SCHEDULE L: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS
A. SIGNIFICANT ACCOUNTING POLICIES
1. ACCOUNTING CONVENTION
The financial statements are prepared under the historical cost convention in accordance with applicable mandatory accounting standards and relevant presentational requirements of the Companies Act, 1956.
2. REVENUE RECOGNITION
(i) Investment management and advisory fees is recognised on accrual basis.
(ii) Interest income is recognised on accrual basis.
(iii) Dividend income is recognised on accrual basis if the dividend is in respect of the period covered by the financial statements or an earlier period, which are proposed or declared by the enterprises after the date but before the approval of financial statements.
3. MISCELLANEOUS EXPENDITURE
Preliminary and preoperative expenses are amortized over ten years. Deferred revenue expenses are amortized over ten years. Share of on going expenses of the Schemes are recognised on accrual basis.
4. FIXED ASSETS
Fixed assets are stated at cost less accumulated depreciation.
5. DEPRECIATION AND AMORTISATION
Depreciation is provided on Written Down Value Method as per rates prescribed Under Schedule XIV of the Companies Act, 1956. Asset costing of Rs. 5,000/-are fully depreciation in the year of acquition. Intangible Assets are amortised over a period of 10 years in accordance with Accounting Standard-26.
6. INVESTMENTS
Long Term Investments are stated at Cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of long term investments
7. STOCK IN TRADE
Stock in Trade is valued at cost or market value which ever is less.
8. EMPLOYEE BENEFITS
(II) The Provision in account for Leave encashment benefit to employees is basis on actuarial valuation at the year-end.
9. DEFERRED TAX
Deferred tax is recognized, subject to consideration of prudence, on timing differences, representing the difference between the taxable Income/(Loss) and accounting Income/(Loss) that originated in one period and are capable of reversal in one or more subsequent periods. Deferred tax Assets and Liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.
B. NOTES TO THE ACCOUNTS
1. Contingent Liability
Demand raised by the Income Tax Department against disallowances made in the assessment order for the Assessment Year 2006-07 amounting to Rs.32,46,118/- and adjusted Rs.11,40,962/- refund claimed by the Company.
2. There is no amount due to Micro Small & Medium Enterprises in terms of “The Micro Small and Medium Enterprises Development Act, 2006”.
3. Following Shares, held in long term investment, have given to the broker as margin and not in the name of the Company:
Scrip’s Name No. Of Shares Purchase Value Market Value
Chambal Fert. & Chem. Ltd 10000 3,43,158/- 4,16,500/-
IFCI 65000 40,01288/- 12,54,500/-
Nagarjuna Fert. Chem. Ltd. 15000 6,00,761/- 2,67,000/-
Rel. Nat. Resources Ltd. 20000 10,38,603/- 8,97,000/-
59,83,810/- 28,35,000/-
4. Deferred Tax
The Breakup of Deferred Tax Asset/Liability as at March 31st, 2009 comprises of the following: -
___________________________________________________________________________
Particulars Deferred Tax Charge / Deferred Tax
Assets/(Liabilities) (Credit) Assets/(Liabilities)
As at 1-4-2008 During the As at 31-3-2009
Year
Assets
Leave Encashment 156,764 209,890 366,654
Gratuity 91,245 117,061 208,306
Prov. for LTA 112,598 28,253 140,851
Sub Total (a) 474,113 348,786 822,899
Liabilities
Depreciation/Amortisation (251,377) (27,990) (279,367)
Deferred Revenue Expenditure (317,215) 112,068 (205,147)
______________________________________________________________________
Sub Total (b) (568,592) 84,078 (484,514)
