1.11 Provisions, Contingent Liabilities and
Contingent Assets

Provisions

Provisions are recognised when the Company
has a present obligation (legal or constructive)
as a result of a past event, it is probable that the
Company will be required to settle the obligation,
and a reliable estimate can be made of the
amount of the obligation.

The amount recognised as a provision is the
best estimate of the consideration required to
settle the present obligation at the end of the
reporting period, taking into account the risks
and uncertainties surrounding the obligation. If
the effect of the time value of money is material,
provisions are discounted using a current pre¬
tax rate that reflects, when appropriate, the risks
specific to the liability. When discounting is used,
the increase in the provision due to the passage
of time is recognised as a finance cost.

A provision for onerous contracts is recognised
when the expected benefits to be derived by
the Company from a contract are lower than
the unavoidable cost of meeting its obligations
under the contract. The provision is measured at
the present value of the lower of the expected cost
of terminating the contract and the expected net
cost of continuing with the contract.

When some or all of the economic benefits
required to settle a provision are expected to
be recovered from a third party, a receivable is
recognised as an asset if it is virtually certain that
reimbursement will be received and the amount
of the receivable can be measured reliably.

In case of litigations, provision is recognised
once it has been established that the Company
has a present obligation based on information
available up to the date on which the Company's
standalone financial statements are finalised
and may in some cases entail seeking expert
advice in making the determination on whether
there is a present obligation.

Contingent Liabilities

Contingent liability is a possible obligation that
arises from past events whose existence will be
confirmed by the occurrence or non-occurrence
of one or more uncertain future events beyond the
control of the Company or a present obligation
that is not recognised because it is not probable
that an outflow of resources will be required
to settle the obligation. Company does not
recognised contingent liability but discloses its
existence in the standalone financial statements.

Contingent Assets

Contingent assets are not recognised in the
standalone financial statements, but are
disclosed where an inflow of economic benefits
is probable.

1.12 Cash and cash equivalents

Cash and cash equivalents comprise of cash
on hand, balances with banks, cheques on
hand, remittances in transit and short-term
investments with an original maturity of three
months or less that are readily convertible to
known amounts of cash and which are subject to
an insignificant risk of changes in value.

1.13 Segment Reporting

Operating segments are reported in a manner
consistent with the internal reporting provided
to the Chief Operating Decision-Maker (CODM).
The CODM assess the financial performance
and position of the Company and makes
strategic decisions.

The Company is predominantly engaged in a
single reportable segment of 'Financial Services'
as per the Ind AS 108 - Segment Reporting.

1.14 Financial Instruments

Classification of financial instruments

The Company classifies its financial assets into
the following measurement categories:

1. Financial assets to be measured at
amortised cost

2. Financial assets to be measured at fair value
through other comprehensive income

3. Financial assets to be measured at fair value
through profit or loss

The classification depends on the contractual
terms of the financial assets' cash flows and

the Company's business model for managing
financial assets which are explained below:

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:

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

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

♦ 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 cash
flows collected).

♦ 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 cash flows
after initial recognition are realised 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.

The Solely Payments of Principal and Interest
(SPPI) test

As a second step of its classification process
the Company assesses the contractual terms of
financial assets to identify whether they meet the
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
the financial asset (for example, if there are
repayments of principal or amortisation of the
premium/discount).

In making this assessment, the Company
considers whether the contractual cash flows are
consistent with a basic lending arrangement i.e.
interest includes only consideration for the time
value of money, credit risk, other basic lending
risks and a profit margin that is consistent
with a basic lending arrangement. Where the
contractual terms introduce exposure to risk
or volatility that are inconsistent with a basic
lending arrangement, the related financial asset
is classified and measured at fair value through
profit or loss.

The Company classifies its financial liabilities
at amortised costs unless it has designated
liabilities at fair value through the profit and
loss account or is required to measure liabilities
at fair value through profit or loss such as
derivative liabilities.

1.14.1 Recognition of Financial Instruments:

Financial assets and financial liabilities are
recognised when entity becomes a party to the
contractual provisions of the instruments. Loans
& advances and all other regular way purchases
or sales of financial assets are recognised and
de-recognised on the trade date basis.

1.14.2 Initial Measurement of Financial
Instruments:

Financial assets and financial liabilities are
initially measured at fair value. Transaction costs
that are directly attributable to the acquisition or
issue of financial assets and financial liabilities
(other than financial assets and financial
liabilities at fair value through profit or loss)
are added to or deducted from the fair value
of the financial assets or financial liabilities, as
appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of
financial assets or financial liabilities at fair value
through profit or loss are recognised immediately
in the Statement of Profit and Loss.

I nvestment in subsidiary is carried at cost as
permissible under Ind AS 27, 'Separate Financial
Statements'.

1.14.3 Subsequent Measurement:

(a) Financial Assets

Financial Assets carried at Amortised Cost:

These financial assets comprise Bank
Balances, Loans, Trade Receivables, Other
Receivables, Investments and Other
financial assets.

A financial asset is measured at amortised
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.

Financial Assets at Fair Value through
Other Comprehensive Income (FVTOCI):

A financial asset is measured at FVTOCI,
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.

