Accounting Policies of Sarvottam Finvest Ltd. Company

Mar 31, 2024

Note No. 3 - Material Accounting Policies

The note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These
policies have been consistently applied to all the years presented, unles otherwise stated.

3.1 Revenue Recognition

(i) Interest income

Interest income is calculated by applying effective interest rate.

(ii) Dividend income

Dividend on shares & securities is recognised on receipt basis.

(Hi) Sale of stock-in-trade

Revenue is recognized on satisfaction of performance obligation upon transfer of control of products or services to
customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or
services.

3.2 Expenditures

(i) Finance costs

Borrowing costs on financial liabilities are recognised using the Effective interest rate.

(ii) Other expenses

Other expenses which are not directly linked to the sourcing of financial assets are recognised in the Statement of Profit and
Loss on an accrual basis.

3.3 Cash and cash equivalents

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

3.4 Financial Instruments

A financial instrument is defined as any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity. Trade receivables and payables, loan receivables, investments in securities and
subsidiaries, debt securities and other borrowings, preferential and equity capital etc. are some examples of financial
instruments. All the financial instruments are recognised on the date when the Company becomes party to the contractual
provisions of the financial instruments. For tradable securities, the Company recognises the financial instruments on
settlement date.

3.5 Financial assets

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

3.5.1 Classification and subsequent measurement

The Company has applied Ind As 109 and classifies its financial assets in the following measurement categories: - Fair
value through profit or loss (FVTPL)

- Fair value through other comprehensive income (FVOCI); or

- Amortised cost

Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value
through profit or loss; A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss
and is not part of a hedging relationship is recognised in statement of profit and loss in the period in which it arise, unless it
arises from debt instruments that were designated at fair value or which are not held for trading. Interest income from these
financial assets is included in ‘interest income’ using the effective interest rate method.

Fair value option for financial assets: The Company may also irrevocably designate financial assets at fair value through
profit or loss if doing so significantly reduces or eliminates an accounting mismatch created by assets and liabilities being
measured on different bases.

Amortised Cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest (‘SPPI,), and that are not designated at FVTPL, are measured at amortised cost. The
carrying amount of these assets is adjusted by any expected credit loss allowance recognise and measured. Interest income
from these financial assets is recognised using the effective interest rate method.

However, the loans granted by the company are in the nature of repayable on demand and the time period of the same is
uncertain and as a result, amortised cost of loans has not been taken.

3.5.2 Interest Income

Interest income is calculated by applying the effective interest rate to the gross carrying amount of financial assets, except
for:

a) Purchased or originated credit impaired (POCI) financial assets, for which the original credit -adjusted effective
interest rate is applied to the amortised cost of that financial assets.

b) Financial assets that are not ‘POCI’ but have subsequently become credit-impaired (or ‘stage 3’), for which interest
revenue is calculated by applying the effective interest rate to their amortised cost (i.e., net of the expected credit loss
provision).

The effective interest rate is the exactly discounts estimated future cash payments or receipts through the expected life of
the financial assets or liability to the gross carrying amount of a financial assets (i,e, its amortised cost before any
impairment allowance) or to the amortised cost of a financial liability. The calculation does not consider expected credit
losses and includes transaction cost, premiums or discounts and fees and points paid or received that are integral to the
effective interest rate, such as origination fees. For FVOCI financial assets - assets that are credit impared at intial
recognition- the company calculates the credit-adjusted effective interest rate, which is calculated based on the amortised
cost of the financial assets instead of its gross carrying amount and incorporates the impact of expected credit losses in

3.5.3 Equity instruments

Equity instruments are instruments that meet the definition of equity from the issuer’s perspective; that is, instruments that do
not contain a contractual obligation to pay and that do not contain a contractual obligation to pay and that evidence a
residual interest in the issuer’s net assets. The Company subsequently measures all equity investments at fair value. Where
the company’s management has elected to present fair value gains and losses on equity investments in other
comprehensive income, there is no subsequent reclassification of fair values gains and losses to profit or loss following the
derecognition of the investment. Changes in the fair value of financial assets at fair value through profit or loss are
recognised in net gain/loss on fair value changes in the statement of profit and loss. Impairment losses (and reversal of
impairment losses) on equity investments measured at FVOIC are not reported separately from other changes in fair value.
Gains and losses on equity investments at FVTPL are included in the statement of Profit and Loss.

