Accounting Policies of Sakthi Finance Ltd. Company

Mar 31, 2025

3. Material Accounting Policies

a. Financial instruments

A Financial Instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.

i. initial recognition and Measurement

Financial assets and Financial liabilities are initially
recognized on the date the company becomes
a party to the contractual provisions of the
instrument.

Financial assets and financial liabilities are initially
measured at fair value. Transaction costs directly
attributable to the acquisition of financial assets or
financial liabilities measured at fair value through
profit or loss are recognised immediately in the
Statement of Profit and Loss.

Transaction costs directly attributable to the
acquisition or issue of financial assets and financial
liabilities that are measured at amortised cost
are added to or deducted from the fair value
of the financial assets or financial liabilities, as
appropriate, on initial recognition.

Unlike the other financial assets, Trade receivables
are measured at transaction price at which the
transaction had taken place.

ii. Classification and subsequent Measurement

The financial assets are classified based on the
Company''s business model for managing the
financial assets and their contractual cash flow
characteristics as subsequently measured:

a) At amortised cost

b) At Fair Value Through Other Comprehensive
Income ("FVTOCi")

c) At Fair Value Through Profit or Loss ("FVTPL")
The Company classifies its financial liabilities at
amortised cost unless it has designated liabilities at
fair value through profit or loss.

Financial assets at amortised cost
The classification of financial assets such as Cash
and Cash Equivalents, Loans, Trade Receivables
and investments (other than those classified at
FVTOCI) are measured at amortized cost based on
the assessment of business model as follows:

Business Model assessment

An assessment of business model for managing
financial assets is fundamental to the classification
of a financial asset.

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

• How the performance of the business model and
the financial assets held within that business
model are evaluated and reported to the
company''s key management personnel;

• 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;

• How managers of the business are compensated
(for example, whether the compensation is
based on the fair value of the assets managed or
on the contractual cash flows collected); and

• The expected frequency, value and timing of
loan disbursements based on the analysis of
disbursements made and realisation of cash
flows in previous periods.

The financial assets of the company are held within a
business model, whose objective is to hold assets in
order to collect contractual cash flows, are managed
to realise cash flows by collecting contractual
payments over the life of the instrument and within
the business model whose objective is achieved
by both collecting the contractual cash flows and
selling the financial asset.

the solely Payments of Principal and interest
("sPPi") test on the principal amount outstanding:

For an asset to be classified and measured at
amortised cost, its contractual terms should give
rise to cash flows that meet SPPI test.

For that purpose:

''Principal'' for the purpose of this test is defined
as the fair value of the financial asset at initial
recognition and may change over the life of the
financial asset.

The interest income represents the consideration
for time value of money, credit risk, other basic
lending risks and a profit margin that is consistent
with a basic lending arrangement.

The SPPI assessment is made in the currency in
which the financial asset is denominated.

The contractual terms of the financial asset give
rise on specified dates to cash fiows that are Solely
Payments of Principal and Interest ("SPPI") on the
principal amount outstanding.

Financial Assets at FVTOCI
Equity instruments

The Company has made an irrevocable election
to classify and measure the equity instruments
at FVTOCI to present the subsequent changes in
Fair Value under Other Comprehensive Income
("OCI") and the classification is determined on an
instrument by instrument basis.

Gains and losses on these equity instruments
are never recycled to profit or loss. Dividends are
recognised in profit or loss as dividend income
when the right to receive the payment has been
established, except when the company benefits
from such proceeds as a recovery of part of the cost
of the instrument, in which case, such gains are
recorded in OCI.

Financial Liabilities at Amortised Cost

The company has classified the debt instruments,
redeemable non-convertible preference shares
and other borrowed funds at amortised cost.
Amortised cost is calculated by taking into account
any discount or premium on issue of funds and
transaction costs that are an integral part of the
Effective Interest Rate ("EIR").

Any fees, paid or received, transaction costs and
other premiums or discounts that are included in
the calculation of the effective interest rate are
amortised over the expected life of the financial
instrument.

iii. Reclassification of Financial Instrument

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 during the financial year.

Till 31st March 2020, the issue expenses relating to
public issue of Non-Convertible Debentures was set
off against securities premium. From 1st April 2020
onwards, the amortised issue expenses are written
off in the statement of profit and loss.

Recognition of Financial Instrument
• Loans and Advances are initially recognised
when the agreements are entered into with
borrowers.

• Investments are initially recognised on the
settlement / delivery date.

• Debt securities, deposits and borrowings are
initially recognised when funds received or date
of allotment whichever is appropriate,

• Other Financial assets and liabilities are initially
recognised on the trade date, i.e., the date that
the Company becomes a party to the contractual
provisions of the instrument.

iv. Derecognition of Financial Instrument
Financial Assets

The Company derecognises the Financial Asset
when and only when:

• The contractual rights to receive the cash fiows
from the financial asset have expired.

• The Company also derecognizes the Financial
Asset if it has both transferred the Financial Asset
and the transfer qualifies for derecognition. The
Company has transferred the Financial Asset, if
and only if, either:

• The Company has transferred its right to receive
cash fiows from the Financial asset or

• It retains the rights to the cash fiows, but has
assumed an obligation to pay the received cash
fiows in full without material delay to a third
party under a ''pass-through'' arrangement.

A transfer qualifies for derecognition only if either :

a. the Company has transferred substantially all
the risks and rewards of the asset, or

b. the Company has neither transferred nor
retained substantially all the risks and rewards
of the asset, but has transferred control of the
asset.

On derecognition of a financial asset, the difference
between:

a. the carrying amount (measured at the date of
derecognition) and

b. the consideration received, is recognised in the
statement of profit and loss.

Financial Liabilities

The Company derecognises the financial liability
when and only when it is extinguished i.e. when the
contractual obligation is discharged or cancelled or
expired.

A financial liability is considered as extinguished
when there is an exchange between the Company
and the lender with substantially different terms
of the original financial liability or when there is
a substantial modification of the terms of existing
financial liability or part thereof.

On derecognition of a financial liability, the
difference between:

a. the carrying amount and

b. the consideration paid,

is recognised in the statement of profit and loss.

v. impairment of Financial Assets

The Company records allowance for expected credit
losses for all loans, other financial assets not held at
fair value through profit or loss ("FVTPL"), referred
to as ''financial instruments. Equity instruments are
not subject to impairment under Ind AS 109.

The impairment loss allowance is provided based
on the Expected Credit Loss ("ECL") model.

The ECL is based on the credit losses expected to
arise over the life of the financial asset (the lifetime
expected credit loss), unless there has been no
significant increase in credit risk since origination,
in which case, the allowance is based on the 12
months'' expected credit loss.

Lifetime ECL are the expected credit losses resulting
from all possible default events over the expected
life of a financial instrument. The 12-month ECL
is the portion of Lifetime ECL 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 has formulated a policy to perform
an assessment, whether a financial instrument''s
credit risk has increased significantly since initial
recognition, by considering the change in the risk
of default occurring over the remaining life of the
financial instrument. When determining whether
the risk of default on a financial asset has increased
significantly since initial recognition, the company
considers reasonable and supportable information
that is relevant and available without undue cost
or effort. This includes both quantitative and
qualitative information which takes into account the
Company''s historical credit loss experience, current
economic conditions, forward looking information.
The expected credit loss is a product of Exposure
at Default (''EAD''), Probability of Default (''PD'')
and Loss Given Default (''LGD''). The Company has
devised an internal model to evaluate the LGD and
PD based on the parameters set out in Ind AS 109.
EAD represents the expected exposure in the event
of a default and is the gross carrying amount in case
of the financial assets are held by the Company. LGD
is an estimate of loss from a transaction given that
a default occurs. PD is defined as the probability
of whether the borrowers will default on their
obligations in the future.

The Company incorporates forward-looking
information into both assessments of whether
the credit risk of an instrument has increased
significantly since its initial recognition and its
measurement of ECL. Based on the consideration
of external actual and forecast information, the
Company forms a ''base case'' view of the future
direction of relevant economic variables. This
process involves developing two or more additional
economic scenarios and considering the relative
probabilities of each outcome. The base case
represents the most likely outcome while the other
scenarios represent more optimistic and more
pessimistic outcomes.

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 ffows 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 ECL calculations
are outputs of complex models with a number of
underlying assumptions regarding the choice of
variable inputs and their interdependencies. The
inputs and models used for calculating ECLs may not
always capture all characteristics of the market at
the date of the financial statements. The Company
regularly reviews its models in the context of actual
loss experience and makes adjustments when such
differences are significantly material. Adjustments
including reversal of ECL are recognised through
the statement of profit and loss.

Significant increase in credit risk
The Company continuously monitors all assets
subject to ECLs in order to determine whether an
instrument or a portfolio of instruments is subject
to 12 month''s ECL or lifetime ECL. The Company
assesses whether there has been an event which
could cause a significant increase in the credit risk
of the underlying asset or the customers'' ability to
pay and accordingly change the 12 month''s ECL to a
lifetime ECL. The Company does the assessment of
significant increase in credit risk at a borrower level.
Regardless of the above, if contractual payments
are more than 30 days past due, the credit risk is
deemed to have increased significantly since initial
recognition.

The financial assets have been segmented into three
stages based on the risk profiles. The three stages
reflect the general pattern of credit deterioration of
a financial asset as detailed below:

Stage 1

Financial assets, where there has not been a
significant increase in credit risk since initial
recognition or that has low credit risk at the
reporting date and that are not credit impaired
upon origination, are classified under this Stage.
The Company classifies all standard loans and loans
up to 30 days overdue under this category. Stage 1
loans also include facilities where the credit risk has
improved and the loan has been reclassified from
Stage 2 and 3. The Company provides 12 month''s
ECL for Stage 1 assets.

Stage 2

Financial assets, where there has been a significant
increase in credit risk since initial recognition but
do not have a objective evidence of impairment
are classified under this Stage. 30 Days Past Due is
considered under Stage 2. The Company provides
Lifetime ECL for Stage 2 assets.

Stage 3

All exposures assessed as credit impaired when one
or more events that have a detrimental impact on
the estimated future cash fiows of that asset have
occurred are classified under this Stage. 90 Days
Past Due is considered as default for classifying
a financial instrument as credit impaired. For
exposures that have become credit impaired, a life
time ECL is recognized, a 100% PD is considered
and interest revenue is calculated by applying the
effective interest rate to the amortised cost (net of
provision) rather than the gross carrying amount.
Definition of default

If the borrower is past due for more than 90 days
on any material credit obligation to the Company or
the borrower is unlikely to pay his credit obligations
to the Company in full, it is considered as default.
Credit-impaired financial assets
At each reporting date, the Company assesses
whether financial assets carried at amortised cost
are credit-impaired. A financial asset is ''credit-
impaired'' when one or more events that have a
detrimental impact on the estimated future cash
fiows of the financial asset have occurred.

ECL on investment in Government securities
The Company has invested in Government Securities.
No ECL has been applied on these investments as
there is no history of delay in servicing of interest/
repayments. The Company does not expect any
delay in interest/redemption servicing in future.
Simplified approach for trade/other receivables
The Company follows ''simplified approach'' for
recognition of impairment loss allowance on trade/
other receivables that do not contain a significant
financing component.

vi. Offsetting of Financial Instruments

Financial assets and financial liabilities are offset
and the net amount presented in the balance sheet
when, and only when, the Company currently has a
legally enforceable right in the event of default to
set off the amounts which must not be contingent.

b. Collateral Valuation and repossession

To mitigate its credit risks on financial assets, the
Company seeks to use collateral such as movable
and immovable assets, guarantees, etc, wherever
applicable. To the extent possible, the Company uses
active market data and external valuers for valuing
financial assets held as collateral. Other financial assets
which do not have readily determinable market values
are valued using models or through external valuers.
The Company physically repossesses and takes
into custody properties or other assets to settle
outstanding debt. Any surplus funds are returned
to the customers/ obligors. Assets held under legal
repossession processes are not recorded in the balance
sheet as it does not meet the recognition criteria in
other standards and disclosed in the notes to Financial
Statements.

c. 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, as per
write-off policy of the Company. This is generally the
case when the Company determines that the debtor
does not have assets or sources of income that could
generate sufficient cash flows to repay the amounts
subject to the write-off. However, financial assets that
are written- off could still be subject to enforcement
activities under the Company''s recovery procedures,
taking into account legal advice where appropriate.
Any recoveries made are recognised in the statement
of profit and loss.

d. Undrawn Loan Commitments

Undrawn loan commitments are commitments under
which, over the duration of the commitment, the
Company is required to provide a loan with pre¬
specified terms to the borrower. They are not recognised
in the Financial Statements. The Company did not have
any undrawn loan commitments in the current financial
year or the preceding year.

e. Fair Value Measurement

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

A fair value measurement assumes that the transaction
to sell the asset or transfer the liability takes place
either:

1. in the principal market for the asset or liability; or

2. in the absence of a principal market, in the most
advantageous market for the asset or liability

The principal or the most advantageous market is
accessible by the company on the measurement date.
The Company measures the fair value of an asset or
liability using the assumption that market participants
would use when pricing the asset or liability.

The price is either directly observable or estimated
using another valuation technique. The Company had
adopted valuation techniques that are appropriate in
the circumstances and for which sufficient data are
available to measure fair value by maximizing the use
of relevant observable inputs and minimizing the use
of unobservable inputs.

The company applied the fair value hierarchy for the
inputs to valuation techniques used to measure fair
value. The three levels of hierarchy are given below:

The Company determines appropriate classes of assets
and liabilities on the basis of the following:

a. the nature, characteristics and risks of the asset or
liability; and

b. the level of the fair value hierarchy within which the
fair value measurement is categorized.

The company evaluates the levelling at each reporting
period on an instrument by instrument basis and
reclassifies instruments when necessary based on the
facts at the end of the period.

f. Property, Plant and Equipment ("PPE")

The Company has elected to use fair value for Land,
Building and Plant & Machinery and carrying value for
all other property, plant & equipment, Intangible assets
as the deemed cost on the date of transition to Ind AS..
The Company recognises an item of Property, Plant and
Equipment when:

a. it is probable that future economic benefits
associated with the item will flow to the Company;
and

b. the cost of the item can be measured reliably.

The cost of assets comprises its purchase price, freight,
duties, taxes and any costs directly attributable to
bringing the asset to the location and condition
necessary for it to be capable of operating in the
manner intended by the management.

Subsequent expenditures related to an item of tangible
asset are added to its gross value only if it increases
the future benefits of the existing asset, beyond its
previously assessed standards of performance if it is
probable that future economic benefits will flow to
the Company from that expenditure and cost can be
measured reliably. Other repairs and maintenance
costs are expensed off as and when incurred.

Property, Plant and Equipment is carried at cost less
accumulated depreciation and any accumulated
impairment losses.

Capital work in progress comprises the cost of PPE that
are not ready for its intended use at the reporting date.
Depreciation

Depreciation is calculated by using the straight-line
Depreciation is calculated by using the straight-line
method to write down the cost of Property, Plant and
Equipment (other than freehold land) to their residual
values over their estimated useful lives which is in line
with the estimated useful life as specified in Schedule
II to the Act except for leasehold improvements
which are amortised on a straight-line basis over the
period of lease or estimated period of useful life of
such improvement, subject to a maximum period

The Management has considered the useful life of
office equipments and computers as 10 years and 6
years respectively.

Property, Plant and Equipment 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 net carrying amount of the asset) is
recognised in other income / expense in the statement
of profit and loss in the year in which the asset is
derecognized.

g. intangible Assets and Amortisation

Intangible assets are carried at its cost less any
accumulated amortisation and accumulated impairment
losses, if any.

The intangible assets comprise computer software
which is amortized over its estimated useful life,
under straight line method. The amortisation charge
is calculated by using the straight line method to write
down the cost of intangible assets over their estimated
useful life of 6 years as per Management''s estimate.
There are no items of intangible assets with "indefinite"
lives.

Amortization is recognised as an expense in the
statement of profit and loss for the period. The
Company has a practice of reviewing the method and
period of amortisation as at the end of each financial
year.

An intangible asset is derecognised on disposal or
when no future economic benefits are expected from
its use or disposal.

Any gain or loss arising on derecognition of the
intangible assets (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 in which the
asset is derecognized.

h. investment Property

Investment properties are properties held to earn
rentals and/or for capital appreciation or both.
Investment properties are measured initially at cost,
including transaction costs.

Subsequent to initial recognition, investment properties
are stated at cost less accumulated depreciation and
impairment losses, if any. When significant parts of
the investment property are required to be replaced
at intervals, the company depreciates them separately
based on their specific useful lives. All other repair and
maintenance costs are recognised in the statement of
profit and loss as incurred.

The company, based on technical assessment made
by management, depreciates the building over its
estimated useful life of 60 years. The management
believes that these estimated useful life is realistic and
reflect fair approximation of the period over which the
assets are likely to be used.

Though the Company measures investment property
using cost-based measurement, the fair value of
investment property is disclosed in Note 10. Fair value
is determined based on an annual evaluation performed
by an accredited external independent valuer.

i. impairment of Non-Financial Assets

The Company reviews the carrying amounts of PPE,
Investment Property and Intangible assets to determine,
if there is an indication that those assets have suffered
any impairment loss. In case of any such indication
those non-financial assets are tested for impairment so
as to determine the impairment loss if any, at the end of
each reporting period.

j. Employee Benefits

Short Term Employee Benefits

Short-term employee benefits are recognised as
expense when the related service is provided. A liability
for salaries and wages, Bonus, leave encashment is
recognised for the amount expected to be paid if the
Company has 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.