Financial Assets at Fair Value through Profit
or Loss (FVTPL):

A financial asset which is not classified as
Amortised Cost or FVTOCI is measured at
FVTPL. Financial assets at FVTPL include
financial assets held for trading and
financial assets designated upon initial
recognition as at FVTPL. A financial asset that
meets the amortised cost criteria or debt
instruments that meet the FVTOCI criteria
may be designated as at FVTPL upon initial
recognition if such designation eliminates
or significantly reduces a measurement
or recognition inconsistency that would
arise from measuring assets or liabilities or
recognising the gains and losses on them
on different bases. The Company has not
designated any debt instrument as at FVTPL.

Any differences between the fair values
of financial assets classified as FVTPL and
held by the Company on the balance sheet
date is recognised in the Statement of Profit
and Loss. In cases there is a net gain in the
aggregate, the same is recognised in "Net
gain on fair value changes" under Revenue
from Operations and if there is a net loss the
same is recognised in "Net loss on fair value
changes" under Expenses in the Statement
of Profit and Loss.

Effective Interest Rate (EIR) Method:

The EIR is a method of calculating the
amortised cost of a financial instrument
and of allocating interest income or expense

over the relevant period. The EIR is the rate
that exactly discounts estimated future cash
receipts or payments through the expected
life of the financial asset or financial liability
to the gross carrying amount of a financial
asset or to the amortised cost of a financial
liability on initial recognition

The EIR for financial assets or financial
liability is computed:

a) By considering all the contractual terms
of the financial instrument in estimating
the cash flows.

b) Including fees and transaction costs
that are integral part of EIR.

Impairment of Financial Assets:

Loss allowance for expected credit losses is
recognised for financial assets measured at
amortised cost and FVTOCI at each reporting
date based on evidence or information that
is available without undue cost or effort.

The Company measures the loss allowance
for a financial asset at an amount equal
to the lifetime expected credit losses if
the credit risk on that financial instrument
has increased significantly since initial
recognition. If the credit risk on a financial
asset has not increased significantly since
initial recognition, the Company measures
the loss allowance for that financial asset
at an amount equal to 12-month expected
credit losses.

No Expected credit losses are recognised on
equity investments.

Also refer Note No. 1.14.6 Overview of the
Expected Credit Loss (ECL) principles.

De-recognition of Financial Assets:

The Company de-recognises a financial
asset when the contractual rights to the
cash flows from the asset expire, or when it
transfers the financial asset and substantially
all the risks and rewards of ownership of the
asset to another party.

On de-recognition of a financial asset
accounted under Ind AS 109 in its entirety:

a) For Financial Assets measured at
Amortised Cost, the gain or loss is
recognised in the Statement of Profit
and Loss.

b) For Financial Assets measured at FVTOCI,
the cumulative fair value adjustments
previously taken to reserves are
reclassified to the Statement of Profit
and Loss unless the asset represents
an equity investment in which case
the cumulative fair value adjustments
previously taken to reserves may be
reclassified within equity.

If the transferred asset is part of a larger
financial asset and the part transferred
qualifies for de-recognition in its entirety,
the previous carrying amount of the
larger financial asset shall be allocated
between the part that continues to be
recognised and the part that is de¬
recognised, on the basis of the relative
fair values of those parts on the date of
the transfer.

If the Company neither transfers nor
retains substantially all the risks and
rewards of ownership and continues
to control the transferred asset, it
recognises its retained interest in the
assets and an associated liability for
amounts it may have to pay.

I f the Company retains substantially all
the risks and rewards of ownership of a
transferred financial asset, it continues
to recognise the financial asset and
also recognises a liability for the
proceeds received.

Modification/revision in estimates of cash
flows of financial assets:

When the contractual cash flows of a financial
asset are renegotiated or otherwise modified
and the renegotiation or modification does
not result in the de-recognition of that
financial asset in accordance with Ind AS
109, the Company recalculates the gross
carrying amount of the financial asset and
recognises a modification gain or loss in the
Statement of Profit and Loss.

(b) Financial Liabilities and Equity Instruments

Classification as debt or equity:

Financial liabilities and equity instruments
issued are classified according to the
substance of the contractual arrangements
entered into and the definitions of a financial
liability and an equity instrument.

Equity Instruments

An Equity Instrument is any contract that
evidences a residual interest in the assets
of the Company after deducting all of its
liabilities. Repurchase of the Company's
own equity instruments is recognised and
deducted directly in equity. No gain or loss is
recognised in the Statement of Profit and Loss
on the purchase, sale, issue or cancellation
of the Company's own equity instruments.

Financial Liabilities

The Company classifies all financial liabilities
as subsequently measured at amortised
cost, except for financial liabilities at FVTPL.
Such liabilities, including derivatives that are
liabilities, shall be subsequently measured
at fair value.

Financial Liabilities at FVTPL

Financial liabilities at FVTPL include
financial liabilities held for trading and
financial liabilities designated upon initial
recognition as at FVTPL. Financial liabilities
are classified as held for trading, if they are
incurred for the purpose of repurchasing in
the near term. This category also includes
derivative financial instruments that are
not designated as hedging instruments in
hedge relationships as defined by Ind AS 109
- "Financial Instruments".

