Hem Holdings & Trading Ltd. कंपली की लेखा नीति

Mar 31, 2025

1. CORPORATE INFORMATION

Hem Holdings and Trading Limited (the "Company") is a public Company domiciled in India and incoiporated under the provisions of the Companies Act, 1956 (CIN-L65990MH1982PLC026823). It is registered as an investment and non-deposit taking nonbanking finance Company ("NBFC") with Reserve Bank of India ("RBI"). The Company is engaged in the business of investment in mutual funds and in equity shares including in group companies as also providing loans to group companies. Its shares are listed in only one recognized stock exchange i.e., BSE Limited (BSE).

The Company''s registered office is at 601 / 602-A, Fairlink Centre, Off Andheri Link Road, Andheri (West), Mumbai-400053, Maharashtra, India.

2. BASIS OF PREPARATION

2.1 Statement of compliance

The standalone financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (the "Ind AS") prescribed under section 133 of the Companies Act, 2013 (the "Act").

2.2 Presentation of financial statements

The Balance Sheet, the Statement of Changes in Equity and the Statement of Profit and Loss are presented in the format prescribed under Division 111 of Schedule 111 of the Act, as amended from time to time, for Non-Banking Financial Companies (''NBFCs'') that are required to comply with Ind AS. The Statement of Cash Hows has been presented as per the requirements of Ind AS 7 Statement of Cash Flows.

The Company presents its balance sheet in order of liquidity. An analysis regarding recovery or settlement within 12 months after the reporting date (current) and more than 12 months after thereporting date (non-current) is presented in Note 31.

Financial assets and financial liability are generally reported gross in the balance sheet. They are only offset and reported net when, in addition to having an unconditional legally enforceable right to offset the recognized amounts without being contingent on a future event, the parties also intend to settle on a net basis in all of the following circumstances:

i) The normal course of business

ii) The event of default

2.3 Basis of Preparation

The standalone financial statements have been prepared under the historical cost convention on accmal basis except for certain financial assets which have been measured at fair values at the end of each reporting period as explained in the accounting policies below.

The standalone financial statements are presented in Indian Thousand Rupees (Rs.’OOO.) which is the currency of the primary economic environment in which the Company operates (the "functional currency"). The values are rop«tteth4£ the nearest rupee, except when otherwise indicated.

2.4 Use of estimates, judgements and assumptions

The preparation of the standalone financial statements in conformity with Ind AS requires 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. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively.

Judgements

In the process of applying the Company''s accounting policies, management has made judgements, which have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year.

i) Business model assessment

Classification and measurement of financial assets depends on the results of business model and the solely payments of principal and interest ("SPPI") test. The Company determines the business model at a level that reflects how groups of financial assets are managed together to achieve a particular business objective. This assessment includes judgement reflecting all relevant evidence including how the performance of the assets is evaluated and their performance measured, the risks that affect the performance of the assets and how these are managed and how the managers of the assets are compensated. The Company monitors financial assets measured at amortized cost or fair value through other comprehensive income that are de-recognized prior to their maturity to understand the reason for their disposal and whether the reasons are consistent with the objective of the business for which the asset was held. Monitoring is part of the Company''s continuous assessment of whether the business model for which the remaining financial assets are held continues to be appropriate and if it is not appropriate whether there has been a change in business model and so a prospective change to the classification of those assets.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the standalone financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

i) Fair value of financial instruments

The fair value of financial instruments is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price) regardless of whether that price is directly observable or estimated using another valuation technique. When the fair valu£sua£financial assets and financial

liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of valuation models. The inputs to these models are taken from observable markets where possible, but where this is not feasible, estimation is required in establishing fair values. For further details about determination of fair value refer note 3.9.

ii) Effective interest rate ("EIR") method

The Company''s EIR methodology, as explained in Note3.1(A), recognizes interest income / Expense using a rate of return that represents the best estimate of a constant rate of return over the expected behavioral life of loans given / taken and recognizes the effect of potentially different interest rates at various stages and other characteristics of the product life cycle (including prepayments and penalty interest and charges).

This estimation, by nature, requires an element of judgement regarding the expected behavior and life cycle of the instruments, as well as expected changes to interest rates and other fee income / expense that are integral parts of the instrument.

iii) Impairment of financial asset

The measurement of impairment losses across all categories of financial assets requires judgement, in particular, the estimation of the amount and timing of future cash flows and collateral values when determining impairment losses and the assessment of a significant increase in credit risk. These estimates are driven by a number of factors, changes in which can result in different levels of allowances.

The Company''s expected credit loss ("ECL") calculations are outputs of complex models with a number of underlying assumptions regarding the choice of variable inputs and their inter dependencies. Elements of the ECL models that are considered accounting judgements and estimates include:

a) The Company''s criteria for assessing if there has been a significant increase in credit risk and so allowances for financial assets should be measured on a life time expected credit loss("LTECL”) basis.

b) Development of ECL models, including the various formulas and the choice of inputs.

c) Determination of associations between macro-economic scenarios and economic inputs, such as gross domestic products, lending interest rates and collateral values, and the effect on probability of default ("PD"), exposure at default ("EAD") and loss given default ("LGD").

d) Selection of forward-looking macro-economic scenarios and their probability weightings, to derive the economic inputs into ECL models.

iv) Provisions and other contingent liabilities

The Company operates in a regulatory and legal environment that, by nature, has a heightened element of litigation risk inherent to its operations. As a result, it is involved in various litigation, arbitration and regulatory investigations and proceedings''^ ordinary course of the Company’s business. N^o\

When the Company can reliably measure the outflow of economic benefits in relation to a specific case and considers such outflows to be probable, the Company records a provision against the case. Where the outflow is considered to be probable, but a reliable estimate cannot be made, a contingent liability is disclosed.

Given the subjectivity and uncertainty of determining the probability and number of losses, the Company takes into account a number of factors including legal advice, the stage of the matter and historical evidence from similar incidents. Significant judgement is required to conclude on these estimates.

For further details on provisions and other contingencies refer note 3.17.

These estimates and judgements are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances. Management believes that the estimates used in preparation of the standalone financial statements are prudent and reasonable.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Recognition of interest income

A. EIR method

Under Ind AS 109, interest income is recorded using the effective interest rate method for all financial instruments measured at amortized cost and financial instrument measured at FVOCI. The EIR is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument or, when appropriate, a shorter period, to the net carrying amount of the financial asset.

The EIR (and therefore, the amortized cost of the asset) is calculated by taking into account any discount or premium on acquisition, fees and costs that are an integral part ol the EIR. The Company recognizes interest income using a rate of return that represents the best estimate of a constant rate of return over the expected life of the financial instrument.

If expectations regarding the cash flows on the financial asset are revised for reasons other than credit risk, the adjustment is booked as a positive or negative adjustment to the carrying amount of the asset in the balance sheet with an increase or reduction in interest income. The adjustment is subsequently amortized through Interest income in the statement of profit and loss.

B. Interest income

The Company calculates interest income by applying EIR to the gross carrying amount of financial assets other than credit impaired assets.

