Accounting Policies of Arman Financial Services Ltd. Company

Mar 31, 2025

3. SUMMARY OF MATERIAL 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 amortised 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 amortised 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 recognises 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 amortised
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 cures and is no longer
credit impaired, the Company reverts to calculating
interest income on a gross basis.

3.2 Financial instrument - initial recognition

A. Date of recognition

Debt securities issued are initially recognised when they
are originated. All other financial assets and financial
liabilities are initially recognised when the Company
becomes a party to 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 para 3.8), 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) Amortised cost

ii) FVOCI

iii) FVTPL

3.3 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. 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).

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 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.

SPPI test

As a second step of its classification process, the
Company assesses the contractual terms of financial
assets 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 amortisation 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 minimum 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 amortised cost ("AC")

A financial asset is measured at amortised cost if it
is held with in 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")

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

iv) Investment in subsidiaries

The Company has accounted for its investments in
subsidiaries at cost.

B. Financial liability

i) Initial recognition and measurement

All financial liabilities are 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 measurement

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

3.4 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.

3.5 Derecognition of financial assets and liabilities
A. Derecognition of financial assets due to substantial

modification of terms and conditions

The Company derecognises 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 recognised
as a derecognition gain or loss, to the extent that
an impairment loss has not already been recorded.
Where the substantial modification is because of
financial difficulties of the borrower and the old loan was

classified as credit-impaired, the new loan will initially be
identified as originated credit-impaired financial asset.
On satisfactory performance of the new loan, the new
loan is transferred to stage I or stage II of ECL.

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

i) Financial assets

financial asset (or, where applicable, a part of a
financial asset or part of a group of similar financial
assets) is derecognised 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 recognised in the statement of profit and loss.
Accordingly, gain on sale or derecognition of
assigned portfolio are recorded upfront in the
statement of profit and loss as per Ind AS 109.
Also, the Company recognises 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 recognise the
portion retained by it as MRR.

ii) Financial liability

A financial liability is derecognised 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 recognised in
the statement of profit and loss.

3.6 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 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 categorises its loans
into Stage 1, Stage 2 and Stage 3, as described below:

Stage 1: When loans are first recognised, the Company
recognises an allowance based on 12 months ECL.
Stage 1 loans includes 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
includes facilities where the credit risk has improved and
the 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 ECL.

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 ECL 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
derecognised 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 realisation 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 analysed.

The mechanics of the ECL method are summarised
below:

Stage 1: The 12 months ECL 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 recognises 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 amortised cost
is recognised in OCI as an accumulated impairment
amount, with a corresponding charge to profit or loss.

The accumulated loss recognised 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 macro parameters 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

3.7 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.

3.8 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 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 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
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.

3.9 (I) 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 recognises 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: Recognise revenue when (or as) the Company
satisfies a performance obligation

A. Dividend income

Dividend income (including from FVOCI investments)
is recognised 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. Income from assignment transactions

Income from assignment transactions i.e. present value
of excess interest spread is recognised when the
related loan assets are de-recognised. Interest income
is also recognised on carrying value of assets over the
remaining period of such assets.

C. Other interest income

Other interest income is recognised on a time
proportionate basis.

D. Other Charges in Respect of Loans

Income in case of late payment charges are recognized
when there is no significant uncertainty of regarding its
recovery.

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
capitalised 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 it 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 straight line method to write down the cost
of property and equipment to their residual values
over their estimated useful lives which are in line with
as specified under schedule II of the Act. Land is not
depreciated. The estimated useful lives are, as follows:

i) Buildings - 60 years

ii) Vehicles - 8 years

iii) Office equipment - 5 years

iv) Furniture and fixtures - 10 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 derecognised
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 recognised in other income /
expense in the statement of profit and loss in the year
the asset is derecognised. Change the useful life of Office
Equipment to 5 years to make it in line with Schedule II

3.12 Intangible assets

The Company''s intangible assets include the value of
software. An intangible asset is recognised 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
amortisation and any accumulated impairment losses.

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

3.13 Impairment of non-financial assets - property,
plant and equipment 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 recognised 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 recognised for an
asset in earlier accounting periods no longer exists or
may have decreased, such reversal of impairment loss is
recognised in the statement of profit and loss.

3.14 Corporate guarantees

Corporate guarantees are initially recognised 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 recognised less cumulative amortisation.

Any increase in the liability relating to financial
guarantees is recorded in the statement of profit and
loss. The notional commission is recognised in the
statement of profit and loss under the head other
income as Income on Financial Guarantee given to banks
on behalf of Subsidiary on a straight line basis over the
life of the guarantee.

3.15 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
@15 days 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 recognised 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 recognised in
the period in which the employee renders the related
service. A liability is recognised 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, when
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, 2024

1. CORPORATE INFORMATION

Arman Financial Services Limited (the "Company") is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. It is registered as a non-deposit taking non-banking finance Company ("NBFC") with Reserve Bank of India ("RBI")and according to RBI Notification DoR.FIN.REC.No. 45/03.10.119/2023-24 dated October 19 2023, company is classified as middle layer NBFC ("NBFC-ML"). The Company is engaged in the business of providing Small and Medium Enterprise loans ("SME"), TwoWheeler loans ("TW") and Loan again property ("LAP") to create the underlying assets of SME, TW and mortgage. Its shares are listed on two recognised stock exchanges in India

1. e. BSE Limited ("BSE") and the National Stock Exchange of India Limited ("NSE").

The Company''s registered office is at 502-503, Sakar III, Opp. Old High Court, Off. Ashram Road, Ahmedabad - 380 014, Gujarat. 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 Basis of measurement

The standalone financial statements have been prepared on historical cost basis except for following assets and liabilities which have been measured at fair value amount:

i) Loans at fair value through other comprehensive income ("FVOCI")

ii) Defined benefit plans - plan assets

iii) Investments in liquid marketable debt securities and units of mutual fund

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Functional and presentation currency

The standalone financial statements are presented in Indian Rupees (H) which is the currency of the primary economic environment in which the Company operates (the "functional currency"). The values are rounded to the nearest lakhs, except when otherwise indicated.

2.3 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 recognised 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 amortised cost or fair value through other comprehensive income that are derecognised 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 Company''s EIR methodology, as explained in para 3.1(A), 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 lifecycle of the instruments, as well as expected changes to interest rates and other fee income/ expense that are integral parts of the instrument.

ii) Effective interest rate ("EIR") method

The Company''s EIR methodology, as explained in Note 3.1(A), 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 lifecycle 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 interdependencies. 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 macroeconomic 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 macroeconomic 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 in the ordinary course of the Company''s business.

