Notes to Accounts of Sainik Finance & Industries Ltd.

Mar 31, 2024

b) Terms/rights attached to equity shares

The Company has only one class of equity shares, having a par value of Rs.10 per share. All shares rank pari passu with respect to dividend, voting rights and other terms. Each shareholder is eligible to one vote per share. The dividend proposed, if any, by the Board of Directors is subject to approval of shareholders in the ensuing Annual General Meeting, except in case of interim dividend. The repayment of equity share capital in the event of liquidation and buy back of shares are possible subject to prevalent regulations. In the event of liquidation, normally the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

i) Statutory Reserve under Section 45-IC of the RBI Act, 1934:

The Company has to create a reserve pursuant to section 45 IC of the Reserve Bank of India Act, 1934 by transferring amount not less than twenty per cent of its net profit after tax every year before any dividend is declared.

ii) Securities premium:

The amount received in excess of face value of the equity shares is recognised in Securities Premium Account. In case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted as securities premium account. The account is utilised in accordance with the provisions of the Companies Act 2013.

iii) General reserve:

Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.

iv) Retained earnings:

Retained earnings represents accumulated earnings of the Company. This reserve can be utilise in accordance with the provisions of Companies Act, 2013.

26 Employee benefits

Defined Contribution Plan - Provident Fund (PF) Contribution

The Company makes provident fund contribution which are defined contribution plans for qualifying employees under the scheme, company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contribution payable to these plans by the company are at rates specified in the rules of the scheme.

Defined Benefit Plan - Gratuity

The Company operates an unfunded gratuity plan, under which every employee who has completed atleast five years of service gets a gratuity on departure @15 days of last drawn basic salary for each completed year of service.

The plan is of a final salary defined benefit in nature which is sponsored by the Company and hence it underwrites all the risks pertaining to the plan. The actuarial risks associated are:

Interest Rate Risk:

The risk of government security yields falling due to which the corresponding discount rate used for valuing liabilities falls. Such a fall in discount rate will result in a larger value placed on the future benefit cash flows whilst computing the liability and thereby requiring higher accounting provisioning.

Longevity Risks:

Longevity risks arises when the quantum of benefits payable under the plan is based on how long the employee lives post cessation of service with the company. The gratuity plan provides the benefit in a lump sum form and since the benefit is not payable as an annuity for the rest of the lives of the employees, there is no longevity risks.

Salary Risks:

The gratuity benefits under the plan are related to the employee’s last drawn salary. Consequently, any unusual rise in future salary of the employee raises the quantum of benefit payable by the company, which results in a higher liability for the company and is therefore a plan risk for the company.

The estimates of the future salary increases, considered in actuarial valuation, include inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. The discount rate is based on the prevailing market yield on government securities as at the balance sheet date for the estimated average remaining service.

27 Additional regulatory information

i) The company does not have any immovable property, hence disclosure for title deeds not held in the name of the company is not applicable

ii) The company does not hold any investment property in its books of accounts, so fair valuation of investment is not applicable

iii) During the year the company has not revalued any of its Property, plant and equipment or intangible assets.

iv) The company does not any trade receivables during the current and previous year

v) The company does not have any trade payable during the current and previous year

vi) The company does not have any Capital work in progress (CWIP) as on 31 March 2024 (PY -Nil)

vii) The company does not have any Intangible Assets under development.

viii) No proceeding have been initiated or pending against the company under the Benami Transactions (Prohibitions) Act 1988.

ix) The Company does not have any borrowings from banks or financial institutions on the basis of security of current assets.

x) The Company have not declared as a wilful defaulter by any bank or financial Institution or other lender.

xi) The company has not any transactions with companies struck off during the period.

xii) The company has no cases of any charges or satisfaction yet to be registered with ROC beyond the statutory time limits.

xiii) The company has complied with the provisions of clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017

xv) No scheme of arrangements has been approved by competent authority in terms of sections 230 to 237 of the Companies Act,2013 in respect of company.

xvi) The company has not provided nor taken any loan or advance to/from any other person or entity with the understanding that benefit of the transaction will go to a third party, the ultimate beneficiary.

xvii) The Company does not have any transaction not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961

xviii) The Company has neither traded nor invested in crypto currency or virtual currency during the financial year.

30 Financial Risk Management

The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The board of directors has constituted the risk management committee, which is responsible for developing and monitoring the Company’s risk management policies. The Company’s risk management commiee oversees how management monitors compliance with the Company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions.

The Company has exposure to the following risks arising from its business operations:

i) Credit risk

Credit risk is the risk of financial loss if a customer or counterparty fails to meet an obligation under a contract. Lending activities account for most of the Company’s credit risk. Other sources of credit risk also exist in loans and transaction settlements. Credit risk is measured as the amount that could be lost if a customer or counterparty fails to make repayments. The maximum exposure to credit risk in case of all the financial instruments is restricted to their respective carrying amount.Credit Risk is monitored through stringent credit appraisal, counter party limits ands internal risk ranges of the borrowers. Exposure to credit risk is managed through regular analysis of the ability of all the customers and counterparties to meet interest and capital repayment obligations and by changing lending limits where appropriate.

b) Credit quality analysis

An impairment analysis is performed at each reporting date based on the facts and circumstances existing on that date to identify expected losses on account of time value of money and credit risk. The credit quality of Loans and advances measured at amortised cost is primarily assessed by the Days Past Due (DPD) status and other qualitative factors leading to increase in credit risk.

Inputs, assumptions and techniques used for estimating impairment

In assessing the impairment of financial assets under the expected credit loss model, the Company defines default when a loan obligation is overdue for more than 90 days and credit impaired.

Assessment of significant increase in credit risk

When determining whether the risk of default has increased significantly since initial recognition, the Company considers the DPD status of the loans. Credit risk is deemed to have increased significantly when an asset is more than 30 days past due (DPD) and other qualitative internal or external factors demonstrating credit or liquidity risk.

Calculation of expected credit losses

The key elements in calculation of ECL are as follows:

PD - The Probability of Default 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 - The Exposure at Default is an estimate of the exposure at a future default date, taking into account expected changes in the exposure after the reporting date, including repayments of principal and interest, whether scheduled by contract or otherwise, expected drawdowns on committed facilities, accrued interest from missed payments and loan commitments.

LGD - The Loss Given Default 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 LGD is determined based on valuation of collaterals and other relevant factors.

For PD the Company has relied upon the PD data from industry benchmarks and external rating agencies. For Loss Given Default (LGD) the Company has relied on internal and external information.

