1. Corporate Information
Sita Enterprises Limited (the Company) is a public limited company registered in India and incorporated under the provisions of the Companies Act, 1956. The Company is registered as a Non-Banking Financial Company with Reserve Bank of India as a non-systematic important NBFC not accepting / holding public deposits. It is classified as an Investment and Credit Company (NBFC-ICC) in the Base Layer Category as per RBI guidelines. The Company is primarily engaged in Investments in shares, securities, mutual and other funds, properties and financing through loans. Its registered office is at 415-416, Arun Chambers, Tardeo Road, Mumbai- 400034. Its shares are listed on BSE Ltd.(Bombay Stock Exchange)
2. Summary of Significant Accounting Policies and Disclosures
a. Statement of compliance
The standalone financial statements (hereinafter referred as financial statements) of the company have been prepared in accordance with the Indian Accounting Standards (hereinafter referred as ‘Ind AS’) notified under Section 133 of the Companies Act, 2013 (“the Act”) [Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) Rules, 2016] and other applicable provisions.
b. Basis of Preparation
The financial statements have been prepared on the historical cost and accrual basis except for certain financial instruments which have been measured at Fair Value / Amortised Cost as described in these notes.
c. Financial Instrument
All financial instruments are recognised initially at transaction value. Financial assets in the form of loans, Advances and investments held for collecting contractual cash flows towards interest or other consideration and principal amount and are not held for sale are measured at amortised cost with impairment provisions. Financial assets in the form of investments held for future disposal- shares and securities quoted on the stock exchanges are periodically valued at the quoted prices, units of mutual funds are valued at the NAV and such assets are classified at fair value through profit or loss. Investment properties and unquoted investments in associates entities are valued at cost. All financial liabilities are measured at transaction value.
d. Impairment of Financial Instruments
The company makes provisions for impairment or Expected Credit Loss and reversals on applicable investments, receivables, loans and advances and other financial assets, which are measured at amortised cost, on the basis of the company's assessment on the reporting date based upon the available qualitative and quantitative considerations and relevant information. Financial Assets are written off either partially or entirely when there is no realistic prospect of recovery.
e. Revenue Recognition
Revenue is measured at the fair value of consideration received or receivable. Revenue is recognised only when it can be reliably measured and it is probable that future economic benefits will flow to the Company. All revenues are accounted at point in time. Interest income on loan is recognised on the accrual basis as per terms. Dividend income is recognised on an accrual basis when the right to receive the dividend is established. Revenue on net Gain / Loss on fair value changes are accounted on the reporting / de-recognition date in respect of financial instruments in the form of investments which are classified at fair value through profit or loss. In respect of that financial instrument in the form of investments including investment property which are classified at cost, or amortised cost revenue on net gain / loss are accounted on the de-recognition date.
f. Income Tax
Income tax provision is made as per the current applicable rates. As a measure of prudence and as permitted in the accounting standards, the company does not recognise in books deferred tax assets on carried forward losses for future tax liabilities. As per tax provisions and other prevalent factors these credits may not be available / lucrative to avail in future assessments. These carried forward entitlements are claimed in tax computation and are availed by the company in the tax provisions of the reporting period, if found beneficial as per prevalent tax provisions. The provision of deferred tax liabilities has also been not made as - these liabilities may be offset against the said available deferred tax assets - there may not be any material net liability for tax payable on such future income.
g. Current Vs Non-Current classification
The Company presents assets and liabilities in its Balance Sheet based on current/non-current classification. An asset / liabilities is classified as current when it is expected to be realised / settled or intended to be sold or consumed in normal operating cycle. The normal operating cycle is considered within twelve months after the reporting period. The Company classifies all other assets / liabilities as non-current.
h. De-recognition
A financial asset is primarily derecognised when the rights to receive cash flows from the asset have expired, or its contractual obligations are discharged or cancelled, or expire. The Company derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.
i. Fair value measurement
The Company’s accounting policies and disclosures require the measurement of fair values for financial instruments. The management regularly reviews significant unobservable inputs and valuation adjustments.
When measuring the fair value of a financial asset or a financial liability, the Company uses observable market data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
i. Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
ii. Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
iii. Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
The carrying amounts of cash and cash equivalents, loans, Inter-corporate deposits, tax receivables, trade payables, deposits and other financial Assets or liabilities are considered to be the same as their fair values, due to their specific nature. The fair value of instruments in the form of investments in unlisted entities are observed with application of several valuation techniques and are modified with the prevailing state of affairs. Due to multiple methods of valuations and number of assumptions required to be made in the exercise, the figures of fair value disclosures are estimates.
j. Capital Management
The primary objectives of the capital management policy is to ensure that the Company continuously complies with capital requirements required by the regulator, maintains and healthy debt to equity ratios in order to support its business and to maximise shareholder value. Over the years the company has not assessed outside debts for its capital needs. The Company manages its capital structure and makes adjustments to it according to changes in economic conditions and the risk characteristics of its activities. In order to fund growth or comply with regulatory capital requirements, Company depends on internal accrual or may raise additional capital. Company may monitor the amount of dividend payment to shareholders and return capital to shareholders.
k. Defined benefit obligation
The provisions of defined benefit obligations for employees are not applicable to the company for the period under report.
l. Earnings per share
Basic earnings per share is computed and disclosed using the weighted average number of equity shares outstanding during the period. Dilutive earnings per share is computed and disclosed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the period, except when the results would be anti-dilutive.
m. Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated. A set of financial statements with amount in rupees is also prepared for accounting and other purposes.
n. Others
Cash and Bank balance, Equity Share Capital, Other Equity, provisions, Financial Liabilities, disclosure of Contingent Liabilities in notes and other accounting matters are dealt with as per applicable provisions. Previous period figures may have been recast, regrouped, modified and reclassified wherever necessary to make them comparable with current period figures and to conform to the requirements of applicable regulations and guidelines.
o. Recent accounting pronouncements
Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended 31 March, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
3. Use of estimates and judgements
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in making provisions of fair value changes, impairments, write offs and other provisions which may vary with the actual subsequent transaction. Appropriate with the size of operations in the company, important and material information is provided to assist users of financial statements as per MCA guidelines.
4. The company is a Non Systemically Important Non-Deposit taking Non-banking Financial Company. As per the Reserve Bank of India (Scale Based) Master Directions, 2023 the company falls into the Base Layer Category. Chapter IV (Prudential Regulations) and Chapter V (Regulatory Restrictions and Limits) of the said directions which includes provisions about leverage Ratio, Asset Classification, Risk Assets, Provisioning Requirements, Liquidity Risk Management, Credit Concentration and related disclosures in Balance Sheet are not applicable to the company as the company has also not assessed any public funds besides public deposits. As per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the company falls in the category of net worth of less than Rupees Twenty Five Crores and paid up equity capital of less than Rupees Ten Crores. Disclosures as prescribed by are made as applicable for such companies. The company follows the Accounting Standard and Guidance notes in line with the said regulations of Reserve Bank of India and SEBI.
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