Defined Contribution Plan

Employees Provident Fund ("EPF") and Employees
state insurance ("ESi")

Retirement benefits such as employees provident
fund and employees state insurance comes under
the defined contribution plan for which the Company

make contributions to such schemes administered by
government organisations set up under the applicable
statute and are recognised as an expense when an
employee renders related service.

Defined Benefit Plans
Gratuity

The obligation in respect of defined benefit plans,
which covers Gratuity is provided for on the basis of
an actuarial valuation at the end of each financial year
by an Independent Actuary using Projected Unit Credit
method. The Company makes contribution to a Gratuity
Fund administered and managed by Life Insurance
Corporation of India ("LIC").

The present value of the defined benefit obligation is
determined by discounting the estimated future cash
outflows by reference to market yields as at the end
of the reporting period on government bonds that
have terms approximating to the terms of the related
obligation.

Past services are recognised at the earlier of the plan
amendment / curtailment and recognition of related
restructuring costs/termination benefits.

The Company recognises the changes in the net defined
benefit obligation such as service cost (including
current service cost, past service cost, as well as gains
and losses on curtailments and settlements) under
employee benefit expenses and net interest expense
or income in the Statement of Profit and Loss in the line
item, Employee Benefits Expenses.

Re-measurements of defined benefit plan, comprising
actuarial gains and losses, the return on plan
assets(excluding amounts included in net interest
on the net defined benefit liability), are recognised
immediately in the balance sheet with a corresponding
debit or credit to Other Comprehensive ncome ("OCI")
in the period in which they occur. Re- measurements are
not reclassified to profit or loss in subsequent periods.

The retirement benefit obligation recognised in the
Balance Sheet represents the actual deficit or surplus
in the Company''s defined benefit plans. Any surplus
resulting from this calculation is limited to the present
value of any economic benefits available in the form
of refunds from the plans or reductions in the future
contribution to the plans..

Other Long-Term Benefits

Leave Encashment, Compensated Absences and
Sick Leave

The Company provides for the encashment / availment
of leave with pay subject to certain rules. The
employees are entitled to accumulate leave subject to

certain limits for future encashment / availment. The
liability is provided based on the number of days of
unutilized leave at each balance sheet date on the basis
of an independent actuarial valuation.

The service cost, interest on defined benefit liability
and remeasurements of defined benefit liability is
recognised in the statement of profit or loss.

k. Revenue Recognition

i. Recognition of interest income on loans

The Company recognises interest income using
Effective Interest rate Method "EIR" on all financial
assets (loans) measured at amortised cost.

EIR is the rate that exactly discounts estimated
future cash receipts through the expected life of
the financial asset, to the gross carrying amount of a
financial asset. The future cash flows are estimated
using the contractual terms of the instrument.

The Company calculates interest income by applying
the EIR to the gross carrying amount of financial assets
other than credit-impaired assets. In case of credit-
impaired financial assets (''Stage 3''), the Company
recognises interest income on the amortised cost
net of impairment loss of the financial asset at EIR.
If the financial asset is no longer credit-impaired, the
Company reverts to calculating interest income on a
gross basis.

Interest levied on customers for delay in repayments/
non-payment of contractual cash flows is recognised
on realization, since the probability / certainty of
collecting such monies is established when the
customer pays.

Interest Income from Government securities is
recognized on time proportion basis taking into
account the amount outstanding and the rate
applicable.

ii. Dividend income

Dividend income on equity shares is recognized
when the Company''s'' right to receive the payment is
established by the reporting date and no significant
uncertainty as to its collectability exists.

iii. Other Operating income

The Company recognises revenue from contracts
with customers (other than financial assets to which
Ind AS 109 ''Financial Instruments'' is applicable)
based on a comprehensive assessment model as
set out in Ind AS 115 ''Revenue from contracts with
customers. The Company identifies contract(s) with
a customer and its performance obligations under
the contract, determines the transaction price
and its allocation to the performance obligations
in the contract and recognises revenue only on

satisfactory completion of performance obligations.
The Company recognises income on recoveries of
financial assets written off on realisation basis.

iv. Rental income

Rental income arising from operating leases
is recognised on a straight-line basis over the
lease term. In cases where the increase is in line
with expected general inflation, rental income is
recognised as per the contractual terms.

Operating leases are leases where the Company
does not transfer substantially all of the risks and
benefits of ownership of the asset.

v. Fees and Commission income

The Company recognises service and administration
charges towards rendering financial services
to its customers on satisfactory completion of
performance obligation at a point in time. Cheque
Bouncing charges levied on customers for non¬
payment of instalment on the contractual date is
recognised on realization, since the probability/
certainty of collecting such monies is established
only when the customer pays. Foreclosure charges
are collected from loan customers for early payment/
closure of loan and are recognised on realization,
since the probability / certainty of collecting such
monies is established only when the customer pays.

vi. Sale of Power from Windmills

Income from power generation is recognized as per
the Power Purchase Agreements entered into with
State Electricity Board and on supply of power to the
grid on satisfaction of performance obligation.

vii. Net gain/loss on fair value changes

The Company designates certain financial assets for
subsequent measurement at FVTOCI. The Company
recognises gains/loss on fair value change of
financial assets measured at FVTOCI.

l. Foreign currency Transaction

The functional currency and presentation currency of
the Company is Indian Rupee. Functional currency of the
Company have been determined based on the primary
economic environment in which the Company and its
foreign operations operate considering the currency in
which funds are generated, spent and retained.
Transactions in currencies other than the Company''s
functional currency are recorded on initial recognition
using the exchange rate at the transaction date. At each
Balance Sheet date, foreign currency monetary items
are translated at the prevailing closing spot rate. Non¬
monetary items are measured in terms of historical cost
in foreign currency and are not retranslated.

Exchange differences, if any, that arise on settlement
of monetary items or on reporting of monetary items
at each Balance Sheet date at the closing spot rate are
recognised in the Statement of Profit and Loss in the
period in which they arise.

m. Borrowing costs

Borrowing costs include interest expense calculated
using the ”EIR" as per Ind AS 109 on ''Financial
instruments'' and interest in respect of lease liability is
recognised in accordance with Ind AS 116.

Borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying
asset are capitalised as part of cost of such asset till
such time the asset is ready for its intended use or sale.
A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended
use or sale. All other borrowing costs are recognised in
the statement of profit and loss in the period in which
they are incurred.

n. Finance costs

Finance costs include Interest Expenses computed
by applying the "EIR" on the respective financial
instruments measured at amortised cost. Financial
Instruments include outstanding liabilities. Finance
Costs are charged to the Statement of Profit and Loss.

o. income taxes

Tax expense (tax income) comprises current tax
expense (current tax income) and deferred tax expense
(deferred tax income)

i. current tax

Current tax is the amount of tax payable to (recovered
from) the taxation authorities on the taxable income
for the year determined in accordance with the
provisions of the Income Tax Act 1961 and Income
Computation and Disclosure Standards prescribed
therein. The tax rates and tax laws used to compute
the amount are those that are enacted by the end
of reporting date. Current tax relating to items
recognised outside the statement of profit and
loss is recognised in correlation to the underlying
transaction either in OCI or directly in other equity.

ii. Deferred tax

Deferred tax is the tax effect on temporary
differences between the tax bases of assets and
liabilities and their carrying amounts in the Financial
Statements as at the reporting date.

Deferred tax liability is recognised for all taxable
temporary differences and deferred tax asset is
recognised for all deductible temporary differences
to the extent that it is probable that taxable profit
will be available against which the deductible
temporary difference can be utilised.

Deferred tax assets and liabilities are measured at
the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled,
based on tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the
reporting period.

The Company reviews the carrying amount of a
deferred tax asset as at the end of each reporting
period and reduce the carrying amount of a deferred
tax asset to the extent that it is no longer probable
that sufficient taxable profit will be available to
allow the benefit of part or all of that deferred tax
asset to be utilised.

Deferred tax relating to items recognized outside
profit or loss is recognised either in other
comprehensive income or in other equity.

p. Goods and Services input Tax Credit

Input Tax credit is accounted for in the books in the
period when the underlying service/supply received is
accounted to the extent permitted as per the applicable
regulatory laws and when there is no uncertainty
in availing/utilising it. The ineligible input credit is
charged off to the respective expense or capitalised as
part of asset cost as applicable.

q. Leases

As a Lessee

The Company''s asset class taken under lease consists
of lease for Office Premises.

The Company has applied Ind AS 116 ''Leases'' for all
lease contracts except for short term leases and leases
for which underlying asset is of low value on modified
retrospective approach.

Right of Use Asset is initially measured as at the sum of
initial measurement of the lease liability and any lease
payments made at or before the date of commencement
of lease, adjusted by any lease incentives received.
On subsequent period, the Right of Use Asset is
measured at cost less accumulated depreciation and
any accumulated impairment losses with adjustment
for remeasurement of lease liability.

Lease Liability is initially measured at the present value
of the lease payments that are not paid as at the date of
recognition discounted at the Company''s incremental
borrowing rate. The lease liability is measured in
subsequent periods using the effective interest rate
method. Right of Use asset is depreciated in accordance
with the requirements of Ind AS 16 Property, Plant
and Equipment, using straight line method from the
commencement date to the end of the lease term. The
lease term over which the company has contracted
operating lease agreements range from up to 11
months and to many years.

The Company''s class of underlying asset comprises
only leases taken for office premises. The company
has elected not to apply the requirements of Ind AS
116 "Leases" to short-term leases of all such class of
assets that have a lease term of 12 months or less. The
Company has elected not to apply the requirements of
Ind AS 116 "Leases" to leases for which the underlying
asset is of low value on a lease by lease basis. The lease
payments associated with these leases are recognised
as an expense on a straight-line basis over the lease
term.

As a Lessor

The Company recognises the lease payments from
operating lease as income on the basis of contractual
terms between the Lessee and the Company.

---

Mar 31, 2024

1. Company Overview

Sakthi Finance Limited ("SFL" or "the Company") with Corporate Identification Number

L65910TZ1955PLC000145 incorporated on 30th March 1955 under the Indian Companies Act 1913 and domiciled in Coimbatore India, is a Public Limited Company situated in Coimbatore. The Registered Office of the Company is situated at 62, Dr. Nanjappa Road, Coimbatore - 641018. The Company is a Deposit-taking Non-Banking Financial Company ("NBFC") registered with Reserve Bank of India ("RBI") under Sec 45-IA of the RBI Act 1934 with Certificate of Registration No. 07-00252 dated 8th May 1998. The Company has been classified as an NBFC-Investment and Credit Company ("NBFC-ICC").Further in terms of Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023 ("RBI-SBR Directions"), the company has been categorised as Middle Layer ("ML") as specified therein. The Company is primarily engaged in the business of Hire Purchase Financing of Commercial Vehicles, Infrastructure Equipment, Machineries, etc. The Equity Shares and Non-Convertible Debentures of the Company are listed on BSE Limited.

The Board of Directors have, at their meeting held on 25th May 2024, approved and authorized the issue of these Financial statements of the Company for the year ended 31st March 2024.

2. Basis of Preparation and Presentation

a. Statement of Compliance

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards ("Ind AS") as per the Companies (Indian Accounting Standards) Rules 2015, as amended and notified under Section 133 of the Companies Act 2013 ("the Act") and is in conformity with the accounting principles generally accepted in India and other relevant provisions of the Act as applicable. Further, the Company has complied with the RBI-SBR Directions and other circular(s), as applicable.

Any application / guidance / clarifications / directions issued by RBI or other regulators are implemented as and when they are issued / applicable.

Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

The regulatory disclosures, as required under RBI-SBR Directions and other Master Directions/Circular(s), if any, are included in the Notes forming as an integral part of the financial statements.

b. Presentation of Financial Statements

The company presents its balance sheet in the order of liquidity. Financial statements of the Company are

prepared and presented in the format prescribed in Division III of Schedule III to the Act applicable to NBFCs, as notified by the Ministry of Corporate Affairs ("MCA"). Financial assets and financial liabilities are generally reported gross in the balance sheet.

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

• The normal course of business

• The event of default

• The event of insolvency or bankruptcy of the Company and/or its counter parties

c. Basis of Measurement

The financial statements have been prepared on a going concern basis and on historical cost convention, except for certain financial instruments that are measured at Fair Value Through Other Comprehensive Income ("FVTOCI") at the end of each reporting period. Accounting policies have been consistently applied to all periods presented, unless otherwise stated.

d. Functional and Presentation Currency

The Financial Statements are presented in Indian Rupees (?) which is the Company''s functional currency. All amounts are rounded off to the nearest lakhs with two decimals except where otherwise indicated.

The aggregation and classification of amounts in the financial statements are based on materiality and similarity between the items. Items of dissimilar nature or function are separately presented unless they are immaterial except when required by law.

e. key accounting judgments, estimates and assumptions Use of Estimates, Judgments and Estimation uncertainty

The preparation of financial statements of the company involves use of estimates in computation of expected credit loss, making judgments in determination of fair value of financial assets and financial liabilities, assumptions for actuarial changes in defined benefit obligations. The Company based its assumptions and estimates on factors available when the financial statements were prepared.

The use of estimates and assumptions, might have an effect on these financial statements.

The estimates are based on historical experience and other factors that are considered to be relevant. The actual results may differ from these estimates. The company believes that the estimates used in the preparation of financial statements are prudent and reasonable.

Estimates, judgments and underlying assumptions are reviewed on an on-going basis. Revision of estimates are recognized prospectively.

Existing circumstances and assumptions about future development, however, may change due to market changes or circumstances arising that are beyond the control of the company. In the process of applying the Company''s material accounting policies, the management has made reasonable estimates and judgments in relation to the carrying amount of assets and liabilities at each balance sheet date.

In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the Financial Statements is included in the following notes:

(i) Business Model Assessment

Classification and measurement of financial assets depends on the results of the Business Model Assessment and Solely Payments of Principal and Interest ("SPPI"). 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 judgment 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 the business model and so a prospective change to the classification of those assets.

(ii) Defined employee benefit obligations

The cost of the defined benefit relating to gratuity and leave encashment plans and the present value of the gratuity and leave encashment obligations are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is

highly sensitive to changes in these assumptions. All assumptions are reviewed annually.

(iii) Fair value measurement

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

(iv) Impairment of Financial assets

The measurement of impairment losses across all categories of financial assets requires judgment, 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. It has been the Company''s policy to regularly review its models in the context of actual loss experience and adjust when necessary.

(v) contingent liabilities and provisions other than impairment on loan portfolio

Provisions and liabilities are recognised in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can reliably be estimated. The timing of recognition and quantification of the liability requires the application of judgment to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed at each Balance Sheet date and revised to take account of changing facts and circumstances.

(vi) Effective Interest Rate ("EIR") method on Financial Assets

The Company''s EIR methodology, recognises interest income / expense using a rate of return that represents the best estimate of a constant rate of return over the expected behavioural life of loans given / taken and recognises the effect of potentially different interest rates at various stages and other characteristics of the product life cycle (including prepayments and penalty interest and charges). This estimation, by nature, requires an element of judgment regarding the expected

behaviour and life-cycle of the instruments as well as expected changes to India''s base rate and other fee income/expense that are integral parts of the instrument.

(vii) Useful lives and residual values of Property Plant and Equipment, Investment Property and Intangible Assets are reviewed by the Company at the end of each Financial year.

3. Material Accounting Policies

a. Financial instruments

A Financial Instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

i. initial recognition and Measurement

Financial assets and Financial liabilities are initially recognized on the date the company becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities measured at fair value through profit or loss are recognised immediately in the Statement of Profit and Loss.

Transaction costs directly attributable to the acquisition or issue of financial assets and financial liabilities that are measured at amortised cost are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

Unlike the other financial assets, Trade receivables are measured at transaction price at which the transaction had taken place.

ii. Classification and subsequent Measurement

The financial assets are classified based on the Company''s business model for managing the financial assets and their contractual cash flow characteristics as subsequently measured:

a) At amortised cost

b) At Fair Value Through Other Comprehensive Income ("FVTOCi")

c) At Fair Value Through Profit or Loss ("FVTPL") The Company classifies its financial liabilities at amortised cost unless it has designated liabilities at fair value through profit or loss.

Financial Assets at Amortised Cost The classification of financial assets such as Cash and Cash Equivalents, Loans, Trade Receivables and investments (other than those classified at FVTOCI) are measured at amortized cost based on the assessment of business model as follows:

Business Model Assessment

An assessment of business model for managing financial assets is fundamental to the classification of a financial asset.

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

• How the performance of the business model and the financial assets held within that business model are evaluated and reported to the company''s key management personnel;

• 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;

• How managers of the business are compensated (for example, whether the compensation is based on the fair value of the assets managed or on the contractual cash flows collected); and

• The expected frequency, value and timing of loan disbursements based on the analysis of disbursements made and realisation of cash flows in previous periods.

The financial assets of the company are held within a business model, whose objective is to hold assets in order to collect contractual cash flows, are managed to realise cash flows by collecting contractual payments over the life of the instrument and within the business model whose objective is achieved by both collecting the contractual cash flows and selling the financial asset.

The Solely Payments of Principal and interest ("SPPi") test on the principal amount outstanding:

For an asset to be classified and measured at amortised cost, its contractual terms should give rise to cash flows that meet SPPI test.

