MATERIAL ACCOUNTING POLICIES:

A. Basis of Preparation:

The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per
the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and notified under
section 133 of the Companies Act, 2013 (the Act) along with other relevant provisions of the Act and the Master
Direction - Non-Banking Financial Company- Non-Systemically Important Non-Deposit taking Company
(Reserve Bank) Directions, 2016 (‘the NBFC Master Directions') issued by RBI. The financial statements have
been prepared on a going concern basis.

The Company uses accrual basis of accounting except in case of significant uncertainties. These financial
statements have been prepared and presented under the historical cost convention, on the accrual basis of
accounting except for certain financial assets and liabilities that are measured at fair values at the end of each
reporting period, as stated in the accounting policies stated out below.

B. Presentation of financial statements

The Company generally reports financial assets and financial liabilities on a gross basis in the Balance Sheet.
They are offset and reported net only when Ind AS specifically permits the same or it has an unconditional
legally enforceable right to offset the recognised amounts without being contingent on a future event.
Similarly, the Company offsets incomes and expenses and reports the same on a net basis when permitted
by Ind AS specifically unless they are material in nature.

C. Critical Accounting Estimates and Judgments

The preparation of financial statements in conformity with generally accepted 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 the financial statements and the results of operations

during the reporting period end. Although these estimates are based upon management's best knowledge
of current events and actions, actual results could differ from these estimates.

D. Revenue Recognition:

i) Interest Income:

The Company recognises interest income using Effective Interest Rate (EIR) on all financial assets
subsequently measured at amortised cost. EIR is calculated by considering all costs and incomes
attributable to acquisition of a financial asset or assumption of a financial liability and it represents a
rate that exactly discounts estimated future cash payments/receipts through the expected life of the
financial asset/financial liability to the gross carrying amount of a financial asset or to the amortised cost
of a financial liability.

The Company recognises 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 the Company
recognises interest income as per the management's estimates of its recoverability. If the financial asset
is no longer credit-impaired, the Company reverts to calculating interest income on a gross basis.

Delayed payment interest (penal interest) levied on customers for delay in repayments/non-payment of
contractual cashflows is recognised on realization if any.

ii) Dividend Income:

Dividend income on equity shares is recognised when the Company's right to receive the payment is
established, which is generally shareholders/board approve the dividend.

Other Revenue from Operations

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. Revenue is measured at fair value of the consideration received
or receivable.

a) Net gain on fair value changes

Financial assets are subsequently measured at fair value through profit or loss (FVTPL) or fair value
through other comprehensive income (FVOCI), as applicable. The Company recognises gains/losses
on fair value change of financial assets measured as FVTPL and realised gains/losses on derecognition
of financial asset measured at FVTPL and FVOCI.

b) Recoveries of financial assets written off

The Company recognises income on recoveries of financial assets written off on realisation or when
the right to receive the same without any uncertainties of recovery is established.

E. Property, Plant and Equipment:

i) Property, plant and equipment are shown at historical cost inclusive of incidental expenses less
accumulated depreciation.

iii) Depreciation on Property, plant and equipment are added or sold during the year, is provided on pro-rata
basis with reference to the date of addition/deletion.

iv) Leasehold property is amortized over the period of lease or useful life whichever is lower.

F. Impairment of Non-financial assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment
based on internal / external factors. An asset is impaired when the carrying amount of the asset exceeds the
recoverable amount. An impairment loss is charged to the Profit & Loss Account in the year in which an asset
is identified as impaired. An impairment loss recognized in prior accounting periods is reversed if there has
been change in the estimate of the recoverable amount.