The following table sets out information about the credit quality of financial assets measured at amortised cost.

c) Movement in Gross Exposures and credit impairment for loans and advances

The Company uses ‘Expected Credit Loss’ (ECL) model, for evaluating impairment of Financial Assets measured at amortised cost or FVTOCI. Company follows a ‘three-stage’ model for impairment based on changes in credit quality since initial recognition. Please refer to the accounting policy for details.

ii) Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulties in meeting the obligations associated with its financial liabilities that are settled by delivering cash or other financial assets. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.Company has in place an Asset-Liability Management Committee (ALCO) which functions as the operational unit for managing the Balance Sheet within the performance and risk parameters laid down by the Board and Risk Committee of the Board. ALCO reviews Asset Liability strategy and Balance Sheet management in relation to asset and liability profile. ALCO ensures that the objectives of liquidity management are met by monitoring the gaps in the various time buckets, deciding on the source and mix of liabilities, setting the maturity profile of the incremental assets and liabilities etc.

Key principles adopted in the Company’s approach to managing liquidity risk include:

a) Monitoring the Company’s liquidity position on a regular basis, using a combination of contractual and behavioural modelling of balance sheet and cash flow information.

b) Maintaining a high quality liquid asset portfolio or maintaining undrawn bank lines.

c) Operating a prudent funding strategy which ensures appropriate diversification and limits maturity concentrations.

The Company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operation.

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include interest accrued till the reporting date.

iii) Market Risk

Market Risk is the risk of financial loss arising on account of changes/fluctuations in market variables such as interest rates, equity prices etc. Market risk stems from the Company’s Loan book and balance sheet management activities, the impact of changes and correlation between interest rates, credit spreads and volatility in bond or equity prices.

Market risk represents the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market variables such as interest rates, foreign exchange rates and equity prices.

iv) Interest rate risk

Company has exposure to interest rate risk, primarily from its lending business and related borrowings. The following table demonstrates the sensitivity to a reasonably possible change in interest rates (all other variables being constant) of the Company’s Statement of Profit and Loss.

Interest rate risk is managed primarily by monitoring the sensitivity of expected net interest income (‘NII’) under varying interest rate scenarios. This monitoring is undertaken by ALCO on regular basis. The NII sensitivities shown are indicative and based on simplified scenarios.

31 Financial Instruments

i) Accounting classification and fair values

The following table shows the carrying amounts and fair values of financial instruments (excluding investment in subsidiaries), including their levels in the fair value hierarchy. The company has disclosed financial instruments not measured at fair value at carrying values because their carrying amounts are a reasonable approximation of the fair values.

34. Contingent Liability

There is an outstanding Income Tax demand of Rs.9.90 lakhs regarding assessment year 2008-09 on account of mismatch of TDS Credit vs TDS Certificates (previous year -Rs.9.90 lakh).

35. Segment information

The Company is an NBFC registered with Reserve Bank of India and is in the business of providing credit. As such there are no separate reportable segments as per the Accounting Standards (Ind AS-108) -‘Operating Segment ‘specified under section 133 of the companies Act 2013. Since the business operations of the Company are concentrated in India, the Company is considered to operate only in the domestic segment and therefore there is no reportable geographic segment.

37. Prudential Norms of the Reserve Bank of India (RBI) :

a) The Company has earned profit during the financial year and Rs.40.09 lakhs transferred to”Reserve Fund” under section 45-IC of the Reserve Bank of India Act.1934. (Previous year Rs.Nil )

b) Balance Sheet of Non-Deposit taking Non-Banking Financial Company -

(as required in terms of paragraph 13 of Non-Banking Financial (Non-Deposit Accepting and Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007)

i) As defined in Paragraph 2(1) (xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998.

ii) Provisioning norms shall be applicable as prescribed in the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007.

iii) All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquoted investments should be disclosed irrespective of whether they are classified as long term or current in column (4) above.

39. In certain cases, the Company has advanced loans on which no amount has been received against the principal and interest accrued thereon. The same is in accordance with the loan agreements entered by the Company which provides for payment of interest along with principal amount or at the expiry of the said loan agreements. The Company has correctly followed the relevant provisions of IND-AS as well as RBI regulations, so far as they are applicable to the said loan agreements in respect of provisioning. The Company is confident of the recovery of the said amounts as per respective terms of the loan agreements and has obtained declarations and confirmations from the respective parties.

40. In respect of loan given to TRN Energy Private Limited (Borrower) as per ICD agreement dated 31 May 2021 it is specified therein that the payment of interest on ICD or repayment of ICD shall be made by the Borrower upon clearing the dues of its term lenders as per financing agreement entered between the Borrower and its term lenders, who have sanctioned term facilities to TRN Energy Private Limited, which will be repaid up to 30 June 2038. Hence, the Company entered into a Novation Agreement dated 31 st March 2022 with ACB (India) Power Limited, the holding company of the Borrower, wherein it was agreed that ACB (India) Power Limited shall take over the loan of TRN Energy Private Limited from the Company by way of novation on cash basis with total consideration of Rs.76.75 crore as against total outstanding loan of Rs.84.09 crore in full and final settlement. Accordingly, during the month of June 2022 an amount of Rs.76.75 crore has been paid by ACB (India) Power Limited in full and final settlement of the ICD given to TRN Energy Private Limited. Also the Borrower has failed to deposit its TDS liability of Rs.1.54 crore pertaining to FY 2019-20 and 2020-21. The said TDS liability has been reversed and written off during the financial year 2023-24.

41. The outbreak of COVID 19 pandemic and consequent lockdown has severely impacted business and operations of the Company during the last three years, In relation to COVID-19, judgments and assumptions include the extent and duration of the pandemic, the impacts of actions of governments and other authorities, and the responses of businesses and consumers in different industries. While the methodologies and assumptions applied in the impairment loss allowance calculations remained unchanged from those applied prior to the COVID-19 pandemic, the Company has separately incorporated estimates, assumptions and judgments specific to the impact of the COVID-19 pandemic based on early indicators of moratorium and delayed payments metrics observed along with an estimation of potential stress on probability of defaults and exposure at defaults. The extent to which the COVID-19 pandemic will impact the Company’s impairment loss allowance on assets and future results will depend on future developments, which are highly uncertain and management has considered various internal and external information available up to the date of approval of financial results in assessing the impact of COVID-19 pandemic in the financial results for the year ended March 31,2024. Management will also continue to monitor changes in future economic conditions. The eventual outcome of the impact of COVID-19 and other business conditions may be different from that estimated as on the date of approval of these financial results..

