1 Corporate information
Galada Finance Limited ('the Company'), incorporated in Chennai, India, is a Non-Systemically Important Deposit taking Non¬
Banking Financial Company ('NBFC') as defined under section 45-IA of the Reserve Bank of India ('RBI') Act, 1934. The
company has been debarred from taking deposits from public and it has repaid all deposits from public. The Company is
mainly engaged in the business of lending across retail, SME and commercial customers with a significant presence in urban
and rural India.
The Registered office of the company is situated at Shanti Sadan, Old No. 4, New No.7, Shaffee Mohammed Road, Thousand
Lights, Chennai 600006.
These financial statements were approved for issues in the meeting of the Board of Directors held on 27-05-2025
2 Basis of preparation of financial statements
2.1 Basis of preparation and compliance with Ind AS
The Company has adopted Indian Accounting Standards ('Ind AS') notified under Section 133 of the Companies Act 2013('the
Act') read with the Companies (Indian Accounting Standards) Rules, 2015 from April 01, 2019 and the effective date of such
transition is April 01, 2018. Such transition has been carried out from the erstwhile Accounting Standards notified under the
Act, read with relevant rules issued thereunder and guidelines issued by the Reserve Bank of India ('RBI') (Collectively referred
to as 'the Previous GAAP'). Accordingly, the impact of transition has been recorded in the opening reserves as at April 01,
2018. The corresponding figures presented in these results have been prepared on the basis of the previously published
unaudited/audited results under previous GAAP for the relevant periods, duly re-stated to Ind AS.
2.2 Basis of measurement
The financial statements have been prepared on a going concern basis, using historical cost convention and on an accrual
method of accounting, except for financial assets, financial liabilities and defined benefit plans which have been measured at
fair value, as required by relevant Ind AS.
2.3 Current and non-current classification
The Company presents assets and liabilities in the Balance Sheet based on current / non-current classification.
An asset is classified as current if it satisfies any of the following criteria:
a) It is expected to be realised or intended to be sold in the Company's normal operating cycle.
b) It is held primarily for the purpose of trading,
c) It is expected to be realised within twelve months after the reporting period, or
d) It is a cash or cash equivalent unless restricted from being exchanged or used to settle a liability for atleast twelve months
after the reporting period.
All other assets are classified as non-current.
A liability is classified as current if it satisfies any of the following criteria:
a) it is expected to be settled in the Company's normal operating cycle,
b) it is held primarily for the purpose of trading,
c) it is due to be settled within twelve months after the reporting period,
d) there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Company classifies all other liabilities as noncurrent.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
2.4 Use of estimates and assumptions
In preparing these financial statements, management has made judgements, estimates and assumptions that affect the
application of the Company's accounting policies and the reported amounts of assets, liabilities, income, expenses and the
disclosures of contingent assets and liabilities. Actual results may differ from these estimates. Estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively. The key assumptions
concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described
below. The Company based its assumptions and estimates on parameters available when the financial statements were
issued. Existing circumstances and assumptions about future developments, however, may change due to market changes or
circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they
occur. Following are areas that involved a higher degree of estimate and judgement or complexity in determining the carrying
amount of some assets and liabilities.
Effective Interest Rate (EIR) Method
The Company recognizes interest income/expense using a rate of return that represents the best estimate of a constant rate
of return over the expected life of the loans given / taken. This estimation, by nature, requires an element of judgement
regarding the expected behaviour and life-cycle of the instruments, as well as expected changes to other fee income/expense
that are integral parts of the instrument.
Impairment of Financial Assets
The measurement of impairment losses on loan assets and commitments, requires judgement, in estimating the amount and
timing of future cash flows and recoverability of collateral values while determining the impairment losses and assessing a
significant increase in credit risk.
The Company's Expected Credit Loss calculation is the output of a complex model with a number of underlying assumptions
regarding the choice of variable inputs and their interdependencies. Elements of the ECL model that are considered
accounting judgements and estimates include:
- The Company's criteria for assessing if there has been a significant increase in credit risk
- The segmentation of financial assets when their ECL is assessed on a collective basis
- Development of ECL model, including the various formulae and the choice of inputs
- Selection of forward-looking macroeconomic scenarios and their probability weightings, to derive the economic inputs into
the ECL model. It has been the Company's policy to regularly review its model in the context of actual loss experience and
adjust when necessary.