G. Employee Benefits:

a) Defined Contribution Plan: Contributions to defined contribution schemes such as provident fund,
employees' state insurance, labour welfare fund are charged as an expense based on the amount of
contribution required to be made as and when services are rendered by the employees. Company's
provident fund contribution, in respect of certain employees, is made to a government administered
fund and charged as an expense to the Statement of Profit and Loss. The above benefits are classified
as Defined Contribution Schemes as the Company has no further obligations beyond the monthly
contributions.

b) Defined Benefit Plan: The Company provides for gratuity which is a defined benefit plan the liabilities of
which is determined based on valuations, as at the balance sheet date, made by an independent actuary
using the projected unit credit method. Re-measurement, comprising of actuarial gains and losses, in
respect of gratuity are recognised in the OCI, in the period in which they occur and is not eligible to be
reclassified to the Statement of Profit and Loss in subsequent periods. Past service cost is recognised in
the Statement of Profit and Loss in the year of plan amendment or curtailment. The classification of the
Company's obligation into current and non-current is as per the actuarial valuation report.

c) Leave entitlement: Leave encashment payments are accounted for on accrual basis and is treated as
short-term employee benefit.

d) Short-term benefits: Short-term employee benefits such as salaries, wages, performance incentives etc.
are recognised as expenses at the undiscounted amounts in the Statement of Profit and Loss of the
period in which the related service is rendered. Expenses on non-accumulating compensated absences
is recognised in the period in which the absences occur.

H. 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.

i) Financial Assets

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

a. Initial recognition and measurement

All financial assets and liabilities are initially recognized at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair
value through profit or loss, are adjusted to the fair value on initial recognition. Purchase and sale of
financial assets are recognised using trade date accounting.

b. Subsequent Measurement

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

1. Debt instruments at amortised cost (AC)

A financial asset is measured at amortised cost if it is held within a business model whose
objective is to hold the asset in order to collect contractual cash flows and the contractual
terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.

2. Equity Instruments at FVTPL

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

3. Equity investments designated under FVOCI

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

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

c. Derecognition of Financial Assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the
financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition
under Ind AS 109.

d. Impairment of Financial Assets

Expected Credit Loss (ECL) is recognised for financial assets held under amortised cost and certain
loan commitments.

Expected Credit Loss is recognized and measured as per the Asset Provisioning norms prescribed by
the Reserve Bank of India or as per Company's assessment, at the end of each reporting period, of
increase/decrease in credit risk at borrower level and accordingly the Company recognizes a financial
asset to be credit impaired by considering relevant objective evidence, primarily whether:

• Contractual payments of either principal or interest are past due for more than 6 months.

• The loan is otherwise considered to be in default.

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

For trade receivables Company applies ‘simplified approach' which requires expected lifetime losses
to be recognised from initial recognition of the receivables. The Company uses historical default rates
to determine impairment loss on the portfolio of trade receivables. At every reporting date these
historical default rates are reviewed and changes in the forward looking estimates are analysed.

For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no
significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used.

ii) 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.

a. 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.

b. Subsequent Measurement

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

c. Derecognition

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

iii) Offsetting of Financial Instruments

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

iv) Investment in subsidiaries and associates

Investment in subsidiaries and associates is recognised at cost and are not adjusted to fair value at the
end of each reporting period. Cost of investment represents amount paid for acquisition of the said
investment.

The Company assesses at the end of each reporting period, if there are any indications that the said
investment may be impaired. If so, the Company estimates the recoverable value/amount of the
investment and provides for impairment, if any i.e. the deficit in the recoverable value over cost.

I. Leases

The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the
contract conveys the right to control the use of an identified asset for a period of time in exchange
for consideration.

Company as a lessee

The Company assesses whether a contract contains a lease, at inception of a contract. A contract
is, or contains, a lease if the contract conveys the right to control the use of an identified asset for
a period of time in exchange for consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the Company assesses whether:

i) the contract involves the use of an identified asset

ii) the Company has substantially all of the economic benefits from use of the asset through the
period of the lease and

iii) the Company has the right to direct the use of the asset

The Company applies a single recognition and measurement approach for all leases, except for
short term leases and leases of low-value assets. For these short-term and low value leases, the
Company recognizes the lease payments as an operating expense on a straight-line basis over

the term of the lease. The Company recognises lease liabilities to make lease payments and

right-of-use assets representing the right to use the underlying assets as below :-

i) Right-of-use assets

The Company recognises right-of-use assets at the commencement date of the lease
(i.e., the date the underlying asset is available for use). Right-of-use assets are measured
at cost, less any accumulated depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of
lease liabilities recognised, initial direct costs incurred, and lease payments made at or
before the commencement date less any lease incentives received. Right-of-use assets are
depreciated on a straight-line basis over the shorter of the lease term and the estimated
useful lives of the underlying assets (i.e. 30 and 60 years)