When a financial asset becomes credit impaired and is, therefore, regarded as ''stage 3'', the Company calculates interest income on the net basis. If the financial asset cui and is no longer credit impaired, the Company reverts to calculating interest incom^^jff"^ gross basis? [

3.2 Financial instrument - Initial recognition

A. Date of recognition

Debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a partyto the contractual provisions of the instrument.

B. Initial measurement of financial instruments

The classification of financial instruments at initial recognition depends on their contractual terms and the business model for managing the instruments (Refer note 3.3(A)). Financial instruments are initially measured at their fair value (as defined in Note 3.9), except in the case of financial assets and financial liabilities recorded at FVTPL, transaction costs are added to, or subtracted from this amount.

C. Measurement categories of financial assets and liabilities

The Company classifies all of its financial assets based on the business model for managing the assets and the asset''s contractual terms, measured at either:

i) Amortized cost

ii) FVOCI

iii) FVTPL

i) Financial assets and liabilities

A. Financial assets

Business model assessment

The Company determines its business model at the level that best reflects how it manages groups of financial assets to achieve its business objective. The Company''s business model is not assessed on an Instrument-by-instrument basis, but at a higher level of aggregated portfolios and is based on observable factors such as:

a) How the performance of the business model and the financial assets held within that business model are evaluated and reported to the Company''s key management personnel.

b) The risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way those risks are managed.

c) How managers of the business are compensated (for example, whether the compensation is based on the fair value of the assets managed or on the contractual cashflows collected).

d) The expected frequency, value and timing of sales are also important aspects of the Company''s assessment.

The business model assessment is based on reasonably expected scenarios without taking ''worst case'' or ''stress case’ scenarios into account. If cashflows after initial recognition are realized in a way that is different from the Company’s original expectations, the Company does not change the classification of the remaining financial assets held in that business model, but incorporates such information when assessing newly originated or newly purchased financial assets going forward.

SPPI test

As a second step of its classification process, the Company assesses the contractual terms of financial to identify whether they meet SPPI test.

''Principal’ for the purpose of this test is defined as the fair value of the financial asset at initial recognition and may change over the life of financial asset (for example, if there are repayments of principal or amortization of the premium/ discount).

The most significant elements of interest within a lending arrangement are typically the consideration for the time value of money and credit risk. To make the SPPI assessment, the Company applies judgement and considers relevant factors such as the period for which the interest rate is set.

In contrast, contractual terms that introduce a more than de minimis exposure to risks or volatility in the contractual cash flows that are unrelated to a basic lending arrangement do not give rise to contractual cash flows that are solely payments of principal and interest on the amount outstanding. In such cases, the financial asset is required to be measured at FVTPL.

Accordingly, financial assets are measured as follows:

i) Financial assets carried at amortized cost("AC")

A financial asset is measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments - of principal and interest on the principal amount outstanding.

ii) Financial assets measured at FVOCI

A financial asset is measured at FVOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Since, the loans and advances are held to sale and collect contractual cash flows, they are measured at FVOCI.

iii) Financial assets at fair value through profit or loss ("FVTPL”)

iv) Other equity investments

All other equity investments are measured at fair value, with value changes recognized in other comprehensive income ("OCI").

B. Financial liability

i) Initial recognition and measurement

All financial liability is initially recognized at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial liability, which are not at fair value through profit or loss, are adjusted to the fair value on initial recognition.

ii) Subsequent amusement

Financial liabilities are carried at amortized cost using the effective interest method.

3.3 Reclassification of financial assets and liabilities

The Company does not reclassify its financial assets subsequent to their initial recognition, apart from the exceptional circumstances in which the Company acquires, disposes of, or terminates a business line. Financial liabilities are never reclassified. The Company did not reclassify any of its financial assets or liabilities in the year ended 31st March 2025 and 31st March 2024.

3.4 Derecognition of financial assets and liabilities

A. Derecognition of financial assets due to substantial modification of terms and conditions

The Company de-recognizes a financial asset, such as a loan to a customer, when the terms and conditions have been renegotiated to the extent that, substantially, it becomes a new loan, with the difference recognized as a derecognition gain or loss, to the extent that an impairment loss has not already been recorded. The newly recognized loans are classified as Stage 1 for ECL measurement purposes.

B. Derecognition of financial assets other than due to substantial modification

i) Financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is de-recognized when the contractual rights to the cash flows from the financial asset expires or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

On derecognition of a financial asset in its entirety, the difference between the carrying amount (measured at the date of derecognition) and the consideration received (including any new asset obtained less any new liability assumed) is recognized in the statement of profit and loss.

Accordingly, gain on sale or de recognition of assigned portfolio are recorded upfront in the statement of profit and loss as per Ind AS 109. Also, the Company recognizes servicing income as a percentage of interest spread over tenure of loan in cases where it retains the obligation to service the transferred financial asset.

As per the guidelines of RBI, the company is required to retain certain portion of the loan assigned to parties in its books as Minimum Retention Requirement ("MRR"). Therefore, it continues to recognize the portion retained by it as MRR.

ii) Financial liability

A financial liability is de-recognized when the obligation under the liability is discharged, cancelled or expires. Where an existing financial liability is replaced by another from. The same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability. The difference between the carrying value of the original financial liability and the consideration paid is recognized in the statement of profit and loss.

3.5 Impairment of financial assets

A. Overview of ECL principles

In accordance with Ind AS 109, the Company uses ECL model, for evaluating impairment of financial assets other than those measured at FVTPL.

Expected credit losses are measured through a loss allowance at an amount equal to:

i) The 12-months expected credit losses (expected credit losses that result from those

default events on the financial instrument that are possible within 12 months after the reporting date); or

ii) Full lifetime expected credit losses (expected credit losses that result from all

possible default events over the life of the financial instrument)

Both LTECLs and 12 months ECLs are calculated on collective basis.

Based on the above, the Company categorizes its loans into Stage 1, Stage 2 and Stage 3, as described below:

Stage 1: When loans are first recognized, the Company recognizes an allowance based on 12 months ECL Stage 1 loans include those loans where there is no significant credit risk observed and also includes facilities where the credit risk has been improved and the loan has been reclassified from stage 2 or stage 3.

Stage 2: When a loan has shown a significant increase in credit risk since origination, the Company records an allowance for the life time ECL. Stage 2 loans also include facilities where the credit risk has improved and loan has been reclassified from stage 3.

Stage 3: Loans considered credit impaired are the loans which are past due for more than 90 days. The Company records an allowance for life time EGL.

Loan commitments: When estimating LTECLs for undrawn loan commitments, the Company estimates the expected portion of the loan commitment that will be drawn down over its expected life. The ECL is then based on the present value of the expected shortfalls in cash flows if the loan is drawn down.

B. Calculation of ECLs

The mechanics of EGL calculations are outlined below and the key elements are, as follows:

PD Probability of Default ("PD") is an estimate of the likelihood of default over a given time horizon. A default may only happen at a certain time over the assessed period, if the facility has not been previously derecognized and is still in the portfolio.