Provisions and other contingent liabilities
The reliable measure of the estimates and judgemets pertaining to litigations and the regulatory proceedings in the ordinary
course of the Company's business are disclosed as contingent liabilities. Estimates and judgements are continually evaluated
and are based on historical experience and other factors, including expectations of future events that may have a financial
impact on the Company and that are believed to be reasonable under the circumstances.
2.5 First time adoption of Ind AS :
The company has adopted Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs with effect
from 1st April, 2019, with a transition date of 1st April, 2018. These financial statements for the year ended 31st March, 2020
are the first financial statement the Company has prepared under Ind AS. For all periods upto and including the year ended
31st March, 2019, the Company prepared its financial statements in accordance with rule 7 of the Companies (Accounts)
Rules, 2014 ("Previous GAAP").
The Company has prepared opening Balance Sheet as per Ind AS as of 01st April, 2018 (transition date) by recognising all
assets and liabilities whose recognition is required by Ind AS, derecognising items of assets or liabilities which are not
permitted to be recognised by Ind AS, reclassifying items from Previous GAAP to Ind AS as required and applying Ind AS to
measure the recognised assets and liabilities. The optional exemption and mandatory exceptions availed by the Company
under Ind AS 101 are as follows :
(A) Deemed cost for property, plant and equipment and intangible assets -
The Company has elected to measure property, plant and equipment, and intangible assets at its Previous GAAP carrying
amount and use that Previous GAAP carrying amount as its deemed cost at the date of transition to Ind AS.
(B) Mandatory Exceptions
Use of Estimates
On assessment of the estimates made under the Previous GAAP financial statements, the Company has concluded that there
is no necessary to revise the estimates under Ind AS, as there is no objective evidence of an error in those estimates.
However, estimates that are required under Ind AS but not required under Previous GAAP are made by the Company for the
relevant reporting dates reflecting conditions existing as at that date.
2.6 Property, plant and equipment
Property, plant and equipments are stated at historical cost less accumulated depreciation. Cost comprises of purchase price
and other attributable costs , if any , in bringing the assets to its working condition for its intended use.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and
equipment recognised as at 1 April 2018 measured as per the previous GAAP and use that carrying value as the deemed cost
of the property, plant and equipment.
Depreciation
(i) Depreciation on Property, plant and equipment is provided for on Written down value method in the manner prescribed in
Part C of Schedule II of the Companies Act,2013 and reckoning the maximum residual value @ 5% of the original cost of the
asset.
(ii) In respect of addition of assets during the year, depreciation has been provided on Pro-rata basis.
2.7 Revenue recognition
a) Recognition of interest income on loans
Interest income is recognised in Statement of profit and loss using the effective interest method for all financial instruments
measured at amortised cost, . The 'effective interest rate' is the rate that exactly discounts estimated future cash payments or
receipts through the expected life of the financial instrument. The calculation of the effective interest rate includes
transaction costs and fees that are an integral part of the contract. Transaction costs include incremental costs that are
directly attributable to the acquisition of financial asset. If expectations regarding the cash flows on the financial asset are
revised for reasons other than credit risk, the adjustment is recorded as a positive or negative adjustment to the carrying
amount of the asset in the balance sheet with an increase or reduction in interest income. The adjustment is subsequently
amortised through Interest income in the Statement of profit and loss. The Company calculates interest income by applying
the EIR to the gross carrying amount of financial assets other than credit impaired assets. When a financial asset becomes
credit-impaired, the Company calculates interest income by applying the effective interest rate to the net amortised cost of
the financial asset. If the financial asset cures and is no longer credit impaired, the Company reverts to calculating interest
income on a gross basis. Additional interest and interest on trade advances, are recognised when they become measurable
and when it is not unreasonable to expect their ultimate collection.
b) Dividend and interest income on investments:
- Dividends are recognised in Statement of profit and loss only when the right to receive payment is established, it is probable
that the economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be
measured reliably.
- Interest income from investments is recognised when it is certain 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 and at the effective interest rate applicable.
2.8 Employee benefits
(i) Short-term employee benefits
Short term employee benefits are recognized as an expense at the undiscounted amount in the statement of profit and loss of
the year in which the related service is rendered.