Financial Liabilities measured at Amortised
Cost

After initial recognition, interest bearing
loans and borrowings are subsequently
measured at amortised cost using the EIR
method except for those designated in an
effective hedging relationship.

Amortised cost is calculated by taking into
account any discount or premium and fee
or costs that are an integral part of the EIR.
The EIR amortisation is included in finance
costs in the Statement of Profit and Loss.
Any difference between the proceeds (net
of transaction costs) and the redemption
amount is recognised in profit or loss over
the period of the borrowings using the
EIR method.

Trade and other payables

A payable is classified as 'trade payable' if it
is in respect of the amount due on account of
goods purchased or services received in the

normal course of business. These amounts
represent liabilities for goods and services
provided to the Company prior to the end
of financial year, which are unpaid. They are
recognised initially at their fair value and
subsequently measured at amortised cost.

Financial Guarantee Contracts

Financial guarantees issued by the
Company are those guarantees that require
a payment to be made to reimburse the
holder of the guarantee for a loss incurred
by the holder because the specified debtor
fails to make a payment, when due, to the
holder in accordance with the terms of
a debt instrument. Financial guarantees
are recognised initially as a liability at fair
value, adjusted for transactions costs that
are directly attributable to the issuance of
the guarantee. 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
recognised less cumulative amortisation.

De-recognition of financial liabilities

A financial liability is de-recognised when the
obligation under the liability is discharged
or cancelled or expires. When 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 the de-recognition
of the original liability and the recognition of
a new liability. The difference between the
carrying amount of the financial liability de¬
recognised and the consideration paid and
payable is recognised in the Statement of
Profit and Loss.

1.14.4 Off-setting of financial instruments

Financial assets and liabilities are offset and the
net amount is reported in the Balance Sheet,
when there is a legally enforceable right to offset
the recognised amounts and there is an intention
to settle on a net basis, or realise the asset and
settle the liability simultaneously backed by
past practice.

1.14.5 Fair value measurement

Fair value is the price that would be received to
sell an asset or paid to transfer a liability in an
orderly transaction between market participants
at the measurement date. The fair value

measurement is based on the presumption that
the transaction to sell the asset or transfer the
liability takes place either:

a) In the principal market for the asset or
liability, or

b) I n the absence of a principal market, in the
most advantageous market for the asset
or liability

The Principal or the most advantageous market
must be accessible by the Company.

The fair value of an asset or a liability is measured
using the assumptions that market participants
would use when pricing the asset or liability,
assuming that market participants act in their
economic best interest.

A fair value measurement of a non-financial
asset takes into account a market participant's
ability to generate economic benefits by using
the asset in its highest and best use or by selling
it to another market participant that would use
the asset in its highest and best use.

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximizing the use of relevant observable inputs
and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value
is measured or disclosed in the financial
statements are categorised 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 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 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. In addition, adjustments may
be required for the condition or location of the
asset or the extent to which it relates to items
that are comparable to the valued instrument.
However, if such adjustments are based on
unobservable inputs which are significant to the
entire measurement, the Company will classify
the instruments as Level 3.

Level 3 financial instruments: Those that include
one or more unobservable input that is significant
to the measurement as whole.

1.14.6Overview of the Expected Credit Loss (ECL)
principles

Expected credit loss (ECL) is the probability-
weighted estimate of credit losses (i.e., the present
value of all cash shortfalls) over the expected life
of the financial instrument. A cash shortfall is the
difference between scheduled or contractual
cash flows and actual expected cash flows.
Consequently, ECL subsumes both the amount
and timing of payments. It also incorporates
available information which is relevant to the
assessment, including information about past
events, current conditions and reasonable and
supportable information about future events and
economic conditions at the reporting date.

For portfolio of exposures, ECL is modelled as
the product of the probability of default, the loss
given default and the exposure at default.

In case of assets identified to be significantly
credit-impaired to the extent that default has
happened or seems to be a certainty rather
than probability, ECL would be determined by
directly estimating the receipt of cash flows and
timing thereof.

Staging:

The loan portfolio would be classified into three
stage-wise buckets - Stage 1, Stage 2 and Stage
3 - corresponding to the contracts assessed
as performing, under-performing and non¬
performing, in accordance with the Ind-AS
guidelines. The key parameter used for stage-
wise classification would be days past due
(DPDs).

Stage 1:

All exposures where there has not been a
significant increase in credit risk since initial
recognition or that has low credit risk at the

reporting date and that are not credit impaired
upon origination are classified under this stage.
The company classifies all standard advances
and advances upto 60 days default under this
category. Stage 1 loans also include facilities
where the credit risk has improved and the loan
has been reclassified from Stage 2.

Stage 2:

All exposures where there has been a significant
increase in credit risk since initial recognition
but are not credit impaired are classified under
this stage. 60 Days Past Due is considered as
significant increase in credit risk.