EAD Exposure at Default ("EAD") is an estimate of the exposure at a future default date, taking into account expected changes in the exposure after the reporting date, including repayments of principal and interest.

LGD Loss Given Default ("LGD") is an estimate of the loss arising in the case where a default occurs at a given time. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, including from the realization of any collateral. It is usually expressed as a percentage of the EAD.

The Company has calculated PD, EAD and LGD to determine impairment loss on the portfolio of loans and discounted at an approximation to the EIR. At every reporting date, the above calculated PDs, EAD and LGDs are reviewed and changes in the forward- looking estimates are analyzed.

The mechanics of the EGL method are summarized below:

Stage 1: The 12 months EGL is calculated as the portion of LTECLs that represent the ECLs that result from default events on a financial instrument that are possible within the 12 months after the reporting date. The Company calculates the 12 months ECL allowance based on the expectation of a default occurring in the 12 months following the reporting date. These expected 12-months default probabilities are applied to a forecast EAD and multiplied by the expected LGD and discounted by an approximation to the original EIR.

Stage 2: When a loan has shown a significant increase in credit risk since origination, the Company records an allowance for the LTECLs. The mechanics are similar to those explained above, but PDs and LGDs are estimated over the lifetime of the instrument. The expected cash shortfalls are discounted by an approximation to the original EIR.

Stage 3: For loans considered credit-impaired, the Company recognizes the lifetime expected credit losses for these loans. The method is similar to that for stage 2 assets, with the PD set at 100%.

C. Loans and advances measured at FVOCI

The ECLs for loans and advances measured at FVOCI do not reduce the carrying amount of these financial assets in the balance sheet, which remains at fair value. Instead, an amount equal to the allowance that would arise if the assets were measured at amortized cost is recognized in OCI as an accumulated impairment amount, with a corresponding charge to profit or loss. The accumulated loss recognized in OCI is recycled to the profit and loss upon derecognition of the assets.

D. Forward looking information

In its ECL models, the Company relies on a broad range of forward-looking macroparameters and estimated the impact on the default at a given point of time.

i) Gross fixed investment (% of GDP)

ii) Lending interest rates

iii) Deposit interest rates

3.6 Write-offs

Financial assets are written off when the Company has stopped pursuing the recovery. If the amount to be written off is greater than the accumulated loss allowance, the difference is first treated as an addition to the allowance that is then applied against the gross carrying amount. Any subsequent recoveries are credited to impairment on financial instruments in the statement of profit and loss.

3.7 Determination of fair value

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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company has taken into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.

In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 financial instruments: Those where the inputs used in the valuation are unadjusted quoted prices from active markets for identical assets or liabilities that the Company has access to at the measurement date. The Company considers^JJjt* markets as active only if there are sufficient trading activities with regards to tIp^/3^ volume and liquidity of the identical assets or liabilities and when there are bindiiU|.r^cc<>U; and exercisable price quotes available on the balance sheet date;

• Level 2 financial instruments: Those where the inputs that are used for valuation and are

significant, are derived from directly or indirectly observable market data available over the entire period of the instrument''s life. Such inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical instruments in inactive markets and observable inputs other than quoted prices such as interest rates and yield curves, implied volatilities, and credit spreads; and

• Level 3 financial instruments: Those that include one or more unobservable input that is

significant to the measurement as whole.

3.8 (1) Recognition of other income

Revenue (other than for those items to which Ind AS 109 - Financial Instruments are applicable) is measured at fair value of the consideration received or receivable. Ind AS 115 - Revenue from contracts with customers outlines a single comprehensive model of accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance found within Ind ASs.

The Company recognizes revenue from contracts with customers based on a five-step model as set out in Ind AS 115:

Step 1: Identify contract(s) with a customer: A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations and sets out the criteria for every contract that must be met.

Step 2: Identify performance obligations in the contract: A performance obligation is a promise in a contract with a customer to transfer a good or service to the customer.

Step 3: Determine the transaction price: The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

Step 4: Allocate the transaction price to the performance obligations in the contract: For a contract that has more than one performance obligation, the Company allocates the transaction price to each performance obligation in an amount that depicts the amount of consideration to which the Company expects to be entitled in exchange for satisfying each performance obligation.

Step 5: Recognize revenue when (or as) the Company satisfies a performance obligation.

A. Dividend income

Dividend income (including from FVOCI investments) is recognized when the Company''s right to receive the payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably. This is generally when the shareholders approve the dividend.

B. Rental income

Rental income arising from operating leases is accounted for on a straight-line basis over the lease terms and is included in rental income in the statement of profit and loss, unless the increase is in line with expected general inflation, in which case lease income is recognized based on contractual terms.

C. Other interest income

Other interest income is recognized on a time proportionate basis.

D. Fees and commission income

Fees and commission income such as stamp and document charges, guarantee commission, service income etc. are recognized on point in time basis.

3.9 (II) Recognition of other expense

A. Borrowing costs

Borrowing costs are the interest and other costs that the Company incurs in connection with the borrowing of funds. Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale.

All other borrowing costs are charged to the statement of profit and loss for the period for which they are incurred.

3.10 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 cash and which are subject to insignificant risk of changes in value.

3.11 Property, plant and equipment

Property, plant and equipment ("PPE") are earned at cost, less accumulated depreciation and impairment losses, if any. The cost of PPE comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use and other incidental expenses. Subsequent expenditure on PPE after its purchase is capitalized only if it is probable that the future economic benefits will flow to the enterprise and the cost of the item can be measured reliably.

Depreciation is calculated using the written down value method to write down the cost of property and equipment to their residual values over their estimated useful lives as specified under schedule II of the Act. --v.

Land is not depreciated.

The estimated useful lives are, as follows:

i) Buildings - 60 years

ii) Office equipment - 3 to 10 years

iii) Furniture and fixtures - 10 years

iv) Vehicles - 8 years

Depreciation is provided on a pro-rata basis from the date on which such asset is ready for its intended use.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

PPE is de-recognized on disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognized in other income I expense in the statement of profit and loss in the year the asset is de- recognized.

3.12 Intangible assets

The Company''s intangible assets include the value of software. An intangible asset is recognized only when its cost can be measured reliably and it is probable that the expected future economic benefits that are attributable to it will flow to the Company.

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses.

Amortization is calculated to write off the cost of intangible assets less their estimated residual values over their estimated useful lives (three years) using the straight-line method, and is included in depreciation and amortization in the statement of profit and loss.

3.13 Impairment of non-financial assets - property, plant and equipment’s and Intangible assets

The carrying values of assets/ cash generating units at each balance sheet date are reviewed

for impairment. If any indication of impairment exists, the recoverable amount of such assets

is estimated and if the carrying amount of these assets exceeds their recoverable amount,

impairment loss is recognized in the statement of profit and loss as an expense, for such

excess amount. The recoverable amount is the greater of the net selling price and value in

use. Value in use is arrived at by discounting the future cash flows to their present value

based on an appropriate discount factor. When there is indication that an impairment loss

recognized for an asset in earlier accounting periods no longer exists or may have decreased,

such reversal of impairment loss is recognized in djs-statement of profit and loss.