For that purpose:

''Principal'' for the purpose of this test is defined as the fair value of the financial asset at initial recognition and may change over the life of the financial asset.

The interest income represents the consideration for time value of money, credit risk, other basic lending risks and a profit margin that is consistent with a basic lending arrangement.

The SPPI assessment is made in the currency in which the financial asset is denominated.

The contractual terms of the financial asset give rise on specified dates to cash fiows that are Solely Payments of Principal and Interest ("SPPI") on the principal amount outstanding.

Financial Assets at FVTOCi Equity instruments

The Company has made an irrevocable election to classify and measure the equity instruments at FVTOCI to present the subsequent changes in Fair Value under Other Comprehensive Income ("OCi") and the classification is determined on an instrument by instrument basis.

Gains and losses on these equity instruments are never recycled to profit or loss. Dividends are recognised in profit or loss as dividend income when the right to receive the payment has been established, except when the company benefits from such proceeds as a recovery of part of the cost of the instrument, in which case, such gains are recorded in OCI.

Financial Liabilities at Amortised Cost

The company has classified the debt instruments, redeemable non-convertible preference shares and other borrowed funds at amortised cost. Amortised cost is calculated by taking into account any discount or premium on issue of funds and transaction costs that are an integral part of the Effective Interest Rate ("EiR").

Any fees, paid or received, transaction costs and other premiums or discounts that are included in the calculation of the effective interest rate are amortised over the expected life of the financial instrument.

iii. Reclassification of Financial Instrument

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 during the financial year.

Till 31st March 2020, the issue expenses relating to public issue of Non-Convertible Debentures was set off against securities premium. From 1st April 2020 onwards, the amortised issue expenses are written off in the statement of profit and loss.

Recognition of Financial instrument • Loans and Advances are initially recognised when the agreements are entered into with borrowers.

• Investments are initially recognised on the settlement / delivery date.

• Debt securities, deposits and borrowings are initially recognised when funds received or date of allotment whichever is appropriate,

• Other Financial assets and liabilities are initially recognised on the trade date, i.e., the date that the Company becomes a party to the contractual provisions of the instrument.

iv. Derecognition of Financial instrument Financial assets

The Company derecognises the Financial Asset when and only when:

• The contractual rights to receive the cash fiows from the financial asset have expired.

• The Company also derecognizes the Financial Asset if it has both transferred the Financial Asset and the transfer qualifies for derecognition. The Company has transferred the Financial Asset, if and only if, either:

• The Company has transferred its right to receive cash fiows from the Financial asset or

• It retains the rights to the cash fiows, but has assumed an obligation to pay the received cash fiows in full without material delay to a third party under a ''pass-through'' arrangement.

A transfer qualifies for derecognition only if either :

a. the Company has transferred substantially all the risks and rewards of the asset, or

b. the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

On derecognition of a financial asset, the difference between:

a. the carrying amount (measured at the date of derecognition) and

b. the consideration received,

is recognised in the statement of profit and loss. Financial liabilities

The Company derecognises the financial liability when and only when it is extinguished i.e. when the contractual obligation is discharged or cancelled or expired.

A financial liability is considered as extinguished when there is an exchange between the Company and the lender with substantially different terms of the original financial liability or when there is a substantial modification of the terms of existing financial liability or part thereof.

On derecognition of a financial liability, the difference between:

a. the carrying amount and

b. the consideration paid,

is recognised in the statement of profit and loss.

v. impairment of Financial Assets

The Company records allowance for expected credit losses for all loans, other financial assets not held at fair value through profit or loss ("FVTPL"), referred to as ''financial instruments. Equity instruments are not subject to impairment under Ind AS 109.

The impairment loss allowance is provided based on the Expected Credit Loss ("ECL") model.

The ECL is based on the credit losses expected to arise over the life of the financial asset (the lifetime expected credit loss), unless there has been no significant increase in credit risk since origination, in which case, the allowance is based on the 12 months'' expected credit loss.

Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is the portion of Lifetime ECL 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 has formulated a policy to perform an assessment, whether a financial instrument''s credit risk has increased significantly since initial recognition, by considering the change in the risk of default occurring over the remaining life of the financial instrument. When determining whether the risk of default on a financial asset has increased significantly since initial recognition, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information which takes into account the Company''s historical credit loss experience, current economic conditions, forward looking information. The expected credit loss is a product of Exposure at Default (''EAD''), Probability of Default (''PD'') and Loss Given Default (''LGD''). The Company has devised an internal model to evaluate the LGD and PD based on the parameters set out in Ind AS 109. EAD represents the expected exposure in the event of a default and is the gross carrying amount in case of the financial assets are held by the Company. LGD is an estimate of loss from a transaction given that a default occurs. PD is defined as the probability of whether the borrowers will default on their obligations in the future.

The Company incorporates forward-looking information into both assessments of whether the credit risk of an instrument has increased significantly since its initial recognition and its measurement of ECL. Based on the consideration of external actual and forecast information, the Company forms a ''base case'' view of the future direction of relevant economic variables. This process involves developing two or more additional economic scenarios and considering the relative probabilities of each outcome. The base case represents the most likely outcome while the other scenarios represent more optimistic and more pessimistic outcomes.

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 ffows 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 ECL calculations are outputs of complex models with a number of underlying assumptions regarding the choice of variable inputs and their interdependencies. The inputs and models used for calculating ECLs may not always capture all characteristics of the market at the date of the financial statements. The Company regularly reviews its models in the context of actual loss experience and makes adjustments when such differences are significantly material. Adjustments including reversal of ECL are recognised through the statement of profit and loss.

Significant increase in credit risk The Company continuously monitors all assets subject to ECLs in order to determine whether an instrument or a portfolio of instruments is subject to 12 month''s ECL or lifetime ECL. The Company assesses whether there has been an event which could cause a significant increase in the credit risk of the underlying asset or the customers'' ability to pay and accordingly change the 12 month''s ECL to a lifetime ECL. The Company does the assessment of significant increase in credit risk at a borrower level. Regardless of the above, if contractual payments are more than 30 days past due, the credit risk is deemed to have increased significantly since initial recognition.

The financial assets have been segmented into three stages based on the risk profiles. The three stages reflect the general pattern of credit deterioration of a financial asset as detailed below:

Stage 1

Financial assets, where there has not been a significant increase in credit risk since initial recognition or that has low credit risk at the reporting date and that are not credit impaired upon origination, are classified under this Stage. The Company classifies all standard loans and loans up to 30 days overdue under this category. Stage 1 loans also include facilities where the credit risk has improved and the loan has been reclassified from Stage 2 and 3. The Company provides 12 month''s ECL for Stage 1 assets.

Stage 2

Financial assets, where there has been a significant increase in credit risk since initial recognition but do not have a objective evidence of impairment are classified under this Stage. 30 Days Past Due is considered under Stage 2. The Company provides Lifetime ECL for Stage 2 assets.

Stage 3

All exposures assessed as credit impaired when one or more events that have a detrimental impact on the estimated future cash fiows of that asset have occurred are classified under this Stage. 90 Days Past Due is considered as default for classifying a financial instrument as credit impaired. For exposures that have become credit impaired, a life time ECL is recognized, a 100% PD is considered and interest revenue is calculated by applying the effective interest rate to the amortised cost (net of provision) rather than the gross carrying amount. Definition of default

If the borrower is past due for more than 90 days on any material credit obligation to the Company or the borrower is unlikely to pay his credit obligations to the Company in full, it is considered as default. Credit-impaired financial assets At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is ''credit-impaired'' when one or more events that have a detrimental impact on the estimated future cash fiows of the financial asset have occurred.

ECL on investment in Government securities The Company has invested in Government Securities. No ECL has been applied on these investments as there is no history of delay in servicing of interest/ repayments. The Company does not expect any delay in interest/redemption servicing in future. Simplified approach for trade/other receivables The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade/ other receivables that do not contain a significant financing component.

vi. Offsetting of Financial Instruments

Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right in the event of default to set off the amounts which must not be contingent.

b. Collateral Valuation and repossession

To mitigate its credit risks on financial assets, the Company seeks to use collateral such as movable and immovable assets, guarantees, etc, wherever applicable. To the extent possible, the Company uses active market data and external valuers for valuing financial assets held as collateral. Other financial assets which do not have readily determinable market values are valued using models or through external valuers. The Company physically repossesses and takes into custody properties or other assets to settle outstanding debt. Any surplus funds are returned to the customers/ obligors. Assets held under legal repossession processes are not recorded in the balance sheet as it does not meet the recognition criteria in other standards and disclosed in the notes to Financial Statements.

c. 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, as per write-off policy of the Company. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written- off could still be subject to enforcement activities under the Company''s recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in the statement of profit and loss.

d. Undrawn Loan Commitments

Undrawn loan commitments are commitments under which, over the duration of the commitment, the Company is required to provide a loan with prespecified terms to the borrower. They are not recognised in the Financial Statements. The Company did not have any undrawn loan commitments in the current financial year or the preceding year.

e. Fair value Measurement

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

A fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either:

1. in the principal market for the asset or liability; or

2. in the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market is accessible by the company on the measurement date. The Company measures the fair value of an asset or liability using the assumption that market participants would use when pricing the asset or liability.

The price is either directly observable or estimated using another valuation technique. The Company had adopted valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value by maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

The company applied the fair value hierarchy for the inputs to valuation techniques used to measure fair value. The three levels of hierarchy are given below:

Level 1	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 regard 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	Those where the inputs that are used for valuation and are significant, are derived from directly or indirectly observable market data available over the entire period of the instrument''s life. Such inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical instruments in inactive markets and observable inputs other than quoted prices such as interest rates and yield curves, implied volatilities, and credit spreads. In addition, adjustments may be required for the condition or location of the asset or the extent to which it relates to items that are comparable to the valued instrument. However, if such adjustments are based on unobservable inputs which are significant to the entire measurement, the Company will classify the instruments as Level 3.
Level 3	Those that include one or more unobservable input that is significant to the measurement as a whole

The Company determines appropriate classes of assets and liabilities on the basis of the following:

a. the nature, characteristics and risks of the asset or liability; and

b. the level of the fair value hierarchy within which the fair value measurement is categorized.

The company evaluates the levelling at each reporting period on an instrument by instrument basis and reclassifies instruments when necessary based on the facts at the end of the period.

f. Property, Plant and Equipment ("PPE")

The Company has elected to use fair value for Land, Building and Plant & Machinery and carrying value for all other property, plant & equipment, Intangible assets as the deemed cost on the date of transition to Ind AS.. The Company recognises an item of Property, Plant and Equipment when:

a. it is probable that future economic benefits associated with the item will flow to the Company; and

b. the cost of the item can be measured reliably.

The cost of assets comprises its purchase price, freight, duties, taxes and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by the management.

Subsequent expenditures related to an item of tangible asset are added to its gross value only if it increases the future benefits of the existing asset, beyond its previously assessed standards of performance if it is probable that future economic benefits will flow to the Company from that expenditure and cost can be measured reliably. Other repairs and maintenance costs are expensed off as and when incurred.

Property, Plant and Equipment is carried at cost less accumulated depreciation and any accumulated impairment losses.

Capital work in progress comprises the cost of PPE that are not ready for its intended use at the reporting date. Depreciation

Depreciation is calculated by using the straight-line Depreciation is calculated by using the straight-line method to write down the cost of Property, Plant and Equipment (other than freehold land) to their residual values over their estimated useful lives which is in line with the estimated useful life as specified in Schedule II to the Act except for leasehold improvements which are amortised on a straight-line basis over the period of lease or estimated period of useful life of such improvement, subject to a maximum period

of 60 months. Leasehold improvements include all expenditure incurred on the leasehold premises that have future economic benefits. The depreciation charge for each period is recognised in the statement of profit and loss for the period..

Particulars	Useful life as prescribed in Schedule ii to the Companies Act 2013	Useful life estimated by the Company
Buildings	60 years	60 years
Plant and Machinery	15 years	15 years
Plant - Windmills	22 years	22 years
Furniture and Fixtures	10 years	10 years
Vehicles	8 years	8 years
Office Equipments	5 years	10 years
Computers	3 years	6 years

The Management has considered the useful life of office equipments and computers as 10 years and 6 years respectively.

Property, Plant and Equipment 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 net carrying amount of the asset) is recognised in other income / expense in the statement of profit and loss in the year in which the asset is derecognized.

g. intangible Assets and Amortisation

Intangible assets are carried at its cost less any accumulated amortisation and accumulated impairment losses, if any.

The intangible assets comprise computer software which is amortized over its estimated useful life, under straight line method. The amortisation charge is calculated by using the straight line method to write down the cost of intangible assets over their estimated useful life of 6 years as per Management''s estimate. There are no items of intangible assets with "indefinite" lives.

Amortization is recognised as an expense in the statement of profit and loss for the period. The Company has a practice of reviewing the method and period of amortisation as at the end of each financial year.

An intangible asset is derecognised on disposal or when no future economic benefits are expected from its use or disposal.

Any gain or loss arising on derecognition of the intangible assets (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 in which the asset is derecognized.

h. investment Property

Investment properties are properties held to earn rentals and/or for capital appreciation or both. Investment properties are measured initially at cost, including transaction costs.

Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and impairment losses, if any. When significant parts of the investment property are required to be replaced at intervals, the company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in the statement of profit and loss as incurred.

The company, based on technical assessment made by management, depreciates the building over its estimated useful life of 60 years. The management believes that these estimated useful life is realistic and reflect fair approximation of the period over which the assets are likely to be used.

Though the Company measures investment property using cost-based measurement, the fair value of investment property is disclosed in Note 10. Fair value is determined based on an annual evaluation performed by an accredited external independent valuer.

i. impairment of Non-Financial Assets

The Company reviews the carrying amounts of PPE, Investment Property and Intangible assets to determine, if there is an indication that those assets have suffered any impairment loss. In case of any such indication those non-financial assets are tested for impairment so as to determine the impairment loss if any, at the end of each reporting period.

j. Employee Benefits

Short Term Employee Benefits

Short-term employee benefits are recognised as expense when the related service is provided. A liability for salaries and wages, Bonus, leave encashment is recognised for the amount expected to be paid if the Company has 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.

Defined Contribution Plan

Employees Provident Fund ("EPF") and Employees state insurance ("ESi")

Retirement benefits such as employees provident fund and employees state insurance comes under the defined contribution plan for which the Company

make contributions to such schemes administered by government organisations set up under the applicable statute and are recognised as an expense when an employee renders related service.

Defined Benefit Plans Gratuity

The obligation in respect of defined benefit plans, which covers Gratuity is provided for on the basis of an actuarial valuation at the end of each financial year by an Independent Actuary using Projected Unit Credit method. The Company makes contribution to a Gratuity Fund administered and managed by Life Insurance Corporation of India ("LIC").

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields as at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.

Past services are recognised at the earlier of the plan amendment / curtailment and recognition of related restructuring costs/termination benefits.

The Company recognises the changes in the net defined benefit obligation such as service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements) under employee benefit expenses and net interest expense or income in the Statement of Profit and Loss in the line item, Employee Benefits Expenses.

Re-measurements of defined benefit plan, comprising actuarial gains and losses, the return on plan assets(excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to Other Comprehensive ncome ("OCI") in the period in which they occur. Re- measurements are not reclassified to profit or loss in subsequent periods.

The retirement benefit obligation recognised in the Balance Sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in the future contribution to the plans.

Other Long-Term Benefits

Leave Encashment, Compensated Absences and Sick Leave

The Company provides for the encashment / availment of leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to

certain limits for future encashment / availment. The liability is provided based on the number of days of unutilized leave at each balance sheet date on the basis of an independent actuarial valuation.

The service cost, interest on defined benefit liability and remeasurements of defined benefit liability is recognised in the statement of profit or loss.

k. Revenue Recognition

i. Recognition of interest income on loans

The Company recognises interest income using Effective Interest rate Method "EIR" on all financial assets (loans) measured at amortised cost.

EIR is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, to the gross carrying amount of a financial asset. The future cash flows are estimated using the contractual terms of the instrument.

The Company calculates interest income by applying the EIR to the gross carrying amount of financial assets other than credit-impaired assets. In case of credit-impaired financial assets (''Stage 3''), the Company recognises interest income on the amortised cost net of impairment loss of the financial asset at EIR. If the financial asset is no longer credit-impaired, the Company reverts to calculating interest income on a gross basis.

Interest levied on customers for delay in repayments/ non-payment of contractual cash flows is recognised on realization, since the probability / certainty of collecting such monies is established when the customer pays.

Interest Income from Government securities is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

ii. Dividend income

Dividend income on equity shares is recognized when the Company''s'' right to receive the payment is established by the reporting date and no significant uncertainty as to its collectability exists.

iii. Other Operating income

The Company recognises revenue from contracts with customers (other than financial assets to which Ind AS 109 ''Financial Instruments'' is applicable) based on a comprehensive assessment model as set out in Ind AS 115 ''Revenue from contracts with customers. The Company identifies contract(s) with a customer and its performance obligations under the contract, determines the transaction price and its allocation to the performance obligations in the contract and recognises revenue only on

satisfactory completion of performance obligations. The Company recognises income on recoveries of financial assets written off on realisation basis.

iv. Rental income

Rental income arising from operating leases is recognised on a straight-line basis over the lease term. In cases where the increase is in line with expected general inflation, rental income is recognised as per the contractual terms.