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 amount 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 3.16.

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.

2.4 Presentation of the standalone financial statements

The Company presents its balance sheet in order of liquidity. An analysis regarding recovery or settlement within 12 months after the reporting date and more than 12 months after the reporting date is presented in Note 38.

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 recognised 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

3. SUMMARY OF MATERIAL 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 amortised 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 amortised 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 recognises 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 amortised 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 cures and is no longer credit impaired, the Company reverts to calculating interest income on a gross basis.

3.2 Financial instrument - initial recognition

A. Date of recognition

Debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Company becomes a party to 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 para 3.8), 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) Amortised cost

ii) FVOCI

iii) FVTPL

3.3 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-byinstrument 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. 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).

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 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.

SPPI test

As a second step of its classification process, the Company assesses the contractual terms of financial assets 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 amortisation 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 minimum 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.

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

A financial asset is measured at amortised cost if it is held with in 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")

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

iv) Investments in subsidiaries

The Company has accounted for its investments in subsidiaries at cost.

B. Financial liability

i) Initial recognition and measurement

All financial liabilities are 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 measurement

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

3.4 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.

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

The Company derecognises 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 recognised as a derecognition gain or loss, to the extent that an impairment loss has not already been recorded. Where the substantial modification is because of financial difficulties of the borrower and the old loan was classified as credit-impaired, the new loan will initially be identified as originated credit-impaired financial asset. On satisfactory performance of the new loan, the new loan is transferred to stage I or stage II of ECL.

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 derecognised 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 recognised in the statement of profit and loss. Accordingly, gain on sale or derecognition of assigned portfolio are recorded upfront in the statement of profit and loss as per Ind AS 109. Also, the Company recognises 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 recognise the portion retained by it as MRR.

ii) Financial liability

A financial liability is derecognised 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 recognised in the statement of profit and loss.

3.6 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 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 categorises its loans into Stage 1, Stage 2 and Stage 3, as described below:

Stage 1: When loans are first recognised, the Company recognises an allowance based on 12 months ECL. Stage 1 loans includes 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 includes facilities where the credit risk has improved and the 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 ECL.

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 ECL 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 derecognised 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 realisation 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 analysed.

The mechanics of the ECL method are summarised below:

Stage 1: The 12 months ECL 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 recognises 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 amortised cost is recognised in OCI as an accumulated impairment amount, with a corresponding charge to profit or loss. The accumulated loss recognised 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 macro parameters 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

3.7 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.

3.8 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 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 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 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.

3.9 (I) 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 recognises 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: Recognise revenue when (or as) the Company satisfies a performance obligation.

A. Dividend income

Dividend income (including from FVOCI investments) is recognised 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. Income from assignment transactions

Income from assignment transactions i.e. present value of excess interest spread is recognised when the related loan assets are de-recognised. Interest income is also recognised on carrying value of assets over the remaining period of such assets.

C. Other interest income

Other interest income is recognised on a time proportionate basis.

D. Other Charges in Respect of Loans

Income in case of late payment charges are recognized when there is no significant uncertainty of regarding its recovery.

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 capitalised 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 it 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 straight line method to write down the cost of property and equipment to their residual values over their estimated useful lives which are in line with as specified under schedule II of the Act. Land is not depreciated. The estimated useful lives are, as follows:

i) Buildings - 60 years

ii) Vehicles - 8 years

iii) Office equipment - 3 to 10 years

iv) Furniture and fixtures - 10 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 derecognised 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 recognised in other income / expense in the statement of profit and loss in the year the asset is derecognised.

3.12 Intangible assets

The Company''s intangible assets include the value of software. An intangible asset is recognised 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 amortisation and any accumulated impairment losses.

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

3.131 mpairment of non-financial assets - property, plant and equipment 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 recognised 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 recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the statement of profit and loss.

3.14 Corporate guarantees

Corporate guarantees are initially recognised in the standalone financial statements (within "other nonfinancial 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 recognised less cumulative amortisation.

Any increase in the liability relating to financial guarantees is recorded in the statement of profit and loss. The notional commission is recognised 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.

3.15 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 @15 days 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 postemployment 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 recognised in OCI.

Short-term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as shortterm employee benefits. Benefits such as salaries, wages etc. and the expected cost of ex-gratia are recognised in the period in which the employee renders the related service. A liability is recognised 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, when 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.

3.16 Provisions, contingent liabilities and contingent assets

A. Provisions

Provisions are recognised 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 recognised nor disclosed except when realisation of income is virtually certain, related asset is disclosed.

3.17 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.

B. Deferred tax

Deferred tax is recognised 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 realised, 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 recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity).

Deferred tax items are recognised 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 and the Company has a legally enforceable right for such set off.

C. Goods and services tax paid on acquisition of assets or on incurring expenses

Expenses and assets are recognised 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 recognised 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.

3.18 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 equity 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 recognised 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.

3.19 Dividends on ordinary shares

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

Non-cash distributions are measured at the fair value of the assets to be distributed with fair value remeasurement recognised 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 recognised in the statement of profit and loss.

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Mar 31, 2023

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 amortised 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 amortised 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 recognises
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 amortised 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 cures
and is no longer credit impaired, the Company reverts
to calculating interest income on a gross basis.

3.2 Financial instrument - initial recognition

A. Date of recognition

Debt securities issued are initially recognised when
they are originated. All other financial assets and
financial liabilities are initially recognised when
the Company becomes a party to 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 3.8),
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) Amortised cost

ii) FVOCI

iii) FVTPL

3.3 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. 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).

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 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.

SPPI test

As a second step of its classification process, the
Company assesses the contractual terms of financial
assets 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
amortisation 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 amortised cost
("AC")

A financial asset is measured at amortised
cost if it is held with in 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")

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

iv) Investments in Mutual Funds

All investments in Mutual Funds are measured
at fair value, with value changes recognised in
Statement of Profit and Loss ("FVTPL'').

B. Financial liability

i) Initial recognition and measurement

All financial liability are 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 measurement

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

3.4 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 March 31, 2023 and
March 31, 2022.

3.5 Derecognition of financial assets and liabilities

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

The Company derecognises 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 recognised as a derecognition gain or loss,
to the extent that an impairment loss has not already
been recorded. Where the substantial modification is
because of financial difficulties of the borrower and
the old loan was classified as credit-impaired, the
new loan will initially be identified as originated credit-
impaired financial asset. On satisfactory performance
of the new loan, the new loan is transferred to stage I
or stage II of ECL.

