Note 2 - Material Accounting Policies
The principal accounting policies applied in the preparation of these Standalone Ind AS financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
(A) Basis of preparation of Standalone Financial Statements:
(i) Compliance with Ind AS
1) The Standalone financial statements comply in all material aspects with Indian Accounting Standards (Ind AS)
notified under Section 133 of the Companies Act, 2013 (the ‘Act') [Companies (Indian Accounting Standards) Rules,
2015 (as amended)] and other relevant provisions of the Act.
2) These standalone financial statements are presented in ‘Indian Rupees', which is also the Company's functional
currency and all amounts, are rounded to the nearest Rupees in Lakhs, unless otherwise stated.
3) The financial statements of the Company as at and for the year ended March 31, 2025, have been prepared in
accordance with requirements of Indian Accounting Standards (“Ind AS”) notified by under the Companies (Indian
Accounting Standards) Rules, 2015 (as amended from time to time) as prescribed under Section 133 of the
Companies Act, 2013 (‘Act'), other accounting principles generally accepted in India and presentation requirements
of Division III of Schedule III of the Act (Ind AS compliant Schedule III), as applicable to the Company along-with
disclosure requirements as per Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation)
Directions, 2023 dated October 19, 2023
4) The standalone Ind AS financial statements have been prepared on a going concern basis.
(ii) Historical cost convention
The Standalone financial statements have been prepared on a historical cost basis, except for the
following:
1) Certain financial assets and liabilities (including derivatives instruments) are measured at fair value.
2) Defined benefit plans - plan assets measured at fair value.
(B) Investment in subsidiaries, associates and joint ventures
Investments in subsidiary companies, associate companies and joint venture company are carried at cost and fair
value (deemed cost) as per Ind AS -101 and 109 less accumulated impairment losses, if any. Where an indication
of impairment exists, the carrying amount of the investment is assessed and written down immediately to its
recoverable amount. On disposal of investments in subsidiary companies, associate company and joint venture
company, the difference between net disposal proceeds and the carrying amounts are recognised in the Statement
of Profit and Loss.
When the Company ceases to control the investment in subsidiary or associate the said investment is carried at fair
value through profit and loss in accordance with Ind AS 109 "Financial Instruments".
(C) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker.
(D) Financial instruments
Financial assets and financial liabilities are recognised when the entity 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.
At initial recognition, the Company measures a financial asset or financial liability at its fair value plus or minus, in the
case of a financial asset or financial liability not at fair value through statement of profit and loss, transaction costs that
are incremental and directly attributable to the acquisition or issue of the financial asset or financial liability, such as fees
and commissions.
Transaction costs of financial assets and financial liabilities carried at fair value through profit or loss are expensed in
profit or loss. Immediately after initial recognition, an expected credit loss allowance (ECL) is recognised for financial
assets measured at amortised cost and investments in debt instruments measured at fair value through statement of
profit and loss, which results in an accounting loss being recognised in statement of profit and loss.
When the fair value of financial assets and liabilities differs from the transaction price on initial recognition, the entity
recognizes the difference as follows:
1) When the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e. a Level 1
input) or based on a valuation technique that uses only data from observable markets, the difference is recognised
as a gain or loss.
2) In all other cases, the difference is deferred and the timing of recognition of deferred day one profit or loss is
determined individually. It is either amortised over the life of the instrument, deferred until the instrument's fair value
can be determined using market observable inputs, or realised through settlement.
When the Company revises the estimates of future cash flows, the carrying amount of the respective financial assets or
financial liability is adjusted to reflect the new estimate discounted using the original effective interest rate. Any changes
are recognised in statement of profit and loss.
(E) 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.
1) Classification and subsequent measurement
a The Company has applied Ind AS 109 and classifies its financial assets in the following measurement categories:
- Fair value through profit or loss (FVPL);
- Fair value through other comprehensive income (FVOCI); or
- Amortised cost.
b 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 arises, 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.
c Fair value through other comprehensive income: Financial assets that are held for collection of contractual cash
flows and for selling the assets, where the assets' cash flows represent solely payments of principal and interest,
and that are not designated at FVPL, are measured at fair value through other comprehensive income. Movements
in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest
revenue and foreign exchange gains and losses on the instrument's amortised cost which are recognised in profit or
loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is
reclassified from equity to profit or loss. Interest income from these financial assets is included in ‘Interest income'
using the effective interest rate method.
d 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 FVPL, are measured at amortised
cost. The carrying amount of these assets is adjusted by any expected credit loss allowance recognised and
measured. Interest income from these financial assets is recognised using the effective interest rate method.
e 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.
f 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 the financial asset.
