A. General Information
Explicit Finance Limited is a public company incorporated under the provisions of the Companies Act,
2013 and listed with BSE Ltd. The Company is NBFC duly registered with RBI.
B. Basis of preparation of financial statement
I. Compliance with Ind AS
Financial statements have been prepared in accordance with the Indian Accounting Standards (hereafter
referred to as the “Ind AS”) as notified by the Ministry of Corporate Affairs pursuant to Section 133 of
Companies Act, 2013 (the “Act”) read with the Companies (Indian Accounting Standards (Ind AS)
Rules, 2015 as amended and other relevant provisions of the Act and rules framed thereunder.
II. Historical cost convention:
The financial statements have been prepared on a historical cost basis.
III. Rounding of amounts:
All the amounts disclosed in the financial statements and notes are presented in Indian Rupees and have
been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise states.
IV. Current and Non-current classification:
All assets and liabilities have been classifies as current or non-current as per the Company’s normal
operating cycle (twelve months) and other criteria set out in the schedule III to the act.
C. Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if
any. Cost includes purchase price and expenditures directly attributable to bringing them into working
condition for its intended use.
Depreciation on property, plant and equipment is provided under the written down value method over
the useful lives of assets as prescribed in Schedule II to the Companies Act 2013 (“Act”),and
management believes that useful life of assets are same as those prescribed in Schedule II to the Act. The
residual values are not less than 5% of the Original cost of the asset. The assets residual values and useful
lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Gain or losses arising
from derecognition of property, plant and equipment are measured as difference between the net disposal
proceeds and the carrying amount of the assets and are recognized in the statement of profit and loss
when the asset is derecognized.
D. Inventories:
Inventories are valued at lower of cost or Market value computed on FIFO basis.
E. Revenue Recognition (to change as per last year BS)
1. Recognition of Dividend:- Income Dividend from investments are recognised in the Statement of
Profit and Loss when the right to receive payment is established._
2. Recognition of Interest Income :-Interest income from a financial asset is recognised when it is
probable that the economic benefits will flow to the Company and the amount of income can
be measured reliably. Interest income is accrued on a time basis, by reference to the principal
outstanding.
3. Other Income :-The Gains / Losses from Sale and Purchase of investments are recognised in
the Statement of Profit and Loss on the trade day and cost of securities is determined on
Weighted Average Cost Method.
F. Employee Benefits
Eligible Employees receive benefit from Provident Fund which is a defined benefit plan both the
employees and the company make monthly contribution to the Provident Fund equally to specified
percentage of the covered employee salary and contribution to Government Administered Fund, however
Provident Fund Act is not applicable to the Company as on date.
G. Income tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year
and any adjustment to the tax payable or receivable in respect of previous years. The amount of current
tax payable or receivable is the best estimate of the tax amount expected to be paid or received after
considering uncertainty related to income taxes, if any. It is measured using tax rates enacted or
substantively enacted at the reporting date.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes._
H. Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
• the profit attributable to owners of the Company
• by the weighted average number of equity shares outstanding during the financial year, adjusted for
bonus elements in equity shares issued during the year and excluding treasury shares
(ii) Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination
of basic earnings per share to take into account:
• the after income tax effect of interest and other financing costs associated with dilutive potential
equity shares, and
• the weighted average number of additional equity shares that would have been outstanding assuming
the conversion of all dilutive potential equity shares
I.Use of estimates and Judgements
The estimates and judgements used in the preparation of financial statements are continuously evaluated
by the management and are based on historical experience and various other assumptions and factors that
the management believes to be reasonable under existing circumstances. Difference between actual
results and_
and estimates are recognized in the period in which the results are known/materialized. The said estimates
are based on the facts and the events, that existed as at the reporting date, or that date but provide
additional evidence about conditions existing on the reporting date.
I. Impairment of non financial assets:
Assessment is done at each Balance Sheet date to evaluate whether there is any indication that a non
financial asset may be impaired. An asset’s recoverable amount is the higher of an asset’s fair value less
costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from other assets or a groups of assets. Where
the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is
written down to its recoverable amount. In assessing value in use, the estimated future cash flows are
discounted to their present value using pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset. In determining fair value less costs of disposal,
recent market transactions are taken into account, if no such transactions can be identified, an appropriate
valuation model is used.
II. Depreciation/amortization and useful lives of property, plant and equipment/intangible assets:
Property, plant and equipment are depreciated over the estimated useful lives of the assets, after taking
into account their estimated residual value. Management reviews the estimated useful lives and residual
values of the assets annually in order to determine the amount of depreciation to be recorded during any
reporting period. The useful lives and residual values are based on the Company’s historical experience
with similar assets and take into account anticipated technological changes. The depreciation for future
periods is adjusted if there are significant changes from previous estimates.
III. Recoverability of trade receivables:
Judgments are required in assessing the recoverability of overdue trade receivables and determining
whether a provision against those receivables is required. Factors considered include the credit rating of
the counter party, the amount and timing of anticipated future payments and any possible actions that
can be taken to mitigate the risk of non-payment.
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