3.5.4 Equity Derivatives.

All Derivatives other than those hedging which do not meet the criteria for classification as subsequently measured at
amortised cost or fair market value through other comprehensive income (FVOCI) are measured at fair value at each
reporting date and all gains/lossess are recoginesed in the statement of profit and loss.

3.5.5 impairment

The Company assesses on a forward looking basis the expected credit losses (ECL) associated with its debt instruments
carried at amortised cost and FVOCI and with the exposure arising from loan commitments and financial guarantee
contracts. The Company recognizes a loss allowance for such losses at each reporting date.

The measurements of ECL reflects:

- An unbiased probability-weighted amount that is determined by evaluating a range of possible outcome;

- The time value of money; and

- Reasonable and supportable information that is available without undue cost or effort at the reporting date about pat
events, current conditions and forecasts of future economic conditions.

The measurement of the ECL allowance is an area that requires the use of complex models and significant assumptions
about future economic condition and credit behaviour (e.g., the likelihood of customers defaulting and the resulting losses.)

3.5.6 Write-off policy

The Company writes off financial assets, in whole or in part, when it has exhausted all practical recovery efforts and has
concluded there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery
include (i) ceasing enforcement activity and (ii) where the company’s recovery method is foreclosing on collateral and the
value of the collateral is such that there is no reasonable expectation of recovering in full.

3.5.1 Derecognition other than on a modification

Financial assets, or a portion thereof, are derecognised when the contractual rights to receive the cash flows from the assets
have expired, or when they have been transferred and either (i) the Company transfers substantially all the risk and rewards
of ownership, or (ii) the Company neither transfer nor retains substantially all the risks and rewards of ownership and the
company has not retained control. The company directly reduces the gross carrying amount of a financial assets when there
is no reasonable expectation of recovering a financial assets in its entirely ora portion thereof.

3.6 Property, plant and equipment (PPE)

Properly, Plant and Equipment are stated at cost less accumulated depreciation and accumulated losses, if any. Cost
includes expenses directly attributable to bringing the Asset to their location and conditions necessary for it to be capable of
operating in the manner intended by the management.

Subsequent cost are included in the assets carrying amount or recognized as separate asset, as appropriate, only when it is
probable that is future economic benefits associated with the item will flow to the Company and the cost of the item can be
measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when
replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are
incurred.

Depreciation methods, estimated useful lives and residual value

Depreciation is calculated using the straight-line method to allocate their cost less their residual values on the basis of useful
lives prescribed in Schedule II to the Companies Act, 2013.

The residual values are not more than 5% of the cost of an item of PPE. Depreciation methods, useful lives and residual
values are reviewed at the end of each financial year and adjusted prospectively, if appropriate.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or
loss within other gains/(losses).

3.7 Financial liabilities

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

3.1.1 initial measurement

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

3.7.2 Subsequent measurement

After initial recognition, all financial liabilities are subsequently measured at amortised cost using the EIR [Refer note no.

3.1 (i)]. Any gains or losses arising on derecognition of liabilities are recognised in the Statement of Profit and Loss.

3.7.3 Derecognition

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

3.8 Offsetting of financial instruments

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

3.9 Fair value measurement

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

Fair value is the price that would be received against sale of an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption that the
transaction to sell the asset or transfer the liability takes place in the accessible principal market or the most advantageous
accessible market as applicable. The Company uses valuation techniques that are appropriate in the circumstances and for
which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the
use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the financial statements
are categorised within the fair value hierarchy into Level I, Level II and Level III based on the lowest level input that is
significant to the fair value measurement as a whole.

For a detailed information on the fair value hierarchy, refer note no. 35. For assets and liabilities that are fair valued in the
financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the
hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as
a whole) at the end of each reporting period. For the purpose of fair value disclosures, the Company has determined classes
of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair
value hierarchy.

3.10 Inventory

Inventories are carried at FVTPL as per IndAs 109.Provision is made for obsolete/slow moving/defective stocks, wherever
necessary.

3.11 Trade recevable

All financial assets are recognised initially at fair value plus in case of financial assets not recorded at fair value through profit
or loss(FVPTL) transaction costs that are attributable yo the acquisition of the financial assets. However trade recevables
that do not contain a significant financial componant are measured at transaction price.