(ii) Post Employment benefits
(a) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay further amounts. Contributions paid/payable for Provident Fund
of eligible employees is recognized in the statement of Profit and Loss each year.
(b) Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company's net
obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit
that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any
plan assets.
Post employment benefits are recognized as an expense in the statement of profit and loss for the year in which the employee
has rendered services.
2.9 Financial instruments
Financial instruments are recognised when the Company becomes a party to the contractual provisions of the instrument.
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Company commits to
purchase or sell the asset.
(A) Financial Assets
The Company determines the classification of its financial assets at initial recognition. The classification depends on the
Company's business model for managing the financial assets and the contractual terms of the cash flows.
The financial assets are classified in the following measurement categories:
a) Those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss),
and
b) Those to be measured at amortised cost.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For
investments in debt instruments, this will depend on the business model in which the investment is held. For investments in
equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial
recognition to account for the equity investment at fair value through other comprehensive income. At initial recognition, the
Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss,
transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets
carried at fair value through profit or loss are expensed in profit or loss as incurred. Subsequent measurement of debt
instruments depends on the Company's business model for managing the asset and the cash flow characteristics of the asset.
There are three measurement categories into which the Company classifies its debt instruments.
(i) Amortised Cost
The Company classifies its financial assets as at amortised cost only if both of the following criteria are met:
a) The asset is held within a business model with the objective of collecting the contractual cash flows, and
b) The contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal outstanding.
Financial assets at amortised cost include loans receivable, trade and other receivables, and other financial assets that are
held with the objective of collecting contractual cash flows. After initial measurement at fair value, the financial assets are
measured at amortised cost using the effective interest rate (EIR) method, less impairment.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit or loss. The losses arising
from impairment are recognised in the Statement of Profit or Loss.
(ii) Fair value through other comprehensive income
Financial assets that are held for collection of contractual cash flows and for selling the financial assets, where the asset's
cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive
income. Movements in the carrying amount are taken through other comprehensive income, except for the recognition of
impairment gains or losses, and interest revenue which are recognised in profit or loss. When the financial asset is
derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from
equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in
other income using the effective interest rate method.
(iii) Financial assets at fair value through profit or loss
The Company classifies the following financial assets at fair value through profit or loss:
a) Debt investments that do not qualify for measurement at amortised cost;
b) Debt investments that do not qualify for measurement at fair value through other comprehensive income; and
c) Debt investments that have been designated at fair value through profit or loss.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the assets expire, or when it
transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.
(B) Financial Liabilities
The Company determines the classification of its financial liabilities at initial recognition.
Classification
The Company classifies all financial liabilities as subsequently measured at amortised cost, except for financial liabilities at fair
value through profit or loss.
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss. Loans and
borrowings, payables are subsequently measured at amortised cost.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
(C) Equity investments
All equity investments in scope of Ind AS 109 are measured at fair value. For equity instruments, the company may make an
irrevocable election to present the subsequent changes in the fair value in other comprehensive income . The classification is
made on initial recognition and is irrevocable.
If the company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding
dividends, are recognized in the OCI. Equity instruments included within the FVTPL category are measured at fair value with
all changes recognized in the Profit and Loss.
2.10 Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks, cash on hand, cheques on hand and short-term
deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For
the purpose of the statement of cash flows, cash and cash equivalents consist of cash, cheques on hand and short-term
deposits, as defined above.
2.11 Taxation
A. Current Tax
Current income tax is measured at the amount of tax expected to be payable on the taxable income for the year.
B. Deferred Tax
Deferred tax is recognised on temporary differences between carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally
recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary
differences to the extend that it is probable that taxable profits will be available against which those deductible temporary
differences can be utilised.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is
settled or the asset realised, based on the tax rates (and tax laws) that have been enacted or substantially enacted by the end
of the reporting period.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly
in equity, respectively.
2.12 Segment accounting
There is no separate reportable segment as per Ind AS 108 on 'Operating Segments' in respect of the Company.
The Company operates in single segment only. There are no operations outside India and hence there is no external revenue
or assets which require disclosure.
The Company operates mainly in Indian market and there are no reportable geographical segments.
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