Operating leases are leases where the Company does not transfer substantially all of the risks and benefits of ownership of the asset.

v. Fees and Commission income

The Company recognises service and administration charges towards rendering financial services to its customers on satisfactory completion of performance obligation at a point in time. Cheque Bouncing charges levied on customers for nonpayment of instalment on the contractual date is recognised on realization, since the probability/ certainty of collecting such monies is established only when the customer pays. Foreclosure charges are collected from loan customers for early payment/ closure of loan and are recognised on realization, since the probability / certainty of collecting such monies is established only when the customer pays.

vi. Sale of Power from Windmills

Income from power generation is recognized as per the Power Purchase Agreements entered into with State Electricity Board and on supply of power to the grid on satisfaction of performance obligation.

vii. Net gain/loss on fair value changes

The Company designates certain financial assets for subsequent measurement at FVTOCI. The Company recognises gains/loss on fair value change of financial assets measured at FVTOCI.

l. Foreign currency Transaction

The functional currency and presentation currency of the Company is Indian Rupee. Functional currency of the Company have been determined based on the primary economic environment in which the Company and its foreign operations operate considering the currency in which funds are generated, spent and retained. Transactions in currencies other than the Company''s functional currency are recorded on initial recognition using the exchange rate at the transaction date. At each Balance Sheet date, foreign currency monetary items are translated at the prevailing closing spot rate. Nonmonetary items are measured in terms of historical cost in foreign currency and are not retranslated.

Exchange differences, if any, that arise on settlement of monetary items or on reporting of monetary items at each Balance Sheet date at the closing spot rate are recognised in the Statement of Profit and Loss in the period in which they arise.

m. Borrowing costs

Borrowing costs include interest expense calculated using the ”EIR" as per Ind AS 109 on ''Financial instruments'' and interest in respect of lease liability is recognised in accordance with Ind AS 116.

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of cost of such asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognised in the statement of profit and loss in the period in which they are incurred.

n. Finance costs

Finance costs include Interest Expenses computed by applying the ”EIR" on the respective financial instruments measured at amortised cost. Financial Instruments include outstanding liabilities. Finance Costs are charged to the Statement of Profit and Loss.

o. income taxes

Tax expense (tax income) comprises current tax expense (current tax income) and deferred tax expense (deferred tax income)

i. current tax

Current tax is the amount of tax payable to (recovered from) the taxation authorities on the taxable income for the year determined in accordance with the provisions of the Income Tax Act 1961 and Income Computation and Disclosure Standards prescribed therein. The tax rates and tax laws used to compute the amount are those that are enacted by the end of reporting date. Current tax relating to items recognised outside the statement of profit and loss is recognised in correlation to the underlying transaction either in OCI or directly in other equity.

ii. Deferred tax

Deferred tax is the tax effect on temporary differences between the tax bases of assets and liabilities and their carrying amounts in the Financial Statements as at the reporting date.

Deferred tax liability is recognised for all taxable temporary differences and deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The Company reviews the carrying amount of a deferred tax asset as at the end of each reporting period and reduce the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised.

Deferred tax relating to items recognized outside profit or loss is recognised either in other comprehensive income or in other equity.

p. Goods and Services input Tax Credit

Input Tax credit is accounted for in the books in the period when the underlying service/supply received is accounted to the extent permitted as per the applicable regulatory laws and when there is no uncertainty in availing/utilising it. The ineligible input credit is charged off to the respective expense or capitalised as part of asset cost as applicable..

q. Leases

As a Lessee

The Company''s asset class taken under lease consists of lease for Office Premises.

The Company has applied Ind AS 116 ''Leases'' for all lease contracts except for short term leases and leases for which underlying asset is of low value on modified retrospective approach.

Right of Use Asset is initially measured as at the sum of initial measurement of the lease liability and any lease payments made at or before the date of commencement of lease, adjusted by any lease incentives received. On subsequent period, the Right of Use Asset is measured at cost less accumulated depreciation and any accumulated impairment losses with adjustment for remeasurement of lease liability.

Lease Liability is initially measured at the present value of the lease payments that are not paid as at the date of recognition discounted at the Company''s incremental borrowing rate. The lease liability is measured in subsequent periods using the effective interest rate method. Right of Use asset is depreciated in accordance with the requirements of Ind AS 16 Property, Plant and Equipment, using straight line method from the commencement date to the end of the lease term. The lease term over which the company has contracted operating lease agreements range from up to 11 months and to many years.

The Company''s class of underlying asset comprises only leases taken for office premises. The company has elected not to apply the requirements of Ind AS 116 "Leases" to short-term leases of all such class of assets that have a lease term of 12 months or less. The Company has elected not to apply the requirements of Ind AS 116 "Leases" to leases for which the underlying asset is of low value on a lease by lease basis. The lease payments associated with these leases are recognised as an expense on a straight-line basis over the lease term.

As a Lessor

The Company recognises the lease payments from operating lease as income on the basis of contractual terms between the Lessee and the Company.

r. Provisions Contingent Liabilities and Contingent Assets

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

If the effect of time value of money is material, provisions are determined by discounting the expected future cash flows to net present value using an appropriate pre-tax discount rate that reflects current market assessments of the time value of money and where appropriate, the risks specific to the liability. 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.

A present obligation that arises from past events, where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as a contingent liability. Contingent liabilities are also disclosed when there is a possible obligation arising from past events, 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.

Contingent assets are not recognised in the financial statements. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and is recognized.

s. cash and cash Equivalents

Cash and cash equivalents in the balance sheet comprise cash on hand, cheques and drafts on hand, balance with banks in current accounts and short-term

deposits with an original maturity upto three months, which are subject to an insignificant risk of change in value.

t. Statement of Cash Flow

Statement of Cash flow are reported using the indirect method as set out in Ind-AS 7 "Statement of Cash Flows", whereby the net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The statement of cash flows from operating, investing and financing activities of the Company are segregated and presented.

u. Earnings Per Share ("EPS")

Basic earnings per share is 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 period.

The weighted average number of equity shares outstanding during

---

Mar 31, 2023

2. Summary of Significant Accounting Policies

a. Statement of Compliance

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards ("Ind AS") as per the Companies (Indian Accounting Standards) Rules 2015, as amended and notified under Section 133 of the Companies Act 2013 ("the Act") and is in conformity with the accounting principles generally accepted in India and other relevant provisions of the Act as applicable. Further, the Company has also complied with the Master Direction on Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions 2016 ("the NBFC Master Directions"), as amended and the notification on implementation of Indian accounting Standards vide circular RBI/2019-20/170DOR(NBFC). CC.PD.No.109/22.10.106/2019-20 dated 13th March 2020 (''RBI Notification on Implementation of Ind AS'') issued by RBI.

any application / guidance / clarifications / directions issued by RBI or other regulators are implemented as and when they are issued / applicable.

Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

The regulatory disclosures, as required by NBFC Master Directions, are included in the Notes forming as an

integral part of the financial statements, are prepared as per RBi Notification on "implementation of ind as" dated 13th March 2020.

b. Basis of Preparation and Measurement

The financial statements have been prepared on a going concern basis and on historical cost convention, except for certain financial instruments that are measured at Fair Value Through Other Comprehensive Income ("FVTOCI") at the end of each reporting period. Accounting policies have been consistently applied to all periods presented, unless otherwise stated.

c. Presentation of Financial Statements

The company presents its balance sheet in the order of liquidity. Financial statements of the Company are prepared and presented in the format prescribed in the Division III of Schedule III to the Act applicable to NBFCs, as notified by the Ministry of Corporate Affairs ("MCA"). Financial assets and financial liabilities are generally reported gross in the balance sheet.

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

• The normal course of business

• The event of default

• The event of insolvency or bankruptcy of the Company and/or its counter parties.

d. Functional and Presentation Currency

The Financial Statements are presented in Indian Rupees (?) which is the Company''s functional currency. All amounts are rounded off to the nearest lakhs with two decimals except where otherwise indicated.

The aggregation and classification of amounts in the financial statements are based on materiality and similarity between the items. Items of dissimilar nature or function are separately presented unless they are immaterial except when required by law.

e. Significant accounting judgments, estimates and assumptions

Use of Estimates, Judgments and Estimation uncertainty

The preparation of financial statements of the company involves use of estimates in computation of expected credit loss, making judgments in determination of fair value of financial assets and financial liabilities, assumptions for actuarial changes in defined benefit obligations. The Company based its assumptions and estimates on factors available when the financial statements were prepared.

The use of estimates and assumptions, which might have an effect on these financial statements.

The estimates are based on historical experience and other factors that are considered to be relevant. The actual results may differ from these estimates. The company believes that the estimates used in the preparation of financial statements are prudent and reasonable.

Estimates, judgments and underlying assumptions are reviewed on an on-going basis. Revision of estimates are recognized prospectively.

Existing circumstances and assumptions about future development, however, may change due to market changes or circumstances arising that are beyond the control of the company. In the process of applying the Company''s accounting policies, the management has made reasonable estimates and judgments in relation to the carrying amount of assets and liabilities at each balance sheet date.

In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the Financial Statements is included in the following notes:

(i) Business Model Assessment

classification and measurement of financial assets depends on the results of the Business Model Assessment and Solely Payments of Principal and Interest ("SPPI"). 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 judgment 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 the business model and so a prospective change to the classification of those assets.

(ii) Defined employee benefit obligations

The cost of the defined benefit gratuity and leave encashment plan and the present value of the gratuity and leave encashment obligation are

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

(iii) Fair value measurement

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

(iv) Impairment of loans portfolio

The measurement of impairment losses across all categories of financial assets requires judgment, 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. It has been the Company''s policy to regularly review its models in the context of actual loss experience and adjust when necessary.

(v) contingent liabilities and provisions other than impairment on loan portfolio

Provisions and liabilities are recognised in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can reliably be estimated. The timing of recognition and quantification of the liability requires the application of judgment to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed at each Balance Sheet date and revised to take account of changing facts and circumstances.

(vi) Effective Interest Rate ("EIR") method on Financial Assets

The Company''s EIR methodology, recognises interest income / expense using a rate of return that represents the best estimate of a constant

rate of return over the expected behavioral 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 judgment regarding the expected behaviour and life-cycle of the instruments as well as expected changes to India''s base rate and other fee income/expense that are integral parts of the instrument.

(vii) Useful lives and residual values of Property Plant and Equipment, Investment Property and Intangible Assets are reviewed by the Company at the end of each Financial year.

f. New Accounting Standards issued but not yet effective / Recent Accounting Development

Ministry of Corporate Affairs ("McA") has notified the following new amendments to Ind AS which the company has not applied as they are effective for annual periods beginning on or after April 1, 2023.

(i) ind AS - 1 Presentation of Financial instruments The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. accounting policy information together with other information is material when it can reasonably be expected to influence decisions of primary users of general purpose financial statements. The company does not expect this amendment to have any significant impact in its financial statements.

(ii) ind AS - 8 Accounting Policies, Changes in Accounting Estimates and Errors

The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty". Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The Company does not expect this amendment to have any significant impact in its financial statements.

(iii) ind AS - 12 income Taxes

The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give

rise to equal taxable and deductible temporary differences. The company is evaluating the impact, if any, in its financial statements.

(iv) ind AS - 102 Share Based Payments

The amendment regarding the change in the placement of a footnote aims in providing better clarity and context within the standard. The Company does not expect this amendment to have any significant impact in its financial statements.

(v) ind AS - 107 Financial instruments: Disclosures

The amendment aims to modify the disclosure requirements complementary to the amendments proposed in Ind AS 1. The Company does not expect this amendment to have any significant impact in its financial statements.

g. Financial instruments

i. initial Recognition and Measurement

Financial assets and Financial liabilities are initially recognized on the date the company becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities measured at fair value through profit or loss are recognised immediately in the Statement of Profit and Loss.

Transaction costs directly attributable to the acquisition or issue of financial assets and financial liabilities that are measured at amortised cost are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

Unlike the other financial assets, Trade receivables are measured at transaction price at which the transaction had taken place.

ii. Classification and subsequent Measurement

The financial assets are classified based on the Company''s business model for managing the financial assets and their contractual cash flow characteristics as subsequently measured:

a) At amortised cost

b) At Fair Value Through Other Comprehensive Income ("FVTOCi ")

c) at Fair Value Through Profit or Loss ("FVTPL")

The company classifies its financial liabilities at amortised cost unless it has designated liabilities at fair value through profit or loss.

Financial Assets at Amortised Cost The classification of financial assets such as Cash and Cash Equivalents, Loans, Trade Receivables and investments (other than those classified at

FVTOCI) are measured at amortized cost based on the assessment of business model as follows: Business Model Assessment An assessment of business model for managing financial assets is fundamental to the classification of a financial asset.

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

• How the performance of the business model and the financial assets held within that business model are evaluated and reported to the company''s key management personnel;

• 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;

• How managers of the business are compensated (for example, whether the compensation is based on the fair value of the assets managed or on the contractual cash flows collected); and

• The expected frequency, value and timing of loan disbursements based on the analysis of disbursements made and realisation of cash flows in previous periods.

The financial assets of the company are held within a business model, whose objective is to hold assets in order to collect contractual cash flows, are managed to realise cash flows by collecting contractual payments over the life of the instrument and within the business model whose objective is achieved by both collecting the contractual cash flows and selling the financial asset.

The Solely Payments of Principal and interest ("SPPI") test on the principal amount outstanding:

For an asset to be classified and measured at amortised cost, its contractual terms should give rise to cash flows that meet SPPI test.

For that purpose:

''Principal'' for the purpose of this test is defined as the fair value of the financial asset at initial recognition and may change over the life of the financial asset.

The interest income represents the consideration for time value of money, credit risk, other basic lending risks and a profit margin that is consistent with a basic lending arrangement.

The SPPI assessment is made in the currency in which the financial asset is denominated.

The contractual terms of the financial asset give rise on specified dates to cash flows that are Solely Payments of Principal and Interest ("SPPi") on the principal amount outstanding.

Financial Assets at FVTOCi Equity instruments

The Company has made an irrevocable election to classify and measure the equity instruments at FVTOCI to present the subsequent changes in Fair Value under Other Comprehensive Income ("OCi") and the classification is determined on an instrument by instrument basis.

Gains and losses on these equity instruments are never recycled to profit or loss. Dividends are recognised in profit or loss as dividend income when the right to receive the payment has been established, except when the company benefits from such proceeds as a recovery of part of the cost of the instrument, in which case, such gains are recorded in OCI.

Financial Liabilities at Amortised Cost

The company has classified the debt instruments, redeemable non-convertible preference shares and other borrowed funds at amortised cost. Amortised cost is calculated by taking into account any discount or premium on issue of funds and transaction costs that are an integral part of the Effective Interest Rate ("EiR").

Any fees, paid or received, transaction costs and other premiums or discounts that are included in the calculation of the effective interest rate are amortised over the expected life of the financial instrument.

iii. Reclassification of Financial Instrument

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 during the financial year.

Till 31st March 2020, the issue expenses relating to public issue of Non-Convertible Debentures was set off against securities premium. From 1st April 2020 onwards, the amortised issue expenses are written off in the statement of profit and loss.

Recognition of Financial instrument

• Loans and Advances are initially recognised when the when agreements are entered into with borrowers.

• Investments are initially recognised on the settlement / delivery date.

• Debt securities, deposits and borrowings are initially recognised when funds received or date of allotment whichever is appropriate,

• Other Financial assets and liabilities are initially recognised on the trade date, i.e., the date that the Company becomes a party to the contractual provisions of the instrument.

iv. Derecognition of Financial instrument Financial Assets

The Company derecognises the Financial Asset when and only when:

• The contractual rights to receive the cash flows from the financial asset have expired.

• The company also derecognizes the Financial Asset if it has both transferred the Financial Asset and the transfer qualifies for derecognition. The Company has transferred the Financial Asset, if and only if, either:

• The company has transferred its right to receive cash flows from the Financial asset or

• It retains the rights to the cash flows, but has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement.

A transfer qualifies for derecognition only if either :

a. the Company has transferred substantially all the risks and rewards of the asset, or

b. the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

On derecognition of a financial asset, the difference between:

a. the carrying amount (measured at the date of derecognition) and

b. the consideration received is recognised in the statement of profit and loss.

Financial Liabilities

The company derecognises the financial liability when and only when it is extinguished i.e. when the contractual obligation is discharged or cancelled or expired.

a financial liability is considered as extinguished when there is an exchange between the Company and the lender with substantially different terms of the original financial liability or when there is a substantial modification of the terms of existing financial liability or part thereof.

On derecognition of a financial liability, the difference between: a. the carrying amount and

b. the consideration paid is recognised in the statement of profit and loss.

v. impairment of Financial Assets

The Company records allowance for expected credit losses for all loans, other financial assets not held at fair value through profit or loss ("FVTPL"), referred to as ''financial instruments''. Equity instruments are not subject to impairment under Ind AS 109.

The impairment loss allowance is provided based on the Expected Credit Loss ("ECL") model.

The ECL is based on the credit losses expected to arise over the life of the financial asset (the lifetime expected credit loss), unless there has been no significant increase in credit risk since origination, in which case, the allowance is based on the 12 months'' expected credit loss.

Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is the portion of Lifetime ECL 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 has formulated a policy to perform an assessment, whether a financial instrument''s credit risk has increased significantly since initial recognition, by considering the change in the risk of default occurring over the remaining life of the financial instrument. When determining whether the risk of default on a financial asset has increased significantly since initial recognition, the company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information which takes into account the Company''s historical credit loss experience, current economic conditions, forward looking information. The expected credit loss is a product of Exposure at Default (''EAD''), Probability of Default (''PD'') and Loss Given Default (''LGD''). The Company has devised an internal model to evaluate the LGD and PD based on the parameters set out in Ind AS 109. EAD represents the expected exposure in the event of a default and is the gross carrying amount in case of the financial assets are held by the Company. LGD is an estimate of loss from a transaction given that a default occurs. PD is defined as the probability of whether the borrowers will default on their obligations in the future.

The Company incorporates forward-looking information into both assessments of whether the credit risk of an instrument has increased significantly since its initial recognition and its

measurement of ECL. Based on the consideration of external actual and forecast information, the Company forms a ''base case'' view of the future direction of relevant economic variables. This process involves developing two or more additional economic scenarios and considering the relative probabilities of each outcome. The base case represents the most likely outcome while the other scenarios represent more optimistic and more pessimistic outcomes.

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 ECL calculations are outputs of complex models with a number of underlying assumptions regarding the choice of variable inputs and their interdependencies. The inputs and models used for calculating ECLs may not always capture all characteristics of the market at the date of the financial statements. The Company regularly reviews its models in the context of actual loss experience and makes adjustments when such differences are significantly material. Adjustments including reversal of ECL are recognised through the statement of profit and loss. Significant increase in credit risk The Company continuously monitors all assets subject to ECLs in order to determine whether an instrument or a portfolio of instruments is subject to 12 month''s ECL or lifetime ECL. The Company assesses whether there has been an event which could cause a significant increase in the credit risk of the underlying asset or the customers'' ability to pay and accordingly change the 12 month''s ECL to a lifetime ECL. The Company does the assessment of significant increase in credit risk at a borrower level. Regardless of the above, if contractual payments are more than 30 days past due, the credit risk is deemed to have increased significantly since initial recognition.

The financial assets have been segmented into three stages based on the risk profiles. The three stages reflect the general pattern of credit deterioration of a financial asset as detailed below:

Stage 1

Financial assets, where there has not been a significant increase in credit risk since initial recognition or that has low credit risk at the

reporting date and that are not credit impaired upon origination, are classified under this Stage. The company classifies all standard loans and loans up to 30 days overdue under this category. Stage 1 loans also include facilities where the credit risk has improved and the loan has been reclassified from Stage 2 and 3. The company provides 12 month''s ECL for Stage 1 assets.

Stage 2

Financial assets, where there has been a significant increase in credit risk since initial recognition but do not have a objective evidence of impairment are classified under this Stage. 30 Days Past Due is considered under Stage 2. The Company provides Lifetime ECL for Stage 2 assets.

Stage 3

All exposures assessed as credit impaired when one or more events that have a detrimental impact on the estimated future cash flows of that asset have occurred are classified under this Stage. 90 Days Past Due is considered as default for classifying a financial instrument as credit impaired. For exposures that have become credit impaired, a life time ECL is recognized, a 100% PD is considered and interest revenue is calculated by applying the effective interest rate to the amortised cost (net of provision) rather than the gross carrying amount. Definition of default

If the borrower is past due for more than 90 days on any material credit obligation to the Company or the borrower is unlikely to pay his credit obligations to the Company in full, it is considered as default. Credit-impaired financial assets At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is ''credit-impaired'' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

ECL on investment in Government securities The Company has invested in Government Securities. No ECL has been applied on these investments as there is no history of delay in servicing of interest/ repayments. The Company does not expect any delay in interest/redemption servicing in future. Simplified approach for trade/other receivables The company follows ''simplified approach'' for recognition of impairment loss allowance on trade/ other receivables that do not contain a significant financing component.

vi. Offsetting of Financial Instruments

Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right in the event of default to set off the amounts which must not be contingent.

h. Collateral Valuation and Repossession

To mitigate its credit risks on financial assets, the Company seeks to use collateral such as movable and immovable assets, guarantees, etc, wherever applicable. To the extent possible, the Company uses active market data and external valuers for valuing financial assets held as collateral. Other financial assets which do not have readily determinable market values are valued using models or through external valuers. The Company physically repossesses and takes into custody properties or other assets to settle outstanding debt. Any surplus funds are returned to the customers/ obligors. Assets held under legal repossession processes are not recorded in the balance sheet as it does not meet the recognition criteria in other standards and disclosed in the notes to Financial Statements.

i. 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, as per write-off policy of the Company. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written-off could still be subject to enforcement activities under the Company''s recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in the statement of profit and loss.

j. Undrawn Loan Commitments

Undrawn loan commitments are commitments under which, over the duration of the commitment, the Company is required to provide a loan with pre-specified terms to the borrower. They are not recognised in the Financial Statements. The Company did not have any undrawn loan commitments in the current financial year or the preceding year.

k. Fair Value Measurement

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

A fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either:

1. in the principal market for the asset or liability; or

2. in the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market is accessible by the company on the measurement date. The Company measures the fair value of an asset or liability using the assumption that market participants would use when pricing the asset or liability.

The price is either directly observable or estimated using another valuation technique. The Company had adopted valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value by maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

The company applied the fair value hierarchy for the inputs to valuation techniques used to measure fair value. The three levels of hierarchy are given below:

The Company determines appropriate classes of assets and liabilities on the basis of the following:

a. the nature, characteristics and risks of the asset or liability; and

b. the level of the fair value hierarchy within which the fair value measurement is categorized.

The company evaluates the levelling at each reporting period on an instrument by instrument basis and reclassifies instruments when necessary based on the facts at the end of the period. l. Property, Plant and Equipment ("PPE")

The Company has elected to use fair value for Land, Building and Plant and Machinery and carrying value for all other property, plant and equipment, Intangible assets as the deemed cost at the date of transition to Ind AS.

The Company recognises an item of Property, Plant and Equipment when:

a. it is probable that future economic benefits associated with the item will flow to the Company; and

b. the cost of the item can be measured reliably.

The cost of assets comprises its purchase price, freight, duties, taxes and any other incidental expenses directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by the management.

Subsequent expenditures related to an item of tangible asset are added to its gross value only if it increases the future benefits of the existing asset, beyond its previously assessed standards of performance if it is probable that future economic benefits will flow to the Company from that expenditure and cost can be measured reliably. Other repairs and maintenance costs are expensed off as and when incurred.

Property, Plant and Equipment is carried at cost less accumulated depreciation and any accumulated impairment losses.

Capital work in progress comprises the cost of PPE that are not ready for its intended use at the reporting date. Depreciation

Depreciation is calculated by using the straight-line method to write down the cost of Property, Plant and Equipment (other than freehold land) to their residual values over their estimated useful lives which is in line with the estimated useful life as specified in Schedule II to the Act except for leasehold improvements which are amortised on a straight-line basis over the period of lease or estimated period of useful life of such improvement, subject to a maximum period

of 60 months. Leasehold improvements include all expenditure incurred on the leasehold premises that have future economic benefits. The depreciation charge for each period will be recognised in the statement of profit and loss for the period.

The Management has considered the useful life of office equipments and computers as 10 years and 6 years respectively.

Property, Plant and Equipment 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 net carrying amount of the asset) is recognised in other income / netted off from any loss on disposal in the statement of profit and loss in the year in which the asset is derecognized.

m. intangible Assets and Amortisation

Intangible assets are carried at its cost less any accumulated amortisation and accumulated impairment losses, if any.

The intangible assets comprise computer software which is amortized over its estimated useful life, under straight line method. The amortisation charge is calculated by using the straight line method to write down the cost of intangible assets over their estimated useful life of 6 years as per Management''s estimate. Amortization is recognised as an expense in the statement of profit and loss for the period. The Company has a practice of reviewing the method and period of amortisation at the end of each financial year.

An intangible asset is derecognised on disposal or when no future economic benefits are expected from its use or disposal.

Any gain or loss arising on derecognition of the intangible assets (calculated as the difference between the net disposal proceeds and the carrying amount of

the asset) is recognised in other income / netted off from any loss on disposal in the statement of profit and loss in the year in which the asset is derecognized.

n. investment Property

Investment properties are properties held to earn rentals and/or for capital appreciation or both. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and impairment losses, if any. When significant parts of the investment property are required to be replaced at intervals, the company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in the statement of profit and loss as incurred.

The company, based on technical assessment made by management, depreciates the building over its estimated useful life of 60 years. The management believes that these estimated useful life is realistic and reflect fair approximation of the period over which the assets are likely to be used.

Though the Company measures investment property using cost-based measurement, the fair value of investment property is disclosed in Note 10. Fair value is determined based on an annual evaluation performed by an accredited external independent valuer.

o. impairment of Non-Financial Assets

The Company reviews the carrying amounts of PPE, Investment Property and Intangible assets to determine, if there is an indication that those assets have suffered any impairment loss. In case of any such indication those non-financial assets are tested for impairment so as to determine the impairment loss if any, at the end of each reporting period.

p. Segment Reporting

The company''s main business is financing by way of loans in India. ah other activities are not significant and Incidental to the main business. Thus in the context of Ind AS 108 - "Operating Segment" is considered to constitute single reportable segment.

q. Employee Benefits

Short Term Employee Benefits

Short-term employee benefits are recognised as expense when the related service is provided. A liability for salaries and wages, Bonus, leave encashment is recognised for the amount expected to be paid if the Company has 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.

Defined Contribution Plan

Employees Provident Fund ("EPF") and Employees State insurance ("ESi")

Retirement benefits such as employees provident fund and employees state insurance comes under the defined contribution plan for which the company make contributions to such schemes administered by government organisations set up under the applicable statute and are recognised as an expense when an employee renders related service.

Defined Benefit Plans Gratuity

The obligation in respect of defined benefit plans, which covers Gratuity is provided for on the basis of an actuarial valuation at the end of each financial year by an Independent Actuary using Projected Unit Credit method. The Company makes contribution to a Gratuity Fund administered and managed by Life Insurance Corporation of India ("LiC").

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.

Past services are recognised at the earlier of the plan amendment / curtailment and recognition of related restructuring costs/termination benefits.

The company recognises the changes in the net defined benefit obligation such as service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements) under employee benefit expenses and net interest expense or income in the Statement of Profit and Loss in the line item, Employee Benefits Expenses.

Re-measurements of defined benefit plan, comprising actuarial gains and losses, the return on plan assets(excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to Other Comprehensive Income ("OCi" ) in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.

The retirement benefit obligation recognised in the Balance Sheet represents the actual deficit or surplus in the company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in the future contribution to the plans.

Leave Encashment, Compensated Absences and Sick Leave

The Company provides for the encashment / availment of leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment / availment. The liability is provided based on the number of days of unutilized leave at each balance sheet date on the basis of an independent actuarial valuation.

The service cost, interest on defined benefit liability and remeasurements of defined benefit liability is recognised in the statement of profit or loss.

r. Revenue Recognition

i. Recognition of interest income on loans

The Company recognises interest income using EIR on all financial assets measured at amortised cost. EIR is the rate that exactly discounts estimated future cash flows of the financial instruments through the expected life of the financial instrument or, where appropriate, a shorter period, to the net carrying amount. The future cash flows are estimated using the contractual terms of the instrument.

The Company calculates interest income by applying the EIR to the gross carrying amount of financial assets other than credit-impaired assets. In case of credit-impaired financial assets (''Stage 3''), the Company recognises interest income on the amortised cost net of impairment loss of the financial asset at EIR. if the financial asset is no longer credit-impaired, the Company reverts to calculating interest income on a gross basis.

Interest levied on customers for delay in repayments/ non-payment of contractual cash flows is recognised on realization, since the probability / certainty of collecting such monies is established when the customer pays.

Interest Income from Government securities is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

ii. Dividend income

Dividend income on equity shares is recognized when the Company''s'' right to receive the payment is established by the reporting date and no significant uncertainty as to its collectability exists.

iii. Other Operating income

The Company recognises revenue from contracts with customers (other than financial assets to which Ind AS 109 ''Financial Instruments'' is applicable) based on a comprehensive assessment model as

set out in Ind AS 115 ''Revenue from contracts with customers. The company identifies contract(s) with a customer and its performance obligations under the contract, determines the transaction price and its allocation to the performance obligations in the contract and recognises revenue only on satisfactory completion of performance obligations. The Company recognises income on recoveries of financial assets written off on realisation basis.

iv. rental income

Rental income arising from operating leases is recognised on a straight-line basis over the lease term. In cases where the increase is in line with expected general inflation, rental income is recognised as per the contractual terms.

Operating leases are leases where the Company does not transfer substantially all of the risks and benefits of ownership of the asset.

v. Fees and commission income

The Company recognises service and administration charges towards rendering financial services to its customers on satisfactory completion of performance obligation at a point in time. Cheque Bouncing charges levied on customers for non-payment of instalment on the contractual date is recognised on realization, since the probability/ certainty of collecting such monies is established only when the customer pays. Foreclosure charges are collected from loan customers for early payment/ closure of loan and are recognised on realization, since the probability / certainty of collecting such monies is established only when the customer pays.

vi. sale of Power from Windmills

Income from power generation is recognized as per the Power Purchase Agreements entered into with State Electricity Board and on supply of power to the grid on satisfaction of performance obligation.

vii. Net gain/loss on fair value changes

The company designates certain financial assets for subsequent measurement at FVTOCI. The Company recognises gains/loss on fair value change of financial assets measured at FVTOci.

s. Foreign currency Transaction

The functional currency and presentation currency of the Company is Indian Rupee. Functional currency of the Company have been determined based on the primary economic environment in which the Company and its foreign operations operate considering the currency in which funds are generated, spent and retained. Transactions in currencies other than the Company''s functional currency are recorded on initial recognition

using the exchange rate at the transaction date. At each Balance Sheet date, foreign currency monetary items are translated at the prevailing closing spot rate. Non-monetary items are measured in terms of historical cost in foreign currency and are not retranslated. Exchange differences, if any, that arise on settlement of monetary items or on reporting of monetary items at each Balance Sheet date at the closing spot rate are recognised in the Statement of Profit and Loss in the period in which they arise.

t. Borrowing Costs

Borrowing costs include interest expense calculated using the "EIR" as per Ind AS 109 on ''Financial instruments'' and interest in respect of lease liability is recognised in accordance with Ind AS 116.

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of cost of such asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognised in the statement of profit and loss in the period in which they are incurred.

u. Finance costs

Finance costs include Interest Expenses computed by applying the "EIR" on the respective financial instruments measured at amortised cost. Financial Instruments include outstanding liabilities. Finance Costs are charged to the Statement of Profit and Loss.

v. Income Taxes

Tax expense (tax income) comprises current tax expense (current tax income) and deferred tax expense (deferred tax income)

i. Current tax

Current tax is the amount of tax payable to (recovered from) the taxation authorities on the taxable income for the year determined in accordance with the provisions of the Income Tax Act 1961 and Income Computation and Disclosure Standards prescribed therein. The tax rates and tax laws used to compute the amount are those that are enacted by the end of reporting date. Current tax relating to items recognised outside the statement of profit and loss is recognised in correlation to the underlying transaction either in OCI or directly in other equity.

ii. Deferred Tax

Deferred tax is the tax effect on temporary differences between the tax bases of assets and liabilities and their carrying amounts in the Financial Statements as at the reporting date.

Deferred tax liability is recognised for all taxable temporary differences and deferred tax asset is

recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The Company reviews the carrying amount of a deferred tax asset as at the end of each reporting period and reduce the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised.

Deferred tax relating to items recognized outside profit or loss is recognised either in other comprehensive income or in other equity.

w. Goods and services input tax credit

Input Tax credit is accounted for in the books in the period when the underlying service/supply received is accounted to the extent permitted as per the applicable regulatory laws and when there is no uncertainty in availing/utilising it. The ineligible input credit is charged off to the respective expense or capitalised as part of asset cost as applicable.

x. Leases

As a lessee

The Company has applied Ind AS 116 ''Leases'' for all lease contracts except for short term leases and leases for which underlying asset is of low value on modified retrospective approach.

Right of Use Asset is initially measured as at the sum of initial measurement of the lease liability and any lease payments made at or before the date of commencement of lease, adjusted by any lease incentives received. On subsequent period, the Right of Use Asset is measured at cost less accumulated depreciation and any accumulated impairment losses with adjustment for remeasurement of lease liability.

Lease Liability is initially measured at the present value of the lease payments that are not paid as at the date of recognition discounted at the Company''s incremental borrowing rate. The lease liability is measured in subsequent periods using the effective interest rate method. Right of Use asset is depreciated in accordance with the requirements of Ind AS 16 Property, Plant and Equipment.

The company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets

that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognised as an expense on a straight-line basis over the lease term.

As a Lessor

The Company recognises the lease payments from operating lease as income on the basis of contractual terms between the Lessee and the Company.

---

Mar 31, 2018

NOTES FORMING AN INTEGRAL PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2018

1 Company Overview

Sakthi Finance Limited ("SFL" or "the Company") is a public limited Company having its Registered Office in Coimbatore, Tamilnadu. The Equity Shares and Non-Convertible Debentures of the Company are listed on BSE Limited.

The Company is a deposit-taking Non-Banking Financial Company (NBFC) registered with Reserve Bank of India (RBI). The Company has been classified as an Asset Financing Company by RBI. The Company is engaged in the business of Hire Purchase Financing of Commercial Vehicles, Infrastructure Equipments, Machineries etc.