3.12 Taxes

3.11.1 Current tax

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

3.11.2 Defen-ed tax

Deferred tax is provided using the Balance Sheet approach on temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are
recognised for all taxable temporary differences and deferred tax assets are recognised for deductible temporary differences
to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can
be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets, if any, are reassessed at each reporting date and are recognised to the extent that it has
become probable that future taxable profits will allow the deferred tax asset to be recovered.

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

Deferred tax relating to items recognised outside profit or loss is recognised either in OCI or in other equity. Deferred tax
assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax
liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

3.13 Impairment of non-financial assets

An assessment is done at each Balance Sheet date to ascertain whether there is any indication that an asset may be
impaired. If any such indication exists, an estimate of the recoverable amount of asset is determined. If the carrying value of
relevant asset is higher than the recoverable amount, the carrying value is written down accordingly.

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Mar 31, 2015

(A) Nature of operations:

The main business of the Company is Trading and Investment in Financial Instruments and financing activities.

(i) System of Accounting

The Financial Statements are prepared under the historical cost convention on accrual basis of accounting, in accordance with Generally Accepted Accounting Principles in India, including the Accounting Standards notified under the relevant provisions of the Companies Act, 2013.

(ii) Use of Estimates

The Preparation of Financial Statements in conformity with Generally Accepted Accounting Principles (GAAP) in India requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements and reported amounts of income and expenses during the period.

(iii) Applicability of RBI Regulations

The Company is a RBI registered Non-Banking Financial Company and it has followed guidelines issued by the RBI relating to Income Recognisation , Assets Clarification and provisioning for NBFC Companies.

(C) Revenue Recognition :

i) Sales comprise sale of financial instruments. Revenue from sale is recognized:

a) when all the significant risks and rewards of ownership are transferred to the buyer which coincides with delivery and are recorded net of expenses incurred in this behalf or the contract for the same is executed through recognized stock exchanges.

b) no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale.

ii) Income from Investments is taken into account when the same are sold and the certainty of transaction is confirmed.

iii) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

iv) Dividend income is recognized on receipt basis.

(D) Fixed Assets and Depreciation :

All fixed assets are stated at cost, comprising of purchase price, duty, levies and direct attributable cost of bringing the assets to their working condition for the intended use. Depreciation on fixed asset is provided using the straight line method based on rates specified in Schedule II of the Companies Act, 2013.

Till the year ended March 31, 2014, Schedule XIV to the Companies Act, 1956, prescribed requirement concerning depreciation of Fixed Asset. From the current year, Schedule XIV has been replaced by Schedule II to the Companies Act, 2013.

(E) Investments:

Long Term Investments are stated at cost. The company provides for diminution, other than temporary, in the value of long term investments. Current Investments, if any are valued at cost or fair market value whichever is lower.

(F) Retirement Benefits:

Contribution of Provident Fund, Gratuity and Leave encashment benefits wherever applicable is being accounted on actual liability basis as and when arises. However, the above referred provisions are not applicable to the company as it does not fall within the purview of the same in the year under review.

(G) Inventories:

Inventories are valued at cost arrived at FIFO basis or net realizable value whichever is lower.

(H) Earning Per Share:

The Basic and Diluted Earning Per Share ("EPS") is computed by dividing the net profit after tax for the year by weighted average number of equity shares outstanding during the year.

(I) Provisions for Taxation:

The expenses comprises of current tax (i.e. amount of tax for the period determined in accordance with the Income Tax Act, 1961) and deferred tax charges or credit (reflecting the tax effects of timing difference between accounting income and taxable income for the period).

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the Balance Sheet date.

Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future; however. where there is unabsorbed depreciation or carry forward loss under taxation laws, deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each Balance Sheet date to reassess realization.

(J) Provisions and Contingencies :

i) Provision is recognized (for liabilities that can be measured by using a substantial degree of estimation) when:

a) The Company has a present obligation as a result of a past event.

b) A probable outflow of resources embodying economic benefits is expected to settle the obligation; and

c) The amount of the obligation can be reliably estimated.

ii) A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources. When there is possible obligation or a present obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.

iii) Provision against Standard Assets has been made as per RBI guidelines.