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 derecognised 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 recognised
in the statement of profit and loss. Accordingly,
gain on sale or derecognition of assigned
portfolio are recorded upfront in the statement
of profit and loss as per Ind AS 109. Also, the
Company recognises 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
recognise the portion retained by it as MRR.

ii) Financial liability

A financial liability is derecognised 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 recognised in the
statement of profit and loss.

3.6 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 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 categorises
its loans into Stage 1, Stage 2 and Stage 3, as
described below:

Stage 1: When loans are first recognised, the
Company recognises an allowance based on
12 months ECL. Stage 1 loans includes 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 includes facilities
where the credit risk has improved and the 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 ECL.

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 ECL 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
derecognised 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
realisation 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 analysed.

The mechanics of the ECL method are
summarised below:

Stage 1: The 12 months ECL 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 recognises 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 amortised
cost is recognised in OCI as an accumulated
impairment amount, with a corresponding charge to
profit or loss. The accumulated loss recognised 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 macro parameters 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

3.7 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.

3.8 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
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
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
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.

3.9 (I) 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 recognises 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: Recognise revenue when (or as) the Company
satisfies a performance obligation

A. Dividend income

Dividend income (including from FVOCI investments)
is recognised 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. Income from assignment transactions

Income from assignment transactions i.e. present
value of excess interest spread is recognised when
the related loan assets are de-recognised. Interest
income is also recognised on carrying value of assets
over the remaining period of such assets.

C. Other interest income

Other interest income is recognised on a time
proportionate basis.

D. Other Charges in Respect of Loans

Income in case of late payment charges are
recognized when there is no significant uncertainty
of regarding its recovery.

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 capitalised 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 it
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 straight-line

method to write down the cost of property and
equipment to their residual values over their estimated
useful lives which are in line with as specified under
schedule II of the Act. Land is not depreciated. The
estimated useful lives are, as follows:

i) Buildings - 60 years

ii) Vehicles - 8 years

iii) Office equipment - 3 to 10 years

iv) Furniture and fixtures - 10 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 derecognised
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 recognised in
other income / expense in the statement of profit and
loss in the year the asset is derecognised.

3.12 Intangible assets

The Company''s intangible assets include the value of
software. An intangible asset is recognised 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 amortisation and any accumulated
impairment losses.

Amortisation 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 amortisation in the statement of
profit and loss.

3.13 Impairment of non-financial assets - property,
plant and equipments and intangible assets

The carrying values of assets / cash generating
units at the 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 recognised
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 recognised for an asset in
earlier accounting periods no longer exists or may
have decreased, such reversal of impairment loss is
recognised in the statement of profit and loss.

3.14 Corporate guarantees

Corporate guarantees are initially recognised 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 recognised less cumulative
amortisation.

Any increase in the liability relating to financial
guarantees is recorded in the statement of profit and
loss. The notional commission is recognised 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.

3.15 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 @15 days 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 recognised 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 recognised in the period in which the
employee renders the related service. A liability is
recognised 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, when 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.

---

Mar 31, 2018

Significant Accounting Policies :

a. Basis of preparation

The financial statements have been prepared under the historical cost convention and on accrual basis and in accordance with Generally Accepted Accounting Principles in India (Indian GAAP) except interest on loans which have been classified as non-performing assets and are accounted for on realization basis. The said financial statements comply in all material respects with Accounting Standards notified under section 133 of the Companies Act, 2013 (“the Act”), read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of RBI as applicable to a Non Banking Financial services (NBFC).

The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

All assets and liabilities have been classified as current or non - current as per the Companies normal operating cycle as 12 months for the above purpose.

b. Use of estimates

In preparing the Company’s financial statements in conformity with the accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.

c. Revenue Recognition

Revenue is recognized to the extent that it is probable that economics benefits will flow to the company and the revenue can be measured reliably.

i. Interest from Loans

Interest income on the loans granted is recognised on accrual basis and when no significant uncertainly as to collectability exists. Income on non performing assets is recognized when realized as per the guidelines for prudential norms prescribed by the Reserve Bank of India.

ii. Income from Assignment

ln case of assignment of receivables “at premium”, the assets are de-recognised since all the rights, title and future receivables are assigned to the purchaser. The interest spread arising on assignment is accounted over the residual tenor of the underlying assets.

iii. Other Interest Income

Other Interest Income is recognized on accrual basis.

iv. Processing Fees

Processing fees on processing of loans are recognized upfront as income.

v. Late Payment Charges

Income in case of late payment charges are recognized as and when realized.

vi. Insurance Commission

Insurance Commission is recognized when there is no uncertainty regarding its receipt.

vii. Income from Investments

Dividend from investments is accounted for as income when the right to receive dividend is established.

d. Property, Plant & Equipment

All the Property, Plant & Equipments are stated at cost less depreciation. The cost of assets includes other direct/indirect and incidental cost incurred to bring them into their working condition.

When assets are disposed or retired, their cost is removed from the financial statements. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between sales proceeds and the carrying amount of the asset and is recognised in statement of profit and loss for the relevant financial year.

Depreciation

The depreciation on assets for own use is provided on “Straight Line Method” as per useful life specified in schedule II to the Companies Act, 2013 on Pro-rata Basis.

When assets are disposed or retired, their accumulated depreciation is removed from the financial statements. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between sales proceeds and the carrying amount of the asset and is recognised in statement of profit and loss for the relevant financial year.

e. Investments

Long term investments are stated at cost. Provision is made for any diminution in the value of the long term investments, if such decline is other than temporary. The Company does not have any current investments.

f. Retirement Benefits

a. The Employee and Company make monthly fixed contribution to government of India employee’s provident fund equal to a specified percentage of the covered employee’s salary. Provision for the same is made in the year in which services are rendered by the employee.

b. The liability for gratuity to employees, which is a defined benefit plan, as at Balance Sheet date determined on the basis of actuarial valuation based on projected unit credit method is funded to a gratuity fund administered by the trustees and managed by Life Insurance Corporation of India and the contribution thereof paid/payable is absorbed in the accounts.

c. The Company does not allow carry forward of unavailed leave and hence unavailed leaves are encashed in the current year itself.

d. Short term benefits are recognised as an expense at the undiscounted amounts in the statement of profit and loss of the year in which the related service is rendered.

g. Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost such assets, whenever applicable, till such assets are ready for their intended use. A qualifying asset is the one which necessarily takes substantial period to get ready for intended use. All other borrowing costs are charged to revenue accounts. Capitalization of borrowing cost is suspended when active development is interrupted.

h. Segment Information

In the opinion of the management, the Company is mainly engaged in the business of providing finance. All other activities of the Company revolve around the main business, and as such, there are no separate reportable segments as per Accounting Standard 17 -’Segment Reporting” notified under section 133 of the Companies Act, 2013 (“the Act”) read with Rule 7 of the Companies (Accounts) Rules, 2014.

i. Lease

The Company’s significant leasing arrangements are in respect of operating lease for premises that are cancelable in nature. The lease rentals paid under such agreements are charged to the statement of profit and loss.

j. Provision for Current and Deferred Tax

Provision for current tax is made after taking into consideration benefits admissible under the provision of the Income Tax Act, 1961.