2 Significant Accounting Policies

a. Basis of preparation of financial statements

The financial statements of the company have been prepared in accordance with the Generally Accepted Accounting Principles in India (IGAAP) to comply with the accounting standards notified 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 as applicable and the guidelines issued by Reserve Bank of India applicable to Non-Banking Financial Companies. The Financial Statements have been prepared on accrual basis under the historical cost convention, except for certain fixed assets which have been revalued. The accounting policies adopted in the preparation of financial statements are consistent with those followed in the previous year.

b. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and the results of operations during the reporting year end. Although the estimates are based on management''s best knowledge of current events and actions, actual results could differ from these estimates. Any revisions to the accounting estimates are recognized prospectively in the current and future period.

c. Tangible Assets

Tangible assets, other than those which have been revalued, are stated at historical cost less accumulated depreciation. The revalued tangible assets are restated at their estimated replacement value at the time of revaluation.

d. Depreciation on Fixed Assets

Depreciation on Fixed Assets is provided on Straight Line Method (SLM) using the rates arrived at based on the Useful Life estimated by the management. The Company has used the following useful life to provide depreciation on Fixed Assets.

Particulars	Useful Life as prescribed by Schedule II to the Companies Act 2013	Useful Life estimated by the Company
Building	60 years	60 years
Plant and Machinery	15 years	15 years
Plant - Wind Mills	22 years	22 years
Furniture and Fixtures	10 years	10 years
Vehicles	8 years	8 years
Office Equipments	10 years	10 years
Computers	3 years	6 years

The Management has considered the useful life of computers as 6 years.

Additional depreciation on revalued Fixed Assets has been transferred from Revaluation Reserve Account to General Reserve Account.

NOTES FORMING AN INTEGRAL PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2018

e. Intangible Assets

Intangible Assets are carried at its cost less any accumulated amortization. The depreciable amount of intangible assets are allocated on a systematic basis over the best estimate of useful life. The Management has considered the useful life of intangible asset as 6 years.

Impairment of Assets

The carrying amount of assets are reviewed at each balance sheet date, if there is any indication of impairment based on internal or external factors. No impairment loss has arisen during the year.

f. Revenue Recognition

The prudential norms for Income Recognition and Provisioning for Non-performing assets as prescribed by the Reserve Bank of India for Non-Banking Financial Companies have been followed.

Accordingly, revenue recognition has been considered in the accounts on accrual basis only on those assets classified as standard assets as stated below:

i) a) Hire purchase finance charges are recognized as income under the internal rate of return method.

b) Interest on advances by way of loans are accounted for, to the extent accrued during the year, ii) Income by way of interest on Government securities is recognized on time proportion basis taking into account the amount outstanding and the rate applicable, iii) Income from Investments by way of dividend is recognized when the right to receive the payment is established by the balance sheet date, iv) Income from power generation is recognized as per the Power Purchase Agreements with

State Electricity Board and on supply of power to the grid.

g. Investments

Investments, by its nature readily realisable to be held for not more than a year, are classified as current investments. All other investments are classified as Non-current investments which are carried at cost and provision for diminution in value, other than temporary, is considered wherever required. Current investments are carried at the lower of cost or fair value.

h. Employee Benefits

i) Defined Contribution Plans

1. Provident Fund (PF)

Contributions are made periodically to the PF Commissioner, under the Employees Provident Fund Scheme, in accordance with the provisions of Employees Provident Funds and Miscellaneous Provisions Act 1952. The Company does not have any obligation other than the stipulated periodical contribution to the Provident Fund. The obligations to make a fixed and determinable amount of contributions are recognized as an expense in the year incurred.

2. Superannuation

The Company contributes a sum equivalent to 15% of eligible employees salary to a Superannuation Fund administered by trustees and managed by Life Insurance Corporation of India (LIC). The company has no liability for future Superannuation Fund benefits other than its annual contribution and recognizes such contribution as an expense in the year incurred.

ii) Defined Benefit Plans Gratuity

The Company makes annual contributions to a Fund administered by Trustees and managed by Life Insurance Corporation of India (LIC). The Company accounts its liability for gratuity based on actuarial valuation determined by LIC as at the Balance Sheet date.

iii) Other Benefits

Other benefits made available to employees include contributions made by the Company under (a) ESI Scheme (b) Employees Deposit Linked Insurance (c) Group Personal Accident Insurance and (d) Group Mediclaim benefits. Obligations under these benefits which are in the nature of staff welfare are recognized as expense in the year in which they are incurred. Leave salary is determined for a period of 12 months ended 31st December of each year and paid fully within the end of the accounting year.

i. Leases

Operating lease payments are recognised as an expense in the Statement of Profit and Loss on the basis of lease term. j. Earnings per share

Basic earnings per share is calculated by dividing the net profit or loss after tax for the year attributable to equity shareholders less preference dividend 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 after tax for the year attributable to equity shareholders less preference dividend and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential of equity shares. k. Cash and Cash Equivalents

Cash and Cash Equivalents in the Cash Flow Statement comprise cash at bank in hand, cheques on hand and balance in Current Account. I. Taxes on Income

The tax expenses is the aggregate of current tax and deferred tax charged or credited to the statement of profit and loss for the period. Current tax is the amount of tax payable on the taxable income for the year and determined in accordance with the provisions of the Income Tax Act 1961.

Deferred tax liability is recognized, on timing differences, being the difference between taxable income and accounting income that originates in one period and are capable of being reversed in one or more subsequent periods.

Deferred tax assets in respect of carry forward losses are recognized if there is a virtual certainty that there will be sufficient future taxable income available to offset such losses. Other deferred tax assets are recognized if there is reasonable certainty that there will be sufficient future taxable income available to recoup the value of such assets. m. Stock on Hire

Stock on Hire represents unexpired and unpaid instalments under Hire Purchase Finance Agreements. Stock on hire in relation to repossessed assets is shown separately under other current assets. n. Provisions, Contingent Liabilities and Contingent Assets

Provision is recognized only when there is a present obligation as a result of past event and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are shown by way of notes forming part of the Balance Sheet. Contingent Assets are neither recognized nor disclosed in the financial statements. o. Provision as per RBI Norms

(i) Provision for Non Performing Assets

Provision for non-performing assets, doubtful debts, loans and advances have been made as per Master Direction-NBFC-Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions 2016. (ii) Contingent Provision against Standard Assets

As per Master Direction - NBFC - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, all Non-Banking Financial Companies are required to make a provision of 0.40% on the Standard Assets as on 31st March 2018. Accordingly, necessary provision has been made.

	Particulars	As at 31st March 2018		As at 31st March 2017
		No. of Shares	Amount	No. of Shares	Amount
3.	SHARE CAPITAL
	AUTHORISED SHARE CAPITAL
	Equity Shares of Rs 10 each	7,00,00,000	7,000.00	7,00,00,000	7,000.00
	Redeemable Cumulative Preference	30,00,000	3,000.00	30,00,000	3,000.00
	Shares of Rs 100 each
			10,000.00		10,000.00
	ISSUED, SUBSCRIBED AND PAID-UP
	SHARE CAPITAL
	Equity Shares of Rs 10 each fully paid-up	5,00,00,000	5,000.00	5,00,00,000	5,000.00
	10% Redeemable Cumulative Preference	3,02,450	302.45	10,50,000	1,050.00
	Shares of Rs 100 each
	9% Redeemable Cumulative Preference	8,35,000	835.00	-	-
	Shares of ? 100 each
			6,137.45		6,050.00

a) Reconciliation of shares outstanding at the beginning and end of the year

Particulars	As at 31st March 2018		As at 31st March 2017
	No. of Shares	Amount	No. of Shares	Amount
Equity Shares with Voting Rights
No. of Shares at the beginning of the year	5,00,00,000	5,000.00	5,00,00,000	5,000.00
Add : Fresh issue of Shares during the year	-	-	-	-
Number of Shares at the end of the year	5,00,00,000	5,000.00	5,00,00,000	5,000.00
Redeemable Cumulative Preference Shares
No. of Shares at the beginning of the year	10,50,000	1,050.00	10,50,000	1,050.00
Add : Fresh issue of Shares during the year	8,35,000	835.00	_	_
Less : Redemption of shares during the year	(7,47,550)	(747.55)	-	-
Number of Shares at the end of the year	11,37,450	1,137.45	10,50,000	1,050.00

b) The rights, preferences and restrictions attached to each class of shares

The Company has two classes of shares namely, Equity Shares and Redeemable Cumulative Preference Shares. The rights, preferences and restrictions attached to each class of shares are given below:

Equity Shares

The equity share has a par value of Rs 10. Each holder of equity share is entitled to one vote per share. An equity shareholder has got a right to attend the General Meetings convened by the company and to receive dividend when declared. The company declares and pays dividend in Indian rupees. The dividend recommended by the Board of Directors is subject to the approval of members at the ensuing Annual General Meeting.

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

Redeemable Cumulative Preference Shares

The Redeemable Cumulative Preference Shares have a par value of ? 100. These shares carry a fixed cumulative dividend of 10% and 9% respectively per annum. These shares would be redeemable at par at the end of 3 years from various dates of allotment.

During the year 8,35,000 9% Redeemable Cumulative Preference Shares of Rs 100 each aggregating to Rs 835.00 Lakhs were allotted on 1st March,2018. 7,47,550 10% Redeemable Cumulative Preference Shares of Rs 100 each aggregating to Rs 747.55 Lakhs were redemeed during the year.

The Redeemable Cumulative Preference Shares (RCPS) have the following preferential rights over the equity shareholders:

a. The payment of dividend at a fixed rate; and

b. The return of capital on winding up of the company.

The preference shareholders can enforce their right of getting dividend in priority over the equity shareholders only if there are profits and the Directors decide to distribute them by way of dividend.

Preference shareholders have no voting rights and except when dividend is outstanding for more than 2 years in case of cumulative shares. But they have the right to vote on any resolution for winding up of the company or for the reduction or repayment of capital.

The Board of Directors have at their meeting held on 28th March 2018, declared an interim dividend of ? 10 per share (10% on a par value of ? 100) for the year ending 31st March 2018. The Board of Directors have also declared a pro rata dividend of 9% on RCPS of ? 100 allotted during the year. The total Preference Dividend, including interim and pro rata dividend, comes to Rs 133.12 lakhs, including corporate dividend tax of Rs 22.51 lakhs.

c) Details of shareholders holding more than 5% shares in the capital of the Company

Name of the Shareholder	As at 31st March 2018		As at 31st March 2017
	% of holding	No. of Shares	% of holding	No. Of Shares
Equity Shares with Voting Rights
ABT Investments (India) Private Limited	17.46	87,27,400	17.46	87,27,400
Sakthifinance Financial Services Limited	16.22	81,10,000	16.22	81,10,000
Avdhoot Finance and Investment Private Limited	11.25	56,24,208	11.25	56,24,208
Bridgewater Investment Corporation Limited	8.90	44,50,000	8.90	44,50,000
The Gounder and Company Auto Limited	7.85	39,25,000	7.85	39,25,000
Sakthi Financial Services (Cochin) Private Limited	6.82	34,11,246	6.82	34,11,246
10% Redeemable Cumulative Preference Shares
Mr B.R.Prabhakar	6.61	20,000	-	-
Mr R.Ramaseshan	9.92	30,000	-	-
Ms Aashika Jayanth	-	-	2.38	25,000

Particulars

Particulars	As at 31st March 2018	As at 31st March 2017
5. LONG-TERM BORROWINGS Secured
Debentures (Refer Note 7)	18,039.12	24,826.99
Term Loans from Financial Institutions / Other Lenders	4,523.31	4,342.06
	22,562.43	29,169.05
Unsecured Deposits	9,486.19	7,994.34
Subordinated Debts	11,201.25	19,558.98
Senior Unsecured NCD	2,500.00	2,500.00
Total	45,749.87	59,222.37

Nature of security and terms of repayment for Debentures

a) 47,96,43,391 (Face value: Rs 1 each) and 1,16,750 (Face value: Rs 1000 each) Secured Redeemable Non-Convertible Debentures issued on Private Placement basis and redeemable at par, are secured by specified Hire Purchase receivables. The rate of interest varies from 9% to 12%; the date of redemption is reckoned at 12 to 36 months from the date of first allotment in relation to each of the series allotted up to 31st July, 2010 and 15 to 36 months in relation to each of the series allotted from 1st August 2010 onwards. Out of the debentures mentioned above, Rs 170 Lakhs (Rs Nil), is classified as short-term borrowings and is shown under Note 7.

b) 36,47,900 Secured Redeemable Non-Convertible Debentures of Rs 100 each aggregating to Rs 3647.90 Lakhs are secured by specified Hire purchase receivables and a building situated at Madurai. The rate of interest varies from 11% to 11.50%. The date of redemption is reckoned at 24 to 48 months from the date of allotment i.e 01.04.2015. Out of the debentures mentioned above, Rs 3647.90 Lakhs (Rs 1686.29 Lakhs), is classified as short-term borrowings and is shown under Note 7.

c) 16,48,708 Secured Redeemable Non-Convertible Debentures of Rs 1000 each aggregating to Rs 16487 Lakhs are secured by specified Hire purchase receivables and an identified immovable property situated at Coimbatore. The rate of interest varies from 10.25% to 11.00%. The date of redemption is reckoned at 24 to 48 months from the date of allotment i.e 18.05.2016. Out of the debentures mentioned above, Rs 3432.09 Lakhs (Rs Nil), is classified as short-term borrowings and is shown under Note 7.

d) During the year, as per the terms and conditions of the Public Issue Prospectus dated 18th February 2015, the Company redeemed Secured Redeemable Non-Convertible Debentures issued under Option on III to V aggregating to Rs 1535.32 Lakhs (Rs 4816.78 Lakhs) on 31st March 2018.

e) For Public Issue of Debentures, Debenture Redemption Reserve has been created based on tenor of the debentures.

---

Mar 31, 2016

1 Company Overview

Sakthi Finance Limited ("SFL" or "the Company") is a public limited Company having its Registered Office in Coimbatore, Tamilnadu. The equity shares of the Company are listed on BSE Limited. The Company is a deposit-taking Non-Banking Financial Company (NBFC) registered with Reserve Bank of India (RBI). The Company has been classified as an Asset Financing Company by RBI. The Company is engaged in the business of Hire Purchase Financing of Commercial Vehicles, Infrastructure Equipments, Machineries etc.

2 Significant Accounting Policies

a. Basis of preparation of financial statements

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 as applicable and the guidelines issued by Reserve Bank of India applicable to Non-Banking Financial Companies. The Financial Statements have been prepared on accrual basis under the historical cost convention, except certain fixed assets which have been revalued. The accounting policies adopted in the preparation of financial statements are consistent with those followed in the previous year.

b. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and the results of operations during the reporting year end. Although the estimates are based on management''s best knowledge of current events and actions, actual results could differ from these estimates. Any revisions to the accounting estimates are recognized prospectively in the current and future period.

c. Tangible Fixed Assets

Fixed assets, other than those which have been revalued, are stated at historical cost less accumulated depreciation. The revalued fixed assets are restated at their estimated replacement value at the time of revaluation.

d. Depreciation

Depreciation on Tangible Fixed Assets has been determined on the Straight Line Method (SLM) as per the Useful Life prescribed in Schedule II to the Companies Act 2013.

Additional depreciation on revalued Fixed Assets has been transferred from Revaluation Reserve Account to General Reserve Account.

e. Intangible Assets

Intangible Assets viz. Computer Software are stated at the consideration paid for its acquisition. Intangible assets are amortized based on the management''s estimate of useful economic life of the asset, reckoned as 6 years.

f. Revenue Recognition

The prudential norms for Income Recognition and Provisioning for Non-performing assets as prescribed by the Reserve Bank of India for Non-Banking Financial Companies have been followed.

Accordingly, revenue recognition has been considered in the accounts on accrual basis only on those assets classified as standard assets as stated below:

i) a) Hire purchase finance charges are recognized as income under the internal rate of return method.

b) Interest on advances by way of loans are accounted for, to the extent accrued during the year.

ii) Income by way of interest on Government securities is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

iii) Income from Investments by way of dividend is recognized when the right to receive the payment is established by the balance sheet date.

iv) Income from power generation is recognized as per the Power Purchase Agreements with State Electricity Board and on supply of power to the grid.

v) Debenture Issue Expenses:

The expenditure relating to Public issue of Debentures is amortized over the tenor of the debentures.

g. Investments

Long-term investments are carried at cost. Provision for diminution in value is made to recognize a decline, if any, other than temporary, in the value of investments. Current investments are carried at the lower of cost and fair value.

h. Employee Benefits (Also refer Note 31 of Notes forming an integral part of the Financial Statements for the year ended 31st March 2016)

i) Defined Contribution Plans

1. Provident Fund (PF)

Contributions are made periodically to the PF Commissioner, under the Employees Provident Fund Scheme, in accordance with the provisions of Employees Provident Funds and Miscellaneous Provisions Act 1952. The Company does not have any obligation other than the stipulated periodical contribution to the Provident Fund. The obligations to make a fixed and determinable amount of contributions are recognized as an expense in the year incurred.