Stage 3:

All exposures assessed as credit impaired when
one or more events that have a detrimental
impact on the estimated future cash flows of that
asset have occurred are classified in this stage.
For exposures that have become credit impaired,
a lifetime ECL is recognised and interest revenue
is calculated by applying the effective interest
rate to the amortised cost (net of provision)
rather than the gross carrying amount. 120 Days
Past Due is considered as default for classifying
a financial instrument as credit impaired. If an
event (for eg. any natural calamity) warrants a
provision higher than as mandated under ECL
methodology, the Company may classify the
financial asset in Stage 3 accordingly.

While the presumption for inter-stage threshold
for Stage 1 is 30 days, the company has rebutted
the presumption and has considered 60 days
as the threshold. As per current market practice,
NBFCs typically tend to be paid later than banks
by borrowers since banks control their working
capital financing.

Methodology:

The basis of the ECL calculations are outlined
below which is intended to be more forward¬
looking. Key elements of ECL are, as follows:

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 de-recognised and is still in
the portfolio.

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, whether scheduled by

contract or otherwise, expected drawdown's on
committed facilities, and accrued interest from
missed payments.

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 realisation of any collateral. It is usually
expressed as a percentage of the EAD.

The key tenets of Company's methodology are
as under:

Past performance as basis for ECL discovery:
Company's ECL methodology is based on
discovery of the relevant parameters - namely
EAD, PD and LGD - from the Company's actual
performance of past portfolios.

Life Cycle Determination: A significant portion
of the advances of the Company is short-term
in nature. Based on maturity pattern on the
Company's advances in past years, the average
life cycle has been considered as 1 year.

The management will continue to monitor the
loan cases on an ongoing basis, and have the
discretion to make higher provisions on the basis
expected recovery of the individual accounts,
wherever considered necessary.

1.14.7 Write-offs

The Company reduces the gross carrying
amount of a financial asset when the Company
has no reasonable expectations of recovering a
financial asset in its entirety or a portion thereof.
This is generally the case when the Company
determines that the borrower does not have
assets or sources of income that could generate
sufficient cash flows to repay the amounts
subjected to write-offs. Any subsequent
recoveries against such loans are credited to the
Statement of profit and loss.

1.15 Earnings per Share ('EPS')

Basic EPS per share are calculated by dividing
the net profit or loss for the year attributable to
equity shareholders (after deducting preference
dividend, if any, and attributable taxes) by the
weighted average number of equity shares
outstanding during the year.

For the purpose of calculating diluted earnings
per share, the net profit or loss for the year
attributable to equity shareholders and the
weighted average number of shares outstanding

during the year are adjusted for the effects of all
dilutive potential equity shares. Dilutive potential
equity shares are deemed converted as of the
beginning of the period, unless they have been
issued at a later date. In computing the dilutive
earnings per share, only potential equity shares
that are dilutive and that either reduces the
earnings per share or increases loss per share
are included.

1.16 Material accounting judgements,
estimates and assumptions

The preparation of standalone financial
statements in conformity with the Ind AS
requires the management to make judgements,
estimates and assumptions that affect the
reported amounts of revenues, expenses, assets
and liabilities and the accompanying disclosure
and the disclosure of contingent liabilities,
at the end of the reporting period. Estimates
and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which
the estimates are revised and future periods are
affected. Although these estimates are based on
the management's best knowledge of current
events and actions, uncertainty about these
assumptions and estimates could result in the
outcomes requiring a material adjustment to
the carrying amounts of assets or liabilities in
future periods.

In particular, information about material areas of
estimation, uncertainty and critical judgements in
applying accounting policies that have the most
significant effect on the amounts recognised in
the standalone financial statements is included
in the following notes:

1.16.1 Impairment Charges on loans and
advances

The measurement of impairment losses 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 are based on the
assumptions which are driven by a number
of factors resulting in future changes to the
impairment allowance.

A collective assessment of impairment takes into
account data from the loan portfolio (such as
credit quality, nature of assets underlying assets
financed, levels of arrears, credit utilization, loan
to collateral ratios etc.), and the concentration
of risk and economic data (including levels of
unemployment, country risk and performance
of different individual groups). These significant
assumptions have been applied consistently to
all period presented.

The impairment loss on loans and advances is
disclosed in more detail in Note No. 1.14.6 Overview
of the ECL principles.

1.16.2 Business Model Assessment

Classification and measurement of financial
assets depends on the results of the SPPI and the
business model 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. The
Company monitors financial assets measured
at amortised cost or fair value through other
comprehensive income that are de-recognised
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, if so, then it will be a prospective change
to the classification of those assets.

1.16.3 Provisions other than Loan Impairment

Provisions are held in respect of a range of future
obligations such as employee entitlements,
litigation provisions, etc. Some of the provisions
involve significant judgement about the likely
outcome of various events and estimated
future cash flows. The measurement of these
provisions involves the exercise of management
judgements about the ultimate outcomes of
the transactions.