3.14 Leasing

The determination of whether an arrangement is a lease, or contains a lease, is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets or whether the arrangement conveys a right to use the asset.

Company as a lessee

Leases that do not transfer to the Company substantially all of the risks and benefits incidental to ownership of the. Leased items are operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term, unless the increase is in line with expected general inflation, in which case lease payments are recognized based on contractual terms.

Company as a lessor

Leases where the Company does not transfer substantially all of the risk and benefits of ownership of the asset are classified as operating leases. Rental income arising from operating leases is accounted for on a straight-line basis over the lease terms and is included in rental income in the statement of profit and loss, unless the increase is in line with expected general inflation, in which case lease income is recognized based on contractual terms. Initial direct costs incurred in negotiating operating leases are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income.

3.15 Corporate guarantees

Corporate guarantees are initially recognized in the standalone financial statements (within "other non-financial liabilities") at fair value, being the notional commission. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognized less cumulative amortization.

Any increase in the liability relating to financial guarantees is recorded in the statement of profit and loss. The notional commission A recognized in the statement of profit and loss under the head fees and commission income on a straight-line basis over the life of the guarantee.

3.16 Retirement and other employee benefits. Defined contribution plans

The Company''s contribution to provident fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.

Defined benefit plans

The Company pays gratuity to the employees whoever has completed five years of service with the Company at the time of resignation / retirement. The gratuity is paid @15days salary for every completed year of service as per the Payment of Gratuity Act, 1972.

The gratuity liability amount is contributed by the Company to the Life insurance corporation of India who administers the fund of the Company.

The liability in respect of gratuity and other post-employment benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is

expected to be derived from employees'' services.

As per Ind AS 19, the service cost and the net interest cost are charged to the statement of profit and loss. Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized in OCI.

Short-term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages etc. and the expected cost of ex-gratia are recognized in the period in which the employee renders the related service. A liability is recognized for the amount expected to be paid when there is a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

The cost of short-term compensated absences is accounted as under:

(a) in case of accumulated compensated absences, employees render the services that increase their entitlement of future compensated absences; and

(b) in case of non-accumulating compensated absences, when the absences occur.

3.17 Provisions, contingent liabilities and contingent assets A. Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of past events, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. When the effect of the time value of money is material, the Company determines the level of provision by discounting the expected cash flows at a pre-tax rate reflecting the current rates specific to the liability. The expense relating to any provision is presented in the statement of profit and loss net of any reimbursement.

B. Contingent liability

A possible obligation that arises from past events and 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 not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability are disclosed as contingent liability and not provided for.

C. Contingent asset

A contingent asset is a possible asset that arises from past events and whose existence 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. Contingent assets are neither recognized not disclosed in the financial statements.

3.18 Taxes

A. Current tax

Current tax assets and liabilities for the current and prior years are measured at the amount expected to be recovered from, or paid to, the taxation authorities. Current tax is the amount of tax payable on the taxable income for the period as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961.

Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognized in correlation to the underlying transaction either in OCI or equity.

B. Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the standalone financial statements and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of deferred tax liabilities and assets are reviewed at the end of each reporting period.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in OCI or equity.

Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws amfilie Company has a legally enforceable right for such set off.

C. Goods and services tax paid on acquisition of assets or on incurring expenses for assets are recognized net of the goods and services tax paid, except when the tax incurred on a purchase of assets or availing of services is not recoverable from the taxation authority, in which case, the tax paid is recognized as part of the cost of acquisition of the asset or as part of the expense item as applicable.

The net amount of tax recoverable from, or payable to the taxation authority is included as part of receivables or payables in the balance sheet.

3.19 Earnings per share

Basic earnings per share ("EPS") is computed by dividing the profit after tax (i.e., profit attributable to ordinary equity holders) by the weighted average number of equities shares outstanding during the year.

Diluted EPS is computed by dividing the profit after tax (i.e., profit attributable to ordinary equity holders) as adjusted for after-tax amount of dividends and interest recognized in the period in respect of the dilutive potential ordinary shares and is adjusted for any other changes in income or expense that would result from the conversion of the dilutive potential ordinary shares, by the weighted average number of equity shares considered for deriving basic earnings per share as increased by the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares

Potential equity shares are deemed to be dilutive only if their conversion to 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. Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits, right issue and bonus shares, as appropriate.

3.20 Dividends on ordinary shares

The Company recognizes a liability to make cash or non-cash distributions to equity holders of the Company when the distribution is authorized and the distribution is no longer at the discretion of the Company. As per the Act, final dividend is authorized when it is approved by the shareholders and interim dividend is authorized when it is approved by the Board of Directors of the Company. A corresponding amount is recognized directly in equity.

Non-cash distributions are measured at the fair value of the assets to be distributed with fair value re-measurement recognized directly in equity.

Upon distribution of non-cash assets, any difference between the carrying amount of the liability and the carrying amount of the assets distributed is recognized in the statement of profit and loss.

---

Mar 31, 2024

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Recognition of interest income

A. EIR method

Under Ind AS 109, interest income is recorded using the effective interest rate method
for all financial instruments measured at amortized cost and financial instrument
measured at FVOCI. The EIR is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial instrument or, when appropriate, a
shorter period, to the net carrying amount of the financial asset.

The EIR (and therefore, the amortized cost of the asset) is calculated by taking into
account any discount or premium on acquisition, fees and costs that are an integral part
of the EIR. The Company recognizes interest income using a rate of return that
represents the best estimate of a constant rate of return over the expected life of the
financial instrument.

If expectations regarding the cash flows on the financial asset are revised for reasons
other than credit risk, the adjustment is booked as a positive or negative adjustment to
the carrying amount of the asset in the balance sheet with an increase or reduction in
interest income. The adjustment is subsequently amortized through Interest income in
the statement of profit and loss.

B. Interest income

The Company calculates interest income by applying EIR to the gross carrying amount
of financial assets other than credit impaired assets. ^N

When a financial asset becomes credit impaired and is, therefore, regarded as ''stage 3'',
the Company calculates interest income on the net basis. If the financial asset cures ,

and is no longer credit impaired, the Company reverts to calculating interest income on
gross basis?

3.2 Financial instrument - Initial recognition

A. Date of recognition

Debt securities issued are initially recognized when they are originated. All other
financial assets and financial liabilities are initially recognized when the Company
becomes a partyto the contractual provisions of the instrument.

B. Initial measurement of financial instruments

The classification of financial instruments at initial recognition depends on their
contractual terms and the business model for managing the instruments (Refer note
3.3(A)). Financial instruments are initially measured at their fair value (as defined in
Note 3.9), except in the case of financial assets and financial liabilities recorded at
FVTPL, transaction costs are added to, or subtracted from this amount.

