BAJAJ FINSERV Accounting Policy

Notes to financial statements for the year ended 31 March 2017


1 The Company is primarily engaged in the business of promoting financial services such as finance, insurance, wealth management etc. through its investments in subsidiaries and joint ventures. The Company is also engaged in the business of generating power through wind turbines, a renewable source of energy.


The Company has been recognized as a Core Investment Company (CIC) by the Reserve Bank of India (RBI) in terms of the regulations governing Non-Banking Financial Companies and is not required to be registered there under.


2 Summary of significant accounting policies followed by the Company Basis of preparation


These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. Pursuant to section 133 of the Companies Act, 2013 read with rule 7 of Companies (Accounts) Rules, 2014, till the standards of accounting or any addendum thereto are prescribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 shall continue to apply. Consequently, these financial statements have been prepared to comply in all material aspects with the Accounting Standards notified under section 211(3C) of the Companies Act, 1956 [Companies (Accounting Standards) Rules, 2006, as amended], other relevant provisions of the Companies Act, 2013 and the RBI guidelines/regulations to the extent applicable.


All assets and liabilities have been classified as current or non-current as per the criteria set out in the Schedule III to the Companies Act, 2013.


1) System of accounting


i) The Company follows the mercantile system of accounting and recognizes income and expenditure on an accrual basis except in case of significant uncertainties.


ii) Financial statements are prepared under the historical cost convention. These costs are not adjusted to reflect the impact of changing value in the purchasing power of money.


iii) Estimates and assumptions used in the preparation of the financial statements and disclosures are based upon Management''''s evaluation of the relevant facts and circumstances as of the date of the financial statements, which may differ from the actual results at a subsequent date.


2) Revenue recognition


a) Income


The Company recognizes income (including rent etc.) on accrual basis. However, where the ultimate collection of the same lacks reasonable certainty, revenue recognition is postponed to the extent of uncertainty.


(1) Income from debentures and bonds is accrued over the maturity of the security, net of amortization of premium/discount, thereby recognizing the implicit yield to maturity, with reference to the coupon dates, where applicable. However, income is accrued only where interest is serviced regularly and is not in arrears, as per the guidelines framed by the Management.


(2) Dividend is accrued in the year in which it is declared whereby a right to receive is established.


(3) Profit/loss on sale of investments is recognized on the contract date.


b) Wind-farm income


Income from wind power generation is recognized on acceptance by Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) of units generated and after giving allowance for wheeling and transmission losses. Simultaneously, relevant entitlements for generating green energy are recognized to the extent the ultimate collection is reasonably certain.


2 Summary of significant accounting policies followed by the Company (Contd.)


3) Other income


The Company recognizes other income on accrual basis. However, where the ultimate collection of the same lacks reasonable certainty, income recognition is postponed to the extent of uncertainty.


4) Fixed assets and depreciation


A. Tangible assets


i) Tangible assets except land are carried at cost of acquisition, construction or at manufacturing cost, as the case may be, less accumulated depreciation and amortization. Land is carried at cost of acquisition. Cost comprises of the purchase price including import duties and non-refundable taxes, and directly attributable expenses incurred to bring the asset to the location and condition necessary for it to be capable of being operated in the manner intended by the Management. Subsequent costs related to an item of the asset are recognized in the carrying amount of the item if the recognition criteria are met.


ii) Land and buildings acquired/constructed, not intended to be used in the operations of the Company are categorized as investment property under Investments and not as Fixed assets.


B. Depreciation and amortization


(a) Leasehold land


Premium on leasehold land is amortized over the period of lease.


(b) On other tangible assets


i. a. Depreciation is provided on a pro rata basis on the straight line method over the useful lives


of the assets.


b. Where a significant component (in terms of cost) of an asset has an economic useful life shorter than that of it''''s corresponding asset, the component is depreciated over it''''s shorter life.


c. Useful life of assets are determined by the Management by internal technical assessments.


ii. Assets which are depreciated over useful life/residual value different than those indicated by Schedule II are as under:


Asset class having residual value at H 1


Computers Furniture Office equipment Electric fittings


iii. Depreciation on additions is being provided on pro rata basis from the month of such additions.


iv. Depreciation on assets sold, discarded or demolished during the year is being provided up to the month in which such assets are sold, discarded or demolished.