1.16.4 Fair Value Measurement

When the fair values of financial assets and
financial liabilities recorded in the balance sheet
cannot be measured based on quoted prices in
active markets, their fair value is measured using
various valuation techniques. The inputs to these
models are taken from observable markets
where possible, but where this is not feasible, a
degree of judgement is required in establishing
fair values. Judgements include considerations
of inputs such as liquidity risk, credit risk and
volatility. Changes in assumptions about these
factors could affect the reported fair value of
financial instruments.

1.16.5 Defined Employee Benefit Assets and
Liabilities

The cost of the defined benefit gratuity plan/
long-term compensated absences and the
present value of the gratuity obligation/long-
term compensated absences are determined
using actuarial valuations. An actuarial valuation
involves making various assumptions that may
differ from actual developments in the future.
These include the determination of the discount
rate; future salary increases and mortality
rates. Due to the complexities involved in the
valuation and its long-term nature, a defined
benefit obligation is highly sensitive to changes
in these assumptions. All assumptions are
reviewed annually.

1.16.6 EIR Method

The Company's EIR methodology recognises
interest income/expense using a rate of return
that represents the best estimate of a constant
rate of return over the expected behavioural life
of loans given/taken and recognises 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 behaviour
and life-cycle of the instruments, as well
expected changes to India's base rate and other
fee income/expense that are integral parts of
the instrument.

1.16.7 Other Estimates

These include contingent liabilities, useful lives of
tangible assets etc.

1.17 Foreign Currency Transactions and
Translations

Transactions in foreign currencies are translated
to the functional currency of the Company
(i.e. INR) at exchange rates at the dates of the
transactions. Monetary assets and liabilities
denominated in foreign currencies at the
reporting date are translated to the functional
currency at the exchange rate at that date and
the related foreign currency gains or losses are
recognised in the Statement of Profit and Loss.

1.18 Recent pronouncements

The Ministry of Corporate Affairs vide notification
dated 9 September 2024 and 28 September
2024 notified the Companies (Indian Accounting
Standards) Second Amendment Rules, 2024 and
Companies (Indian Accounting Standards) Third
Amendment Rules, 2024, respectively, which
amended/notified certain accounting standards
(see below), and are effective for annual reporting
periods beginning on or after 1 April 2024:

♦ Insurance contracts - Ind AS 117; and

♦ Lease Liability in Sale and Leaseback -
Amendments to Ind AS 116

The Company has reviewed the new
pronouncements and based on its evaluation
has determined that it is not likely to have any
material impact in its financial statements.

(iii) Brief description of the valuation technique and inputs used to value the Investment
Property

Investment property includes and represents a flat located at "Mani Ratnam Apartment", Diamond Block,
4th floor, flat No.- 4DF, Kharibari Road, Duck Banglo More, Rajarhat Chowmatha, under Rajarhat-Bishnupur-1
No. Gram Panchayet, P.O.-Rajarhat , P.S.- Rajarhat, Dist.- North 24 Parganas, Pincode -700135, West Bengal
held for capital appreciation. The fair value of investment property is determined in accordance with
the advice of independent, professionally qualified registered valuer. The fair value was derived based
on Government Guideline price collected from government website and local enquiry considering the
location, position, finishing and age of the property.

(iv) Contractual obligations

The Company has no contractual obligations to purchase, construct or develop investment property.
However, the responsibility for its repairs, maintenance or enhancements is with the Company. Also, the
property is not pledged.

b. Rights, preferences and restrictions in respect of Equity Shares

The Company's authorised capital consists of one class of shares, referred to as Equity Shares, having
face value of g 10/- each. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividend in Indian rupees. The dividend, if any, proposed by the Board
of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining
assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion
to the number of equity shares held by the shareholders.

c. Aggregate number of Equity Shares allotted as fully paid-up without payment being
received in cash/by way of bonus shares (during 5 years preceding 31st March, 2025)

The Company has not issued any Equity shares during the 5 year preceding 31st March, 2025 without
payment being received in cash/by way of bonus shares.

f. Refer Note No. 35- "Capital Management" for the Company's objectives, policies and
processes for managing capital.

20.1 Preferential Allotment of Equity Shares and Convertible Warrants

1) During the year ended 31st March, 2025, pursuant to special resolution passed at Extraordinary General
Meeting held on 30th August, 2024, the Company has, on September 06, 2024, made allotment of
95,40,000 Equity shares of face value g 10 each on preferential basis for cash to promoters group and
certain identified non- promoters person/entity at a price of g 118 each (including a premium of g 108
each) aggregating to g 11,257.20 Lakhs.

Further the Company pursuant to aforesaid special resolution has, on 06th September, 2024, also
made allotment of 60,30,000 Convertible Warrants on Preferential Basis for cash to Promoter and
Non-Promoter at a price of g 118 per Warrant each convertible into, or exchangeable for, 1 (one) fully
paid-up equity share of the Company having face value of 10 each at a premium of g 108 each
aggregating to g 7,115.40 Lakhs. The Company has received 25% of the issue price per warrant i.e.
g 29.50 each as upfront payment aggregating to g 1,778.85 Lakhs. Each warrant, so allotted, is
convertible into an equal number of equity shares of face value g 10 each of the Company on receipt
of balance consideration.