2. Superannuation

The Company contributes a sum equivalent to 15% of eligible employees salary to a Superannuation Fund administered by trustees and managed by Life Insurance Corporation of India (LIC). The company has no liability for future Superannuation Fund benefits other than its annual contribution and recognizes such contribution as an expense in the year incurred.

ii) Defined Benefit Plans Gratuity

The Company makes annual contributions to a Fund administered by Trustees and managed by Life Insurance Corporation of India (LIC). The Company accounts its liability for gratuity based on actuarial valuation determined by LIC as at the Balance Sheet date.

iii) Other Benefits

Other benefits made available to employees include contributions made by the Company under (a) ESI Scheme (b) Employees Deposit Linked Insurance (c) Group Personal Accident Insurance and (d) Group Mediclaim benefits. Obligations under these benefits which are in the nature of staff welfare are recognized as expense in the year in which they are incurred. Leave salary is determined for the period of 12 months ended 31st December of each year and paid fully within the end of the accounting year.

i. Leases

Operating lease payments are recognized as an expense in the Statement of Profit and Loss.

j. Earnings per share

Basic earnings per share is calculated by dividing the net profit or loss after tax for the year attributable to equity shareholders less preference dividend 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 after tax for the year attributable to equity shareholders less preference dividend and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential of equity shares.

k. Cash and Cash Equivalents

Cash and Cash Equivalents in the Cash Flow statement comprise Cash at Bank and in hand, Cheques on hand and Balance in Current Account and Short term investments with an original maturity of three months or less.

l. Taxes on Income

Current tax is the amount of tax payable on the taxable income for the year and determined in accordance with the provisions of the Income Tax Act 1961.

Deferred tax liability is recognized, on timing differences, being the difference between taxable income and accounting income that originates in one period and are capable of being reversed in one or more subsequent periods.

Deferred tax assets in respect of carry forward losses are recognized if there is a virtual certainty that there will be sufficient future taxable income available to offset such losses. Other deferred tax assets are recognized if there is reasonable certainty that there will be sufficient future taxable income available to recoup the value of such assets.

m. Stock on Hire

Stock on Hire represents unexpired Installments under Hire Purchase Finance Agreements including that in relation to repossessed Assets.

n. Provisions, Contingent Liabilities and Contingent Assets

Provision is recognized only when there is a present obligation as a result of past event and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are shown by way of notes attached to and forming part of the Balance Sheet. Contingent Assets are neither recognized nor disclosed in the financial statements.

o. Provision as per RBI Norms

(i) Provision for Non Performing Assets

Provision for non-performing assets, doubtful debts, loans and advances have been made as per the Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions 2007.

(ii) Contingent Provision against Standard Assets

RBI by its Notification No.DNBR.011/CGM(CDS)-2015 dated March 27, 2015 has issued directions to all Non-Banking Financial Companies to make a provision of 0.30% on the Standard Assets as on March 31, 2016. Accordingly necessary provision has been made.

---

Mar 31, 2015

A. Basis of preparation of financial statements

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 Sec 133 of The Companies Act 2013 read with rule 70 of The Companies (Accounts) Rules 2014 and the relevant provisions of the Companies Act 2013 as applicable and the guidance issued by Reserve Bank of India applicable to Non-Banking Financial Companies. The Financial Statements have been prepared on accrual basis under the historical cost convention, except certain fixed assets which have been revalued. The accounting policies adopted in the preparation of financial statements are consistent with those followed in the previous year.

b. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and the results of operations during the reporting year end. Although the estimates are based on management's best knowledge of current events and actions, actual results could differ from these estimates. Any revisions to the accounting estimates are recognized prospectively in the current and future period.

c. Tangible Fixed Assets

Fixed assets, other than those which have been revalued, are stated at historical cost less accumulated depreciation. The revalued fixed assets are restated at their estimated replacement value at the time of revaluation.

d. Depreciation

Depreciation on Tangible Fixed Assets has been on the Straight Line method (SLM) as per the Useful Life prescribed in Schedule II to the Companies Act 2013.

e. Intangible Assets

Intangible Assets viz. Computer Software are stated at the consideration paid for its acquisition. Intangible assets are amortized based on the management's estimate of useful economic life of the asset, reckoned as 6 years.

f. Revenue Recognition

The prudential norms for Income Recognition and Provisioning for Non-performing assets as prescribed by the Reserve Bank of India for Non-Banking Financial Companies have been followed.

Accordingly, revenue recognition has been considered in the accounts on accrual basis only on those assets classified as standard assets as stated below:

i) a) Hire purchase finance charges are recognized as income under the internal rate of return method.

b) Interest on advances by way of loans are accounted for, to the extent accrued during the year.

ii) Income by way of interest on Government securities is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

iii) Income from Investments by way of dividend is recognized when the right to receive the payment is established by the balance sheet date.

iv) Income from power generation is recognized as per the Power Purchase Agreements with State Electricity Board and on supply of power to the grid.

g. Investments

Long-term investments are carried at cost. Provision for diminution in value is made to recognize a decline, if any, other than temporary, in the value of investments. Current investments are carried at the lower of cost and fair value.

h. Employee Benefits (Also refer Note 30 of Notes forming an integral part of the Financial Statements for the year ended 31st March 2015)

i) Defined Contribution Plans

1. Provident Fund (PF)

Contributions are made periodically to the PF Commissioner, under the Employees Provident Fund Scheme, in accordance with the provisions of Employees Provident Funds and Miscellaneous Provisions Act 1952. The Company does not have any obligation other than the stipulated periodical contribution to the Provident Fund. The obligations to make a fixed and determinable amount of contributions are recognized as an expense in the year incurred.

2. Superannuation

The Company contributes a sum equivalent to 15% of eligible employees salary to a Superannuation Fund administered by trustees and managed by Life Insurance Corporation of India (LIC). The company has no liability for future Superannuation Fund benefits other than its annual contribution and recognizes such contribution as an expense in the year incurred.

ii) Defined Benefit Plans

Gratuity

The Company makes annual contributions to a Fund administered by Trustees and managed by Life Insurance Corporation of India (LIC). The Company accounts its liability for gratuity based on actuarial valuation determined by LIC as at the Balance Sheet date.

iii) Other Benefits

Other benefits made available to employees include contributions made by the Company under (a) ESI Scheme (b) Employees Deposit Linked Insurance (c) Group Personal Accident Insurance and (d) Group Mediclaim benefits. Obligations under these benefits which are in the nature of staff welfare are recognized as expense in the year in which they are incurred. Leave salary is determined for the period of 12 months ended 31st December of each year and paid fully within the end of the accounting year

i. Leases

Operating lease payments are recognized as an expense in the Statement of Profit and Loss.

j. Earnings per share

Basic earnings per share is calculated by dividing the net profit or loss after tax for the year attributable to equity shareholders less preference dividend 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 after tax for the year attributable to equity shareholders less preference dividend and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential of equity shares.

k. Taxes on Income

Current tax is the amount of tax payable on the taxable income for the year and determined in accordance with the provisions of the Income Tax Act 1961.

Deferred tax liability is recognized, on timing differences, being the difference between taxable income and accounting income that originates in one period and are capable of being reversed in one or more subsequent periods.

Deferred tax assets in respect of carry forward losses are recognized if there is a virtual certainty that there will be sufficient future taxable income available to offset such losses. Other deferred tax assets are recognized if there is reasonable certainty that there will be sufficient future taxable income available to recoup the value of such assets.

l. Stock on Hire

Stock on Hire represents unexpired Installments under Hire Purchase Finance Agreements including that in relation to repossessed Assets.

m. Provision as per RBI Norms

(i) Provision for Non Performing Assets

Provision for non-performing assets, doubtful debts, loans and advances have been made as per the Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions 2007.

(ii) Contingent Provision against Standard Assets

RBI by its Notification No.DNBS.222/CGM(US)-2011 dated 17th January 2011 has issued directions to all Non-Banking Financial Companies to make a provision of 0.25% on the Standard Assets. Accordingly necessary provision has been made.

---

Mar 31, 2014

A. Basis of preparation of financial statements

The financial statements are prepared under the historical cost convention on accrual basis of accounting except for certain fixed assets which have been revalued and comply with the mandatory Accounting Standards notified by the Central Government under the Companies (Accounting Standards) Rules 2006, the relevant provisions of the Companies Act 1956 and the guidelines issued by the Reserve Bank of India applicable to Non-Banking Financial Companies.

b. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of financial statements and the results of operations during the reporting year end. Although the estimates are based on management''s best knowledge of current events and actions, actual results could differ from these estimates. Any revisions to the accounting estimates are recognized prospectively in the current and future period.

c. Fixed Assets

Fixed assets, other than those which have been revalued, are stated at historical cost less accumulated depreciation.The revalued fixed assets are restated at their estimated current replacement value.

d. Depreciation

i) Depreciation on Fixed Assets is provided on straight line method by adopting the rates as prescribed under Schedule XIV to the Companies Act 1956.

ii) For assets acquired costing Rs.5,000 each or below, the total cost of the asset has been depreciated.

e. Intangible Assets

Intangible Assets viz. Computer Software are stated at the consideration paid for its acquisition. Intangible assets are amortized based on the management''s estimate of useful life of the asset. Its life is estimated to be 7 years.

f. Revenue Recognition

The prudential norms for Income Recognition and Provisioning for Non-performing assets as prescribed by the Reserve Bank of India for Non - Banking Financial Companies have been followed.

Accordingly, revenue recognition has been considered in the accounts on accrual basis only on those assets classified as standard assets as stated below:

i) a) Hire purchase finance charges are recognized as income under the internal rate of return method.

b) Interest on advances by way of loans are accounted for, to the extent accrued during the year.

ii) Income by way of interest on Government securities is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

iii) Income from Investments by way of dividend is recognized when the right to receive the payment is established by the balance sheet date.

iv) Income from power generation is recognized as per the Power Purchase Agreements with State Electricity Board and on supply of power to the grid.

g. Investments

Long-term investments are carried at cost. Provision for diminution in value is made to recognize a decline, if any, other than temporary, in the value of investments. Current investments are carried at the lower of cost and fair value.

h. Employee Benefits (Also refer Note 30 of Notes forming an integral part of the Financial Statements for the year ended 31st March 2014)

i) Defined Contribution Plans

1. Provident Fund (PF)

Contributions are made periodically to the PF Commissioner, under the Employees Provident Fund Scheme, in accordance with the provisions of Employees Provident Funds and Miscellaneous Provisions Act 1952. The Company does not have any obligation other than the stipulated periodical contribution to the Provident Fund. The obligations to make a fixed and determinable amount of contributions are recognized as an expense in the year incurred.

2. Superannuation

The Company contributes a sum equivalent to 15% of eligible employees salary to a Superannuation Fund administered by trustees and managed by Life Insurance Corporation of India (LIC). The company has no liability for future Superannuation Fund benefits other than its annual contribution and recognizes such contribution as an expense in the year incurred.

ii) Defined Benefit Plans Gratuity

The Company makes annual contributions to a Fund administered by Trustees and managed by Life Insurance Corporation of India (LIC). The Company accounts its liability for gratuity based on actuarial valuation determined by LIC as at the Balance Sheet date.

iii) Other Benefits

Other benefits made available to employees include contributions made by the Company under (a) ESI Scheme (b) Employees Deposit Linked Insurance (c) Group Personal Accident Insurance and (d) Group Mediclaim benefits. Obligations under these benefits which are in the nature of staff welfare are recognized as expense in the year in which they are incurred.

Leave salary is determined for the period of 12 months ended 31st December of each year and paid fully within the end of the accounting year, as a result of which making of provision is not necessary.

i. Leases

Operating lease payments are recognized as an expense in the Statement of Profit and Loss.

j. Earnings per share

Basic earnings per share is calculated by dividing the net profit or loss after tax for the year attributable to equity shareholders less preference dividend 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 after tax for the year attributable to equity shareholders less preference dividend and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential of equity shares.

k. Taxes on Income

Current tax is the amount of tax payable on the taxable income for the year and determined in accordance with the provisions of the Income Tax Act 1961.

Deferred tax liability is recognized, on timing differences, being the difference between taxable income and accounting income that originates in one period and are capable of being reversed in one or more subsequent periods.

Deferred tax assets in respect of carry forward losses are recognized if there is a virtual certainty that there will be sufficient future taxable income available to offset such losses. Other deferred tax assets are recognized if there is reasonable certainty that there will be sufficient future taxable income available to recoup the value of such assets.

l. Stock on Hire

Stock on hire under Hire purchase agreements including repossessed stocks on hire are stated at agreement value less instalments received.

m. Provision as per RBI Norms

(i) Provision for Non Performing Assets

Provision for non-performing assets, doubtful debts, loans and advances have been made as per the Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions 2007.

(ii) Contingent Provision against Standard Assets

RBI by its Notification No.DNBS.222/CGM(US)-2011 dated 17th January 2011 has issued directions to all Non-Banking Financial Companies to make a provision of 0.25% on the Standard Assets.

---

Mar 31, 2013

A. Basis of preparation of financial statements

The financial statements are prepared under the historical cost convention on accrual basis of accounting except for certain fixed assets which have been revalued and comply with the mandatory Accounting Standards notified by the Central Government under the Companies (Accounting Standards) Rules 2006'' the relevant provisions of the Companies Act 1956 and the guidelines issued by the Reserve Bank of India applicable to Non-Banking Financial Companies.

b. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of financial statements and the results of operations during the reporting year end. Although the estimates are based on management''s best knowledge of current events and actions'' actual results could differ from these estimates. Any revisions to the accounting estimates are recognized prospectively in the current and future period.

c. Fixed Assets

Fixed assets'' other than those which have been revalued'' are stated at historical cost less accumulated depreciation. The revalued fixed assets are restated at their estimated current replacement value.

d. Depreciation

i) Depreciation on Fixed Assets is provided'' on straight line method by adopting the rates as prescribed under Schedule XIV to the Companies Act 1956.

ii) For assets acquired costing Rs.5''000 each or below'' the total cost of the asset has been depreciated.

e. Intangible Assets

Intangible Assets viz. Computer Software are stated at the consideration paid for its acquisition. Intangible assets are amortized based on the management''s estimate of useful life of the asset. Its life is estimated to be 7 years.

f. Revenue Recognition

The prudential norms for Income Recognition and Provisioning for Non-performing assets as prescribed by the Reserve Bank of India for Non-Banking Financial Companies have been followed.

Accordingly'' revenue recognition has been considered in the accounts on accrual basis only on those assets classified as standard assets as stated below:

i) a) Hire purchase finance charges are recognized as income under the internal rate of return method.

b) Interest on advances by way of loans are accounted for'' to the extent accrued during the year.

ii) Income by way of interest on Government securities is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

iii) Income from Investments by way of dividend is recognized when the right to receive the payment is established by the balance sheet date.

iv) Income from power generation is recognized as per the Power Purchase Agreements with State Electricity Board and on supply of power to the grid.

g. Investments

Long-term investments are carried at cost. Provision for diminution in value is made to recognize a decline'' if any'' other than temporary'' in the value of investments. Current investments are carried at the lower of cost and fair value.

h. Employee Benefits (Also refer Note 30 of Notes forming an integral part of the Financial Statements for the year ended 31st March 2013)

i) Defined Contribution Plans

1. Provident Fund (PF)

Contributions are made periodically to the PF Commissioner'' under The Employees Provident Fund Scheme'' in accordance with the provisions of Employees’ Provident Funds and Miscellaneous Provisions Act 1952. The Company does not have any obligation other than the stipulated periodical contribution to the Provident Fund. The obligations to make a fixed and determinable amount of contributions are recognized as an expense in the year incurred.

2. Superannuation

The Company contributes a sum equivalent to 15% of eligible employees salary to a Superannuation Fund administered by trustees and managed by Life Insurance Corporation of India (LIC). The company has no liability for future Superannuation Fund benefits other than its annual contribution and recognizes such contribution as an expense in the year incurred.

ii) Defined Benefit Plans

Gratuity

The Company makes annual contributions to a Fund administered by Trustees and managed by Life Insurance Corporation of India (LIC). The Company accounts its liability for gratuity based on actuarial valuation determined by LIC as at the Balance Sheet date.

iii) Other Benefits

Other benefits made available to employees include contributions made by the Company under (a) ESI Scheme (b) Employees Deposit Linked Insurance (c) Group Personal Accident Insurance and (d) Group Mediclaim benefits. Obligations under these benefits which are in the nature of staff welfare are recognized as expense in the year in which they are incurred.

Leave salary is determined for the period of 12 months ended 31st December of each year and paid fully within the end of the accounting year'' as a result of which making of provision is not necessary.

i. Leases

Operating lease payments are recognized as an expense in the Statement of Profit and Loss.

j. Earnings per share

Basic earnings per share is calculated by dividing the net profit or loss after tax for the year attributable to equity shareholders less preference dividend 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 after tax for the year attributable to equity shareholders less preference dividend and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential of equity shares.

k. Taxes on Income

Current tax is the amount of tax payable on the taxable income for the year and determined in accordance with the provisions of the Income Tax Act 1961.

Deferred tax liability is recognized'' on timing differences'' being the difference between taxable income and accounting income that originates in one period and are capable of being reversed in one or more subsequent periods.

