3.8 Provisions :
Provisions are recognised when there is a present obligation as a result of a past
event, and it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation and there is a reliable estimate of the amount
of the obligation. Provisions are reviewed at each balance sheet date and adjusted to
reflect the current best estimate.
The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the end of the reporting period, taking into
account the risks and uncertainties surrounding the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax
rate that reflects current market assessments of the time value of money and the risks
specific to the liability.
When there is a possible obligation or a present obligation in respect of which the
likelihood of outflow of resources is remote, no provision or disclosure is made.
3.9 Employee Benefits :
A) Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid if the Company has
a present legal or constructive obligation to pay this amount as a result of past
service provided by the employee and the obligation can be estimated reliably.
B) Contribution to provident fund and ESIC
Company's contribution paid/payable during the year to provident fund and
ESIC is recognised in the Statement of profit and loss.
C) Gratuity
The Company's liability towards gratuity scheme is determined by independent
actuaries, using the projected unit credit method. The present value of the
defined benefit obligation is determined by discounting the estimated future
cash outflows by reference to market yields at the end of the reporting period
on government bonds that have terms approximating to the terms of the related
obligation. Past services are recognised at the earlier of the plan amendment /
curtailment and recognition of related restructuring costs/ termination benefits.
The net interest cost is calculated by applying the discount rate to the net
balance of the defined benefit obligation and the fair value of plan assets. This
cost is included in employee benefit expense in the Statement of profit and loss.
Remeasurement gains/ losses-
Remeasurement of defined benefit plans, comprising of actuarial gains / losses,
return on plan assets excluding interest income are recognised immediately in
the balance sheet with corresponding debit or credit to Other Comprehensive
Income (OCI). Remeasurements are not reclassified to Statement of profit and
loss in the subsequent period.
Remeasurement gains or losses on long-term compensated absences that are
classified as other long-term benefits are recognised in Statement of profit and
loss.
D) Leave encashment / compensated absences / sick leave -
The Company provides for the encashment / availment of leave with pay
subject to certain rules. The employees are entitled to accumulate leave subject
to certain limits for future encashment / availment. The liability is provided based
on the number of days of unutilized leave at each balance sheet date on the
basis of an independent actuarial valuation.
3.10 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, debt
instruments measured at FVOCI and debt instruments designated at FVTPL.
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 creditimpaired,
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
Income from bill discounting is recognised over the tenure of the instrument so
as to provide a constant periodic rate of return.
B) Fees and commission income :
Fee based income are recognised when they become measurable and when it
is probable to expect their ultimate collection.
Commission and brokerage income earned for the services rendered are
recognised as and when they are due.
C) 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.
3.11 Finance costs
Finance costs include interest expense computed by applying the effective interest
rate on respective financial instruments measured at Amortised cost. Financial
instruments include bank term loans, non-convertible debentures, fixed deposits
mobilised, commercial papers, subordinated debts and exchange differences arising
from foreign currency borrowings to the extent they are regarded as an adjustment to
the interest cost. Finance costs are charged to the Statement of profit and loss.
3.12 Taxation - Current and Deferred Tax:
Income tax expense comprises of current tax and deferred tax. It is recognised in
Statement of profit and loss except to the extent that it relates to an item recognised
directly in equity or in other comprehensive income
A) Current Tax :
Current tax comprises amount of tax payable in respect of the taxable income or
loss for the year determined in accordance with Income Tax Act, 1961 and any
adjustment to the tax payable or receivable in respect of previous years. The
Company's current tax is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting period.
B) Deferred Tax :
Deferred tax assets and liabilities are recognized for the future tax consequences
of temporary differences between the carrying values of assets and liabilities
and their respective tax bases. 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 tax rates (and tax laws) that have
been enacted or substantively enacted by the end of the reporting period. The
measurement of deferred tax liabilities and assets reflects the tax consequence
that would follow from the manner in which the Company expects, at the end of
the reporting period, to recover or settle the carrying amount of its assets and
liabilities.
Deferred tax assets are recognized to the extent that it is probable that future
taxable income will be available against which the deductible temporary
difference could be utilized. Such deferred tax assets and liabilities are not
recognised if the temporary difference arises from the initial recognition of
assets and liabilities in a transaction that affects neither the taxable profit nor
the accounting profit. The carrying amount of deferred tax assets is reviewed at
the end of each reporting period and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the
asset to be recovered.
3.13 Leases
As a lessee
The Company has applied Ind AS 116. For these short term and low value leases, the
company recognizes the lease payments as an expense in the Statement of Profit
and Loss on a Straight line basis over the term of lease.