Further the Company has received balance 75% of consideration amount for 25,00,000 warrants and
accordingly the said warrants are converted to equal number of Equity shares of face value of g 10
each on 09th November, 2024.

Further the Company has received balance 75% of consideration amount for 35,30,000 warrants and
accordingly, the said warrants are converted to equal number of equity shares of face value of g 10
each on 7th February, 2025.

2) During the year ended 31st March, 2025, pursuant to special resolution passed at Extraordinary General
Meeting held on 17th October, 2024, The Company has, on 28th October, 2024, made allotment of
12,69,000 Equity shares of face value g 10 each on preferential basis for cash to certain identified non¬
promoters person/entity at a price of g 306 each (including a premium of g 296 each) aggregating
to g 3,883.14 Lakhs.

Further the Company pursuant to aforesaid special resolution has, on 28th October, 2024, also
made allotment of 95,31,000 Convertible Warrants on Preferential Basis for cash to Promoter and
Non-Promoter at a price of g 306 per Warrant each convertible into, or exchangeable for, 1 (one)
fully paid-up equity share of the Company having face value of 10 each at a premium of g 296
each aggregating to g 29,164.86 Lakhs. The Company has received 25% of the issue price per warrant
i.e. g 76.50 each as upfront payment aggregating to g 7,291.22 Lakhs. Each warrant, so allotted, is
convertible into an equal number of equity shares of face value g 10 each of the Company, subject
to receipt of balance consideration of g 229.50 each (being 75% of the issue price per warrant)
aggregating to g 21,873.65 Lakhs from the allottees to exercise conversion option against each
such warrant.

Further the Company has received balance 75% of consideration amount for 43,88,800 warrants and
accordingly, the said warrants are converted to equal number of equity shares of face value of g 10
each on 07th February, 2025.

Further the Company has received balance 75% of consideration amount for 32,27,700 warrants and
accordingly, the said warrants are converted to equal number of equity shares of face value of g 10
each on 10th April, 2025.

Further the company has received balance 75% of consideration amount for 14,11,500 and 4,43,464
warrants and accordingly, the said warrants are converted to equal number of equity shares of face
value of g 10 each on 30th April, 2025 and 02nd May, 2025 respectively.

Further the Company has forfeited 25% of consideration, being the upfront payment aggregating
to g 45.55 Lakhs, for 59,536 warrants due to non-receipt of balance 75% consideration within the
warrants exercise period i.e. within 6 months from the date of allotment i.e. 28th October, 2024.

3) During the year ended 31st March, 2025, pursuant to special resolution passed at Extraordinary
General Meeting held on December 12, 2024, the Company has, on 26th December, 2024, made
allotment of 18,00,000 Convertible Warrants on Preferential Basis for cash to Non-Promoter at a price
of g 609 per Warrant each convertible into, or exchangeable for, 1 (one) fully paid-up equity share of
the Company having face value of 10 each at a premium of g 599 aggregating to g 10,962.00 Lakhs.
The Company has received 25% of the issue price per warrant i.e. g 152.25 each as upfront payment
aggregating to g 2,740.50 Lakhs. Each warrant, so allotted, is convertible into an equal number of
equity shares of face value g 10 each of the Company, subject to receipt of balance consideration
of g 456.75 each (being 75% of the issue price per warrant) aggregating to g 8,221.50 Lakhs from the
allottees to exercise conversion option against each such warrant.

32. Disclosure pursuant to Ind AS 19 - Employee Benefits

Defined Contribution Plans

The employees of the Company are entitled to receive benefits under the Provident Fund and Employees State
Insurance scheme in which both the employee and the Company contribute monthly at a stipulated rate. The
Company has recognised an amount of g7.70 Lakhs (Previous year: g 7.53 Lakhs) for the year ended 31st March,
2025 as an expense in the Statement of Profit and Loss.

Defined Benefit Plans

The Company provides for gratuity, a defined benefit plans (unfunded) covering all employees. Under the
Gratuity plan, every employee is entitled to gratuity as laid down under the Payment of Gratuity Act, 1972.
Gratuity is payable on death/retirement/termination and the benefit vests after 5 year of continuous service.
The present value of the obligation under such defined benefit plans is determined based on actuarial
valuation, carried out by an independent actuary at each Balance Sheet date, using the Projected Unit Credit
Method, which recognises each period of service as giving rise to an additional unit of employee benefit
entitlement and measures each unit separately to build up the final obligation.

Risk Management

The Defined Benefit Plans expose the Company to risk of actuarial deficit arising out of interest rate risk, salary
inflation risk and demographic risk.

(a) Interest Rate Risk: The defined benefit obligation calculated uses a discount rate based on government
bonds. If bond yields fall, the defined benefit obligation will tend to increase.

(b) Salary Inflation Risk: Higher than expected increase in salary will increase the defined benefit obligation.

Below are the methodologies and assumptions used to determine fair values for the above financial
instruments which are not recorded and measured at fair value in the Company's financial statements. These
fair values were calculated for disclosure purposes only. The below methodologies and assumptions relate
only to the instruments in the above tables.