Deferred tax resulting from “timing difference” between taxable and accounting income is accounted for using the tax rates and laws that are enacted or subsequently enacted as on the balance sheet date. Deferred tax asset is recognised and carried forward only to the extent that there is virtual certainty that the assets will be realized in future.

k. Intangible Assets

Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization. All costs, including financing costs till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets are capitalized.

Intangible assets are amortized on a straight - line basis over their estimated useful lives. A rebuttable presumption that the useful life of an intangible asset will not exceed than years from the date when the asset is available for use is considered by the management. The amortization period and the amortization method are reviewed at least at each reporting date. If the expected useful life of the asset is significantly different from previous estimates, the amortization period is changed accordingly.

The gain or loss arising on the disposal or retirement of an intangible asset is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognised as income or expenses in the Statement of Profit and Loss in the year of disposal. Intangible assets are amortized on a straight - line basis over 5 years.

l. Earnings per Share

Basic earnings per share is calculated by dividing net profit after tax for the year attributable to equity shareholders of the Company by the weighted average number of equity shares issued during the year. Diluted earnings per share is calculated by dividing net profit attributable to equity shareholders (after adjustment for diluted earnings) by average number of weighted equity shares outstanding during the year.

m. Impairment

The management periodically assesses, using external and internal sources whether there is an indication that an asset may be impaired. If an asset is impaired, the Company recognizes an impairment loss as the excess of the carrying amount of the asset over the recoverable amount.

n. Provision, Contingent Liabilities and Contingent Assets

A provision is recognized when there is a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.

A disclosure for a contingent liability is made when there is a possible or present obligation that may, but probably will not require an outflow of resources. Contingent assets are neither recognized nor disclosed in the financial statements.

o. Transfer and recourse obligation under Debt Securitization

The Company assigns assets under securitization transactions. The assigned loans / assets are derecognized and gains / losses are recorded on assignment of loan contracts. Recourse obligation with respect to Debt Securitizations with other financiers is provided in books as per past track records of delinquency / servicing of the loans of the Company.

p. Classification and Provision Policy for Loan Portfolio

(i) Classification of Loan Portfolio

Provision for loans and advances are made as per directions issued by Reserve Bank of India for Non Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 as amended from time to time.

(ii) Provisioning policy for loan portfolio

Loans are provided for as per provisions required by Non Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 and as per RBI circular RBI/201516/22 DNBR (PD) CC.No.045/03.10.119/2015-16 dated July 01, 2015 (updated as on April 11,2016). Loans are classified and the percentage of provision made on such loans is as under.

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Mar 31, 2016

SIGNIFICANT ACCOUNTING POLICIES:

a. Basis of preparation

The financial statements have been prepared under the historical cost convention and on accrual basis and In accordance with Generally Accepted Accounting Principles in India (Indian GAAP) except interest on loans which have been classified as non-performing assets and are accounted for on realization basis. The said financial statements comply in all material respects with Accounting Standards notified under section 133 of the Companies Act,2013 ("the Act”),read with Rule 7 of the Companies(Accounts) Rules, 2014 and the relevant provisions of RBI as applicable to a Non Banking Financial services(NBFC).

The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

All Assets and liabilities have been classified as current or non - current as per the Companies normal operating cycle as 12 months for the above purpose.

b. Use of estimates

In preparing the Company''s financial statements in conformity with the accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and 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 the current and future periods.

c. Revenue Recognition:

Revenue is recognized to the extent that it is probable that economics benefits will flow to the company and the revenue can be measured reliably.

i. Interest from Loans:

Interest income on the loans granted is recognized on accrual basis and when no significant uncertainly as to collectability exists. Income on non performing assets is recognized when realized as per the guidelines for prudential norms prescribed by the Reserve Bank of India.

ii. income from Assignment

in case of assignment of receivables "at premium”, the assets are de-recognized since all the rights, title and future receivables are assigned to the purchaser. The interest spread arising on assignment is accounted over the residual tenor of the underlying assets.

iii. Other Interest Income

Other Interest Income is recognized on accrual basis.

iv. Processing Fees

Processing fees on processing of loans are recognized upfront as income.

v. Late Payment Charges

Income in case of late payment charges are recognized as and when realized.

vi. Insurance Commission

Insurance Commission is recognized when there is no uncertainty regarding its receipt.

vii. Income from Investments

Dividend from investments is accounted for as income when the right to receive dividend is established.

d. Fixed Assets

All the Fixed Assets are stated at cost less depreciation. The cost of assets includes other direct/indirect and incidental cost incurred to bring them into their working condition.

When assets are disposed or retired, their cost is removed from the financial statements. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between sales proceeds and the carrying amount of the asset and is recognized in Statement of Profit and Loss for the relevant financial year.

e. Depreciation

The depreciation on assets for own use is provided on "Straight Line Method “as per useful life Specified in Schedule II to the Companies Act, 2013 on Pro-rata Basis. . Intangible assets are amortized on a straight - line basis over 5 years.