42. The figures for the corresponding previous year have been regrouped/ reclassified wherever necessary to make them comparable.

43. The Financial Statements have been reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on 24 May 2024.

44. There have been no events after the reporting date that require disclosure in these financial statements.

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Mar 31, 2023

2.7 Provisions and contingent liabilities

The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. The Company also discloses present obligations for which a reliable estimate cannot be made. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

2.8 Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding at end of the year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

2.9 Taxes

i) Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, in accordance with the Income Tax Act, 1961 and the Income Computation and Disclosure Standards (ICDS) prescribed therein. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current tax relating to items recognised outside profit or loss is recognised in correlation to the underlying transaction either in OCI or directly in other equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

ii) Deferred tax

Deferred tax is provided using the Balance Sheet approach on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for deductible temporary differences to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.

Unrecognized deferred tax assets, if any, are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside profit or loss is recognised either in OCI or in other equity. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

2.10 Employee benefits

i) Short Term Employee Benefits: (i.e. benefits payable within one year) are recognized in the period in which employee services are rendered.

ii) Contributions towards provident fund are recognized as expense. Provident Fund contributions in respect of all employees are made to Provident Fund Authorities.

iii) Provision for gratuity payable has been made in accordance with the period of qualifying service put in by each employee of the Company from the date of joining and up to the end of the financial year.

iv) Contribution to Central Government Employees State Insurance Scheme for eligible employees is recognized as charge for the year.

2.11 Finance costs

Borrowing costs on financial liabilities are recognised using the EIR.

2.12 Provisions and contingencies

The Company creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

2.13 Cash and cash equivalents

Cash and cash equivalents include cash on hand, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are sub ject to an insignificant risk of changes in value.

2.14 Financial Instruments

A financial instrument is defined as any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Trade receivables and payables, loan receivables, investments in securities and subsidiaries, debt securities and other borrowings, preferential and equity capital etc. are some examples of financial instruments.

All the financial instruments are recognised on the date when the Company becomes party to the contractual provisions of the financial instruments. For tradable securities, the Company recognises the financial instruments on settlement date.

(i) Financial assets

Financial assets include cash, or an equity instrument of another entity, or a contractual right to receive cash or another financial asset from another entity. Few examples of financial assets are loan receivables, investment in equity and debt instruments, trade receivables and cash and cash equivalents.

Initial measurement

All financial assets are recognised initially at fair value including transaction costs that are attributable to the acquisition of financial assets except in the case of financial assets recorded at FVTPL where the transaction costs are charged to profit or loss.

Subsequent measurement

For the purpose of subsequent measurement, financial assets are classified into four categories:

(a) Debt instruments at amortised cost

(b) Debt instruments at FVOCI

(c) Debt instruments at FVTPL

(d) Equity instruments designated at FVOCI

(a) Debt instruments at amortised cost

The Company measures its financial assets at amortised cost if both the following conditions are met:

• The asset is held within a business model of collecting contractual cash flows; and

• Contractual terms of the asset give rise on specified dates to cash flows that are Sole Payments of Principal and Interest (SPPI) on the principal amount outstanding.

To make the SPPI assessment, the Company applies judgment and considers relevant factors such as the nature of portfolio and the period for which the interest rate is set.

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. 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 financial assets going forward.

The business model of the Company for assets subsequently measured at amortised cost category is to hold and collect contractual cash flows. However, considering the economic viability of carrying the delinquent portfolios in the books of the Company, it may sell these portfolios to banks and/or asset reconstruction companies.

After initial measurement, such financial assets are subsequently measured at amortised cost on effective interest rate (EIR). The expected credit loss (ECL) calculation for debt instruments at amortised cost is explained in subsequent notes in this section.

(b) Debt instruments at FVOCI

The Company subsequently classifies its financial assets as FVOCI, only if both of the following criteria are met:

• The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets; and

• Contractual terms of the asset give rise on specified dates to cash flows that are Solely Payments of Principal and Interest (SPPI) on the principal amount outstanding.

Debt instruments included within the FVOCI category are measured at each reporting date at fair value with such changes being recognised in other comprehensive income (OCI). The interest income on these assets is recognised in profit or loss. The ECL calculation for debt instruments at FVOCI is explained in subsequent notes in this section.

Debt instruments such as long term investments in Government securities to meet regulatory liquid asset requirement of the Company’s deposit program and mortgage loans portfolio where the Company periodically resorts to partially selling the loans by way of assignment to willing buyers are classified as FVOCI.

On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified to profit or loss.

(c) Debt instruments at FVTPL

The Company classifies financial assets which are held for trading under FVTPL category. Held for trading assets are recorded and measured in the Balance Sheet at fair value. Interest and dividend incomes are recorded in interest income and dividend income, respectively according to the terms of the contract, or when the right to receive the same has been established. Gain and losses on changes in fair value of debt instruments are recognised on net basis through profit or loss.

The Company’s investments into mutual funds, Government securities (trading portfolio) and certificate of deposits for trading and short term cash flow management have been classified under this category.

(d) Equity investments designated under FVOCI

All equity investments in scope of Ind AS 109 ‘Financial Instruments’ are measured at fair value. The Company has strategic investments in equity for which it has elected to present subsequent changes in the fair value in other comprehensive income. The classification is made on initial recognition and is irrevocable.

All fair value changes of the equity instruments, excluding dividends, are recognised in OCI and not available for reclassification to profit or loss, even on sale of investments. Equity instruments at FVOCI are not subject to an impairment assessment.

De-recognition of Financial Assets

The Company derecognises a financial asset (or, where applicable, a part of a financial asset) when:

• The right to receive cash flows from the asset have expired; or

• The Company has transferred its right to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under an assignment arrangement and the Company has transferred substantially all the risks and rewards of the asset. Once the asset is derecognised, the Company does not have any continuing involvement in the same.

The Company transfers its financial assets through the partial assignment route and accordingly derecognises the transferred portion as it neither has any continuing involvement in the same nor does it retain any control. If the Company retains the right to service the financial asset for a fee, it recognises either a servicing asset or a servicing liability for that servicing contract. A service liability in respect of a service is recognised at fair value if the fee to be received is not expected to compensate the Company adequately for performing the service. If the fees to be received are expected to be more than adequate compensation for the servicing, a service asset is recognised for the servicing right at an amount determined on the basis of an allocation of the carrying amount of the larger 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 profit or loss.

Impairment of financial assets

ECL is recognised for financial assets held under amortised cost, debt instruments measured at FVOCI, and certain loan commitments.