Loans measured at Amortised Cost

Loans having short term maturity (less than twelve months) are valued at carrying amounts, which are net of
impairment and are considered reasonable approximation of their fair value. Loans having long term maturity
(more than twelve months) are valued using a discounted cash flow model based on observable future cash
flows based on term, discounted at the average lending rate of the Company.

Financial Assets (excluding loans) measured at Amortised Cost

Financial assets (excluding loans) generally have assets with short-term maturity (less than twelve months)
as on balance sheet date and therefore, the carrying amounts, which are net of impairment, are a reasonable
approximation of their fair value.

Such instrument majorly include: Cash and Cash Equivalents, other bank balances, Receivables and other
financial assets.

Borrowing measured at Amortised Cost

The borrowing generally have liabilities with short-term maturity (less than twelve months) as on balance
sheet date and therefore, the carrying amounts, are a reasonable approximation of their fair value.

Other Financial Liabilities measured at Amortised Cost

Other financial liabilities have liability with short-term maturity (less than twelve months) as on balance sheet
date and therefore, the carrying amounts are a reasonable approximation of their fair value.

Valuation technique and Key inputs

(i) Equity Instruments: The listed equity instruments are actively traded on stock exchanges with readily
available active prices on a regular basis. Such instruments are classified as Level 1. Unlisted equity
instruments are classified as Level 3.

(ii) Investment in Mutual funds and Alternative investment funds: Units held in the funds of Mutual funds
and AIF are measured based on their net asset value (NAV), taking into account redemption and/or other
restrictions. Such instruments are generally Level 2. NAV represents the price at which the issuer will issue
further units of funds and the price at which the issuers will redeem such units from the investors.

(iii) Derivatives financial instruments: Equity linked future and option contracts are measured on the basis
of active market price of underlying equity instruments. Such instruments are classified as Level 2.

Sensitivity of fair value measurements to changes in unobservable market data

Since there are no assets and liabilities measured at fair value where significant unobservable inputs are
used, hence the disclosure are not applicable.

37. Risk Management

Whilst risk is inherent in the Company's activities, it is managed through an integrated risk management
framework including ongoing identification, measurement and monitoring, subject to risk limits and other
controls. This process of risk management is critical to the Company's continuing profitability and each
individual within the Company is accountable for the risk exposures relating to his or her responsibilities. The
Company is mainly exposed to market risk, liquidity risk and credit risk. It is also subject to various operating
and business risks.

The Board of Directors are responsible for the overall risk management approach and for approving the risk
management strategies and principles.

The Board of Directors are responsible for the overall risk management approach and for approving the risk
management strategies and principles.

The Company has a robust Risk management framework to identify, evaluate business risk and opportunities.
This framework seeks to create transparency, minimize adverse impact on the business objectives and
enhance the competitive advantage. The framework has a different risk model which helps in identifying risk
trends, exposure and potential impact analysis at a company level.

a. Market Risk

The Company's Financial Instruments are exposed to market changes as are summarised below:

(i) Foreign Currency Risk

The Company does not have any exposure to foreign currency. Hence, any fluctuations on account of foreign
currency has not arisen.

(ii) Equity Price Risk

The Company is exposed to equity price risk arising from its investments in equity instruments. Equity price risk
is related to the change in market reference price of the investment in equity securities.

(iii) Interest Rate Risk

The Company is exposed to interest rate sensitivity on fixed and floating rate liabilities. The Company raises
funds from financial institutions. In view of the financial nature of assets and liabilities, changes in market
interest rates can affect its financial condition. Fluctuations in interest rates can occur due to both internal
and external factors. Internal factors include composition of assets and liabilities, maturity profile, pricing of
borrowings and fixed and floating nature of assets and liabilities. External factors include macroeconomic
developments, competitive pressures, regulatory developments, and global factors.

b. Liquidity Risk

Liquidity risk is the risk that the Company does not have sufficient financial resources to meet its obligations
as they fall due, or will have to do so at an excessive cost. This risk arises from mismatches in the timing of
cash flows which is inherent in all finance driven organisations and can be affected by a range of Company-
specific and market-wide events.

41. There is no proceedings been initiated or pending against the Company for holding any benami property
under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the Rules made thereunder during
the year ended 31st March, 2025 and 31st March,2024.

42 . The Company does not have any transaction with companies struck off U/s 248 of the Companies Act,

2013 or Section 560 of Companies Act, 1956.

43 . As at 31st March, 2025 and as at 31st March, 2024, there are no loans or advances in the nature of loans

granted to promoters, directors, KMPs and the related parties (as defined under the Companies Act, 2013),
either severally or jointly with any other person that are repayable on demand or without specifying any
terms or period of repayment.

44 .The Company has duly registered it's charges or satisfaction of charges with the Registrar of Companies

(ROC).

45 . There are no transactions not recorded in the books of accounts during the year ended 31st March, 2025

and 31st March, 2024 that has been surrendered or disclosed as income in the tax assessments under the
Income Tax Act,1961

There are no previously unrecorded income and related assets to be recorded in the books of account
during the year ended 31st March, 2025 and 31st March, 2024.

