2. Material Accounting Policies

2.1 Functional and Presentation Currency

These financial statements are presented in Indian
Rupees, the national currency of India, which is the
functional currency of the Company.

2.2 Basis for adoption of Financial Statements

The financial statements are prepared in
accordance with Indian Accounting Standards (Ind-
AS) notified under Companies (Indian Accounting
Standards) Rules, 2015 and as amended further.
The Financial Statements are prepared under
historical cost convention from the books of
accounts maintained on accrual basis except for
certain financial instruments (refer note 2.11)
which are measured at fair value. Further, the
Company continues to follow the Reserve Bank
of India (RBI) Directions issued for Non-Banking
Financial Companies - Middle layer (NBFC-ML) with
respect to preparation & presentation of accounts.
Accounting policies have been consistently applied
except where a newly issued accounting standard,
if initially adopted or a revision to an existing Ind AS
requires a change in the accounting policy hitherto
in use. Management evaluates all recently issued or
revised Ind AS on an ongoing basis.

2.3 Use of Estimation, Assumption and Judgement

The key assumption, judgement and estimation
at the reporting date, that have significant risk,
causing the material adjustment to the carrying
amounts of assets and liabilities within the next
financial year, are described below. The company
based its assumption, judgement and estimation
on parameters available on the date when financial
statements were prepared. Existing circumstances
and assumption about future development,
however, may change due to the market changes or

circumstances arising that are beyond the control
of the company. Such changes are reflected in the
assumption when they occur. The Management
believes that the estimates used in preparation
of the financial statements are prudent and
reasonable.

2.4 Exceptions

Derecognition of financial assets and liabilities

The Company has applied Para B2, which permit
first-time adopter to apply de-recognition
requirements in Ind-AS 109 prospectively for
transactions occurring on or after the date of
transition to Ind-AS.

Classification & measurement of financial assets:

The Company has followed classification and
measurement of financial assets in accordance
with Ind-AS 109 and classification of Financial
Instruments have been made based on the facts
and circumstances that existed at the date of
transition to Ind-AS.

Estimates

The Company made estimates for following items
in accordance with Ind-AS:

- Investment in equity instruments carried at
FVTPL or FVTOCI;

- Investment in debt instruments carried at
FVTPL; and

- Impairment of financial assets based on
expected credit loss model

2.5 Cost for Property, Plant & Equipment and
Intangible Assets

The company has availed exemption under para
D7AA of appendix D to Ind-AS 101 which permits
a first time adopter to continue with the carrying
values for its PPE and intangible assets as at date
of transition to Ind-AS measured as per previous
IGAAP.

The cost of an item of Property, Plant & Equipment,

comprises its purchase price, including import
duties and non-refundable taxes after deducting
trade discounts/rebates and including any direct
attributable expenditure to bring the PPE to the
location and making it ready for its intended
use. Subsequent costs are included in the asset's
carrying amount, only when it is probable that
future economic benefits associated with the items
will flow to the entity and the cost of the item can
be reliably measured. Gains or losses arising from

de-recognition of items of PPE are measured as the
difference between the net disposal proceeds and
the carrying amount of the asset and are recognized
in the statement of profit and loss when the asset
is derecognized. Major repairs and/or renovation
expenditure are capitalized under IndAS-16 as
replacement costs.

An Intangible Asset is recognized where it is
probable that the future economic benefits
attributable to the asset will flow to the company.
Intangible assets are carried at cost less accumulated
amortization and accumulated impairment losses,
if any. These assets are amortized based on Straight
Line Method over a period of 10 years or its useful
life, whichever is lower

2.6 Revenue Recognition

For recognition of revenue, the Company adopts
the accrual basis except where there is uncertainty
as to collection. Revenue is measured at fair value
of the consideration received or receivable. Interest
income is recognized on a time proportion basis,
using the effective interest rate method (EIR) except
in case of income on 'Non-Performing Assets' which
is recognized on realization basis. Any gain/loss on
account renegotiation/modification is recognized
in the P&L statement.