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 rate that exactly discounts estimated future cash payments or receipts through the
expected life of the financial asset or financial liability to the gross carrying amount of a financial asset (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 costs, 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-impaired at initial recognition - the Company calculates the credit-adjusted effective interest
rate, which is calculated based on the amortised cost of the financial asset instead of its gross carrying amount and
incorporates the impact of expected credit losses in estimated future cash flows.
g Equity instruments
i) 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 evidence a residual interest in the issuer's
net assets.
ii) 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 value gains and losses to profit or loss following the derecognition of the
investment.
iii) 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 FVOCI are not reported separately from other changes in fair value.
iv) Gains and losses on equity investments at FVPL are included in the statement of profit and loss.
v) Equity instruments at FVOCI are not subject to an impairment assessment.
2) Impairment
The Company assesses on a forward looking basis the expected credit losses (ECL) associated with its debt
instruments carried at amortised cost 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 measurement of ECL reflects:
- An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
- The time value of money; and
- Reasonable and supportable information that is available without undue cost or effort at the reporting date about
past 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 conditions and credit behavior (e.g. the likelihood of customers defaulting and the resulting
3) 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.
4) 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 risks
and rewards of ownership, or (ii) the Company neither transfers 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 asset when there is no reasonable expectation of recovering a financial asset in its entirety or a portion thereof.
5) Loans: Advances are classified into performing advances and non-performing advances (‘NPAs') as per the RBI
guidelines and are stated net of specific provision made towards NPAs. Further, NPAs are classified into substandard,
doubtful and loss assets based on the criteria stipulated by the RBI. Provisions for NPAs are made at rates as prescribed
by the RBI.
(F) 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.
1) Classification and subsequent measurement
All financial liabilities are recognised initially at fair value and, in the case of borrowings and payables, net of directly
attributable transaction costs.
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.
2) Derecognition
Financial liabilities are derecognised when they are extinguished i.e. when the obligation specified in the contract is
discharged, cancelled or expires).
3) Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally
enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset
and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be
enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the
counterparty.
(G) Financial guarantee obligation
1) Financial guarantee obligation are obligation that require the issuer to make specified payments to reimburse the holder
for a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt
instrument. Such financial guarantees are given to banks, financial institutions and others on behalf of customers to
secure loans, overdrafts and other banking facilities.
2) For financial guarantee obligation, the loss allowance is recognised as a provision, if any.
(H) Repossessed collateral
Repossessed collateral represents financial and non-financial assets acquired by the Company in settlement of overdue
loans. The assets are initially recognised at book value when acquired and included in premises and equipment, other
financial assets, investment properties or inventories within other assets depending on their nature and the Company's
intention in respect of recovery of these assets, and are subsequently remeasured and accounted for in accordance with
the accounting policies for these categories of assets.
(I) Derivatives and hedging activities
1) Derivatives are initially recognised at fair value on the date on which the derivative contract is entered into and are
subsequently remeasured at fair value. All derivatives are carried as assets when fair value is positive and as
liabilities when fair value is negative.
2) The method of recognising the resulting fair value gain or loss depends on whether the derivative is designated and
qualifies as a hedging instrument, and if so, the nature of the item being hedged.
Derivatives that are not designated as hedges
The Company may enters into certain derivative contracts to hedge risks which are not designated as hedges. Such
contracts are accounted for at fair value through profit or loss and are included in statement of profit and loss.
(J) Revenue Recognition
1) Revenue is measured at fair value of the consideration received or receivable. Revenue is recognised when (or as) the
Company satisfies a performance obligation by transferring a promised good or service to a customer.
2) When (or as) a performance obligation is satisfied, the Company recognizes as revenue the amount of the transaction
price (excluding estimates of variable consideration) that is allocated to that performance obligation.
i) Interest income
Interest income is recognised using the effective interest rate. The EIR method calculates the amortized cost of a
financial instrument and allocates the interest income or interest expense over the relevant period. The Company
calculates interest income by applying the EIR to the gross carrying amount of financial assets other than the credit
impaired assets.
ii) Dividend income
Dividend income is recognised when the right to receive the Dividend is established.
iii) Income from investments
Profit / (Loss) earned from sale of securities is recognised on trade date basis. The cost of securities is computed
based on First in First out (FIFO) method.
iv) Discount on investments
The difference between the acquisition cost and face value of debt instruments is recognised as interest income
over the tenor of the instrument on straight-line basis.
v) Redemption premium on investments
Redemption premium on investments is recognised as income over the tenor of the investment.
vi) Management fee income and/or Advisory Fees and Services
Management fee income towards support services and/or income from Advisory Fees and Services is accounted as
and when services are rendered and it becomes due on contractual terms with the parties.
vii) Rental income
Lease rental income is recognized in the Statement of Profit and Loss on a straight-line basis over the lease term.
viii) Net Gain/(Loss) on fair value changes
The company recognises the fair value on Investment mesured at FVTPL in the statement of Profit & Loss in
accordence with IND AS Log.