Financial assets where no significant increase in credit risk has been observed are considered to be in ‘stage 1’ and for which a 12 month ECL is recognised.

Financial assets that are considered to have significant increase in credit risk are considered to be in ‘stage 2’ and those which are in default or for which there is an objective evidence of impairment are considered to be in ‘stage 3’. Lifetime ECL is recognised for stage 2 and stage 3 financial assets.

At initial recognition, allowance (or provision in the case of loan commitments) is required for ECL towards default events that are possible in the next 12 months, or less, where the remaining life is less than 12 months.

In the event of a significant increase in credit risk, allowance (or provision) is required for ECL towards all possible default events over the expected life of the financial instrument (‘lifetime ECL’).

Financial assets (and the related impairment loss allowances) are written off in full, when there is no realistic prospect of recovery.

Treatment of the different stages of financial assets and the methodology of determination of ECL

(a) Credit impaired (stage 3)

The Company recognises a financial asset to be credit impaired and in stage 3 by considering relevant objective evidence, primarily whether:

• Contractual payments of either principal or interest are past due for more than 90 days;

• The loan is otherwise considered to be in default.

Restructured loans, where repayment terms are renegotiated as compared to the original contracted terms due to significant credit distress of the borrower, are classified as credit impaired. Such loans continue to be in stage 3 until they exhibit regular payment of renegotiated principal and interest over a minimum observation period, typically 12 months- post renegotiation, and there are no other indicators of impairment. Having satisfied the conditions of timely payment over the observation period these loans could be transferred to stage 1 or 2 and a fresh assessment of the risk of default is done for such loans.

Interest income is recognised by applying the EIR to the net amortised cost amount i.e. gross carrying amount less ECL allowance.

(b) Significant increase in credit risk (stage 2)

An assessment of whether credit risk has increased significantly since initial recognition is performed at each reporting period by considering the change in the risk of default of the loan exposure. However, unless identified at an earlier stage, 30 days past due is considered as an indication of financial assets to have suffered a significant increase in credit risk. Based on other indications such as borrower’s frequently delaying payments beyond due dates though not 30 days past due are included in stage 2 for mortgage loans.

The measurement of risk of defaults under stage 2 is computed on homogenous portfolios, generally by nature of loans, tenors, underlying collateral, geographies and borrower profiles. The default risk is assessed using PD (probability of default) derived from past behavioural trends of default across the identified homogenous portfolios. These past trends factor in the past customer behavioural trends, credit transition probabilities and macroeconomic conditions. The assessed PDs are then aligned considering future economic conditions that are determined to have a bearing on ECL.

(c) Without significant increase in credit risk since initial recognition (stage 1)

ECL resulting from default events that are possible in the next 12 months is recognised for financial instruments in stage 1. The Company has ascertained default possibilities on past behavioural trends witnessed for each homogenous portfolio using application/behaviourial score cards and other performance indicators, determined statistically.

(d) Measurement of ECL

The assessment of credit risk and estimation of ECL are unbiased and probability weighted. It incorporates all information that is relevant including information about past events, current conditions and reasonable forecasts of future events and economic conditions at the reporting date. In addition, the estimation of ECL takes into account the time value of money. Forward looking economic scenarios determined with reference to external forecasts of economic parameters that have demonstrated a linkage to the performance of our portfolios over a period of time have been applied to determine impact of macro economic factors.

Measurement of expected credit losses are based on 3 main parameters:

• Probability of default (PD):

It is defined as the probability of whether borrowers will default on their obligations in future. Since the company don’t have any history of past losses therefore it was not adequate enough to create our own internal model through which actual defaults for each grade could be estimated. Hence, the default study published by one of the recognised rating agency is used for estimating the PDs for each range grade.

• Loss given default (LGD):

It is the magnitude of the likely loss, if there is a default. The LGD represents expected losses on the EAD given the event of default, taking into account, among other attributes, the mitigating effect of collateral value. The default study published by one of the recognised rating agency is used for estimating the LGD for secured and unsecured loans.

• Exposure at default (EAD):

EAD represents the expected balance at default, taking into account the repayment of principal and interest from the Balance Sheet date to the date of default together with any expected drawdowns of committed facilities.

Write offs - The gross carrying amount of a financial asset is written-off (either partially or in full) to the extent that there is no reasonable expectation of recovering the asset in its entirety or a portion thereof. This is generally the case when the Company determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off and when there is no reasonable expectation of recovery from the collaterals held. However, financial assets that are written-off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

The Company has calculated ECL using three main components: a probability of default (PD), a loss given default (LGD) and the exposure at default (EAD). ECL is calculated by multiplying the PD, LGD and EAD and adjusted for time value of money using a rate which is a reasonable approximation of EIR.

• Determination of PD is covered above for each stages of ECL.

• EAD represents the expected balance at default, taking into account the repayment of principal and interest from the Balance Sheet date to the date of default together with any expected drawdowns of committed facilities.

• LGD represents expected losses on the EAD given the event of default, taking into account, among other attributes, the mitigating effect of collateral value at the time it is expected to be realised and the time value of money.

(ii) Financial liabilities

Financial liabilities include liabilities that represent a contractual obligation to deliver cash or another financial asset to another entity, or a contract that may or will be settled in the entities own equity instruments. Few examples of financial liabilities are trade payables, debt securities and other borrowings and subordinated debts.

Initial measurement

All financial liabilities are recognised initially at fair value and, in the case of borrowings and payables, net of directly attributable transaction costs. The Company’s financial liabilities include trade payables, other payables, debt securities and other borrowings.

Subsequent measurement

After initial recognition, all financial liabilities are subsequently measured at amortised cost using the EIR. Any gains or losses arising on derecognition of liabilities are recognised in the Statement of Profit and Loss.

Derecognition

The Company derecognises a financial liability when the obligation under the liability is discharged, cancelled or expired.

(iii) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet only if there is an enforceable legal right to offset the recognised amounts with an intention to settle on a net basis or to realise the assets and settle the liabilities simultaneously.

1.15 Fair value measurements

The Company measures its qualifying financial instruments at fair value on each Balance Sheet date.

Fair value is the price that would be received against sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place in the accessible principal market or the most advantageous accessible market as applicable.

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

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy into Level I, Level II and Level III based on the lowest level input that is significant to the fair value measurement as a whole.