Dividend Income is recognized on right to receive
basis. Consultancy, Advisory and Management Fee
are recognized on actual receipt basis.

Revenue from lease rentals is recognised on a time
proportion basis from the commencement date, as
prescribed in the lease agreement entered with the
lessee.

2.7 Depreciation

The depreciable amount of an item of PPE is
allocated on a straight-line basis over its useful life
as prescribed under Schedule II to the Companies
Act, 2013.

Each part of an item of PPE with a cost that is
significant in relation to the total cost of the
asset and useful life of that part is different from
remaining part of the asset; such significant part is
depreciated separately.

Depreciation on additions to/deductions from PPE
during the year is charged on pro-rata basis from
the month of such addition and/or upto the month
in which such PPE is sold, discarded, demolished or
destroyed.

2.8 Assets held for Sale

Non-current assets or disposal groups comprising
of assets and liabilities are classified as 'held for
sale' when all of the following criteria's are met:

- Decision has been made to sell,

- The assets are available for sale in its present
condition,

- The assets are being actively marketed, and

- Sale has been agreed or is expected to be
concluded within 12 months of the Balance
Sheet date.

Subsequently, such non-current assets and disposal
groups classified as held for sale are measured at
the lower of its carrying value and fair value less
costs to sell. Non-current assets held for sale are
not depreciated or amortized.

2.9 Impairment - PPE and Intangible Assets

If the recoverable amount of an asset is estimated
to be less than it's carrying amount, the carrying
amount of the asset is reduced to its recoverable
amount. An impairment loss is recognized
immediately in statement of profit and loss, unless
the relevant asset is carried at a revalued amount,
in which case the impairment loss is treated as a
revaluation decrease.

Recoverable amount is the higher of fair value less
costs of disposal or value in use. In assessing value in
use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate
that reflects current market assessments of the
time value of money and the risks specific to the
asset for which the estimates of future cash flows
have not been adjusted.

At the end of each reporting year, the company
reviews the carrying amounts of its tangible,
intangible assets to determine whether there is
any indication that those assets have suffered an
impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in
order to determine the extent of the impairment
loss (if any).

2.10 Investment Property

Investment properties are properties held to earn
rentals and/or for capital appreciation (including
property under construction for such purposes).
All of the Company's property interests held
under operating leases to earn rentals or for
capital appreciation purposes are accounted for as
investment properties.

Investment properties are measured initially at cost,
including transaction costs. After initial recognition,
the company measures investment property at cost
less accumulated depreciation and accumulated
impairment loss, if any.

Investment properties are to be depreciated in
accordance to the class of assets it belongs and the
life of the asset shall be as conceived for the same
class of asset by the Company.

Though investment property is measured using
cost model, the fair value of investment property is
disclosed in the notes to accounts.

2.11 Financial instruments

2.11.1 Financial Assets

The Company shall classify financial assets
measured at amortized cost, fair value
through other comprehensive income
(FVTOCI) or fair value through Statement
of Profit and Loss(FVTPL) on the basis of its
business model for managing the financial
assets and the contractual cash flows
characteristics of the financial asset.

Financial assets are recognised when
the Company becomes a party to the
contractual provisions of the instrument
and are initially recognised at fair value
and directly attributable transaction costs
towards acquisition or issue of the financial
asset are added to or deducted from the
fair value on initial recognition except for
financial assets which are recognised at fair
value through profit and loss.

For the purposes of subsequent
measurement financial assets are classified
in the following categories:

- Amortised cost, where the financial
assets are held solely for collection of
cash flows arising from payments of
principal and/or interest

- Fair value through other
comprehensive income (FVTOCI),
where the financial assets are held
not only for collection of cash flows
arising from payments of principal
and/or interest but also from the sale
of such assets.

- Fair value through profit or loss
(FVTPL), where the financial assets
are not classified either at amortized
cost or FVTOCI.

Financial Assets include Investments in
equity/preference share, Bonds/debentures
or Security receipts, Loans, Security
Deposits, Cash & cash equivalents etc.

Management determines the classification
of an asset at initial recognition depending
on the purpose for which the assets were
acquired.