C. Measurement categories of financial assets and liabilities

The Company classifies all of its financial assets based on the business model for
managing the assets and the asset''s contractual tenns, measured at either:

i) Amortized cost

ii) FVOCI

iii) FVTPL

i) Financial assets and liabilities

A. Financial assets

Business model assessment

The Company determines its business model at the level that best reflects how it
manages groups of financial assets to achieve its business objective. The Company’s
business model is not assessed on an Instrument-by-instrument basis, but at a higher
level of aggregated portfolios and is based on observable factors such as:

a) How the performance of the business model and the financial assets held within that
business model are evaluated and reported to the Company’s key management
personnel.

b) The risks that affect the performance of the business model (and the financial assets
held within that business model) and, in particular, the way those risks are
managed.

c) How managers of the business are compensated (for example, whether the
compensation is based on the fair value of the assets managed or on the contractual
cashflows collected).

d) The expected frequency, value and timing of sales are also important aspects of the
Company''s assessment.

The business model assessment is based on reasonably expected scenarios without
taking ''worst case’ or ’stress case'' scenarios into account. If cashflows after initial
recognition are realized in a way that is different from the Company’s original
expectations, the Company does not change the classification of the remaining
financial assets held in that business model, but incorporates such information when
assessing newly originated or newly purchased financial assets going forward.

SPPI test

As a second step of its classification process, the Company assesses the contractual
terms of financiajr to identify whether they meet SPPI test.

’Principal’ for the purpose of this test is defined as the fair value of the financial
asset at initial recognition and may change over the life of financial asset (for
example, if there are repayments of principal or amortization of the premium/
discount).

The most significant elements of interest within a lending arrangement are typically
the consideration for the time value of money and credit risk. To make the SPPI
assessment, the Company applies judgement and considers relevant factors such as
the period for which the interest rate is set.

In contrast, contractual terms that introduce a more than de minimis exposure to
risks or volatility in the contractual cash flows that are unrelated to a basic lending
arrangement do not give rise to contractual cash flows that are solely payments of
principal and interest on the amount outstanding. In such cases, the financial asset is
required to be measured at FVTPL.

Accordingly, financial assets are measured as follows:

i) Financial assets carried at amortized cost("AC")

A financial asset is measured at amortized cost if it is held within a business
model whose objective is to hold the asset in order to collect contractual cash
flows and the contractual terms of the financial asset give rise on specified dates
to cash flows that are solely payments of principal and interest on the principal
amount outstanding.

ii) Financial assets measured at FVOCI

A financial asset is measured at FVOCI if it is held within a business model
whose objective is achieved by both collecting contractual cash flows and selling
financial assets and the contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal and interest on
the principal amount outstanding. Since, the loans and advances are held to
and collect contractual cash flows, they are measured at FVOCI.

iii) Financial assets at fair value through profit or loss ("FVTPL”)

A financial asset which is not classified in any of the above categories are ^
measured at FVTPL.

iv) Other equity investments

All other equity investments are measured at fair value, with value changes
recognized in other comprehensive income ("OCI").

B. Financial liability

i) Initial recognition and measurement

All financial liability is initially recognized at fair value. Transaction costs that are
directly attributable to the acquisition or issue of financial liability, which are not at
fair value through profit or loss, are adjusted to the fair value on initial recognition.

ii) Subsequent amusement

Financial liabilities are carried at amortized cost using the effective interest method.

3.3 Reclassification of financial assets and liabilities

The Company does not reclassify its financial assets subsequent to their initial recognition,
apart from the exceptional circumstances in which the Company acquires, disposes of, or
terminates a business line. Financial liabilities are never reclassified. The Company did not
reclassify any of its financial assets or liabilities in the year ended 31st March 2024 and 31st
March 2023.

3.4 Derecognition of financial assets and liabilities

A. Derecognition of financial assets due to substantial modification of terms and
conditions

The Company de-recognizes a financial asset, such as a loan to a customer, when the
terms and conditions have been renegotiated to the extent that, substantially, it
becomes a new loan, with the difference recognized as a derecognition gain or loss, to
the extent that an impairment loss has not already been recorded. The newly recognized
loans are classified as Stage 1 for ECL measurement purposes.

B. Derecognition of financial assets other than due to substantial modification

i) Financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group
of similar financial assets) is de-recognized when the contractual rights to the cash
flows from the financial asset expires or it transfers the rights to receive the
contractual cash flows in a transaction in which substantially all of the risks and
rewards of ownership of the financial asset are transferred or in which the Company
neither transfers nor retains substantially all of the risks and rewards of ownership
and it does not retain control of the financial asset.

On derecognition of a financial asset in its entirety, the difference between the
carrying amount (measured at the date of derecognition) and the consideration
received (including any new asset obtained less any new liability assumed) is
recognized in the statement of profit and loss. ____

Accordingly, gain on sale or de recognition of assigned portfolio are recorded
upfront in the statement of profit and loss as per Ind AS 109. Also, the Company
recognizes servicing income as a percentage of interest spread over tenure of loan
in cases where it retains the obligation to service the transferred financial asset.

As per the guidelines of RBI, the company is required to retain certain portion of the
loan assigned to parties in its books as Minimum Retention Requirement ("MRR").
Therefore, it continues to recognize the portion retained by it as MRR.

ii) Financial liability

A financial liability is de-recognized when the obligation under the liability is
discharged, cancelled or expires. Where an existing financial liability is replaced by
another from. The same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is
treated as a derecognition of the original liability and the recognition of a new
liability. The difference between the carrying value of the original financial liability
and the consideration paid is recognized in the statement of profit and loss.

3.5 Impairment of financial assets

A. Overview of ECL principles

In accordance with Ind AS 109, the Company uses ECL model, for evaluating
impairment of financial assets other than those measured at FVTPL.

Expected credit losses are measured through a loss allowance at an amount equal to:

i) The 12-months expected credit losses (expected credit losses that result from those

default events on the financial instrument that are possible within 12 months
after the reporting date); or

ii) Full lifetime expected credit losses (expected credit losses that result from all

possible default events over the life of the financial instrument)

Both LTECLs and 12 months ECLs are calculated on collective basis.

Based on the above, the Company categorizes its loans into Stage 1, Stage 2 and Stage
3, as described below:

Stage 1: When loans are first recognized, the Company recognizes an allowance based
on 12 months ECL Stage 1 loans include those loans where there is no significant credit
risk observed and also includes facilities where the credit risk has been improved and the
loan has been reclassified from stage 2 or stage 3.

Stage 2: When a loan has shown a significant increase in credit risk since origination, the
Company records an allowance for the life time ECL. Stage 2 loans also include facilities
where the credit risk has improved and loan has been reclassified from stage 3.

Stage 3: Loans considered credit impaired are the loans which are past due for more
than 90 days. The Company records an allowance for life time EGL.

Loan commitments: When estimating LTECLs for undrawn loan commitments, the
Company estimates the expected portion of the loan commitment that will be drawn
down over its expected life. The ECL is then based on the present value of the
expected shortfalls in cash flows if the loan is drawn down.