For assets and liabilities that are fair valued in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy

Notes:

i) Statutory Reserve under Section 45-IC of the RBI Act, 1934:

The Company has to create a reserve pursuant to section 45 IC of the Reserve Bank of India Act, 1934 by transferring amount not less than twenty per cent of its net profit after tax every year before any dividend is declared. However the company has not made any appropriation/provision due to net loss incurred during the year.

ii) Securities premium:

The amount received in excess of face value of the equity shares is recognised in Securities Premium Account. In case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted as securities premium account. The account is utilised in accordance with the provisions of the Companies Act 2013.

iii) General reserve:

Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.

iv) Retained earnings:

Retained earnings represents accumulated earnings of the Company. This reserve can be utilise in accordance with the provisions of Companies Act, 2013.

## Financial Risk Management

The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The board of directors has constituted the risk management committee, which is responsible for developing and monitoring the Company’s risk management policies. The Company’s risk management commiee oversees how management monitors compliance with the Company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions.

The Company has exposure to the following risks arising from its business operations: i) Credit risk

Credit risk is the risk of financial loss if a customer or counterparty fails to meet an obligation under a contract. Lending activities account for most of the Company’s credit risk. Other sources of credit risk also exist in loans and transaction settlements. Credit risk is measured as the amount that could be lost if a customer or counterparty fails to make repayments. The maximum exposure to credit risk in case of all the financial instruments is restricted to their respective carrying amount.

Credit Risk is monitored through stringent credit appraisal, counter party limits ands internal risk ranges of the borrowers. Exposure to credit risk is managed through regular analysis of the ability of all the customers and counterparties to meet interest and capital repayment obligations and by changing lending limits where appropriate.

b) Credit quality analysis

An impairment analysis is performed at each reporting date based on the facts and circumstances existing on that date to identify expected losses on account of time value of money and credit risk. The credit quality of Loans and advances measured at amortised cost is primarily assessed by the Days Past Due (DPD) status and other qualitative factors leading to increase in credit risk.

Inputs, assumptions and techniques used for estimating impairment

In assessing the impairment of financial assets under the expected credit loss model, the Company defines default when a loan obligation is overdue for more than 90 days and credit impaired.

Assessment of significant increase in credit risk

When determining whether the risk of default has increased significantly since initial recognition, the Company considers the DPD status of the loans. Credit risk is deemed to have increased significantly when an asset is more than 30 days past due (DPD) and other qualitative internal or external factors demonstrating credit or liquidity risk.

Calculation of expected credit losses

The key elements in calculation of ECL are as follows:

PD - The Probability of Default 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 - The Exposure at Default is an estimate of the exposure at a future default date, taking into account expected changes in the exposure after the reporting date, including repayments of principal and interest, whether scheduled by contract or otherwise, expected drawdowns on committed facilities, accrued interest from missed payments and loan

LGD - The Loss Given Default 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 LGD is determined based on valuation of collaterals and other relevant factors.

For PD the Company has relied upon the PD data from industry benchmarks and external rating agencies. For Loss Given Default (LGD) the Company has relied on internal and external information.

ii) Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulties in meeting the obligations associated with its financial liabilities that are settled by delivering cash or other financial assets. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

Company has in place an Asset-Liability Management Committee (ALCO) which functions as the operational unit for managing the Balance Sheet within the performance and risk parameters laid down by the Board and Risk Committee of the Board. ALCO reviews Asset Liability strategy and Balance Sheet management in relation to asset and liability profile. ALCO ensures that the objectives of liquidity management are met by monitoring the gaps in the various time buckets, deciding on the source and mix of liabilities, setting the maturity profile of the incremental assets and liabilities etc.

Key principles adopted in the Company’s approach to managing liquidity risk include:

a) Monitoring the Company’s liquidity position on a regular basis, using a combination of contractual and behavioural modelling of balance sheet and cash flow information.

b) Maintaining a high quality liquid asset portfolio or maintaining undrawn bank lines.

c) Operating a prudent funding strategy which ensures appropriate diversification and limits maturity concentrations.

iii) Market Risk

Market Risk is the risk of financial loss arising on account of changes/fluctuations in market variables such as interest rates, equity prices etc. Market risk stems from the Company’s Loan book and balance sheet management activities, the impact of changes and correlation between interest rates, credit spreads and volatility in bond or equity prices.

Market risk represents the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market variables such as interest rates, foreign exchange rates and equity prices.

34. Contingent Liability

There is an outstanding Income Tax demand of Rs.9.90 lakhs regarding assessment year 2008-09 on account of mismatch of TDS Credit vs TDS Certificates. (previous year - Nil)

35. Segment information

The Company is an NBFC registered with Reserve Bank of India and is in the business of providing credit. As such there are no separate reportable segments as per the Accounting Standards (Ind AS-108) -‘Operating Segment ‘specified under section 133 of the companies Act 2013. Since the business operations of the Company are concentrated in India, the Company is considered to operate only in the domestic segment and therefore there is no reportable geographic segment.

37. Prudential Norms of the Reserve Bank of India (RBI) :

a) The Company has not made any profit during the year and hence no appropriation of profit has been done to“Reserve Fund” under section 45-IC of the RBI Act.1934. (Previous year Rs. Nil )

b) Balance Sheet of Non-Deposit taking Non-Banking Financial Company -

(as required in terms of paragraph 13 of Non-Banking Financial (Non-Deposit Accepting and Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007)

39. In certain cases, the Company has advanced loans on which no amount has been received against the principal and interest accrued thereon. The same is in accordance with the loan agreements entered by the Company which provides for payment of interest along with principal amount or at the expiry of the said loan agreements. The Company has correctly followed the relevant provisions of IND-AS as well as RBI regulations, so far as they are applicable to the said loan agreements in respect of provisioning. The Company is confident of the recovery of the said amounts as per respective terms of the loan agreements and has obtained declarations and confirmations from the respective parties.

40. a) In respect of loan given to Tejswi Impex Private Limited, as per the ICD Agreement dated 30 November 2011 expired on 30 November 2021. Tejswi Impex Private Limited has offered a settlement amount of Rs.6.50 crore as against total outstanding loan of Rs.8.34 crore, and the Company has agreed to settle the loan vide agreement dated 01 May 2022. Accordingly during the month of May’22 & June’22, amount of Rs.6.5 crore has been recovered as full and final settlement. Hence, no interest has been provided during the FY 2022-23 as per the above settlement.

b) Also, in respect of loan given to TRN Energy Private Limited (Borrower) as per ICD agreement dated 31 May 2021 it is specified therein that the payment of interest on ICD or repayment of ICD shall be made by the Borrower upon clearing the dues of its term lenders as per financing agreement entered between the Borrower and its term lenders, who have sanctioned term facilities to TRN Energy Private Limited, which will be repaid up to 30 June 2038. Hence, the Company entered into a Novation Agreement dated 31st March 2022 with ACB (India) Power Limited, the holding company of the Borrower, wherein it was agreed that ACB (India) Power Limited shall take over the loan of TRN Energy Private Limited from the Company by way of novation on cash basis with total consideration of Rs.76.75 crore as against total outstanding loan of Rs.84.09 crore in full and final settlement. Accordingly, during the month of June 2022 an amount of Rs.76.75 crore has been paid by ACB (India) Power Limited in full and final settlement of the ICD given to TRN Energy Private Limited.

