting for Investments.

b. Unquoted Investments are valued at Lower of Cost or Break-up Value.

c. Investments in Government Securities are treated as Long Term Investments and are valued at Carrying Cost.

7. Employee Benefits:

The Company accounts for gratuity and earned leave liability equivalent to the premium amount payable to LIC of India every year for the schemes in accordance with the AS-15: Accounting for Retirement Benefits.

B. NOTES ON ACCOUNTS:

1. The Management has capitalized under Fixed Assets Accumulated Lease Equalisation Net of Lease Adjustment Account Rs. 47.01 lacs.

2. (a) A sum ofRs. 230.06 lacs included in Loans and Advances is not recoverable for which no provision is made. Consequently the loss is understated by Rs. 230.06 lacs.

(b) Secured loans from banks is secured by assignment of hire purchase and lease agreements, lien on fixed deposits and personal guarantee of some of the present and past directors of the company. There is no operation in the accounts with ING Vysya Bank since 18th September, 2008 and the bank has filed a suit before the Debt Recovery Tribunal. The company has not provided for interest liability amounting to Rs. 29.65 lacs and the same is shown under contingent liability as it is being disputed. Subject to (a) and(b) above, the Company has followed the prudential norms for income recognition, concentration of credit/investment, asset classification and provisioning in respect of non-performing assets, as per the norms prescribed by Reserve Bank of India.

3. Lease Equalisation Charge for the year on Assets Leased upto 31 -03-2001 has been accounted for as per the Guidance Note (Revised) issued by the Institute of Chartered Accountants of India.

4. Lease Rentals includes Lease Equalisation Charge of Rs. NIL (Previous Year Rs. 41.66 lacs).

5. In the opinion of the management and based on legal opinion obtained by the Company, AS - 28: Impairment of Assets is not applicable to the Company since the Company is in the business of Equipment Leasing, Hire Purchase, Bills Discounting and ICDs which are considered as financial assets.

6. Income from operations is inclusive of overdue compensatory charges and net of rebates and discounts. The overdue compensatory charges receivable as on 31-3-2009 is Rs. 38.25 Lacs (Previous Year Rs. 38.25 Lacs).

7. Balances in sundry debtors, hirers, lessees and other loans, advances and deposits are subject to confirmation.

8. Tax deducted at source on Income from investments and Bank Deposits is Rs. 2,16,892/- (P.Y. Rs. 1,81,480/-)

9. Deposits with banks include: (a) Rs. 9.36 lacs (P.Y. Rs. 8.72 Lacs) under lien for facilities availed from the State Bank of India and (b) Rs.4.60 lacs (P.Y.Rs.4.60 lacs) against bank guarantee availed from the Karur Vysya Bank furnished to Tamilnadu Sales Tax authorities for the year 2004-05, in respect of appeal pending before the appellate authorities.

10. The Company is primarily engaged in the business of Hire Purchase Financing and Equipment Lease Financing. Since these activities are covered by the same set of Risks and Rewards, these have been considered as a single segment, which is in accordance with the guiding principle enunciated by AS-17: Segment Reporting.

11. The Company has recognized Deferred Tax Asset amounting to Rs. 289.36 lacs as per AS-22: Accounting for Taxes on Income considering the reliability of said asset against sufficient future taxable income. The Components of Deferred Tax Asset arising out of Timing Differences are: -

Deferred Tax Asset on account of Carry Forward Losses Under the Income Tax Act Rs. 373.35 Lacs

Deferred Tax Liability on account of difference in WDV of Fixed Assets Rs. 83.99 Lacs

Deferred Tax Asset (Net) Rs. 289.36 Lacs

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Mar 31, 2000

1. Recognition of Income:

a) Hire Purchase Finance Charges are accounted for, on the basis of average of time elapsed.

b) Lease Rentals are accounted for, over the period of lease as per agreements.

c) Income on Bills Discounted is accounted on accrual basis.

d) Overdue Compensatory Charges on delayed receipts of Lease/ Hire-Purchase instalments are accounted for when determined on certainty of receipt, in accordance with the prevailing business practices.

e) Interest on Investments and Deposits are accounted for on accrual basis.

f) Dividend income is accounted on receipt basis.

g) All other Incomes are accounted for on accrual basis.

2. Depreciation:

Depreciation has been calculated and provided in the accounts on prorata basis with reference to the period of use as follows:

a. In respect of assets acquired upto March 31, 1995, at the rates as prescribed under Schedule XIV of the Companies Act, 1956, on Straight Line basis.

b. In respect of assets acquired after March 31, 1995, at the rates as prescribed under Schedule XIV of the Companies Act, 1956, on Written Down Value basis.

c. In respect of improvements to lease-hold buildings, over the period of lease.

3. Fixed Assets:

Fixed assets are stated at historical cost less accu- mulated depreciation. Assets on Lease are further adjusted for balance in Lease Adjustment account.

4. Investments:

a. Long term quoted Investments are stated at cost in accordance with the accounting standards issued by ICAI.

b. Unquoted Investments are valued at lower of Cost or Break-up Value.

c. Government securities are valued at carrying cost.

5. Miscellaneous Expenditure

Public Issue and Deferred Revenue Expenses are amortised over a period of ten years.

6. Employee Benefits:

a. As per the policy of the Company, Earned leave benefits accrue only on termination of employment and will be accounted on actual payment basis.

b. The Company accounts for gratuity liability equivalent to the premium amount payable to L.I.C. of India every year for the Group Gratuity Insurance Policy.