Grand Total (a-b) (94,479) 432,864 338,385
Brought Forward Long Term Capital Loss 67,84,490 - 7,033,949
5. Disclosures as required under Accounting Standard – 15 (Revised) on “Employees Benefits”.
A. Assumptions
|
Particulars |
Gratuity |
Leave Encashment |
|
|
31.03.09 |
31.03.09 |
|
Discount Rate |
7.60% (8.00%) |
7.60 (8.00%) |
|
Rate of Return on Plan Assets |
00% (0.00%) |
0.00% |
|
Rate of increase in Compensation |
10.00% (10.00%) |
10.00% (10.00%) |
|
Average Outstanding Services of Employees up to Retirement |
27 yrs (28 yrs) |
27 yrs (28 yrs) |
|
Estimated Term of Benefit obligations |
21 yrs (NIL) |
|
B. Changes in Benefit Obligations
|
Particulars |
Gratuity |
Leave Encashment |
|
|
31.03.09 |
31.03.09 |
|
Value of Obligation as at beginning of the period on 01-04-08 |
2,71,105 (2,55,212) |
4,65,912 (5,33,335) |
|
Acquisition adjustment |
Nil (Nil) |
Nil (Nil) |
|
Interest Cost |
21688 (20,417) |
37,273 (42,667) |
|
Past Service Cost |
Nil (Nil) |
Nil (Nil) |
|
Current Service Cost |
2,09,851 (67,303) |
4,34,641 (2,12,007) |
|
Curtailment Cost / (Cost) |
Nil (Nil) |
Nil (Nil) |
|
Settlement Cost / (Cost) |
Nil (Nil) |
Nil (Nil) |
|
Benefit Paid |
Nil (1,64,423) |
27,198 (3,14,523) |
|
Actuarial (gain)/ Loss on obligation |
1,12,858 (92,596) |
1,72,789 (7,574) |
|
Presnt Value of Obligation as at the end of the period |
6,15,502 (2,71,105) |
10,83,417 (4,65,912) |
C. Fair Value of Plan Asset
|
Particulars |
Gratuity |
Leave Encashment |
|
|
31.03.09 |
31.03.09 |
|
Fair Value of Plan Assets at beginning of the year |
Nil (Nil) |
Nil (Nil) |
|
Acquisition Adjustments |
Nil (Nil) |
Nil (Nil) |
|
Expected Return on plan assets |
Nil (Nil) |
Nil (Nil) |
|
Contributions |
Nil (Nil) |
Nil (Nil) |
|
Benefits Paid |
Nil (Nil) |
Nil (Nil) |
|
Acturial Gain / (loss) on Plan Asset |
Nil (Nil) |
Nil (Nil) |
|
Fair Value of Plan Assets at the end of the year |
Nil (Nil) |
Nil (Nil) |
|
Funded Status |
6,15,502 (2,71,105) |
10,83,417 (4,65,912) |
|
Excess of actual over estimated return on plan assets |
Nil (Nil) |
Nil (Nil) |
D. Expenses recognised in the Profit & Loss Account
|
Particulars |
Gratuity |
Leave Encashment |
|
|
31.03.09 |
31.03.09 |
|
Current Service Cost |
2,09,850 (67,303) |
4,34,641 (2,12,007) |
|
Interest Cost |
21,688 (20,417) |
37,273 (42,667) |
|
Net Actuarial (gain)/ Loss for the period |
1,12,858 (92,595) |
1,72,789 (7,574) |
|
Expenses Recognized in Profit & Loss account |
3,44,397 (1,80,316) |
6,44,703 (2,95,877) |
E. Balance Sheet Reconciliation
|
Particulars |
Gratuity |
Leave Encashment |
|
|
31.03.09 |
31.03.09 |
|
Opening Net Liability |
2,71,105 (2,73,793) |
4,65,912 (4,84,558) |
|
Expenses charged to Profit & Loss account |
3,44,397 (1,61,735) |
6,44,703 (2,95,877) |
|
Benefit Paid |
Nil (1,64,423) |
27,198 (3,14,523) |
|
Closing Liability as at 31.03.09 |
6,15,502 (2,71,105) |
10,83,417 (4,65,912) |
6. Related Party Disclosures:
(as identified and certified by the management)
a) List of Related Parties
i. Under Common Control
(Domestic)
Escorts Construction Equipment Ltd.,
Escorts Automotive Ltd., Escorts Securities Ltd,
Cellnext Solutions Ltd.,
(Overseas)
Escorts Agri Machinery Inc.,
Farmtrac Tractors Europe Spolka Z.O.O,
Farmtrac North America LLC (USA),
Beaver Creeks Holdings LLC.(USA)
ii. Holding Company
Escorts Ltd.
Iii Key Management Personnel
Mr. Lalit K. Khanna
b) Related Party Transactions:
Particulars Under Common Holding Company Key
Control Management
(Escorts Securities Ltd Escorts Ltd. Personnel
(Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs)
Reimbursement of 37.41 Nil Nil
Common Sharing (35.55) (0.81) (Nil)
Expenses
Traveling Expenses Nil Nil Nil
(Nil) (Nil) (Nil)
Purchase 31,858,531 Nil Nil
(878,620,035) (Nil) (Nil)
Sales 22,232,043 Nil Nil (874,381,463) (Nil) (Nil)
Balance as on
31st March 2008
Payables Nil 2.37 Nil (63.99) (2.37) (Nil)
7. Previous Year’s figures have been regrouped / reclassified wherever considered necessary to make them comparable with the current year figures.
for Bansal Gupta & Associates
Chartered Accountants
Pankaj Gupta
Partner Whole Time Director Director
Membership No.: 93233
Place: New Delhi Vipin Chawla
Dated: 20-07-09
Company Secretary