B. Calculation of ECLs

The mechanics of EGL calculations are outlined below and the key elements are, as
follows:

PD Probability of Default ("PD") is an estimate of the likelihood of default over a given
time horizon. A default may only happen at a certain time over the assessed period, if
the facility has not been previously derecognized and is still in the portfolio.

EAD Exposure at Default ("EAD") is an estimate of the exposure at a future default date,
taking into account expected changes in the exposure after the reporting date, including
repayments of principal and interest.

LGD Loss Given Default ("LGD") is an estimate of the loss arising in the case where a
default occurs at a given time. It is based on the difference between the contractual cash
flows due and those that the lender would expect to receive, including from the
realization of any collateral. It is usually expressed as a percentage of the EAD.

The Company has calculated PD, EAD and LGD to determine impairment loss on the
portfolio of loans and discounted at an approximation to the EIR. At every reporting
date, the above calculated PDs, EAD and LGDs are reviewed and changes in the
forward- looking estimates are analyzed.

The mechanics of the EGL method are summarized below:

Stage 1: The 12 months EGL is calculated as the portion of LTECLs that represent the
ECLs that result from default events on a financial instrument that are possible within
the 12 months after the reporting date. The Company calculates the 12 months ECL
allowance based on the expectation of a default occurring in the 12 months following the
reporting date. These expected 12-months default probabilities are applied to a forecast
EAD and multiplied by the expected LGD and discounted by an approximation to the
original EIR.

Stage 2: When a loan has shown a significant increase in credit risk since origination,
the Company records an allowance for the LTECLs. The mechanics are similar to those
explained above, but PDs and LGDs are estimated over the lifetime of the instrument.
The expected cash shortfalls are discounted by an approximation to the original EIR.

Stage 3: For loans considered credit-impaired, the Company recognizes the lifetime
expected credit losses for these loans. The method is similar to that for stage 2
assets, with the PD set at 100%.

C. Loans and advances measured at FVOCI

The ECLs for loans and advances measured at FVOCI do not reduce the carrying
amount of these financial assets in the balance sheet, which remains at fair value.

Instead, an amount equal to the allowance that would arise if the assets were
measured at amortized cost is recognized in OCI as an accumulated impairment
amount, with a corresponding charge to profit or loss. The accumulated loss
recognized in OCI is recycled to the profit and loss upon derecognition of the assets.

D. Forward looking information

In its ECL models, the Company relies on a broad range of forward-looking
macroparameters and estimated the impact on the default at a given point of time.

i) Gross fixed investment (% of GDP)

ii) Lending interest rates

iii) Deposit interest rates

3.6 Write-offs

Financial assets are written off when the Company has stopped pursuing the recovery. If
the amount to be written off is greater than the accumulated loss allowance, the
difference is first treated as an addition to the allowance that is then applied against the
gross carrying amount. Any subsequent recoveries are credited to impairment on
financial instruments in the statement of profit and loss.

3.7 Determination of fair value

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,
regardless of whether that price is directly observable or estimated using another
valuation technique. In estimating the fair value of an asset or a liability, the Company
has taken into account the characteristics of the asset or liability if market participants
would take those characteristics into account when pricing the asset or liability at the
measurement date.

In addition, for financial reporting purposes, fair value measurements are categorized
into Level 1, 2, or 3 based on the degree to which the inputs to the fair value
measurements are observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows: ''

• Level 1 financial instruments: Those where the inputs used in the valuation ar^V^^ifo
unadjusted quoted prices from active markets for identical assets or liabilities thatN^£“J»
the Company has access to at the measurement date. The Company considers
markets as active only if there are sufficient trading activities with regards to the
volume and liquidity of the identical assets or liabilities and when there are binding
and exercisable price quotes available on the balance sheet date;

• Level 2 financial instruments: Those where the inputs that are used for valuation and are

significant, are derived from directly or indirectly observable market data available
over the entire period of the instrument''s life. Such inputs include quoted prices for
similar assets or liabilities in active markets, quoted prices for identical instruments in
inactive markets and observable inputs other than quoted prices such as interest rates and
yield curves, implied volatilities, and credit spreads; and

• Level 3 financial instruments: Those that include one or more unobservable input that is

significant to the measurement as whole.

3.8 (1) Recognition of other income

Revenue (other than for those items to which Ind AS 109 - Financial Instruments are
applicable) is measured at fair value of the consideration received or receivable. Ind AS
115 - Revenue from contracts with customers outlines a single comprehensive model of
accounting for revenue arising from contracts with customers and supersedes current
revenue recognition guidance found within Ind ASs.

The Company recognizes revenue from contracts with customers based on a five-step
model as set out in Ind AS 115:

Step 1: Identify contract(s) with a customer: A contract is defined as an agreement
between two or more parties that creates enforceable rights and obligations and sets out
the criteria for every contract that must be met.

Step 2: Identify performance obligations in the contract: A performance obligation is a
promise in a contract with a customer to transfer a good or service to the customer.

Step 3: Determine the transaction price: The transaction price is the amount of
consideration to which the Company expects to be entitled in exchange for transferring
promised goods or services to a customer, excluding amounts collected on behalf of third
parties.

Step 4: Allocate the transaction price to the performance obligations in the contract: For a
contract that has more than one performance obligation, the Company allocates the
transaction price to each performance obligation in an amount that depicts the amount of
consideration to which the Company expects to be entitled in exchange for satisfying each
performance obligation.

Step 5: Recognize revenue when (or as) the Company satisfies a performance obligation.
A. Dividend income

Dividend income (including from FVOCI investments) is recognized when the
Company''s right to receive the payment is established, it is probable that the economic
benefits associated with the dividend will flow to the Company and the amount of the
dividend can be measured reliably. This is generally when the shareholders approve
the dividend.

Maccount^J^J ^r

B. Rental income

Rental income arising from operating leases is accounted for on a straight-line basis
over the lease terms and is included in rental income in the statement of profit and
loss, unless the increase is in line with expected general inflation, in which case lease
income is recognized based on contractual terms.

C. Other interest income

Other interest income is recognized on a time proportionate basis.

D. Fees and commission income

Fees and commission income such as stamp and document charges, guarantee
commission, service income etc. are recognized on point in time basis.

3.9 (II) Recognition of other expense

A. Borrowing costs

Borrowing costs are the interest and other costs that the Company incurs in
connection with the borrowing of funds. Borrowing costs that are directly attributable
to the acquisition or construction of qualifying assets are capitalized as part of the
cost of such assets. A qualifying asset is an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale.

All other borrowing costs are charged to the statement of profit and loss for the
period for which they are incurred.

3.10 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 cash and which are subject to insignificant risk of changes in value.

3.11 Property, plant and equipment

Property, plant and equipment ("PPE") are carried at cost, less accumulated depreciation
and impairment losses, if any. The cost of PPE comprises its purchase price net of any
trade discounts and rebates, any import duties and other taxes (other than those
subsequently recoverable from the tax authorities), any directly attributable expenditure on
making the asset ready for its intended use and other incidental expenses. Subsequent
expenditure on PPE after its purchase is capitalized only if it is probable that the future
economic benefits will flow to the enterprise and the cost of the item can be measured
reliably.