In case of short-term financial assets,
carrying value is considered to be its fair
value.

2.11.2 Impairment

The Company as permitted by Ind-AS 101,
has used reasonable and supportable
information that is available without undue
cost or effort to determine the credit risk as
at the year end.

The Company at each reporting year end
tests a financial asset or a group of financial
assets (other than financial assets held at fair
value through profit or loss) for impairment
based on evidence or information that
is available without undue cost or effort.
Expected credit loss (ECL) is assessed and
impairment loss recognized if the credit
risk of the financial asset is significantly
increased.

The impairment losses and reversals are
recognized in statement of profit and loss.

Impairment model under IndAS-109 applies
to financial instruments as listed below:

- Financial assets that are debt

instruments measured at Amortized
Cost (AC)

- Equity investments are measured

at Fair Value Through Other

Comprehensive Income (FVTOCI)

- Loan commitments not measured at
FVTPL (Fair Value Through Profit and
Loss)

- Financial guarantee contracts issued

in the scope of Ind AS 109 not
measured at FVTPL

- Lease receivables in the scope of Ind
AS 116.

However, investments in equity shares and
financial instruments measured at FVTPL
are out of the scope of ECL.

The Company shall at every reporting year
test loans given to companies for impairment
as per Ind AS- 109 and Impairment Loss/
ECL if any shall be charged to Profit & Loss
Account. The company can however utilize
the provision made under section 36(i)
(viii) to write off/ provide for impairment
loss. All credit exposures in tourism & non¬
tourism segments based on the nature of
substantive security shall be grouped into
3 categories namely Stage-1, Stage-2 &
Stage-3 exposures as enumerated below:

Wherever relaxations in contractual terms
have been granted pursuant to regulatory
guidelines, such amendment in terms of
original sanction would be outside the scope
of restructuring.

ECL shall be calculated based on past ten
years' data as follows:

ECL= Exposure at Default at various stages
(EAD) X Probability of Default (PD) X Loss
given Default (LGD)

All credit exposure shall also be classified
into performing and non-performing assets
as per RBI guidelines applicable to Non¬
Banking Financial Companies (NBFCs).
The company shall also compute general
provision for standard asset and specific
provision for sub-standard, doubtful & loss
assets as per applicable RBI guidelines and

compare the same with Impairment Loss/
ECL as per Ind-AS. In case, Impairment
Loss is lower than provisions required as
per RBI guidelines then difference shall
be appropriated from PAT to a separate
Impairment Reserve, which shall not be
reckoned for regulatory capital.

2.11.3 Derecognition

Financial assets are derecognized when the
contractual right to receive cash flows from
the financial assets expires or transfers the
contractual rights to receive the cash flows
from the asset. However, the company can
also derecognize financial assets in case
the management feels that the chances of
recovery are quite remote.

2.11.4 Financial Liability

All financial liabilities are recognized initially
at fair value and, in the case of loans and
borrowings, net of directly attributable
transaction costs. The Company's financial
liabilities include trade and other payables,
loans and borrowings including bank
overdrafts.

The subsequent measurement of financial
liabilities depends on their classification, as
described below:

• Amortized costs, interest-bearing
loansandborrowings are subsequently
measured at amortized cost using the
effective interest rate (EIR) method.
Gains and losses are recognized in
Statement of Profit and Loss when the
liabilities are derecognized as well as
through the EIR amortization process.
Amortized 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
amortization is included as finance
costs in the Statement of Profit and
Loss.

• Fair value through statement of Profit
and loss, include financial liabilities
held for trading and financial liabilities
designated upon initial recognition as
at fair value through Statement of
Profit and Loss. Financial liabilities
are classified as held for trading if
they are incurred for the purpose of
repurchasing in the near term.

The carrying value of financial liability is
considered to be its fair value in case of
Short Term.