46 . The Company is not declared as wilful defaulter by any bank or financial Institution or other lender during

the year ended 31st March, 2025 and 31st March, 2024

47. Utilisation of Borrowed Funds and Share Premium

(a) During the year ended and as at 31st March, 2025 and 31st March, 2024, the Company has not
advanced or loaned or invested funds (either borrowed funds or share premium or any other sources
or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with
the understanding (whether recorded in writing or otherwise) that the Intermediary shall:

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever
by or on behalf of the Company (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(b) During the year ended and as at 31st March, 2025 and 31st March, 2024, the Company has not
received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the
understanding (whether recorded in writing or otherwise) that the Company shall:

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever
by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

48 .The Company has not traded or invested in any Crypto Currency or Virtual Currency during the year

during the year ended 31st March, 2025 and 31st March, 2024.

49 . Information as required in terms of Master Direction - Reserve Bank of India (Non Banking Financial

Company-Scale Based regulation) Directions, 2023 is furnished vide Annexure - I attached herewith.
These disclosures are prepared under Ind AS issued by MCA unless otherwise stated.

50 . The Company's operating segments is established in the manner consistent with the components of the

company that are evaluated regularly by the Chief Operating Decision Maker as defined in Ind AS 108,
"Operating Segments". The business of the Company falls within a single operating reportable segment
viz., 'Financial services' and hence, there are no separate reporting segments as per Ind AS 108, "Operating
Segments".

51. Disclosure as per Paragraph 10 of Master direction - Reserve Bank of India (Non Banking Financial company
-Scale Based Regulation) Direction, 2023 on 'Implementation of Indian Accounting Standards'.

A comparison between provisions required under Income Recognition, Asset Classification and
Provisioning ('IRACP') and impairment allowances made under Ind AS 109 is given below:

Therefore, the effect of above Scheme of Arrangements has not been accounted in the books of account
of the Company.

54 . On January 21, 2025, the Company has acquired 5,100 shares (i.e. 51% of the equity share capital) of g 10
each, aggregating to g 0.51 lakhs in Ashika Private Equity Advisors Private Limited (Formerly known as
Ashika Entercon Private Limited). Accordingly, Ashika Private Equity Advisors Private Limited (Formerly
known as Ashika Entercon Private Limited) became subsidiary of the company w.e.f 21st January, 2025.

52 . The Company has complied with the number of layers prescribed under clause (87) of section 2 of the
Companies Act, 2013 read with Companies (Restriction on number of Layers) Rules, 2017 for the financial
year ended 31st March, 2025. However, the Company does not have any subsidiary as at 31st March, 2024
and accordingly clause (87)of section 2 of the Act read with Companies (Restriction on number of Layers)
Rules, 2017 is not applicable.

53. During the year ended 31st March, 2025, a Scheme of Arrangement ('the Scheme') involving merger
of Yaduka Financial Services Limited with the Company was approved by the Board of Directors of the
respective companies at their meeting held on 31st July, 2024. The Scheme is subject to receipt of approval
from Hon'ble National Company Law Tribunal, Kolkata Bench and from Shareholders and Creditors of each
of the Companies, as may be required and other requisite Statutory/Regulatory Approvals, as applicable.
The appointed date for the proposed scheme is 1st October, 2024.

During the year ended 31st March, 2025, the Board of Directors at its meeting held on 12th November, 2024,
approved a Composite Scheme of Amalgamation ("the Composite Scheme") of: (i) Ashika Commodities
& Derivatives Private Limited ("ACDPL" or "Transferor Company") Wholly Owned Subsidiary of Ashika Global
Securities Private Limited ("AGSPL" or "Amalgamating Company" or "Transferee Company"), with and into
AGSPL and (ii) AGSPL with and into Ashika Credit Capital Limited ("ACCL" or "Amalgamated Company") and
their respective shareholders and creditors, under Sections 230 to 232 of the Companies Act, 2013 and
other applicable laws including the rules and regulations. The Scheme is subject to receipt of approval
from Hon'ble National Company Law Tribunal, Kolkata Bench and from Shareholders and Creditors of each
of the Companies, as may be required and other requisite Statutory/Regulatory Approvals, as applicable.
The appointed date for the proposed scheme is 1st April, 2025.

The Company has recognised its investment in subsidiary at cost.

55. Figures pertaining to previous year have been rearranged/regrouped, wherever necessary, to make them
comparable with those of current year.

Signature to Notes 1 to 55

As per our report of even date attached.

For DHC & Co. For and on behalf of the Board of Directors of Ashika Credit Capital Ltd.

Chartered Accountants

ICAI Firm Registration No. 103525W

Pradhan Priya Dass Pawan Jain Daulat Jain Chirag Jain

Partner Chairman Managing Director Executive Director & Chief Executive Officer

Membership No. 219962 (DIN: 00038076) (DIN: 00040088) (DIN: 07648747)

Place: Mumbai Place: Kolkata Place: Mumbai

Anju Mundhra Gaurav Jain

Company Secretary Chief Financial Officer

Place: Bengaluru (F6686) Place: Mumbai

Date: 10th May, 2025 Place: Mumbai