1 Corporate Overview
Asia Capital Limited is a Listed Public Limited Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is registered as NBFC-ND with the RBI.
2 Significant Accounting Policies
2.1 Basis of accounting and preparation of financial statements
Compliance with Ind AS
The financial statements ofthe Companyhave beenprepared in accordance withthe relevantprovisions ofthe Companies Act, 2013, (“The Act”) the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 read with the Companies (Indian Accounting Standards) Amendment Rules, 2016 and the Guidance Notes and other authoritative pronouncements issued by the Institute of Chartered Accountants of India (ICAI).
Histioric Cost Convention and Fair Value
The financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities measured at fair value at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
Reporting Presentation Currency
The financial statement are prepared in Indian Rupee (“INR”) and all values are rounded to nearest INR, except when otherwise indicated.
This being the first period of presentation and reporting of financial statements, comparison and reporting of any change in accounting policies adopted in the preparation of the financial statements vis-a-vis the previous year does not apply.
2.2 Current and Non-Current Classification of Assets and Liabilities
An asset is considered as current when it is:
- Expected to be realised or ntended to be sold or consumed in normal operating cycle,
- Held primarily for the purpose of trading,
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at leasttwelve months after the reporting period
All other assets are classified as non-current.
A liability is considered as current when:
- It is expected to be settled n normal operating cycle,
- It is held primarily for the purpose of trading,
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
2.3 Use of estimates
The preparation of the financial statements requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialise.
2.4 Inventories
Inventories are valued at the lower of cost (e.g on FIFO/weighted average basis) and the net realisable value after providing for obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the goods to the point of sale, includhg STT, Cess and other levies.
2.5 Cash and cash equivalents
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of c ash and which are subject to insignificant risk of changes in value.
2.6 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals ofpast or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investng and financing activities of the Company are segregated.
2.7 Depreciation on Tangible Fixed Assets
Depreciable amount for 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 written down value method as per the useful life prescribed in Schedule II to the Companies Act, 2013.
The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation period is revised to reflect the changed pattern, if any.
2.8 Revenue Recognition
Revenue is recognized to the extent that it is probability that the economic benefits willflow to the company and the revenue can be reliably measured. The following specific criteria must also be met before revenue is recognized.
a Sale/Purchase of Shares
Shares Purchases/Sales has been taken on absolute basis. b Other Income
Dividend income is accounted for when the right to receive is established. c Interest
Interest income is recognized as applicable rate, on a time proportion basis on principal amount only, taking into account and the same interest accrued amount is due as and whenpaid by the party. Interest income is included under the head "Revenue from operations" in the Statement of Profit and Loss.
d Dividend
Dividend Income is recognized when the company's right to receive dividend is established by the reporting
2.9 Accounting for forward contracts
Premium/discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortised over the period ofthe contracts if such contracts relate to monetary items as at the balance sheet date. Any profit orloss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense in the period in which such cancellation or renewal is made.
2.10 Investments
Long-term investments (excluding investment properties), are carried individually at cost less provision for diminution, other than temporary, in the value ofsuch investments. Current nvestments are carried individually, at the lower ofcost and fair value. Cost ofinvestments include acquisition charges such as brokerage, fees and duties.
2.11 Employee benefits
Employee benefits include provident fund, superannuation fund, employee state insurance scheme, gratuity fund, compensated absences, long service awards and post-employment medical benefits. Retirement benefits are accounted for as and when paid.
2.12 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss) after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversionto equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (ie. average market value ofthe outstanding shares). Dilutive potential equity shares are determined independently for each period presented.
2.13 Segment reporting
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.
Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market/fair value factors.
Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under “unallocated revenue/expenses/assete/liabilities”
2.14 Leases
Lease arrangements where the risks and rewards incidental to ownership ofan asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis over the lease term.
2.15 Income Taxes
Current tax is the amount oftax payable onthe taxable income for the year as determined in accordance with the applicable taxrates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.
Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable ofreversal in one or more subsequentperiods. Deferred tax is measured usingthe taxrates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed depreciation and carry forward oflosses and items relating to capital losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability.
Current and deferred tax relating to items directly recognised in reserves are recognised in reserves and not in the Statement of Profit and Loss.
Deferred Tax Assets and Deferred Tax Liabilities are offset, if a legally enforceable right exists to set off current tax assets against current liabilities and the deferred tax assets and deferred tax liabilities relate to the same taxable entity and the same taxation authority.
2.16 Provisions & Contingencies
Contingent Liabilities:
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable tha an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The company does not recognize any contingent liability but discloses its existence in the financial statements.
Provisions:
(a) As per the prudential norms on Income Recognition, Asset Classification with reference to Master Direction DNBR.PD.007/03.10.119/2016-17 dated September 01, 2016, the Board has transferred 0.25% of standard assets (Total of Loans & Advances given) in “Contingent provision against Standard Assets”.
(b) As per the requirement of sec. 45-IC ofthe Reserve Bank of India Act, 1934, the Board ofDirectors has created a Special Reserve Account to transfer 20% of the net profit of the year.
2.17 Operating Cycle
All assets and liabilities have been classified as current or non current as per company's normal operating cycle another criteria as set out in sechedule III to the nature of the services and there realization in cash and cash equivalents, the company has ascertained its operating cycle as twelve months for the purpose of current and non current classification of assets and liabilities.
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