2.12 Employee Benefits2.12.1 Defined Contribution Plan
Employees Provident Fund:

In terms of the Employees Provident
and Miscellaneous Provisions Act, 1952,
TFCI contributes at the rate of 12% of PF
applicable salary (consisting basic salary &
other retaining allowances) payable to each
employee covered under the scheme. An
equal & matching contribution is payable
by each employee. Both employer &
employees contributions are deposited with
EPFO within the prescribed time period
on monthly basis. The entire employer
contribution deposited with EPFO is
recognized in the financial statement as
Employees Benefit Expenses.

2.12.2 Defined Benefit Plan
Gratuity:

TFCI's gratuity policy provides for 15 days
salary for each completed year or part
thereof in excess of six months on separation
of any employee from TFCI, on retirement
or otherwise, after completion of 5 years
of continuous services. However, in case of
completion of minimum service of 10 years,
the gratuity shall be payable @one month
salary for each completed year or part
thereof in excess of six months limited to
maximum ^ 20.00 lakh or maximum amount
provided under the Payment of Gratuity
Act whichever is higher. Further, in case of
employment for more than 20 years in TFCI,
in addition to above, gratuity shall also be
admissible to a sum equal to half month's
salary in respect of each year of service or
part thereof exceeding six months of service
over & above 20 years. As per actuarial
valuation, the expense has been recognized
in the financial statement as Employees
Benefit Expenses. Gains/losses due to
actuarial revaluation have been shown as
other comprehensive income.

Leave Encashment:

TFCI's policy provides for accrual of 1 day
of ordinary leave for each 11 days of duty
rendered by him/her subject to accumulation
of maximum 90 days. No further ordinary
leave can be earned by an employee if he/
she has in credit the maximum number of
ordinary leaves. TFCI's ordinary leave policy
also provides for encashment of 15 days
of such leave in year which is fully taxable.
As per actuarial valuation, the expense has
been recognized in the financial statement
as Employees Benefit Expenses. Gains/
losses due to actuarial revaluation have
been recognized in P&L account.

2.13 Taxation

Tax expense for the period comprises current tax
and deferred tax. Tax is recognised in the statement
of profit and loss, except to the extent that it
relates to items recognised in other comprehensive
income or directly in equity in which case the tax is
also recognised in other comprehensive income or
equity.

2.13.1 Current Tax

Current tax is the expected tax payable on the
taxable income for the year as determined
in accordance with the applicable tax rates
and the provision of the Income Tax Act,
1961 and the other applicable tax laws.

2.13.2 Deferred Tax

Deferred tax is recognized in respect of
temporary differences between the carrying
amount of assets and liabilities in the
financial statements and the corresponding
amounts used for taxation purposes, at the
end of the year.

2.14 Lease

In compliance with Ind AS-116 effective from
1^st April 2019 as notified by MCA, the Company
assesses at the time of contract inception whether
a contract is, or contains, a lease i.e. if the contract
conveys the right of use of an identified asset for a
period of time in exchange for consideration, the
same is considered as lease.

2.14.1 Company 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 which are charged to
Profit on straight line basis. The Company
recognises lease liabilities to make
lease payments and right-of-use assets
representing the right to use the underlying
assets.

(i) Right-of-use assets

The Company recognizes 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 re-measurement
of lease liabilities. The cost of right-
of-use assets includes the amount
of lease liabilities recognized, initial
direct costs incurred, and lease
payments made at or before the lease
commencement date less any lease
incentives received. Right-of-use
assets are depreciated on a straight¬
line basis over the estimated useful
lives of the assets. The right-of-use
assets are also subject to impairment.

(ii) Lease liabilities

At the commencement date of the
lease, the Company recognizes 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 incentive
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 in the period
in which the event or condition that
triggers the payment occurs.

In 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

Demand deposits with banks having a maturity of
more than three months, though liquid investments,
are disclosed as Bank Balances other than cash and
cash equivalents.

2.16 Borrowing Costs

Borrowing costs include interest and amortization
of ancillary costs incurred in connection with the
arrangement of borrowings.

Borrowing costs directly attributable to acquisition,
construction or production of qualifying asset that
necessarily takes a substantial period of time to get
ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other
borrowing costs are expensed in the period they
occur.

A qualifying asset is an asset that necessarily takes
a substantial period of time to get ready for its
intended use or sale.