NOTES FORMING PART OF FINANCIAL STATEMENT

Corporate Information

Mangal Credit & Fincorp Limited (the company) is a public company domiciled in India and incorporated under the Companies Act, 1956. The company had obtained its license from Reserve Bank of India to operate as a Non Banking Financial Company (NBFC) on March 11, 1998 vide certificate of registration no. 13.00329. In Previous Year, the Company was Systemically Important Non Deposit Taking NBFC (NBFC-ND-SI) but vide circular no. RBI/2014-15/37 DNBS (PD) CC No.382/ 03.02.001/2014-15 dated 1 July 2014 the company was removed from the category of NBFC-ND-SI. Apart from financing activity the Company is also engaged in activity of trading in jewellery. It's shares are listed on Bombay Stock Exchange (BSE) and Ahmadabad Stock Exchange (ASE).

Note 1: Significant Accounting Policies

i. Basis of brparation of accounts

The financial statements have been brpared and brsented under the historical cost convention, on an accrual basis of accounting and in accordance with the generally accepted accounting principles and in compliance with the relevant provisions of the Companies Act, 2013. Further, the Company follows directions issued by the Reserve Bank of India ("RBI") as applicable.

All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013 read with RBI Directions as aforesaid. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/ non-current classification of assets and liabilities.

ii. Use of Estimates

The brsentation of Financial Statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, revenues and expenses on the date of financial statements and the reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which results are known / materialized.

iii. Revenue Recognition

i) Interest income from financing activities is recognized on an accrual basis except in the case of non-performing assets, where it is recognised on realisation, as per the prudential norms of the RBI.

ii) Dividend from investments is accounted for as income when the Company's right to receive dividend is established.

iii) Income from Interest on Fixed Deposits with Banks is recognized on accrual basis.

iv) Revenue from sale of goods is recognized when the significant risks and rewards of ownership of the goods are transferred to the customer and is stated net of sales tax and sales returns.

iv. Fixed Assets

a. Tangible Assets

Tangible fixed assets are stated at cost less accumulated debrciation and accumulated impairment losses. Subsequent expenditures related to an item of tangible assets are added to its book value only if they increase the future benefits from the existing asset beyond its brviously assessed standard of performance.

b. Intangible Assets

Intangible Assets are recognized only if it is probable that the future economic benefits that are attributable to assets will flow to the enterprise and the cost of the assets can be measured reliably. Intangible assets are recorded at cost and carried at cost less accumulated debrciation and accumulated impairment losses, if any.

v. Debrciation

Debrciation is provided on written down value Method, at the rates so calculated by useful life as specified in Schedule II of the Companies Act, 2013. Debrciation is provided on pro-rata basis on the assets acquired, sold or disposed off during the year.

vi. Investments

a. Investments are classified into Long Term Investments and Current Investments.

b. Investments which are by nature readily realisable and intended to be held for not more than one year from the date of acquisition are classified as Current Investments and Investments other than Current Investments are classified as Long Term Investments.

c. Long Term Investments are accounted at cost and any decline in the carrying value other than temporary in nature is provided for.

d. Current Investments are valued at lower of cost and market value. In case of mutual funds, the net asset value of the units declared by the Mutual Funds is considered as the market value.

vii. Inventories

Stock is valued at weighted average cost. Cost of inventory comprises of all cost of conversion and other cost incurred in bringing them to their respective brsent location and condition.

viii. Leased Assets

i) Assets acquired under Leases where a significant portion of the risks and rewards of the ownership are retained by the lessor are classified as Operating Leases. The rentals and all the other expenses of assets under operating lease for the period are treated as revenue expenditure.

ii) Assets given on operating leases are included in fixed assets. Lease income is recognized in the statement of profit and loss on straight line basis over the lease term. Operating costs of leased assets, including debrciation are recognized as an expense in the statement of profit and loss. Initial direct cost such as legal costs, brokerages etc. are charged to Statement of Profit and Loss as incurred.

ix. Impairment of Assets

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable amount. An impairment loss is charged to the statement of profit & loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in estimate of the recoverable amount.

x. Taxes on Income

i) Current tax is determined based on the amount of tax payable in respect of taxable income for the year.

ii) Deferred tax asset is recognized with regard to all deductable timing differences to the extent that it is probable that taxable profit will be available against which deductible timing differences could be utilized.

iii) 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. At each Balance Sheet date, the Company re-assesses unrecognised deferred tax assets, if any.

iv) Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

xi. Provisions, Contingent Liabilities and Contingent Assets

i) A provision is recognized when the Company has a brsent obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

ii) Contingent liabilities are not recognized but disclosed in the financial statement when there is a:

• Possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or

• Present obligation that arises from past events where it is either not probable that an outflow of resources will be required to be settled or a reliable estimate of the amount cannot be made.

iii) Contingent assets are neither recognized nor disclosed in the financial statements.

iv) Provision on Standard assets is made @ 0.25% of standard loans in accordance with the directions issued by RBI for NBFC.

v) Provision for non-performing assetsis made in accordance with the directions issued by RBI for NBFC.

xii. Earnings Per Share

The basic earnings per share is computed by dividing the net profit / loss attributable to the equity shareholders for the period by the weighted average number of equity shares outstanding during the reporting period. For the purpose of calculating Diluted earnings per share the net profit for the year attributable to equity shareholders and weighted average number of shares outstanding during the reporting year is adjusted for the effects of all dilutive potential equity shares. In considering whether potential equity shares are dilutive or anti dilutive, each issue or series of potential equity shares is considered separately rather than in aggregate.

NOTE 27: SEGMENT REPORTING

The Company has two business segments i.e. finance activity and trading in jewellery activity. The segment information is being brsented in consolidated financial statements.

NOTE 28

During last year the brmises of the company were subjected to search and seizure proceedings u/s 132 of the Income Tax Act, 1961 alongwith the similar proceedings at the residential brmises of the directors and also the brmises of certain other group concerns. Cash of Rs. 7,50,000/- belonging to the company was seized during such proceedings, besides certain other papers, documents, books, electronic data which, according

to management, does not contain any incriminating material. During the year notice under section 153A for filing of the returns of income for the F.Y. 2007-08 to 2012-13 were served in compliance of which returns of income have been filed by making a self assessment of undisclosed income at Rs. NIL in all the years. The Assessment Proceedings are pending as on date. The management is of the view that no additional tax liability shall arise as a result of such proceedings.

NOTE 29:

The company has complied with norms brscribed by Reserve Bank of India vide circular no. RBI/2014-15/299 DNBS (PD) CC No.002/ 03.10.001/2014-15 dated 10 Nov, 2014 for NBFCs-ND.

NOTE 33:

Disclosure required as per clause 32 of Listing Agreement has been set out in a separate Annexure A2 attached to the financial statement.

NOTE 34: brVIOUS YEAR FIGURES

Previous year figures have also been regrouped, re-arranged and reclassified wherever necessary to confirm to the current year's classification.

In terms of our audit report of even date

FOR MGB & Co. LLP

FRN: 101169W/W-100035

Chartered Accountants

Sd/- Sandeep Jhanwar

Partner

M.No. 078146

For and on behalf of the board of directors

Mangal Credit & Fincorp Ltd

Sd/-Ajit Jain Whole Time Director DIN: 01317169

Sd/- Meghraj Jain Managing Director

DIN: 01311041

Sd/- Sandeep Maloo Managing Director

DIN: 01145616

Place: Mumbai

Date : 30th May, 2015