C. Impairment of assets


An assessment is done at each Balance Sheet date as to whether there are any indications that an asset may be impaired. If any such indication exists, an estimate of the recoverable amount of the asset/Cash Generating Unit (CGU) is made. Where the carrying value of the asset/CGU exceeds the recoverable amount, the carrying value is written down to the recoverable amount.


5) Investments


a) Current investments representing debt securities with a maturity less than 1 year and those intended to be held for a period less than 1 year from the date on which the investment is made are stated at cost adjusted for amortization and diminution with reference to realizable value, as necessary.


b) Debt securities, other than current, are carried at cost, less amortization of premium/discount, as the case may be, and provision for diminution, if any, as considered necessary. Debt securities maturing within 12 months from the close of the year (current maturities) are reclassified as current investments.


c) Investments other than debt securities (Eg. equity, mutual funds etc.) are valued at cost of acquisition, less provision for diminution as considered necessary where they are intended to be held for a long-term, else current investments are valued at lower of cost or realizable value.


d) Long-term investments are carried at cost. However, provision for diminution is made to recognize a decline, other than temporary, in the value of the investments.


e) The Management has laid out guidelines for the purpose of assessing likely impairments in investments and for making provisions based on given criteria. Appropriate provisions are accordingly made, which in the opinion of the Management are considered adequate.


6) Employee benefits


a) Privilege leave entitlements


Privilege leave entitlements are recognized as a liability, in the calendar year of rendering of service, as per the rules of the Company. As accumulated leave can be availed and/or encased at any time during the tenure of employment the liability is recognized on the basis of an independent actuarial valuation.


b) Gratuity


Payment for present liability of future payment of gratuity is being made to approved gratuity fund, which fully covers the same under Cash Accumulation Policy and Debt fund of the Life Insurance Corporation of India (LIC) and Bajaj Allianz Life Insurance Company Ltd. (BALIC). However, any deficit in plan assets managed by LIC and BALIC as compared to the liability on the basis of an independent actuarial valuation is recognized as a liability.


c) Superannuation


Defined contribution to superannuation fund is being made as per the scheme of the Company.


d) Defined provident fund contribution is made to Government Provident Fund Authority.


e) Defined contribution to Employees Pension Scheme 1995 is made to Government Provident Fund Authority.


f) Long-term incentive plan


The Company''''s liability towards long-term incentive plan being defined benefit plan is accounted for on the basis of an independent actuarial valuation.


7) Taxation


a) Provision for tax is made for the current accounting period (reporting period) on the basis of the taxable profits computed in accordance with the Income-tax Act, 1961 and the Income Computation and Disclosure Standards prescribed therein. Excess/short provisions and interest thereon are recognized only on completion of assessment or where adjustments made by the Assessing Officer are disputed, on receiving the ''''Order Giving Effect'''' to the tax determined by the CIT (Appeals) and thereafter on final settlement of further disputes.


b) MAT is recognized as an asset only when and to the extent there is reasonable certainty that the Company will pay normal income-tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal tax during the specified period.


c) Deferred tax resulting from timing difference between book profits and taxable profits are accounted for to the extent deferred tax liabilities are expected to crystallize with reasonable certainty. However, in case of deferred tax assets (representing unabsorbed depreciation or carried forward losses) are recognized, if and only if there is virtual certainty that there would be adequate future taxable income against which such deferred tax assets can be realized. Deferred tax is recognized on adjustments to revenue reserves to the extent the adjustments are allowable as deductions in determination of taxable income and they would reverse out in future periods.


8) Provisions and contingent liabilities


The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.


9) Operating leases As a lessee


Leases in which a significant portion of the risks and rewards of ownership are retained by the less or are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight line basis over the period of the lease.


As a less or


The Company has leased certain tangible assets and such leases where the Company has substantially retained all the risks and rewards of ownership are classified as operating leases. Lease income on such operating leases are recognized in the Statement of Profit and Loss on a straight line basis over the lease term which is representative of the time pattern in which benefit derived from the use of the leased asset is diminished. Initial direct costs are recognized as an expense in the Statement of Profit and Loss in the period in which they are incurred.


10)Cash and cash equivalents


In the cash flow statement, cash and cash equivalents include cash in hand, demand deposits with banks, other shortterm highly liquid investments with original maturities of 3 months or less.


11) Earnings per share


Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company''''s earnings per share is the net profit for the period. The weighted average number of equity shares outstanding during the period and all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of share outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
“2019 © COPYRIGHT DYNAMIC EQUITIES PVT. LTD.”

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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