3.14 Exceptional items
When items of income and expenses within profit or loss from ordinary activities
are of such size, nature or incidence that their disclosure is relevant to explain the
performance of the enterprise for the period, the nature and amount of such items is
disclosed separately as Exceptional items.
3.15 Earning Per Share
The Company reports basic and diluted earnings per equity share. Basic earnings per
equity share have computed by dividing net profit/loss attributable to the equity share
holders for the year by the weighted average number of equity shares outstanding
during the year. Diluted earnings per equity share have been computed by dividing
the net profit attributable to the equity share holders after giving impact of dilutive
potential equity shares for the year by the weighted average number of equity shares
and dilutive potential equity shares outstanding during the year, except where the
results are anti-dilutive.
3.16 Recent Accounting Development
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 31st March, 2024, MCA has not notified any
new standards or amendments to the existing standards applicable to the Company
Description of the nature and purpose of Other Equity:
Capital Reserve
The company recognise profit and Loss on purchase, sale, issue or cancellation of its own
equity instrument to capital reserve.
Securities Premium
Securities premium represents amount received in excess of face value of the equity
shares. The Securities premium can be applied by the company for limited purposes such
as issuance of bonus shares, buy back of shares etc. in accordance with the provisions of
Section 52 of the Companies Act, 2013.
Stautory Reserve
Statutory reserve represents reserve fund created pursuant to Section 45-IC of the RBI
Act, 1934 through transfer of specified percentage (20%) of net profit every year before
any dividend is declared. The reserve fund can be utilised only for limited purposes as
specified by RBI from time to time and every such utilisation shall be reported to the RBI
within specified period of time from the date of such utilisation.
Retained Earnings
Retained earnings or accumulated surplus represents total of all profits retained since
Company's inception. Retained earnings are credited with current year profits, reduced
by losses, if any, dividend payouts, transfers to General reserve or any such other appro¬
priations to specific reserves. Debit balance in retained earnings represents balance of
accumulated losses.
Other Comprehensive Income-Remeasurement gain/ (losses) on defined benefit
plan
The Company recognises change on account of remeasurement of the net defined benefit
liability/(asset) as part of other comprehensive income.
29. DUE TO MICRO, SMALL AND MEDIUM ENTERPRISES
To the extent information available with the company, it has no dues to the Micro,Small and
medium enterprises as at 31st March, 2024 and 31st March, 2023.
30. CAPITAL MANAGEMENT
The Company's policy is to maintain a strong capital base so as to maintain investor,
creditor and market confidence and to sustain future development of the business.
The company has adequate cash and bank balances. The company monitors its capital
by careful scrutiny of the cash and bank balances, and a regular assessment of any debt
requirements. In the absence of any significant amount of debt, the maintenance of debt
equity ratio etc. may not be of any relevance to the Company.
31. Financial Risk Management
Financial risk factors
The Company's principal financial liabilities, comprise borrowings and trade and other
payables. The main purpose of these financial liabilities is to manage finances for the
Company's operations. The Company's principal financial assets include inter corporate
deposits, loans, cash and cash equivalents and other receivables. The Company's
activities expose it to a variety of financial risks
I. Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in market prices. Market prices comprise three
types of risk: currency rate risk, interest rate risk and other price risks, such as
commodity risk. Financial instruments affected by market risk include loans and
borrowings, deposits, investments.
The company is exposed to market risk primarily related to the market value of its
investments.
Interest Rate Risk
Interest rate risk is the risk that the fair value of future cash flows of Financial
Instruments will fluctuate because of change in market interest rates.The company
does not have exposure to the risk of changes in market interest rate as it has interest
free debt obligations.
Currency Risk
Currently company does not have transaction in foreign currencies and hence the
company is not exposed to currency risk.
Equity Price Risk
(a) Exposure
The company is exposed to equity price risk arising from Investments held by
the company and classified in the balance sheet as fair value through P & L. To
manage its price risk arising from investment in equity securities, the company
diversifies its portfolio. Diversification of portfoio is done in accordance with the
limits set by the company. The majority of the company's equity instruments are
listed on the Bombay stock exchange (BSE) or the National stock exchange
(NSE) in India.
(b) Sensitivity Analysis- Equity Price Risk
The table below sumarise the impact of increase/ decrease of the index on the
company's equity and the profit for the period. The analysis is based on the
assumption that the equity/ index had increased by 2% or decreased by 2% with
all other variable held constant, and that all the company's equity instruments
moved in line with the Index.
