A. SIGNIFICANT ACCOUNTING POLICIES
a) Basis of Preparation of Financial Statements
The accompanying financial statements have been prepared under the historical cost
convention and accrual basis of accounting, unless otherwise stated, in accordance
with Indian Generally Accepted Accounting Principles (GAAP) and other accounting
principles generally accepted in India, to the extent applicable and conform to the
statutory requirements prescribed under the State Financial Corporation (SFCs) Act,
1951, circulars and guidelines issued by the Small Industries Development Bank of
India.(SlDBI).
b) Use of Estimates
The preparation of financial statements requires estimates and assumptions to be
made that affect the reported amounts of assets and liabilities on the date financial
statements and the reported amount of revenue and expenses during the reporting
period. Any difference between the actual results and estimates are recognised in the
financial statements in the period in which the results are known/materialized.
c) Fixed Assets
Fixed Assets are stated at written down value. Cost of acquisition or
construction is inclusive of duties, taxes and other incidental.
d) Depreciation
Depreciation on fixed assets is provided on written down value method (WDV) at the
rates prescribed under provisions of Income Tax Rules, 1962.
e) Revenue Recognition
All expenses and income to the extent ascertained as payable and receivable
respectively, are accounted for on accrual basis except the matters as under:
- Additional demand raised upon completion of assessment under Sales Tax,
Income Tax, ESIC and EPF, etc are being debited in Profit & Loss a/c in the
year of demand raised.
- Interest on NPA’s are accounted for on receipt basis as per RBI guidelines.
f) Appropriation
The amount received from the borrowers against loans and advances is
appropriated in the following order:-
i. Miscellaneous Expenses.
ii. Interest.
iii. Principal.
g) As per policy in respect of mortgaged properties, the Auction Purchaser has to
make the payment within 3 months from the date of sale confirmation. However,
in some exceptional cases, the Managing Director may give extension in payment of
sale consideration for a further period of 9 months with interest @ 13% p.a.
compounded on monthly basis. The possession of the unit is handed over to the
Auction Purchaser after receipt of full amount of bid.
h) The Corporation had introduced settlement policies namely, “The Policy for
Compromise Settlement of Chronic Non-Performing Assets (Doubtful Loan Accounts)
of Haryana Financial Corporation-2021 ” and “The Policy for Compromise
Settlement of Loss Accounts of Haryana Financial Corporation-2021” in the
financial year 2021-22 which were valid upto 31.03.2022 to reduce NPAs/written
off portfolios. There is no settlement policy for settlement of NPA’s now.
i) Retirement Benefits-
Gratuity to Staff is covered under the Group Gratuity Scheme of Life Insurance
Corporation of India and Leave Encashment to staff is covered under the Group
Leave Encashment Scheme of Life Insurance Corporation of India.
Post employment and other long term employee benefits viz. Contribution to
Gratuity, Leave Encashment etc. are recognized as an expense in the Profit & Loss
account in which the employee has been rendered services. The expense is recognized
at the present value of the amount payable determining using actuarial valuation.
Actuarial gains and losses in respect of post employment and other long-term benefits
are charged to profit and loss account.
Monthly matching contribution towards Employees Provident Fund is
remitted to the Regional Provident Fund Commissioner, Chandigarh as per
provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952
and is charged to profit and loss account.
j) Asset Classification and Provisioning
i. Loans and Advances have been categorised and provisioning has
been made as^per guidelines received from Small Industries Development
Bank of India (SIDBI) which are as under:
k) Investments
As per guidelines issued by SIDBI in respect of Investments in equity shares
(available for sale), valuation has been done as per market rate, which is
the price of the script available from traders/quotes on the Stock
Exchange. Those scripts, for which current quotations are not available or
where the shares are not quoted on Stock Exchange, have been valued at
book value ascertained from their latest balance sheets. In case the latest
balance sheet is not available, the shares have been valued at Rs. 1 /- per
company. In case of Investment in equity shares (held to maturity)
valuation has been done at acquisition price. (Reference Annexure to
Schedule-‘F’ & ‘H’).
The provisioning has been made without giving the effect of the amount
lying in the Sundry Deposits under Schedule-‘C’ - Other Current Liabilities.
B. NOTES ON ACCOUNTS -
a) Retirement Benefits
i. Gratuity to staff is covered under the Group Gratuity Scheme of
Life Insurance Corporation of India. As per actuarial valuation of Life
Insurance Corporation of India (LIC) as on 31.03.25 the amount payable is
Rs.11.04 lakh (shown in Schedule ‘C’ - Other Current Liability) and fund
value lying with LIC towards above gratuity fund is Rs.2,15,99,957/-.
Leave Encashment to staff is covered under the Group Leave
Encashment Scheme of Life Insurance Corporation of India (LIC). As per
books of accounts total liability towards Leave Encashment at the end of
year is Rs. 1,63,70,207/- shown in Schedule ‘C’ - Other Current Liability.
Against this liability the fund size of Leave Encashment Policy with LIC is
Rs,1,68,33,438/- shown in Schedule ‘J’ - Other Current Assets. There is no
liability towards leave encashment as per actuarial valuation of LIC. The
detail of fund size with LIC is as under:
At the time of retirement, the Corporation is paying Leave
Encashment maximum up to 10 months of salary (last pay drawn plus
applicable DA). Similarly Gratuity is now paid as per Gratuity Act, 1972
up to maximum of Rs.20.00 lakh as compare to earlier scheme under which
the Gratuity was paid maximum Rs. 10.00 lakh. Due to increase in gratuity
limit to Rs.20.00 lakh instead of Rs.10.00 lakh, payment of Rs.103.16 lakh
has been made to LIC towards additional contribution during the current
financial year.
n. Monthly matching contribution towards Employees Provident Fund is
remitted to the Regional Provident Fund Commissioner, Chandigarh as per
provisions of the Employees Provident Fund and Miscellaneous Provisions
Act, 1952 and is charged to profit and loss account.
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