When assets are disposed or retired, their accumulated depreciation is removed from the financial statements. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between sales proceeds and the carrying amount of the asset and is recognized in Statement of Profit and Loss for the relevant financial year.

f. Investments

Long Term Investments are stated at cost. Provision is made for any diminution in the value of the Long Term Investments, if such decline is other than temporary. The Company does not have any Current Investments.

g. Retirement Benefits

a. The Employee and Company make monthly fixed Contribution to Government of India Employee''s Provident Fund equal to a specified percentage of the Covered employee''s salary. Provision for the same is made in the year in which services are rendered by the employee.

b. The Liability for Gratuity to employees, which is a defined benefit plan, as at Balance Sheet date determined on the basis of actuarial Valuation based on Projected Unit Credit method is funded to a Gratuity fund administered by the trustees and managed by Life Insurance Corporation of India and the contribution thereof paid/payable is absorbed in the accounts.

c. The Company does not allow carry forward of unveiled leave and hence unveiled leaves are encashed in the current year itself.

d. Short Term benefits are recognized as an expense at the undiscounted amounts in the Statement of Profit and Loss of the year in which the related service is rendered.

h. Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost such assets, whenever applicable, till such assets are ready for their intended use. A qualifying asset is the one which necessarily takes substantial period to get ready for intended use. All other borrowing costs are charged to revenue accounts. Capitalization of borrowing cost is suspended when active development is interrupted.

i. Segment Information:

In the opinion of the management, the Company is mainly engaged in the business of providing Finance. All other activities of the Company revolve around the main business, and as such, there are no separate reportable segments as per Accounting Standard 17 -''Segment Reporting” notified under section 133 of the company’s Act,2013 ("the Act”),read with Rule 7 of the Companies (Accounts) Rules, 2014.

j. Lease:

The company''s significant leasing arrangements are in respect of operating lease for premises that are cancelable in nature. The lease rentals paid under such agreements are charged to the Statement of Profit and Loss.

k. Provision for Current and Deferred Tax

Provision for current tax is made after taking into consideration benefits admissible under the provision of the Income Tax Act, 1961.

Deferred Tax resulting from "timing difference” between taxable and accounting income is accounted for using the tax rates and laws that are enacted or subsequently enacted as on the balance sheet date. Deferred tax asset is recognized and carried forward only to the extent that there is virtual certainty that the assets will be realized in future.

l. Intangible Assets

Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization. All costs, including financing costs till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets are capitalized.

Intangible assets are amortized on a straight - line basis over their estimated useful lives. A rebuttable presumption that the useful life of an intangible asset will not exceed than years from the date when the asset is available for use is considered by the management. The amortization period and the amortization method are reviewed at least at each reporting date. If the expected useful life of the asset is significantly different from previous estimates, the amortization period is changed accordingly.

The gain or loss arising on the disposal or retirement of an intangible asset is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognized as income or expenses in the Statement of Profit and Loss in the year or disposal.

m. Earnings per Share

Basic earnings per share is calculated by dividing net profit after tax for the year attributable to Equity Shareholders of the company by the weighted average number of Equity Shares issued during the year. Diluted earnings per share is calculated by dividing net profit attributable to equity Shareholders (after adjustment for diluted earnings) by average number of weighted equity shares outstanding during the year.

n. Impairment

The management periodically assesses, using external and internal sources whether there is an indication that an asset may be impaired. If an asset is impaired, the company recognizes an impairment loss as the excess of the carrying amount of the asset over the recoverable amount.

o. Provision, Contingent Liabilities and Contingent Assets :

A provision is recognized when there is a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.

A disclosure for a contingent liability is made when there is a possible or present obligation that may, but probably will not require an outflow of resources. Contingent Assets are neither recognized nor disclosed in the financial statements.

p. Transfer and recourse obligation under Debt Securitization.

The company assigns assets under securitization transactions. The assigned loans / assets are derecognized and gains / losses are recorded on assignment of loan contracts. Recourse obligation with respect to Debt Securitizations with other financiers is provided in books as per past track records of delinquency / servicing of the loans of the Company.

q. Classification and Provision Policy for Loan Portfolio.

(i) Classification of Loan Portfolio

Provision for loans and advances are made as per directions issued by Reserve Bank of India for Non Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 as amended from time to time.

(ii) Provisioning policy for loan portfolio

Loans are provided for as per provisions required by Non Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 and as per RBI circular RBI/2015-16/22 DNBR (PD) CC.No.045/03.10.119/2015-16 dated July 01, 2015 (updated as on April 11,2016). Loans are classified and the percentage of provision made on such loans is as under.

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Mar 31, 2015

A. Basis of preparation

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies(Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act"), as applicable. The financial statements have been prepared as a going concern on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

b. Use of estimates

In preparing the Company's financial statements in conformity with the accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and 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 the current and future periods.

c. Revenue Recognition

i. Interest from Loans

Interest income on the loans granted is recognized on accrual basis and when no significant uncertainly as to collectability exists. Income on non performing assets is recognized when realized as per the guidelines for prudential norms prescribed by the Reserve Bank of India.

ii. income from Assignment

in case of assignment of receivables "at premium", the assets are de-recognized since all the rights, title and future receivables are assigned to the purchaser. The interest spread arising on assignment is accounted over the residual tenor of the underlying assets.

iii. Other Interest Income

Other Interest Income is recognized on accrual basis.

iv. Processing Fees

Processing fees on processing of loans are recognized upfront as income.

v. Late Payment Charges

Income in case of late payment charges are recognized as and when realized.

vi. Insurance Commission

Insurance Commission is recognized when there is no uncertainty regarding its receipt.

vii. Income from Investments

Dividend from investments is accounted for as income when the right to receive dividend is established.

d. Fixed Assets

All the Fixed Assets are stated at cost less depreciation, after taking into consideration provision for NPA. The cost of assets includes other direct/indirect and incidental cost incurred to bring them into their working condition.

When assets are disposed or retired, their cost is removed from the financial statements. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between sales proceeds and the carrying amount of the asset and is recognized in Statement of Profit and Loss for the relevant financial year.

e. Depreciation

The depreciation on assets for own use is provided on "Straight Line Method" on the basis of useful life of assets as specified in Schedule II to the Companies Act, 2013 on Pro-rata Basis.

-When assets are disposed or retired, their accumulated depreciation is removed from the financial statements. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between sales proceeds and the carrying amount of the asset and is recognized in Statement of Profit and Loss for the relevant financial year.

f. Investments

Long Term Investments are stated at cost. Provision is made for any diminution in the value of the Long Term Investments, if such decline is other than temporary. The Company does not have any Current Investments.

g. Retirement Benefits'

a. The Employee and Company make monthly fixed Contribution to Government of India Employee's Provident Fund equal to a specified percentage of the Covered employees salary. Provision for the same is made in the year in which services are rendered by the employee.

b. The Liability for Gratuity to employees, which is a defend benefit plan, as at Balance Sheet date determined on the basis of actuarial Valuation based on Projected Unit Credit method is funded to a Gratuity fund administered by the trustees and managed by Life Insurance Corporation of India and the contribution thereof paid/payable is absorbed in the accounts.

c. The Company does not allow carry forward of unveiled leave and hence unveiled leaves are encased in the current year itself.

d. Short Term benefits are recognized as an expense at the undiscounted amounts in the Statement of Profit and Loss of the year in which the related service is rendered.

h. Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost such assets, whenever applicable, till such assets are ready for their intended use. A qualifying asset is the one which necessarily takes substantial period to get ready for intended use. All other borrowing costs are charged to revenue accounts. Capitalization of borrowing cost is suspended when active development is interrupted.

i. Segment Information

In the opinion of the management, the Company is mainly engaged in the business of providing finance. All other activities of the Company revolve around the main business, and as such, there are no separate reportable segments as per Accounting Standard 17 -,Segment Reporting" prescribed by Companies (Accounting Standards) Rules, 2006.

j. Lease

The Company's significant leasing arrangements are in respect of operating lease for premises that are cancellable in nature. The lease rentals paid under such agreements are charged to the Statement of Profit and Loss.

k. Provision for Current and Deferred Tax

Provision for current tax is made after taking into consideration benefits admissible under the provision of the Income Tax Act, 1961.