(K) Income Tax
i) Current Taxes
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.
ii) Deferred Taxes
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.
(L) 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
i) As a Lessee
The Company applies a single recognition and measurement approach for all leases, except for 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). Lease payments on short-term leases are recognized as and when due.
ii) As a Lessor
Leases for which the Company is a lessor is classified as finance lease or operating lease. Whenever the terms of
the lease transfer substantially all the risks and rewards of ownership to the lessee, the lease contract is classified
as finance lease. All other leases is classified as operating lease.
For Operating Lease, lease rentals are recognised on a straight line basis over the term of lease.
(M) Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, other
short-term deposits, 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 , net of outstanding bank
overdrafts as they are considered an integral part of the Company's cash management.
(N) Property, Plant & Equipment
The Company had applied for the one time transition exemption of considering the carrying cost on the transition date
i.e. April 01,2018 as deemed cost under Ind As. Hence, regarded thereafter as historical cost.
Property, plant and equipment are carried at historical cost of acquisition less accumulated depreciation and impairment
losses, consistent with the criteria specified in Ind AS 16 ‘Property, Plant and Equipment'.
The cost of an item of property, plant and equipment comprises its purchase price, including import duties and non¬
refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable costs of bringing the
asset to its working condition for its intended use and estimated costs of dismantling and removing the item and
restoring the item and restoring the site on which it is located.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that 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
derecognised 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 & residual value
Depreciation is provided on a pro-rata basis for all tangible assets on straight line method over the useful life of assets
as prescribed in Schedule II to the Companies Act, 2013 to allocate their cost, net of their residual values, over their
estimated useful lives as follows:
The estimated useful lives for the different types of assets are :
(i) Furniture and Fixtures -10 years
(ii) Office equipments - 5 years
(iii) Computers - 3 years
(iv) Vehicles - 8 years
(v) Buildings - 60 years
The Company provides pro-rata depreciation from the day the asset is put to use and for any asset sold, till the date of
sale. The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are recognised in the
statement of profit and loss.
(O) Intangible assets
The Company had applied for the one time transition exemption of considering the carrying cost on the transition date
i.e. April 01,2018 as deemed cost under Ind As. Hence, regarded thereafter as historical cost.
Intangible assets are recognised where it is probable that the future economic benefit attributable to the assets will flow
to the Company and its cost can be reliably measured. Intangible assets are stated at cost of acquisition less
accumulated amortisation.
Intangible Assets are amortised on straight-line basis over the useful life of the asset up to a maximum of 5 years
commencing from the month in which such asset is first installed.
The Company provides pro-rata amortization from the day the asset is put to use and for any asset sold, till the date of
sale.
(P) Investment properties
The Company had applied for the one time transition exemption of considering the carrying cost on the transition date
i.e. April 01,2018 as deemed cost under Ind As. Hence, regarded thereafter as historical cost.
An investment property is accounted for in accordance with cost model. The cost of any shares in a co-operative society
or a company, the holding of which is directly related to the right to hold the investment property, is added to the carrying
amount of the investment property.
Depreciation on investment property is provided in accordance with the provisions of Schedule II of the Companies Act,
2013. Tangible assets are depreciated on straight line basis method over the useful life of assets, as prescribed in Part
C of Schedule II of the Companies Act, 2013.
The Company reclassifies an asset between investment property and property, plant and equipment when there is a
change in use, evidenced by commencement or cessation of owner-occupation or other relevant indicators, in
accordance with Ind AS 16 and Ind AS 40. The reclassification is accounted for at the carrying amount of the asset on
the date of change in use.
(Q) Borrowing costs
Borrowing costs, which are directly attributable to the acquisition / construction of property plant and equipment, till the
time such assets are ready for intended use, are capitalised as part of the cost of the assets. Other borrowing costs are
recognised as an expense in the year in which they are incurred. Brokerage costs directly attributable to a borrowing are
expensed over the tenure of the borrowing.
(R) 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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