Depreciation is calculated using the written down value method to write down the cost of
property and equipment to their residual values over their estimated useful lives as
specified under schedule II of the Act.

Land is not depreciated.

The estimated useful lives are, as follows:

i) Buildings - 60 years

ii) Office equipment - 3 to 10 years

iii) Furniture and fixtures - 10 years

iv) Vehicles - 8 years

Depreciation is provided on a pro-rata basis from the date on which such asset is ready
for its intended use.

The residual values, useful lives and methods of depreciation of property, plant and
equipment are reviewed at each financial year end and adjusted prospectively, if
appropriate.

PPE is de-recognized on disposal or when no future economic benefits are expected
from its use. Any gain or loss arising on derecognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the asset) is
recognized in other income I expense in the statement of profit and loss in the year the
asset is de- recognized.

3.12 Intangible assets

The Company''s intangible assets include the value of software. An intangible asset is
recognized only when its cost can be measured reliably and it is probable that the expected
future economic benefits that are attributable to it will flow to the Company.

Intangible assets acquired separately are measured on initial recognition at cost. Following
initial recognition, intangible assets are carried at cost less any accumulated amortization and
any accumulated impairment losses.

Amortization is calculated to write off the cost of intangible assets less their estimated
residual values over their estimated useful lives (three years) using the straight-line method,
and is included in depreciation and amortization in the statement of profit and loss.

3.13 Impairment of non-financial assets - property, plant and equipment’s and
Intangible assets

The carrying values of assets/ cash generating units at each balance sheet date are reviewed
for impairment. If any indication of impairment exists, the recoverable amount of such assets
is estimated and if the carrying amount of these assets exceeds their recoverable amount,
impairment loss is recognized in the statement of profit and loss as an expense, for such
excess amount. The recoverable amount is the greater of the net selling price and value in
use. Value in use is arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that an impairment loss
recognized for an asset in earlier accounting periods no longer exists or may have decreased,
such reversal of impairment loss is recognized in the statement of profit and loss.

3.14 Leasing

The determination of whether an arrangement is a lease, or contains a lease, is based on the
substance of the arrangement and requires an assessment of whether the fulfilment of the
arrangement is dependent on the use of a specific asset or assets or whether the arrangement
conveys a right to use the asset.

Company as a lessee

Leases that do not transfer to the Company substantially all of the risks and benefits
incidental to ownership of the. Leased items are operating leases. Operating lease
payments are recognized as an expense in the statement of profit and loss on a straight-line
basis over the lease term, unless the increase is in line with expected general inflation, in
which case lease payments are recognized based on contractual terms.

Company as a lessor

Leases where the Company does not transfer substantially all of the risk and benefits of
ownership of the asset are classified as operating leases. Rental income arising from
operating leases is accounted for on a straight-line basis over the lease terms and is
included in rental income in the statement of profit and loss, unless the increase is in line
with expected general inflation, in which case lease income is recognized based on
contractual terms. Initial direct costs incurred in negotiating operating leases are added to the
carrying amount of the leased asset and recognized over the lease term on the same basis as
rental income.

3.15 Corporate guarantees

Corporate guarantees are initially recognized in the standalone financial statements (within
"other non-financial liabilities") at fair value, being the notional commission. Subsequently,
the liability is measured at the higher of the amount of loss allowance determined as per
impairment requirements of Ind AS 109 and the amount recognized less cumulative
amortization.

Any increase in the liability relating to financial guarantees is recorded in the statement of
profit and loss. The notional commission is recognized in the statement of profit and loss
under the head fees and commission income on a straight-line basis over the life of the
guarantee.

3.16 Retirement and other employee benefits, Defined contribution plans

The Company''s contribution to provident fund and employee state insurance scheme are
considered as defined contribution plans and are charged as an expense based on the
amount of contribution required to be made and when services are rendered by the
employees. _

(£1 Ww^witGl

Defined benefit plans

The Company pays gratuity to the employees whoever has completed five years of service
with the Company at the time of resignation / retirement. The gratuity is paid @15days
salary for every completed year of service as per the Payment of Gratuity Act, 1972.

The gratuity liability amount is contributed by the Company to the Life insurance corporation
of India who administers the fund of the Company.

The liability in respect of gratuity and other post-employment benefits is calculated using the
Projected Unit Credit Method and spread over the period during which the benefit is

expected to be derived from employees'' services.

As per Ind AS 19, the service cost and the net interest cost are charged to the statement of
profit and loss. Remeasurement of the net defined benefit liability, which comprise
actuarial gains and losses, the return on plan assets (excluding interest) and the effect of
the asset ceiling (if any, excluding interest), are recognized in OCI.

Short-term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are
classified as short-term employee benefits. Benefits such as salaries, wages etc. and the
expected cost of ex-gratia are recognized in the period in which the employee renders the
related service. A liability is recognized for the amount expected to be paid when there is a
present legal or constructive obligation to pay this amount as a result of past service
provided by the employee and the obligation can be estimated reliably.

The cost of short-term compensated absences is accounted as under:

(a) in case of accumulated compensated absences, employees render the services that
increase their entitlement of future compensated absences; and

(b) in case of non-accumulating compensated absences, when the absences occur.

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Mar 31, 2015

A. BASIS OF ACCOUNTING

The financial statement have been prepared under the historical cost conventional accrual basis of accounting, in conformity with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. Accounting principles generally accepted in India requires management to make estimates and assumptions that affect the reported amounts of asset and liabilities and disclosures relating to contingent liabilities as at the date of financial statements and reported amounts of revenues and expenses during the reporting period.

Some of the more important Accounting policies which have been applied are summarized below.

B. USE OF ESTIMATES

The preparation of financial statements are in conformity with Indian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods. Examples of such estimates include provisions for doubtful debts, provision for income taxes and the useful lives of fixed assets.

C FIXED ASSETS

1. Fixed Assets are stated at cost of acquisition and valued at Historical cost. Related pre operational expenses form part of the value of assets capitalized less Depreciation.

2. Directly identified expenses are being capitalized. All other allocable expenses during the period of construction for the project are being capitalized proportionately on the basis of the value of assets on date of production

D DEPRECIATION

i. Depreciation on depreciable assets has been provided in the books of accounts, as per the rates prescribed in schedule II of the companies Act, 2013 as per Written Down Value Method. ^

ii Depreciation on additions to and deductions from fixed assets is being provided on pro-rata basis from /to the date of acquisition/disposal.

E. INVESTMENTS

Investments are stated at cost of acquisition , Investment being Long Term Investments , diminution ,if any , in their market value on account of temporary factors is not provided for.

F. INVENTORIES-

The Company has no stock of raw material, stores, finished goods, spares etc.