41. The outbreak of COVID 19 pandemic and consequent lockdown has severely impacted business and operations of the Company during the last three years, In relation to COVID-19, judgments and assumptions include the extent and duration of the pandemic, the impacts of actions of governments and other authorities, and the responses of businesses and consumers in different industries. While the methodologies and assumptions applied in the impairment loss allowance calculations remained unchanged from those applied prior to the COVID-19 pandemic, the Company has separately incorporated estimates, assumptions and judgments specific to the impact of the COVID -19 pandemic based on early indicators of moratorium and delayed payments metrics observed along with an estimation of potential stress on probability of defaults and exposure at defaults. The extent to which the COVID-19 pandemic will impact the Company’s impairment loss allowance on assets and future results will depend on future developments, which are highly uncertain and management has considered various internal and external information available up to the date of approval of financial results in assessing the impact of COVID-19 pandemic in the financial results for the year ended March 31, 2023. Management will also continue to monitor changes in future economic conditions. The eventual outcome of the impact of COVID-19 and other business conditions may be different from that estimated as on the date of approval of these financial results..

42. The figures for the corresponding previous year have been regrouped/ reclassified wherever necessary to make them comparable.

43. The Financial Statements have been reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on 25 May 2023.

44. There have been no events after the reporting date that require disclosure in these financial statements.

As per our report of even date On behalf of the board of Directors

For Kumra Bhatia & Co. For Sainik Finance & Industries Limited

Chartered Accountants

ICAI Firm Registration No. : 002848N

Harish Kumar Bhargava Rudra Sen Sindhu Kuldeep Singh Solanki

Partner Director Director

Membership No. : 090572 DIN-00006999 DIN-00009212

Chandra Datt Piyush Garg

Chief Executive Officer Company Secretary

PAN- AAPPD9901J PAN-AZAPP6975E

Jagdish Chandra

Place: New Delhi Chief Financial Officer

Dated: 25 May 2023 PAN-AAJPU3255G

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Mar 31, 2015

1. General

The Company was incorporated on 22nd August 1991 with Registrar of Companies, NCT Delhi and Haryana in the name of M/s Garuda Clays Limited (a manufacturing company). Later on M/s Ramanuj Leasing Ltd which was incorporated on 02.01.1985 and was doing leasing & finance activities merged with M/s Garuda Clays Limited by order of the Hon'ble High Court of Delhi dt.01.11.1999 and the said order was filed with registrar of companies on 04.12.2000. The name of M/s Garuda Clays Ltd. was later on changed to M/s Sainik Finance & Industries Limited.

The Company is engaged in non-banking finance activities and registered with Reserve Bank of India as Non Banking Finance Company (NBFC). The Reserve Bank of India has renewed its registration on 03/09/ 2003 vide new registration certificate No. N.14.02967.

The Company was engaged in manufacturing of Portland Cement (ITC Code : 25.23.29.10) and Pre- stressed Concrete Pole (ITC Code-68.69.60.00). The business operation with respect to manufacturing of Portland Cement were discontinued in July, 2012 and the Plant machinery and equipment thereof were dismantled for sale etc. However the business operation with respect of Pre-stressed Poles continued till 2013 and thereafter the company decided the dispose off the factory building etc in entirety.

2. Deferred Tax - In accordance with the Accounting standard (AS-22) relating to "Accounting for Taxes on Income", the company has recorded cumulative net deferred tax liability of Rs.23,89,091/- in respect of timing differences upto 1st April, 2014 as a reduction to General Reserves. Further, the deferred tax asset of the year amounting to Rs.1,45,627/- has been debited to the Profit & Loss Account.

3. The company has made provision on Non Performing Assets in accordance with the RBI directives to the extent of Rs. 28,07,457/- which has been debited to the Profit & Loss Account.

4. The company has made provision for Standard Assets accordance with the RBI directives to the extent of Rs.17,84,172/- has been debited to the Profit & Loss Account. During the year company has made an provision of Rs.10,59,718 on 07-07-2014 for Standard Assets pertaining to preveious year.

5. Upto the financial year ended 31.03.2014, the company has made provision for gratuity of Rs.2,04,592/- under the payment of Gratuity Act, 1972. The company has made provision of Rs. 3,01,871/- for Gratuity in the financial year ended 31.03.2015.

6. Contingent Liability is - Nil (previous year - Nil)

7. Balances shown under the head of Current Assets, Loans and Advances are considered as good and recoverable by the management.

8. Debit balances of debtors are subjected to confirmation and reconciliation form respective parties. The final adjustment, if any, in the account of parties shall be known only after confirmation / reconciliation, the amount of which could not be ascertained.

9. As per the Accounting Standard, disclosure regarding related party as defined in the are given below :

a. Enterprises where control Exist : Subsidiaries - Nil

Other Entities under control of company - Nil

b. Other related party with whom the company had transactions, etc.

i) Associates and Others :

a) Sindhu Trade Links Limited Director Interested

b) Kapil Construction Private Limited -do-

c) Indus Portfolio Private Limited -do-

d) Shyam Indus Power Solutions Private Limited -do-

e) ACB (India) Limited -do-

f) ACB (India) Power Limited -do-

g) Kartikay Coal Washery Private Limited -do-

h) Bhilwara Tex-fin Limited -do-

i) Sarvesh Coaltech Private Limited -do-

j) Mittersen Agro Farms Private Limited Shareholding

k) Pragati Vanijaya Limited -do-

l) Blastec (India) Private Limited -do-

ii) Joint Venture Nil

iii) Key Management

a) Sh.Kuldeep Singh Solanki Director

b) Sh.Rudra Sen Sindhu Director

10. Prudential Norms of the Reserve Bank of India (RBI) :

a) Appropriated 20% of the net profit to "Reserve Fund" under section 45-IC of the RBI Act.1934. - Rs.64,17,452/- (Previous year Rs.10,95,193/-)

Notes : i) As defined in Paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998.

ii) Provisioning norms shall be applicable as prescribed in the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007.

iii) All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquoted investments should be disclosed irrespective of whether they are classified as long term or current in column (4) above.