II. Credit Risk
Credit risk is the risk that a counter party will not meet its obligations under a financial
instrument or customer contract, leading to a financial loss.The company is exposed
to credit risk from its financing activities towards inter corporate loans where no
significant impact on credit risk has been identified.
III. Liquidity Risk
Liquidity risk is the risk that the Company may not be able to meet its present and
future cash and collateral obligations without incurring unacceptable losses.The
Company manages its liquidity requirement by analysing the maturity pattern of
Company's cash flows of financial assets and financial liabilities.
The table below summarises the maturity profile of the undiscounted cash flows of
the Company's financial assets and liabilities.
39. The Company did not have any long term contracts including derivative contracts for which
there were any material foreseeable losses.
40. Other statutory information
i The Company does not have any Benami property, where any proceeding has been
initiated or pending against the Group for holding any Benami property.
ii The company has performed an assesment to identify transactions with Struck off
Companies as at 31/03/2024 and the details of which are as under:
36. LITIGATION :
a) The Company is in appeal in respect of various income tax matters.The Contingent
liability in respect thereof is disclosed in note no. 27 (a).Besides,in respect of appeals
decided in favour of the company,the department is in appeals in certain cases.
b) A party has filed a suit for claim of Rs. 158.03/- Lakhs with future interest against the
company in respect of certain leasing and hire purchases agreements pertaining to
more than 20 years back. The company does not acknowledge any debt.
In addition,the company is subject to legal proceedings and claims,which have arisen
in the ordinary course of business.The Company's management does not reasonably
expect that the above legal claims and proceedings, when ultimately concluded and
decided will have a meterial and adverse effect on the company's results of opera¬
tions or financial statements.
37. SEGMENT REPORTING:
In the opinion of Management there are no separate reportable segments as per Indian
Accounting Standard (Ind AS-108).
38. The company was not required to spend any amount on Corporate social responsibility
activities during the current and previous year.
Note: - In the absence of purchase price of share held by struck off companies face
value is considered for reporting purpose.
iii The Company does not have any charges or satisfaction which is yet to be registered
with ROC beyond the statutory period
iv The Company has not traded or invested in Crypto currency or Virtual Currency
during the financial year.
v The Company has not been declared wilful defaulter by any bank or financial
institution or government or any government authority.
vi The Company has not advanced or loaned or invested funds to any other person(s)
or entity(ies), including foreign entities (Intermediaries) with the understanding that
the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any
manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate
Beneficiarie
vii The Company has not received any fund from any person(s) or entity(ies), including
foreign entities (Funding Party) with the understanding (whether recorded in writing
or otherwise) that the Group shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any
manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries)
or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficia¬
ries,
viii The Company has not any such transaction which is not recorded in the books of
accounts that has been surrendered or disclosed as income during the year in the tax
assessments under the Income Tax Act, 1961 (such as, search or survey or any other
relevant provisions of the Income Tax Act, 1961
c) Sectoral Exposure
The Company does not have any exposures, in the nature of loans as at 31st March,
2024 and 31st March, 2023.
d) Intra Group Exposures: -
The Company has invested in group companies totalling to Rs. 36.42 Lakhs as at the
year end (Previous Rs. 31.31 Lakhs).
e) Unhedged foreign currency exposure
The Company does not have any unhedged foreign currency exposures as at 31st
March,2024 and 31st March,2023
f) Disclosure of complaints
The Company does not have any customer interface and thus there are no complaints
received by the NBFCs from customers and from the Offices of Ombudsman during
the year ended 31st March, 2024 and 31st March, 2023.
g) Related Party Disclosure
For related party disclosures refer to Note 25 of the notes to financial statements.
43. The Previous year figures have been regrouped/reclassified,wherever necessary to
confirm to the Current Year's presentation.
The accompanying notes form an integral part of the Standalone Financial Statements.
As Per our Report of even date attached
FOR N. C. AGARWAL & CO. FOR AND ON BEHALF OF THE
CHARTERED ACCOUNTANTS BOARD OF DIRECTORS OF
Firm Registration Number : 003273N HB LEASING & FINANCE COMPANY LIMITED
Sd/- Sd/- Sd/-
G. K. AGARWAL LALIT BHASIN ANIL GOYAL
(PARTNER) (CHAIRMAN) (MANAGING DIRECTOR)
MEMBERSHIP NO. : 086622 DIN: 00002114 DIN: 00001938
Sd/- Sd/-
PLACE: GURUGRAM C.P. SINGH SONALI SHARMA
DATED: 17TH MAY, 2024 (CHIEF FINANCIAL OFFICER) (COMPANY SECRETARY)
|