If ownership of the leased asset transfers to the Company at the end of the lease term or the
cost reflects the exercise of a purchase option, depreciation is calculated using the estimated
useful life of the asset. The right-of-use assets are also subject to impairment.

ii) Lease Liabilities

At the commencement date of the lease, the Company recognises lease liabilities measured
at the present value of lease payments to be made over the lease term. The lease payments
include fixed payments (including in substance fixed payments) less any lease incentives
receivable, variable lease payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees. The lease payments also include the
exercise price of a purchase option reasonably certain to be exercised by the Company and
payments of penalties for terminating the lease, if the lease term reflects the Company
exercising the option to terminate. Variable lease payments that do not depend on an index
or a rate are recognised as expenses (unless they are incurred to produce inventories) in the
period in which the event or condition that triggers the payment occurs.

I n calculating the present value of lease payments, the Company uses its incremental
borrowing rate at the lease commencement date because the interest rate implicit in
the lease is not readily determinable. After the commencement date, the amount of
lease liabilities is increased to reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease liabilities is remeasured if there is
a modification, a change in the lease term, a change in the lease payments (e.g., changes to
future payments resulting from a change in an index or rate used to determine such lease
payments) or a change in the assessment of an option to purchase the underlying asset.

iii) Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition exemption to its short-term leases
(i.e., those leases that have a lease term of 12 months or less from the commencement
date and do not contain a purchase option). It also applies the lease of low-value assets
recognition exemption to leases that are considered to be low value. Lease payments on
short-term leases and leases of low-value assets are recognised as expense on a straight-line
basis over the lease term.

"Lease liability” and "Right of Use” asset are separately presented in the Balance Sheet and
lease payments have been classified as financing cash flows.

Determining the lease term of contracts with renewal as a Lessee: The Company evaluates if
an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of
a lease requires significant judgment. The Company uses significant judgement in assessing
the lease term (including anticipated renewals).The Company determines the lease term as
the non-cancellable period of a lease, together with both periods covered by an option to
extend the lease if the Company is reasonably certain to exercise that option; and periods
covered by an option to terminate the lease if the Company is reasonably certain not to
exercise that option. In assessing whether the Company is reasonably certain to exercise

an option to extend a lease, or not to exercise an option to terminate a lease, it considers
all relevant facts and circumstances that create an economic incentive for the Company to
exercise the option to extend the lease, or not to exercise the option to terminate the lease.
Any subsequent change in certainty of exercising option to extend lease term could impact
the carrying value of right-of-use asset and lease liability significantly.

J. Borrowing Costs:

(a) Borrowing costs that are attributable to the acquisition, construction, or production of a qualifying asset
are capitalized as a part of the cost of such asset till such time the asset is ready for its untended use or
sale. A qualifying asset is an asset that necessarily requires a substantial period of time (generally over
twelve months) to get ready for its intended use or sale.

(b) All other borrowing costs are recognized as expense in the period in which they are incurred.

K. Taxation

Income tax expense comprises current and deferred tax. It is recognised in statement of profit and loss except
to the extent that it relates to items recognised directly in equity or in OCI.

Current Tax

Current tax is measured at the amount of tax expected to be payable on the taxable income for the year as
determined in accordance with the provisions of the Income Tax Act, 1961. Current tax assets and current tax
liabilities are off set when there is a legally enforceable right to set off the recognized amounts and there is an
intention to settle the asset and the liability on a net basis.

Deferred Tax

The deferred tax for timing differences between the book and tax profits for the year is accounted for, using
tax rates and laws that have been substantively enacted as of the balance sheet date.

L. Earnings per share

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