Deferred Tax resulting from "timing difference" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or subsequently enacted as on the balance sheet date. Deferred tax asset is recognized and carried forward only to the extent that there is virtual certainty that the assets will be realized in future.

l. Intangible Assets

Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization. All costs, including financing costs till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets are capitalized.

m. Earnings per Share

Basic earnings per share is calculated by dividing net Profit after tax for the year attributable to Equity Shareholders of the company by the weighted average number of Equity Shares issued during the year. Diluted earnings per share is calculated by dividing net Profit attributable to equity Shareholders (after adjustment for diluted earnings) by average number of weighted equity shares outstanding during the year.

n. Impairment

-The management periodically assesses, using external and internal sources whether there is an indication that an asset may be impaired. If an asset is impaired, the company recognizes an impairment loss as the excess of the carrying amount of the asset over the recoverable amount.

o. Shares Issue Expenses

Expenses incurred on issue of shares are charged to Statement of Profit and Loss.

p. Provision, Contingent Liabilities and Contingent Assets

A provision is recognized when there is a present obligation as a result of past event and it is probable that an outfow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.

A disclosure for a contingent liability is made when there is a possible or present obligation that may, but probably will not require an outfow of resources. Contingent Assets are neither recognized nor disclosed in the financial statements.

q. Transfer and recourse obligation under Assignment

The company assigns assets under securitization transactions. The assigned loans / assets are derecognized and gains / losses are recorded on assignment of loan contracts. Recourse obligation with respect to Debt Securitizations with other financiers is provided in books as per past track records of delinquency / servicing of the loans of the Company.

r. Classification and Provision Policy for Loan Portfolio

(i) Classification of Loan Portfolio

Provision for loans and advances are made as per directions issued by Reserve Bank of India for Non Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 as amended from time to time.

(ii) Provisioning policy for loan portfolio

Loans are provided for as per provisions required by Non Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 and as per RBI circular dated December 02, 2011, as amended from time to time. Loans are classified and the percentage of provision made on such loans is as under.

---

Mar 31, 2014

A) Basis of preparation

The financial statements have been prepared to comply with the Accounting Standards referred to in the Companies (Accounting Standards) Rule, 2006 issued by the Central Government in exercise of the power conferred under sub-section ( I ) (a) of section 642 and the relevant provisions of the Companies Act, 1956 (the 'Act'). The financial statements have been prepared under the historical cost convention on the accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

b) Use of estimates

In preparing the Company's financial statements in conformity with the accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.

c) Revenue Recognition

(i) Interest from Loans:

Interest from Loans is recognized in the year in which the installment falls due as per the terms of Loan Agreement. Income on non performing assets is recognized when realized as per the guidelines for prudential norms prescribed by the Reserve Bank of India.

(ii) Other Interest Income

Other Interest Income is recognized on accrual basis.

(iii) Processing Fees

Processing fees on processing of loans are recognized upfront as income.

(iv) Late Payment Charges

Income in case of late payment charges are recognized as and when realized.

(v) Insurance Commission

Insurance Commission is recognized when there is no uncertainty regarding its receipt.

(vi) Income from Investments

Dividend from investments is accounted for as income when the right to receive dividend is established.

(vii) lncome from Assignment

ln case of assignment of receivables "at premium", the assets are de-recognised since all the rights, title and future receivables are assigned to the purchaser. The premium / profit spread arising on assignment is accounted over the residual tenor of the underlying assets.

d) Fixed Assets

All the Fixed Assets are stated at cost less depreciation, after taking into consideration provision for NPA.

The cost of assets includes other direct/indirect and incidental cost incurred to bring them into their working condition.

When assets are disposed or retired, their cost is removed from the financial statements. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between sales proceeds and the carrying amount of the asset and is recognised in Statement of Profit and Loss for the relevant financial year.

e) Depreciation

The depreciation on assets for own use is provided on "Straight Line Method" at the rates Specified in Schedule XIV of the Companies Act, 1956 on Pro-rata Basis.

When assets are disposed or retired, their accumulated depreciation is removed from the financial statements. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between sales proceeds and the carrying amount of the asset and is recognised in Statement of Profit and Loss for the relevant financial year.

f) Investments

Long Term Investments are stated at cost. Provision is made for any diminution in the value of the Long Term Investments, if such decline is other than temporary. The Company does not have any Current Investments.

g) Retirement Benefits

(i) The Employee and Company make monthly fixed Contribution to Government of India Employee's Provident Fund equal to a specified percentage of the Covered employee's salary. Provision for the same is made in the year in which services are rendered by the employee.

(ii) The Liability for Gratuity to employees, which is a defined benefit plan, is determined on the basis of actuarial Valuation based on Projected Unit Credit method. Actuarial gain / loss in respect of the same are charged to the Statement of Profit and Loss.

(iii) The Company does not allow carry forward of unavailed leave and hence unavailed leaves are encashed in the current year itself.

