Non Trade Investment

Let us take an example. You deal in cloth . For taking Raymond agency you have to give Rs. 1 Cr as security and Raymonds will give u 4% as interest. This Investment iS Trade Investment.... While dealing in cloth business you invest in some other shares and bonds which are not related to business thats NON TRADE INVESTMENT

But that Deposit Will Be Treated as Deposits Under 'Loans & Advances'.

one more interesting thing about Trade n non Trade Investments is that Trade Investments can not be traded in open market Generally, but Non Trade Investments are generally traded in open market.

There may be the suitable example in case of trade investment:

In case of construction company, there may be the requirement of the contract to deposit some risk free govt. securities in pursuance to security margin. Company will take such risk free securities for the purpose of business hence classified as an trade investment.

Do you have more differentiated examples.

suppose if we invest  in a co. which is  holding or subsidiary of  our co, or  owner is same for both co  then the investment  would be trad or non trad ?

Money which are invested for other than operational purpose of business. e.g. purchase of sahres or securities, called non trade investment

Trade investments are necessary to operate business or there is vital role of that investment in operation e.g. security deposit for rent or electricity etc. 

Sir in the balance sheet if it is not given wheather the investments is trade or non trade...what assumption should be made by us??