Deferred tax assets in respect of carry forward losses are recognized if there is a virtual certainty that there will be sufficient future taxable income available to offset such losses. Other deferred tax assets are recognized if there is reasonable certainty that there will be sufficient future taxable income available to recoup the value of such assets.

l. Stock on Hire

Stock on hire under Hire purchase agreements including repossessed stocks on hire are stated at agreement value less instalments received.

m. Provision as per RBI Norms

i) Provision for Non Performing Assets

Provision for non-performing assets'' doubtful debts'' loans and advances have been made as per the Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions 2007.

ii) Contingent Provision against Standard Assets

RBI by its Notification No.DNBS.222/CGM(US)-2011 dated 17th January 2011 has issued directions to all Non-Banking Financial Companies to make a provision of 0.25% on the Standard Assets.

---

Mar 31, 2012

A. Fixed Assets

Fixed assets, other than those which have been revalued, are stated at historical cost less accumulated depreciation. The revalued fixed assets are restated at their estimated current replacement value.

b. Depreciation

i) Depreciation on Fixed Assets is provided, on straight line method by adopting the rates as prescribed under Schedule XIV to the Companies Act 1956.

ii) For assets acquired costing Rs.5,000 each or below, the total cost of the asset has been depreciated.

c. Intangible Assets

Intangible Assets viz. Computer Software are stated at the consideration paid for its acquisition. Intangible assets are amortized based on the management's estimate of useful life of the asset. Its life is estimated to be 7 years.

d. Revenue Recognition

The prudential norms for Income Recognition and Provisioning for Non-performing assets as prescribed by the Reserve Bank of India for Non - Banking Financial Companies have been followed.

Accordingly, revenue recognition has been considered in the accounts on accrual basis only on those assets classified as standard assets as stated below:

i) a) Hire purchase finance charges are recognized as income under the internal rate of return method.

b) Interest on advances by way of loans are accounted for, to the extent accrued during the year.

ii) Income from Investments by way of dividend is recognized when the right to receive the payment is established by the balance sheet date.

iii) Income by way of interest on Government securities is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

iv) Income from power generation is recognized as per the Power Purchase Agreements with State Electricity Board and on supply of power to the grid.

e. Investments

Long-term investments are carried at cost. Provision for diminution in value is made to recognize a decline, if any, other than temporary, in the value of investments. Current investments are carried at the lower of cost and fair value.

f. Retirement Benefits (Also refer Note 30 of Notes forming an integral part of the Financial Statements for the year ended 31st March 2012)

i) Defined Contribution Plans

1. Provident Fund (PF)

Contributions are made periodically to the PF Commissioner, under the Employees Provident Fund Scheme, in accordance with the provisions of PF and Miscellaneous Provisions Act 1952. The Company does not have any obligation other than the stipulated periodical contribution to the Provident Fund. The obligations to make a fixed and determinable amount of contributions are recognized as an expense in the year incurred.

2. Superannuation

The Company contributes a sum equivalent to 15% of eligible employees salary to a Superannuation Fund administered by trustees and managed by Life Insurance Corporation of India (LIC). The company has no liability for future Superannuation Fund benefits other than its annual contribution and recognizes such contribution as an expense in the year incurred.

ii) Defined Benefit Plans Gratuity

The Company makes annual contributions to a Fund administered by Trustees and managed by Life Insurance Corporation of India (LIC). The Company accounts its liability for gratuity based on actuarial valuation determined by LIC as at the Balance Sheet date.

iii) Other Benefits

Other benefits made available to employees include contributions made by the Company under (a) ESI Scheme (b) Employees Deposit Linked Insurance (c) Group Personal Accident Insurance and (d) Group Mediclaim benefits. Obligations under these benefits which are in the nature of staff welfare are recognized as expense in the year in which they arise.

Leave salary is determined for the period of 12 months ended 31st December of each year and paid fully within the end of the accounting year, as a result of which making of provision does not arise.

g. Leases

Operating lease payments are recognized as an expense in the Statement of Profit and Loss.

h. Earnings per share

Basic earnings per share is calculated by dividing the net profit or loss after tax for the year 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 after tax for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

i. Taxes on Income

Current tax is the amount of tax payable on the taxable income for the year and determined in accordance with the provisions of the Income Tax Act 1961.

Deferred tax liability is recognized, on timing differences, being the difference between taxable income and accounting income that originates in one period and are capable of being reversed in one or more subsequent periods.

Deferred tax assets in respect of carry forward losses are recognized if there is a virtual certainty that there will be sufficient future taxable income available to offset such losses. Other deferred tax assets are recognized if there is reasonable certainty that there will be sufficient future taxable income available to recoup the value of such assets.

j. Stock on Hire

Stock on hire under Hire purchase agreements including repossessed stocks on hire are stated at agreement value less instalments received.

k. Provision as per RBI Norms

i) Provision for Non Performing Assets

Provision for non-performing assets, doubtful debts, loans and advances have been made as per the Non-Banking Financial (Deposit accepting or holding) Companies Prudential Norms (Reserve Bank) Directions 2007.

ii) Provision against Standard Assets

RBI by its Notification No.DNBS.222/CGM(US)-2011 dated 17th January 2011 has issued directions to all Non-Banking Financial Companies to make a provision of 0.25% on the Standard Assets.

---

Mar 31, 2011

1.1 BASIS OF PREPARATION

The financial statements are prepared under the historical cost convention on accrual basis of accounting except for certain fixed assets which have been revalued and comply with the mandatory Accounting Standards notified by the Central Government under the Companies (Accounting Standards) Rules 2006, the relevant provisions of the Companies Act 1956 and the guidelines issued by the Reserve Bank of India applicable to Non-Banking Financial Companies.

1.2 FIXED ASSETS

Fixed assets, other than those which have been revalued, are stated at historical cost less accumulated depreciation. The revalued fixed assets are restated at their estimated current replacement value as on 31st March 2011 based on valuation reports of an external valuer.

1.3 DEPRECIATION

a) Depreciation is provided for, on straight line method by adopting the rates as prescribed under Schedule XIV to the Companies Act 1956.

b) For assets acquired costing Rs. 5,000 each or below, the total cost of the asset has been depreciated.

1.4 INTANGIBLE ASSETS

Intangible Assets viz. Computer Software are stated at the consideration paid for its acquisition. Intangible assets are amortized based on the management's estimate of useful life of the asset. It's life is estimated to be 7 years.

1.5 REVENUE RECOGNITION

The prudential norms for Income Recognition and Provisioning for Non-performing assets as prescribed by the Reserve Bank of India for Non - Banking Financial Companies have been followed.

Accordingly, revenue recognition has been considered in the accounts on accrual basis only on those assets classified as standard assets as stated below:

1) a) Hire purchase finance charges are recognized as income under the internal rate of return method.

b) Interest on advances by way of loans are accounted for, to the extent accrued during the year.

2) Income from Investments by way of dividend is recognized when the right to receive the payment is established.

3) Income by way of interest on Government securities is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

4) In respect of sell-down receivables, the difference between the book value of the assets and the sale consideration, after netting of incidental expenses incurred is recognized as revenue.

5) Income from power generation is recognized as per the Power Purchase Agreements with State Electricity Board and on supply of power to the grid.

1.6 INVESTMENTS

Long term investments are carried at cost. Provision for diminution in value is made to recognize a decline, if any, other than temporary, in the value of investments.

1.7 RETIREMENT BENEFITS (ALSO REFER NOTE 9.0 OF SCHEDULE-19)

I. DEFINED CONTRIBUTION PLANS PROVIDENT FUND (PF)

Contributions are made periodically to the PF Commissioner, under the Employees Provident Fund Scheme, in accordance with the provisions of Employees' Provident Fund and Miscellaneous Provisions Act 1952. The Company does not have any obligation other than the stipulated periodical contribution to the Provident Fund. The obligations to make a fixed and determinable amount of contributions are recognised as an expense in the year incurred.

II. DEFINED BENEFIT PLANS

GRATUITY

The Company makes annual contributions to a Fund administered by Trustees and managed by Life Insurance Corporation of India (LIC). The Company accounts its liability for gratuity based on actuarial valuation, determined by LIC as at the Balance Sheet date.

III.OTHER BENEFITS

Other benefits made available to employees include contributions made by the Company under (a) ESI Scheme (b) Employees Deposit Linked Insurance (c) Group Personal Accident Insurance and (d) Group Mediclaim benefits. Obligations under these benefits which are in the nature of staff welfare are recognized as expense in the year in which they arise.

Leave salary is determined for the period of 12 months ended 31st December of each year and paid fully within the end of the accounting year as a result of which making of provision does not arise.

1.8 TAXES ON INCOME

Current tax is the amount of tax payable on the taxable income for the year and determined in accordance with the provisions of the Income Tax Act 1961.

Deferred tax liability is recognized, on timing differences, being the difference between taxable income and accounting income that originates in one period and are capable of being reversed in one or more subsequent periods.

Deferred tax assets in respect of carry forward losses are recognized if there is a virtual certainty that there will be sufficient future taxable income available to realize such losses. Other deferred tax assets are recognized if there is reasonable certainty that there will be sufficient future taxable income available to realize such assets.

1.9 STOCK ON HIRE

Stock on hire under Hire purchase agreements including repossessed stocks on hire are stated at agreement value less instalments received.

1.10 PROVISION AS PER RBI NORMS

1. Provision for Non Performing Assets:

Provision for non-performing assets, doubtful debts, loans and advances have been made as per the Non-Banking Financial Companies Prudential Norms (Reserve Bank of India) Directions 2007.

2. Provision against Standard Assets:

The RBI vide its Notification No.DNBS.222/CGM(US)-2011 dated 17th January 2011, has issued directions to all NBFCs to make a provision of 0.25% on the Standard Assets. Accordingly, the company has made a provision of Rs. 1,35,12,499 as at 31st March 2011 as an exceptional item.

---

Mar 31, 2010

1.1 BASIS OF PREPARATION

The financial statements are prepared under the historical cost convention on accrual basis of accounting and comply with the mandatory Accounting Standards notified by the Central Government under the Companies (Accounting Standards) Rules 2006, the relevant provisions of the Companies Act 1956 and the guidelines issued by the Reserve Bank of India applicable to Non-Banking Financial Companies.

1.2 FIXED ASSETS

Fixed assets are stated at historical cost less accumulated depreciation.

1.3 DEPRECIATION

a) Depreciation on assets on own use is provided for, on straight line method by adopting the rates as prescribed under Schedule XIV to the Companies Act 1956.

b) For assets under own use acquired during the current year costing Rs.5,000 each or below, the total cost of the asset has been depreciated.

1.4 REVENUE RECOGNITION

The prudential norms for Income Recognition and Provisioning for Non-performing assets as prescribed by the Reserve Bank of India for Non - Banking Financial Companies have been followed.

Accordingly, revenue recognition has been considered in the accounts on accrual basis only on those assets classified as standard assets as stated below:

1) a) Hire purchase finance charges are recognized as income under the internal rate of return

method.

b) Interest on advances by way of loans are accounted for, to the extent accrued during the year.

2) Income from Investments by way of dividend is recognized when the right to receive the payment is established.

3) Income by way of interest on Government securities is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

4) In respect of sell-down receivables, the difference between the book value of the assets and the sale consideration, after netting of incidental expenses incurred is recognized as revenue.

5) Income from power generation is recognized as per the Power Purchase Agreements with State Electricity Board and on supply of power to the grid.

1.5 INVESTMENTS

Long term investments are carried at cost. Provision for diminution in value is made to recognize a decline, if any, other than temporary, in the value of investments.

1.6 RETIREMENT BENEFITS (ALSO REFER NOTE 9.0 OF SCHEDULE-19) I. DEFINED CONTRIBUTION PLANS

PROVIDENT FUND (PF)

Contributions are made periodically to the PF Commissioner, under the Employees Provident Fund Scheme, in accordance with the provisions of PF and Miscellaneous Provisions Act. The Company does not have any obligation other than the stipulated periodical contribution to the Provident Fund. The obligations to make a fixed and determinable amount of contributions are recognised as an expense in the year incurred.

II. DEFINED BENEFIT PLANS

GRATUITY AND SICK LEAVE

The Company makes annual contributions to a Fund administered by Trustees and managed by Life Insurance Corporation of India (LIC). The Company accounts its liability for gratuity and sick leave benefits based on actuarial valuation as at the Balance Sheet date, determined every year by LIC using the Projected Unit Credit method.

III.OTHER BENEFITS

Other benefits made available to employees include contributions made by the Company under (a) ESI Scheme (b) Employees Deposit Linked Insurance (c) Group Personal Accident Insurance and (d) Group Mediclaim benefits. Obligations under these benefits, which are in the nature of staff welfare, are recognized as expense in the year in which they arise.

1.7 TAXES ON INCOME

Current tax is the amount of tax payable on the taxable income for the year and determined in accordance with the provisions of the Income Tax Act 1961.

Deferred tax is recognized, on timing differences, being the difference between taxable income and accounting income that originates in one period and are capable of being reversed in one or more subsequent periods.

Deferred tax assets in respect of carry forward losses are recognized if there is a virtual certainty that there will be sufficient future taxable income available to realize such losses. Other deferred tax assets are recognized if there is reasonable certainty that there will be sufficient future taxable income available to realize such assets.

1.8 STOCK ON HIRE

Stock on hire under Hire purchase agreements are stated at agreement value less instalments received.

1.9 PROVISION AS PER RBI NORMS

Provision for non-performing assets, doubtful debts, loans and advances have been made as per the Non-Banking Financial Companies Prudential Norms (Reserve Bank of India) Directions 2007.

2.0 BALANCE SHEET

2.1 RESERVES AND SURPLUS

A Statutory Reserve as per the requirements of Section 45IC of the Reserve Bank of India Act 1934 has been created at 20% of the profits after tax available for appropriation.

2.2 SECURED LOANS

a) 295 Secured Redeemable Non-Convertible Debentures of the face value of Rs.1,000 each and 2,96,60,84,341 Secured Redeemable Non-Convertible Debentures of the face value of Re.1 each issued and redeemable at par are secured by specified Hire Purchase receivables and immovable properties; the earliest date of redemption is reckoned at 12 to 36 months from the date of first allotment for each series.

b) Term Loan from The Tamilnadu Industrial Investment Corporation Limited is secured by mortgage of immovable properties consisting of land and buildings and three Wind Electric Generators. Further, the loan is also guaranteed by two directors of the company. Amount availed and outstanding: Rs.5,22,68,000 (Sanctioned limit: Rs.6,62,68,000).

c) Term Loan from The Tamilnadu Industrial Investment Corporation Limited is secured by specified hire purchase assets and further guaranteed by two directors of the company. Amount availed and outstanding: Rs.5,88,00,000 (Sanctioned limit: Rs.7,50,00,000).

d) Term Loan from Small Industries Development Bank of India is secured by hypothecation of specified hire purchase assets and by collateral security of a lease hold land/building and further guaranteed by two directors of the company. Amount outstanding: Rs.2,76,00,000 (Sanctioned limit: Rs.6,00,00,000).

e) Term Loan from Small Industries Development Bank of India is secured by hypothecation of specified hire purchase assets and further guaranteed by two directors of the company. Amount outstanding: Rs.7,27,25,000 (Sanctioned limit: Rs.7,50,00,000).

f) Cash Credits/Working Capital Demand Loans from Scheduled Banks are secured by hypothecation of specified hire purchase assets, the related book debts and personal guarantee of directors. Amount availed and outstanding Rs.54,70,87,144 (Sanctioned limit Rs.75,50,00,000).

2.3 INVESTMENTS

In accordance with the Reserve Bank of India Circular no. RBI/2006-2007/225/DNBS(PD)C.C No.87/03.02.004/2006-07 dated 4th January 2007, the Company has created a floating charge on the statutory liquid assets comprising investment in Government Securities for Rs.902.01 lakhs and Rs.19.30 lakhs interest accrued on the above investments in favour of trustees representing the fixed deposit holders of the company.

b) Balance with Scheduled Banks in deposit accounts include Rs. 92,500 (Rs.6,25,503) pledged with Sales Tax Authorities. Deposits with scheduled banks for Statutory Liquid assets as per RBI Norms: Rs. Nil (Rs.44,00,000)

c) Bank deposits of Rs.1,34,12,584 (Rs.1,39,90,781) are under lien towards managed business.

2.6 LOANS AND ADVANCES

i) Loans and Advances include:

a) Loans considered good in respect of which the Company is fully secured: Rs.2,85,44,653 (Rs.2,58,79,716).

b) Loans considered good and unsecured in respect of which the Company holds no security other than the debtors’ personal security: Rs.5,59,84,423 (Rs.7,13,06,717).

c) Loans considered as bad and doubtful: Nil (Rs.29,60,145) for which provision has been made.

d) Amount due from an Officer of the Company Rs.1,08,525 (Rs.53,736). Maximum amount outstanding during the year Rs.1,25,889 (Rs.77,242).

e) Amount due from wholly owned subsidiary: Rs.12,19,135 (Rs.9,84,637).

2.7 CURRENT LIABILITIES

a) There is no amount due to be transferred to Investor Education and Protection Fund as on 31st March 2010.

b) Micro, Small and Medium Enterprises Development Act 2006

The Company has not received any intimation from “suppliers” regarding their status under the Micro, Small and Medium Enterprises Development Act 2006 and, hence, disclosures, if any, relating to the amounts unpaid as at 31st March 2010 together with interest paid/ payable as required under the said Act have not been given.

3.0 PROFIT AND LOSS ACCOUNT

3.1 Income-tax deducted at source on interest Rs.6,16,493 (Rs.8,94,073) and on other receipts Rs.4,61,410 (Rs.5,30,951).