(iv) Short Term benefits are recognised as an expense at the undiscounted amounts in the Statement of Profit and Loss of the year in which the related service is rendered.

h) Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost such assets, whenever applicable, till such assets are ready for their intended use. A qualifying asset is the one which necessarily takes substantial period to get ready for intended use. All other borrowing costs are charged to revenue accounts. Capitalization of borrowing cost is suspended when active development is interrupted.

i) Segment Information:

In the opinion of the management, the Company is mainly engaged in the business of providing finance. All other activities of the Company revolve around the main business, and as such, there are no separate reportable segments as per Accounting Standard 17 -'Segment Reporting" prescribed by Companies (Accounting Standards) Rules, 2006.

j) Lease:

The company's significant leasing arrangements are in respect of operating lease for premises that cancelable are in nature. The lease rentals paid under such agreements are charge to the Statement of Profit and Loss.

k) Provision for Current and Deferred Tax

Provision for current tax is made after taking into consideration benefits admissible under the provision of the Income Tax Act, 1961. Deferred Tax resulting from "timing difference" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or subsequently enacted as on the balance sheet date. Deferred tax asset is recognised and carried forward only to the extent that there is virtual certainty that the assets will be realized in future.

l) Impairment

The management periodically assesses, using external and internal sources whether there is an indication that an asset may be impaired. If an asset is impaired, the company recognizes an impairment loss as the excess of the carrying amount of the asset over the recoverable amount. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amounts.

m) Intangible Assets

Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization. All costs, including financing costs in respect of qualifying assets till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets are capitalized.

n) Share Issue Expenses

Expenses incurred on issue of shares are adjusted against Security Premium Reserve.

o) Earnings per Share

Basic earnings per share is calculated by dividing net profit after tax for the year attributable to Equity Shareholders of the company by the weighted average number of Equity Shares issued during the year. Diluted earnings per share is calculated by dividing net profit attributable to equity Shareholders (after adjustment for diluted earnings) by average number of weighted equity shares outstanding during the year.

p) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes to the accounts. Contingent Assets are neither recognized nor disclosed in the financial statement.

q) Transfer and recourse obligation under Debt Securitization.

The company assigns assets under securitization transactions. The assigned loans / assets are derecognized and gains / losses are recorded on assignment of loan contracts. Recourse obligation with respect to Debt Securitizations with other financiers is provided in books as per past track records of delinquency / servicing of the loans of the Company.

r) Classification and Provision Policy for Loan Portfolio

(i) Classification of Loan Portfolio

Provision for loans and advances are made as per directions issued by Reserve Bank of India for Non Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 as amended from time to time.

(ii) Provisioning policy for loan portfolio

Loans are provided for as per provisions required by Non Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 and as per RBI circular dated December02, 2011, as amended from time to time. Loans are classified and the percentage of provision made on such loans is as under.

s) Accounting policies not specifically referred to otherwise are consistent with generally accepted accounting principles.

---

Mar 31, 2013

A) Basis of preparation

The financial statements have been prepared to comply with the Accounting Standards referred to in the Companies (Accounting Standards) Rule, 2006 issued by the Central Government in exercise of the power conferred under sub-section (I) (a) of section 642 and the relevant provisions of the Companies Act, 1956 (the ''Act''). The financial statements have been prepared under the historical cost convention on the accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

b) Use of estimates

In preparing the Company''s financial statements in conformity with the accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.

c) Revenue Recognition

(i) Interest from Loans:

Interest from Loans is recognized in the year in which the installment falls due as per the terms of Loan Agreement. Income on non performing assets is recognized when realized as per the guidelines for prudential norms prescribed by the Reserve Bank of India.

(ii) Other Interest Income

Other Interest Income is recognized on accrual basis. (iii) Processing Fees

Processing fees on processing of loans are recognized upfront as income. (iv) Late Payment Charges

Income in case of late payment charges are recognized as and when realized. (v) Insurance Commission

Insurance Commission is recognized when there is no uncertainty regarding its receipt. (vi) Income from Investments

Dividend from investments is accounted for as income when the right to receive dividend is established

(vii) Income from Assignment

In case of assignment of receivables "at premium", the assets are de-recognised since all the rights, title and future receivables are assigned to the purchaser. The interest spread arising on assignment is accounted over the residual tenor of the underlying assets.

d) Fixed Assets

All the Fixed Assets are stated at cost less depreciation, after taking into consideration provision for NPA.

The cost of assets includes other direct/indirect and incidental cost incurred to bring them into their working condition.

When assets are disposed or retired, their cost is removed from the financial statements. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between sales proceeds and the carrying amount of the asset and is recognised in Statement of Profit and Loss for the relevant financial year.

e) Depreciation

The depreciation on assets for own use is provided on "Straight Line Method" at the rates Specified in Schedule XIV of the Companies Act, 1956 on Pro-rata Basis.

When assets are disposed or retired, their accumulated depreciation is removed from the financial statements. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between sales proceeds and the carrying amount of the asset and is recognised in Statement of Profit and Loss for the relevant financial year.

f) Investments

Long Term Investments are stated at cost. Provision is made for any diminution in the value of the Long Term Investments, if such decline is other than temporary. The Company does not have any Current Investments.

g) Retirement Benefits

(i) The Employee and Company make monthly fixed Contribution to Government of India Employee''s Provident Fund equal to a specified percentage of the Covered employee''s salary. Provision for the same is made in the year in which services are rendered by the employee.

(ii) The Liability for Gratuity to employees, which is a defined benefit plan, is determined on the basis of actuarial Valuation based on Projected Unit Credit method. Actuarial gain / loss in respect of the same are charged to the Statement of Profit and Loss.

(iii) The Company does not allow carry forward of unavailed leave and hence unavailed leaves are encashed in the current year itself.

(iv) Short Term benefits are recognised as an expense at the undiscounted amounts in the Statement of Profit and Loss of the year in which the related service is rendered.

h) Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost such assets, whenever applicable, till such assets are ready for their intended use. A qualifying asset is the one which necessarily takes substantial period to get ready for intended use. All other borrowing costs are charged to revenue accounts. Capitalization of borrowing cost is suspended when active development is interrupted.

i) Segment Information:

In the opinion of the management, the Company is mainly engaged in the business of providing finance. All other activities of the Company revolve around the main business, and as such, there are no separate reportable segments as per Accounting Standard 17 -''Segment Reporting" prescribed by Companies (Accounting Standards) Rules, 2006.

j) Lease:

The company''s significant leasing arrangements are in respect of operating lease for premises that cancelable are in nature. The lease rentals paid under such agreements are charge to the Statement of Profit and Loss.

k) Provision for Current and Deferred Tax

Provision for current tax is made after taking into consideration benefits admissible under the provision of the Income Tax Act, 1961.

Deferred Tax resulting from ''liming difference" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or subsequently enacted as on the balance sheet date. Deferred tax asset is recognised and carried forward only to the extent that there is virtual certainty that the assets will be realized in future.

