SCHEDULE L: SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON 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. 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.
7. STOCK IN TRADE
Stock in Trade is valued at cost or market value which ever is less.
8. RETIREMENTS BENEFITS
Provision for Gratuity has been made up-to 31st March 2007 on the assumption that such benefits are payable to all the employees at the end of the accounting year.
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 ON ACCOUNTS
1. Auditors’ remuneration: 2006-2007 2005-2006 (Rs.) (Rs.)
Audit Fee 70,000/- 60,000/-
Tax Audit Fee 10,000/- 10,000/-
Out of Pocket 5,000/- _
85,000/- 70,000/-
2. Balances due from companies under the same management within the meaning of sub-section (1B) of Section 370 of the Companies Act, 1956:
2006-2007 2005-2006
(Rs.) (Rs.)
Escorts Securities Ltd. 4,39,63,462/- 4,48,43,931/-
Maximum Balance during the Year 4,94,33,540/- 4,48,43,931/-
3. Some of the balances of Debtors and Creditors are subject to confirmation.
4. Deferred Tax
The Breakup of Deferred Tax Asset/Liability as at March 31st, 2007 comprises of the following: -
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Particulars Deferred Tax Charge / Deferred Tax
Assets/(Liabilities) (Credit) Assets/(Liabilities)
As at 1-4-2006 During the As at 31-3-2007
Year
Assets
Leave Encashment 129,021 34,081 163,102
Gratuity 71,154 21,005 92,159
Sub Total (a) 2,37,200 96,718 333,918
Liabilities
Depreciation/Amortisation (83,752) (84,904) (168,656)
Deferred Revenue Expenditure (5,41,534) 112,251 (429,283)
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Sub Total (b) (6,25,286) 27,347 (597,939)
Grand Total (a-b) (3,88,086) 124,065 (264,021)
Brought Forward Long Term Capital Loss 6,784,490 - 6,784,490
5. 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., Escorts Telecommunications Ltd., Escotoonz Entertainment Pvt.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
Common Sharing 28.04 1.63 --
Expenses
Traveling Expenses --- --- 0.63
Balance as on
31st March 2007
Payables -- 5.97 --
6. Previous Year’s figures have been regrouped / reclassified wherever considered necessary to make them comparable with the current year figures.
for Arun K. Garg & Associates
Chartered Accountants
Arun K. Garg
Partner Director Director
Membership No.: 84580
Place: New Delhi Vipin Chawla
Dated: 05-09-2007
Company Secretary