2.13 Provisions, Contingent Liabilities and Contingent Assets
A. Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
B. Contingent liabilities
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be
confirmed only by occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
company or a present obligation that arises from past events where it is either not probable that an outflow of resources will
be required to settle or a reliable estimate of the amount can not be made.
C. Contingent assets
Contingent assets are disclosed, where an inflow of economic benefit is probable.
Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.
2.14 Statement of Cash flows
Cash flow are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a
non-cash nature, any deferrals of accruals of past or future operating cash receipts or payments and item of income or
expenses associated with investing or financing cash flows. The cash flows from operating, investing and finance activities of
the Company are segregated.
2.15 Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by
the weighted average number of equity shares outstanding during the period.
2.16 Dividend to Equity Shareholders
Dividend to equity shareholders is recognised as a liability and deducted from shareholder's equity in the period in which the
dividends are approved by the equity shareholders in the general meeting.
Nature and purpose of Reserve
(a) Statutory Reserve
Created pursuant to section 45-IC of Reserve Bank of India Act, 1934.
(b) Other Comprehensive Income
The company has elected to recognise changes in the fair value of certain investments in equity security under other
comprehevise income. These changes are accumulated within the FVOCI equity investments reserve within equity. The
company transfers the amount from this reserve to retained earnings when the relevant equity security are derecognised.
28 Fair Value Measurement
(a) Valuation Principles
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most
advantageous) market at the measurement date under current market conditions (i.e., an exit price), regardless of whether that price is
directly observable or estimated using a valuation technique. In order to show how fair values have been derived, financial instruments are
classified based on a hierarchy of valuation techniques, as explained below:
(i) Short-term and other financial assets and liabilities
For financial assets and financial liabilities that have a short-term maturity (less than twelve months) and for other financial assets and
(ii) Loans
These financial assets are recorded at amortised cost less impairment loss as per expected credit loss.
(iii) Debt securities, borrowings and subordinated liabilities
These financial liabilities are recorded at amortised cost.
29 Capital Management
The primary objective of the Company's capital management policy is to ensure compliance with regulatory capital
requirements. In line with this objective, the Company ensures adequate capital at all times and manages its business in a
way in which capital is protected, satisfactory business growth is ensured, cash flows are monitored, borrowing
covenants are honoured and ratings are maintained.
30 Risk Management
While risk is inherent in the Company's activities, it is managed through an integrated risk management framework,
including ongoing identification, measurement and monitoring, subject to risk limits and other controls. The Board of
Directors are responsible for the overall risk management approach and for approving the risk management strategies
and principles.
a) Credit risk
The company manages and controls credit risk by setting limits on the amount of risk it is willing to accept for individual
counterparties and for geographical and industry concentrations, and by monitoring exposures in relation to such limits.
Financial assets measured on a collective basis
The company splits its exposure into smaller homogeneous portfolios, based on shared credit risk characteristics, as
described below in the following order:
- Secured/unsecured i.e. based on whether the loans are secured
- Nature of security i.e. the nature of the security if the loans are determined to be secured
- Nature of loan i.e. based on the nature of loan
Significant increase in credit risk
The company considers an exposure to have significantly increased in credit risk when the borrower
crosses 30 DPD but is within 90 DPD.
Impairment assessment
The company considers a financial instrument defaulted and therefore Stage 3 (credit-impaired) for ECL calculations in all
cases when the borrower crosses 90 days past due on its contractual payments. Further, the borrower is retained in
Stage 3 (credit-impaired) till all the overdue amounts are repaid i.e borrower falls within 90 days past due on its
contractual payments..
Exposure at default
The exposure at default (EAD) represents the gross carrying amount of the financial instruments subject to the
impairment calculation.
Loss given default
The credit risk assessment is based on a standardised LGD assessment framework that incorporates the probability of
default and subsequent recoveries. Current economic data and forward-looking economic forecasts and scenarios are
used in order to determine the Ind-AS 109 LGD rate. The company uses data obtained from third party sources and
combines such data with inputs to the Company's ECL models including determining the weights attributable to the
multiple scenarios.
Collateral and other credit enhancements
The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. Guidelines
are in place covering the acceptability and valuation of each type of collateral.
b) Liquidity risk and funding management
Liquidity risk arises because of the possibility that the Company might be unable to meet its payment obligations when
they fall due as a result of mismatches in the timing of the cash flows under both normal and stress circumstances. To
limit this risk, management has arranged for diversified funding sources, and adopted a policy of managing assets with
liquidity in mind and monitoring future cash flows and liquidity on a daily basis.
Maturity profile of financial liabilities
The table below summarises the maturity profile of the cash flows of the Company's financial liabilities as at 31st March,
2025
c) Market risk
Market risk represents the risk that the fair value or future cash flows of financial instruments will fluctuate due to
changes in market variables such as interest rates, foreign exchange rates and equity prices.
d) Operational risk
Operational risk is the risk of loss arising from inadequate or failed internal process or proper systems. The operational
risks of the Company are managed through comprehensive internal control systems and procedures and key back up
processes. This enables the management to evaluate key areas of operational risks and the process to adequately
mitigate them on an ongoing basis. The Company also undertakes Risk based audits on a regular basis across all business
units / functions. While examining the effectiveness of control framework through self-assessment would assure
effective implementation of selfcertification and internal financial controls adherence, thereby, reducing enterprise
exposure.
Event after Reporting Date
There has been no event after the reporting date. Necessary adjustments/disclosures were not required to be provided
in the financial statements.
In terms of our report of even date attached.
For CHANDRANA & SANKLECHA For and on behalf of the Board of Directors of M/s. Galada Finance Limited
Chartered Accountants
Firm Regn No. 000557S
BHARAT RAJ SANKLECHA Naveen Galada Ramu Vishnu
Proprietor Managing Director Director
Membership No. 027539 DIN : 00043054 DIN : 10190641
Date : 27-05-2025 Mahaveerchand Jain Divya K.R Manimeghala
UDIN : 25027539BMJHEQ7986 Company Secretary Chief Financial Officer
Peerreview No. : 014772
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