11. CIF Value of Import of Raw Materials Components, Spare parts & Capital goods : Nil

a) Expenditure in Foreign Currency : Nil

b) Remittance in Foreign Currency : Nil

c) Earning in Foreign currency : Nil (CIF Value in Exports)

12. Additional information in accordance of Companies Act, 2013. The company was discontinued its manufacturing operation in the Cement and Poles segment in Financial year 2012-13.

a) Licensed & Installed Capacity and Actual Production in MT: Nil (Previous Year- Nil)

b) Quantitative Detail of Consumption of Raw Materials and packing material : Nil (Previous Year- Nil )

13. Previous Years Figures are regrouped /reclassified wherever necessary.

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Mar 31, 2014

1. DEFERRED TAX LIABILITY

Deferred Tax - In accordance with the Accounting standard (AS-22) relating to “Accounting for Taxes on Income”, the company has recorded cumulative net deferred tax liability of Rs.74,53,375/- in respect of timing differences upto 1st April, 2013 as a reduction to General Reserves. Further, the deferred tax asset of the year amounting to Rs.50,64,284/- has been debited to the Profit & Loss Account

2. PROVISIONS

2.1 The company has made provision on Non Performing Assets in accordance with the RBI directives to the extent of Rs. 27,48,897/- which has been debited to the Profit & Loss Account.

2.2 Upto the financial year ended 31.03.2013, the company has made provision for gratuity of Rs.7,39,574/- under the payment of Gratuity Act, 1972. The company has made provision of Rs. Nil - for Gratuity in the financial year ended 31.03.2014. Although the company has paid gratuity to employees left.

3. INVESTMENTS

3.1 The company has made an investment of Rs.25,00,000 in the equity shares of M/s Haryana Financial Corporation(HFC). The said equity shares were forfeited by HFC and the company has filed an appeal against the same before the Hon’ble Company Law Board at New Delhi. The company law board has given directions for filing of a case before the appropriate court of law and the company has accordingly filed a case with Hon’ble Delhi High Court. During the year the Board of directors has decided to written off the said Investments.

4. In the opinion of the Board, Current Assets, Loans and Advances are approximately of the value stated, if realised in the ordinary course of business. Provision for Depreciation on Fixed Assets and other known liabilities has not been made in excess of the amount reasonably necessary.

5. Debit & credit balances of parties are subject to confirmation.

6. Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

7 Related party Disclosures

a. Enterprises where control Exist : Subsidiaries - Nil Other Entities under control of company - Nil

b. Other related party with whom the company had transactions, etc.

i) Associates

a) Sainik Mining And Allied Services Ltd.

b) Kapil Construction Private Limited

c) Indus Portfolio Private Limited

d) Global Coal Mining Private Limited

e) Shyam Indus Power Solutions Private Limited

f) ACB (India) Power Limited

g) Aryan Clean Coal Technologies Pvt.Ltd.

h) Kartikay Coal Washery Private Limited

i) Sarvesh CoalTech Private Limited

j) Mittersen Coal Tech Pvt.Ltd. (Shareholding)

k) Pragati Vanijaya Ltd. (Shareholding)

l) Blastec (India) Pvt.Ltd. (Shareholding)

ii) Joint Venture - Nil

iii) Key Management Personnel Nil

8. Other information

Notes : i) As defined in Paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998.

ii) Provisioning norms shall be applicable as prescribed in the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007.

iii) All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquoted investments should be disclosed irrespective of whether they are classified as long term or current in column (4) above.

9. Additional information in accordance with Part-II of Schedule VI of Companies Act, 1956. The company has discontinued its operation in the Cement and Poles manufacturing segment w.e.f. 31st July, 2012 and thereafter installed capacity (Plant & Machinery) has been partially removed and sold.

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Mar 31, 2013

1. GENERAL

The Company was incorporated on 22nd August 1991 with Registrar of Companies, NCT Delhi and Haryana in the name of M/s Garuda Clays Limited (a manufacturing company). Later on M/s Ramanuj Leasing Ltd which was incorporated on 02.01.1985 and was doing leasing & finance activities merged with M/s Garuda Clays Limited by order of the Hon''ble High Court of Delhi dt. 01.11.1999 and the said order was filed with registrar of companies on 04.12.2000. The name of M/s Garuda Clays Ltd. was later on changed to M/s Sainik Finance & Industries Ltd. and Company Identification Number is L26912DL1991PLC045449

The Company was engaged in manufacturing of 43 & 53 Grade Portland Cement (ITC Code : 25.23.29.10) and Pre-stressed Concrete Pole (ITC Code-68.69.60.00). The Company''s manufacturing unit was located at Rewari, Haryana.

The Company has discontinued its manufacturing activities in the Cement and Poles manufacturing segment. The Board of Directors, vide resolution passed on 1st June, 2012, had taken a decision to suspend the production of Cement etc. with immediate effect due to the erratic power supply, high per unit cost of captive generation of power, non-availability of quality raw material. Pursuant to the resolution passed, the Company has discontinued its manufacturing operations w.e.f. 31st July 2012 and has taken steps to dispose off the assets deployed in the said operations.

The Company is also engaged in non-banking finance activities and registered with Reserve Bank of India as Non Banking Finance Company. The Reserve Bank of India has renewed its registration on 03/09/2003 vide new registration certificate No. N.14.02967.

2. In the opinion of the Board, Current Assets, Loans and Advances are approximately of the value stated, if realised in the ordinary course of business. Provision for Depreciation on Fixed Assets and other known liabilities has not been made in excess of the amount reasonably necessary.

3. Debit & credit balances of parties are subject to confirmation.

4. Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

5. Schedule in terms of paragraph 9BB of Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 2007

Notes : i) As defined in Paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998.

ii) Provisioning norms shall be applicable as prescribed in the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007.

iii) All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquoted investments should be disclosed irrespective of whether they are classified as long term or current in column (4) above.

6. Additional information in accordance with Part-II of Schedule VI of Companies Act,1956. The company has discontinued its operation in the Cement and Poles manufacturing segment w.e.f. 31st July, 2012 and thereafter the installed capacity of 66000 MTPA for Cement and 99000 Nos Poles per annum has been reflected on pro-rata basis for 4 months as 22000 MT for Cement and 33000 Nos for Poles.