I) Impairment

The management periodically assesses, using external and internal sources whether there is an indication that an asset may be impaired. If an asset is impaired, the company recognizes an impairment loss as the excess of the carrying amount of the asset over the recoverable amount. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amounts.

m) Intangible Assets

Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization. All costs, including financing costs in respect of qualifying assets till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets are capitalized.

n) Share Issue Expenses

Expenses incurred on issue of shares are adjusted against Security Premium Reserve.

o) Earnings per Share

Basic earnings per share is calculated by dividing net profit after tax for the year attributable to Equity Shareholders of the company by the weighted average number of Equity Shares issued during the year. Diluted earnings per share is calculated by dividing net profit attributable to equity Shareholders (after adjustment for diluted earnings) by average number of weighted equity shares outstanding during the year.

p) Provisions. Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes to the accounts. Contingent Assets are neither recognized nor disclosed in the financial statement.

q) Transfer and recourse obligation under Debt Securitization.

The company assigns assets under securitization transactions. The assigned loans / assets are derecognized and gains / losses are recorded on assignment of loan contracts. Recourse obligation with respect to Debt Securitizations with other financiers is provided in books as per past track records of delinquency / servicing of the loans of the Company.

r) Accounting policies not specifically referred to otherwise are consistent with generally accepted accounting principles.

---

Mar 31, 2012

A) Basis of Accounting:

The financial statements are prepared on a historical cost convention on the accrual basis and materially comply with the accounting standard notified by Companies (Accounting Standard) Rules, 2008 and relevant provisions of the Companies Act, 1956.

b) Revenue Recognition

(i) Interest on Loan:

Interest on Loan is recognized in the year in which the installment falls due as per the terms of Loan Agreement. Income on non performing assets is recognized when realized as per the guidelines for prudential norms prescribed by the Reserve Bank of India.

(ii) Other Interest Income

Other Interest Income is recognized on accrual basis. (iii) Processing Fees Processing fees on processing of loans are recognized upfront as income.

(iv) Late Payment Charges

Income in case of late payment charges are recognized as and when realized.

(v) Insurance Commission

Insurance Commission is recognized when there is no uncertainty regarding its receipt.

c) Fixed Assets

All the assets are stated at cost less depreciation, after taking into consideration provision for NPA.

d) Depreciation

The depreciation on assets for own use is provided on straight line method at the rates Specified in Schedule XIV of the Companies Act, 1956 on Pro-rata Basis.

e) Investments

Long Term Investments are stated at cost. Provision is made for any diminution in the market value of the Quoted Investments. The Company does not have any Current Investments.

f) Retirement Benefits

(i) The Employee and Company make monthly fixed Contribution to Government of India Employee's Provident Fund equal to a specified percentage of the Covered employee's salary, Provision for the same is made in the year in which services are rendered by the employee.

(ii) The Liability for Gratuity to employees, which is a defined benefit plan, is determined on the basis of actuarial Valuation based on Projected Unit Credit method. Actuarial gain / loss in respect of the same are charged to the profit and loss account.

g) Borrowing Cost

Borrowing costs are capitalized as part of qualifying fixed assets when it is possible that they will result in future economic benefits. Other borrowing costs are expensed.

h) Provision for Taxation

Provision for taxation has been made in accordance with the tax laws and rules applicable to the relevant assessment year.

i) Deferred Taxation

Deferred Tax resulting from timing differences between book and tax profit is accounted for under the liability method, at the current rates of tax, to the extent that the timing differences are expected to crystallize.

j) Impairment

The management periodically assesses, using external and internal sources whether there is an indication that an asset may be impaired. If an asset is impaired, the company recognizes an impairment loss as the excess of the carrying amount of the asset over the recoverable amount.

k) Earning per Share

Basic earning per share is calculated by dividing net profit after tax for the year attributable to Equity Shareholders of the company by the weighted average number of Equity Shares issued during the year. Diluted earnings per share is calculated by dividing net profit attributable to equity Shareholders (after adjustment for diluted earnings) by average number of weighted equity shares outstanding during the year

l) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes to the accounts. Contingent Assets are neither recognized nor disclosed in the financial statement.

m) Transfer and recourse obligation under Debt Securitization.

The company assigns assets under securitization transactions. The assigned loans / assets are derecognized and gains / losses are recorded on assignment of loan contracts. Recourse obligation with respect to Debt Securitizations with other financiers is provided in books as per past track records of delinquency / servicing of the loans of the Company.

n) Accounting policies not specifically referred to otherwise are consistent with generally accepted accounting principles.

---

Mar 31, 2010

(a) Method of Accounting

The Company follows accrual method of accounting.

(b) Revenue Recognition

(i) Interest on Loan against:

Interest on Loan against hypothecation of vehicle is recognised in the year in which the installment falls due as per the terms of contract.

(ii) Income is not recognized in respect of Non Performing Assets, as per the guidelines for prudential norms prescribed by the Reserve Bank of India.

(c) Fixed Assets

All the assets are stated at cost less depreciation, after taking into consideration provision for NPA.

(d) Depreciation

The depreciation on assets for own use is provided on straight line method at the rates Specified in Schedule XIV of the Companies Act, 1956 on Pro-rata Basis.

(e) Investments

Long Term Investments are stated at cost. Provision is made for any diminution in the market value of the Quoted Investments. The Company does not have any Current Investments.

(f) Stock In Trade

Stock in Trade is valued at Lower of Cost and net realizable value. Cost is determined on FIFO basis.

(g) Retirement Benefits

a) The Employee and Company make monthly fixed Contribution to Government of India Employees Provident Fund equal to a specified percentage of the Covered employees salary, Provision for the same is made in the year in which services are rendered by the employee.

b) The Liability for Gratuity to employees, which is a defined benefit plan is determined on the basis of actuarial Valuation based on Projected Unit Credit method. Actuarial gain / loss in respect of the same is charged to the profit and loss account.

(h) Borrowing Cost

Borrowing costs are capitalized as part of qualifying fixed assets when it is possible that they will result in future economic benefits. Other borrowing costs are expensed.

(i) Provision for Taxation

Provision for taxation has been made in accordance with the tax laws and rules applicable to the relevant assessment year.

(j) Deferred Taxation

Deferred Tax resulting from timing differences between book and tax profit is accounted for under the liability method, at the current rates of tax, to the extent that the timing differences are expected to crystallise.

(k) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes to the accounts. Contingent Assets are neither recognized nor disclosed in the financial statement.

(l) Transfer and recourse obligation under Debt Securitization.

The company assigns assets under securitization transactions. The assigned loans / assets are derecognized and gains / losses are recorded on assignment of loan contracts. Recourse obligation with respect to Debt Securitisations with other financiers is provided in books as per past track records of delinquency / servicing of the loans of the Company.