G TAXES ON INCOME

Current tax is determined as the amount of tax payable in respect of taxable income for the years. Deferred tax is recognised, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Where there is an unabsorbed depreciation or carry forward loss, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets, other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation in future. '

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal tax after the tax holiday period. Accordingly, it is recognized as an asset in the balance sheet when it is probable that the future economic benefit associated with it will flow to the Company and the asset can be measured reliably.

H REVENUE RECQGNITION;-

i. Mercantile method of accounting is employed. However where the amount is immaterial or negligible or undeterminable no entries are made for the accruals.

ii. Interest on allotment/call/refund money is accounted for on cash basis

I. BORROWING COST

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowings costs are charged to revenue.

J. EMPLOYEE BENEFITS

a. Provident Fund is a defined contribution scheme and the contribution is chargeble to the Profit & Loss A/c of the year when the contributions to the Government Funds is due.

b. Gratuity Liability is defined benefit obligations and are provided for on the basis of following formula:-

Last drawn Salary * 15/26 * No. of Completed year of Services. The above calculation is to be done only for those employees who have completed continuous five year of services. However, the above calculation of Gratuity is not as per Actuary Valuation

c. Short Term Compensated absences are to be provided for based on estimates. Long Term compensated absences are provided for based on actuarial valuation.

d. Actuarial gains / losses are to be taken to the profit & loss account and are not deferred.

K. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is normally charged to Profit & Loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

L. LEASE

There are no Finance leases or leases of any other kind taken by the Company to be dealt with in the accounts.

M. FOREIGN CURRENCY TRANSACTIONS

There are no foreign currency transactions.

N. EARNINGS PER SHARE

The Company reports Basic and Diluted Earnings Per Share (EPS/DEPS) in accordance with Accounting Standard 20 on "Earnings Per Share". Basic EPS is computed by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

Diluted EPS is computed by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, except where the results are anti-dilutive.

O. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

The Company recognizes provisions when there is present obligation as a result of past event and it is probable that there will be an outflow of resources and reliable estimate can be made of the amount of the obligation. A disclosure for Contingent liabilities is made in the notes on accounts when there is a possible obligation or present obligations that may, but probably will not, require an outflow of resources. Contingent assets are neither recognised nor disclosed in the financial statements.

P. TRADE REC1EVABLE & PAYABLES

Services rendered on credit are included in trade receivables at the balance sheet date & reduced by appropriate allowances for estimated doubtful amounts. Trade payables are stated at their nominal value.

Q. CASH AND CASH EQUIVALENTS

For the purpose of the cash flows, cash & cash equivalents comprise cash on hand, balances with bank and deposits with banks.

R. CASH FLOW STATEMENT

The cash flow statement is prepared as per the Indirect method prescribed under "Accounting Standard - 3" Cash Flow Statement issued by the Institute of Chartered Accountants of India.

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Mar 31, 2014

A) Basis of Accounting

The accounts have been prepared on the basis of historical costs.

b) Fixed Assets

Fixed Assets are valued at cost less depreciation. Cost comprises of purchase price and any attributable cost of bringing the assets to the working conditions for its intended use.

c) Depreciation:

Depreciation on Fixed Assets has been provided on "Written Down Value Basis" in the manner and at the rates specified in Schedule XIV of the Companies Act, 1956.

d) Investments:

Investments are stated at cost of acquisition, Investments being Long Term Investments, diminution, if any, in their market value on account of temporary factors is not provided for.

e) Recognition of Income and Expenditure

Items of Income and Expenditure are generally recognised on accrual basis.

f) Contingent Liabilities:

Contingent Liabilities, if any, are generally not provided in the accounts are shown separately in notes to the accounts.

g) Deferred Tax:

Deferred tax asset or liability is recognised for timing differences between the profit as per financial statements and the profit offered for income tax, based on tax rates enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only if there is reasonable certainly that sufficient future taxable income will be available, against which they can be realized.

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Mar 31, 2013

(a) Basis of Accounting :

The accounts have been prepared on the basis of historical costs.

(b) Fixed Assets :

Fixed Assets are valued at cost less depreciation, Cost comprises of purchase price and any attributable cost of bringing the assets to the working conditions for its intended use.

(c) Depreciation :

Depreciation on Fixed Assets has been provided on "Written Down Value Basis" in the manner at rates specified in schedule XIV of the Companies Act, 1956.

(d) Investments:

Investments are stated at cost of acquisition. Investments beingLong Term Investments, dimunition, if any, in their market value on account of temporaryis not provided for.

(e) Recognition of Income and Expenditure :

Items of income and Expenditure are generally recognised on accrual basis.

(f) Contingent Liabilities :

Contigient Liabilities, if any, are generally not provided in the accounts are shown separately in notes to the accounts.

(g) Deferred Tax.

Deferred tax asset or liability is recognised for timing differences between the profit as per financial statements and the prom offered for income tax, based on tax rates enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only if there is reasonable certaintly that sufficient future taxable income will be available, against which they can be realised.

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Mar 31, 2012

(a) Basis of Accounting :

The accounts have been prepared on the basis of historical costs.

(b) Fixed Assets:

Fixed Assets are valued at cost less depreciation; Cost comprises of purchase price and any attributable cost of bringing the assets to the working conditions for its intended use.

(c) Depreciation:

Depreciation on Fixed Assets has been provided on "Written Down Value Basis" in the manner and at the rates specified in Schedule XIV of the Companies Act, 1956.

(d) Investments:

Investments are stated at cost of acquisition. Investments being Long Term Investments, diminution, if any, in their market value on account of temporary factors is not provided for.

(e) Recognition of Income and Expenditure:

Items of Income and Expenditure are generally recognized on accrual basis.

(f) Contingent Liabilities:

Contingent Liabilities, if any, are generally not provided in the accounts and are shown separately in notes to the accounts.

(g) Deferred Tax:

Deferred tax asset or liability is recognized for timing differences between the profit as per financial statements and the profit offered for income tax, based on tax rates enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognized only if there is reasonable certainly that sufficient future taxable income will be available, against which they can be realized.

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Mar 31, 2010

(a) Baas of Accounting :

The accounts have been prepared on the basis of historical costs.

(b) Fixed Assets:

Fixed Assets are valued at cost less depreciation; Cost comprises of purchase price and any attributable cost of bringing the assets to the working conditions for its intended use.

(c) Depreciation:

Depreciation on Fixed Assets has been provided on "Written Down Value Basis" in the manner and at the rates specified in Schedule XIV of the Companies Act, 1956.

(d) Investments:

Investments are stated at cost of acquisition. Investments being Long Term Investments, dimunition, if any, in their market value on account of temporary factors is not provided for.

(e) Recognition of Income and Expenditure:

Items of Income and Expenditure are generally recogni

(f) Contingent Liabilities:

Contingent Liabilities, if any, are generally not provided in the accounts and are shown separately in notes to the accounts.

(g) Deferred Tax:

Deferred tax asset or liability is recognised lor timing differences between the profit as per financial statements and the profit offered for income tax, based on tax rates have been enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only if there is reasonable certaintly that sufficient future taxable income will be available, against which they can be realised