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Mar 31, 2012

1. GENERAL

The Company was incorporated on 22nd August 1991 with Registrar of Companies, NCT Delhi and Haryana in the name of M/s Garuda Clays Limited (a manufacturing company). Later on M/s Ramanuj Leasing Ltd which was incorporated on 02.01.1985 and was doing leasing & finance activities merged with M/s Garuda Clays Limited by order of the Hon'ble High Court of Delhi dt. 01.11.1999 and the said order was filed with registrar of companies on 04.12.2000. The name of M/s Garuda Clays Ltd. was later on changed to M/s Sainik Finance & Industries Ltd. and Company Identification Number is L26912DL1991PLC045449.

The Company is now engaged in manufacturing of 43 & 53 Grade Portland Cement (ITC Code : 25.23.29.10) and Pre-stressed Concrete Pole (ITC Code-68.69.60.00). The Company's manufacturing unit are located at Rewari, Haryana. The Company is also engaged in non-banking finance activities and registered with Reserve Bank of India. The Reserve Bank of India was renewed its registration on 03.09.2003 vide new registration certificate No. N.14.02967.

2. DEFERRED TAX LIABILITY (Net)

2.1 Deferred Tax -In accordance with the Accounting standard (AS-22) relating to "Accounting for Taxes on Income", the company has recorded cumulative net deferred tax liability of Rs. 89,81,598/- in respect of timing differences upto 1st April, 2011 as a reduction to General Reserves. Further, the deferred tax asset of the year amounting to Rs. 1,74,197/- has been debited to the Profit & Loss Account

3. PROVISIONS

3.1 The company has made provision on Non Performing Assets in accordance with the RBI directives to the extent of Rs. 75,36,775/- which has been debited to the Profit & Loss Account.

3.2 Upto the financial year ended 31.03.2011, the company has made provision for gratuity of Rs. 22,11,001/- under the payment of Gratuity Act, 1972. The company has made provision of Rs. Nil - for Gratuity in the financial year ended 31.03.2012. Although the company has written back excess provision of Gratuity due to decrease in number of employees.

4. INVESTMENTS

4.1 The company has made an investment of Rs. 25,00,000 in the equity shares of M/s Haryana Financial Corporation(HFC). The said equity shares were forfeited by HFC and the company has filed an appeal against the same before the Hon'ble Company Law Board at New Delhi. The company law board has given directions for filing of a case before the appropriate court of law and the company has accordingly filed a case with Hon'ble Delhi High Court, which is pending for disposal.

4.2 The company has sold 2451 equity shares (face value of Rs. 10/- each) of Sainik Mining And Allied Services Ltd at a price of Rs. 26910/-

5. EMPLOYEE BENEFITS EXPENSE

5.1 Compensation paid to Mr. Kulwant Singh due to causality happened at Plant during the repairing of electricity control panel.

5.2 Salary includes Director remuneration of Rs. 390,000/- paid to Dr. Punit Ghai, Director of the Company (Previous year Rs. Nil)

6. OTHER EXPENSES

6.1 Donation - Rs. Nil (Previous year Rs. 100000/- paid to Bhartiya Janata Party Vishesh Sahyog Nidi-complied u/s 293A)

7. In the opinion of the Board, Current Assets, Loans and Advances are approximately of the value stated, if realised in the ordinary course of business. Provision for Depreciation on Fixed Assets and other known liabilities has not been made in excess of the amount reasonably necessary.

8. Event occurring between the date of Balance Sheet and date of approval of financial statement (AS-4) -

The Board of Directors, vide resolution passed on 1st June, 2012, have taken a decision to suspend the production of Cement etc. with immediate effect due to the erratic power supply, high per unit cost of captive generation of power, non-availability of quality raw material. Pursuant to the resolution passed the Company has discontinued its manufacturing operations w.e.f. 31st July 2012.

9. Debit & credit balances of parties are subject to confirmation.

10. Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

11. Related party Disclosures:

b. Other related party with whom the company had transactions, etc.

i) Associates

a) Sainik Mining And Allied Services Ltd.

b) Kapil Construction Pvt. Ltd.

c) Indus Portfolio Pvt. Ltd.

d) Paramitra Holdings Pvt. Ltd.

e) Maneesha Finlease Ltd.

f) Global Coal Mining Pvt. Ltd.

g) Sindhu Trade Links Limited

h) Shyam Indus Power Solutions Pvt. Ltd.

i) Aryan Clean Coal Technologies Pvt. Ltd.

j) ACB (India) Ltd.

k) Aryan Energy Pvt. Ltd.

12. Schedule in terms of paragraph 9BB of Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998

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Mar 31, 2010

1) Claims against the company not acknowledged as debts Rs. NIL (Previous year - Rs. NIL)

2) Estimated amount of contracts remaining to be executed on capital account not provided for Rs. NIL (Previous Year - Rs. NIL)

3) In the opinion of the Board, Current Assets, Loans and Advances are approximately of the value stated, if realised in the ordinary course of business. Provision for Depreciation on Fixed Assets and other known liabilities has not been made in excess of the amount reasonably necessary.

4) Profit & Loss Account does not include any remuneration paid to directors.

5) None of the Employees of the Company was in receipt of remuneration exceeding Rs.2,00,000/- per month where employed for the part of the year or Rs.24,00,000/- per annum where employed throughout the year.

6) Upto the financial year ended 31.03.2009, the company has made provision for gratuity of Rs.20,82,355/- under the payment of Gratuity Act, 1972. The company has made provision of Rs.772/- for Gratuity in the financial year ended 31.03.2010.

7) Debit & credit balances of parties are subject to confirmation.

9) Previous year figures have been re-grouped/recast & rounded off to make the same comparable with those of the current year. Paise have been rounded off to nearest Rupee in the Previous Year figures.

8) The company has made provision on Non Performing Assets in accordance with the RBI directives to the extent of Rs.53,69,548/- which has been debited to the Profit & Loss Account.

9) The company has made an investment of Rs.25,00,000 in the equity shares of M/s Haryana Financial Corporation(HFC). The said equity shares were forfeited by HFC and the company has filed an appeal against the same before the Honble Company Law Board at New Delhi. The company law board has given directions for filing of a case before the appropriate court of law and the company has accordingly filed a case with Honble Delhi High Court, which is pending for disposal.

10) Deferred Tax: In accordance with the Accounting standard (AS-22) relating to "Accounting for Taxes on Income", the company has recorded cumulative net deferred tax liability of Rs.96.68 lacs in respect of timing differences upto 1st April, 2009 as a reduction to General Reserves. Further, the deferred tax asset of the year amounting to Rs.2.00 lacs has been debited to the Profit & Loss Appropriation Account.

11) Schedule 1-14 are duly authenticated and form an integral part of the Balance Sheet as at 31st March, 2010.