15.1 Company had acquired certain properties on settlement of loan dues from its borrowers which has been classified as held for sale and is being measured at the lower of carrying value or fair value less cost to sell. Fair market value of these properties is estimated at Rs. 23.42 lakhs (Rs. 269.42 lakhs) based on valuation conducted by a registered valuer. During the year, Company has sold a property having carrying value of Rs. 107.03 lakhs at a sale value of Rs. 104.08 lakhs (net of outstanding dues and selling expenses) and accordingly loss on sale of Rs. 2.95 lakhs has been shown under Note 27 as 'Loss on sale of repossessed assets'.
16.2 Terms of Security and Interest Rates for Working Capital Loans:
(i) Working Capital loans from banks are secured by :
(a) Primary Security- first pari passu charge on present and future receivables of the Company.
(b) Collateral Security - Immovable properties belonging to promoter & others.
(c) Personal guarantees of Managing Director and relative of Managing Director.
(d) Corporate guarantee of Bubble Infosolutions Private Limited (Company in which Managing Director of the Company is a director) and Amulet Technologies Limited, (Subsidary of the Company). The said corporate guarantees since been released on 17.05.2025 and 22.04.2025 respectively.
(ii) Interest rates on above loans range between 11.65 % - 15.00 % per annum (31.03.2024: 11.65% - 15.00%
16.4 The Company has availed term loans and working capital facilities from various Banks, however, slow down of its lending business and increased level of non-performing / impaired loan portfolio, has impacted its cash flow / liquidity, and the Company is un-able to service term loans and working capital facilities including interest thereon to certain banks as detailed in para 16.3 above and had approached these banks for its restructuring / settlement which inter alia includes waiver / reduction of interest. As the Company is reasonably hopeful of waiver / reduction of the interest under these restructuring / settlement packages, interest of Rs. 6,515.10 lakhs i.e. Rs. 1,496.34 lakhs for the current year ended 31 March, 2025 and Rs. 5,018.76 lakhs for the period upto 31 March, 2024, though accrued on these loans, has not been provided in these financial statements. These proposals of the Company have since been approved/accepted by the lender Banks through One Time Settlement (OTS) scheme; however, the same are pending for implementation as detailed in note 16.5 below.
16.5 During the year, the Company's proposal for settlement of its loans have been accepted / approved by all the lender banks under One Time Settlement (OTS). The Company has substantially paid the OTS amount till date of approval of these financial statements and is in the process of complying with the other terms and conditions thereof to complete /implement the OTS. The financial impact of these OTS will be accounted in the period in which all terms and conditions of the OTS are fully complied with, OTS is implemented and No Dues Certificates are obtained from the respective lender Bank/s.
16.6 Unsecured credit facilities obtained from a related party and carries interest rate of 15.00% per annum for a tenor of maximum 36 months with maturity due in September, 2026. These facilities have been obtained for utilizing for day-to-day business operational payments as Bank accounts of the Company were freezed by the Borrower Banks from July, 2023 to 06 January, 2025.
16.7 Unsecured credit facility obtained from a Director and carries interest rate of 15.00% per annum for a tenor of maximum 48 months with maturity due in February, 2029. This facility have been obtained for meeting the shortfall of funds towards the OTS sanctioned by all the Banks of the Company as mentioned in note 16.5 above.
16.8 Amount of Rs. Nil (Previous year Rs. 225.00 lakhs) held under lien with Banks i.e. Rs. Nil (Previous year Rs. 149.70 lakhs) held under no lien account and Rs. Nil (Previous year Rs. 75.30 lakhs) has been lien marked by a Bank (Refer note 5.1).
20.2 Rights, preferences and restrictions attached to each class of shares
The Company has only one class of Equity Share having par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. All Equity Shareholders are entitled to receive dividend as declared from time to time. The voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company in proportion of their shareholding.
21.1 Nature and purpose of other equity:
i Securities Premium
Securities premium is used to record the premium on issue of shares. It can be utilised only for limited purposes in accordance with the provisions of the Companies Act, 2013
ii Statutory Reserve as per Section 45-IC(1) of RBI Act, 1934
Reserve fund is created as per the terms of section 45-IC(1) of the Reserve Bank of India Act, 1934 as a statutory reserve.
iii Impairment Reserve
Reserve Bank of India (RBI) issued Notification No. DOR (NBFC).CC.PD.No.109/22.10.106/2019-20 dated 13 March, 2020 in respect of 'Implementation of Indian Accounting Standards' by NBFCs. In terms of the said circular, in case where the impairment allowance under Ind AS 109 is lower than the provisioning required under Income Recognition, Asset Classification and Provisioning (IRACP) Norms (including standard asset provisioning) issued by RBI, the Company is required to appropriate the difference from their net profit after tax to “Impairment Reserve”. No withdrawals are permitted from this reserve without prior permission from the Department of Supervision, RBI. Refer Note. 31.17 in respect of the disclosure in respect of comparison between impairment allowance and provisioning under IRACP Norms.
iv Retained Earnings
The profit / loss earned till date, less any transfers/appropriations to any other reserve, dividends or other distribution paid to shareholders. .
The above information regarding dues to Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information collected with the Company.
31.3 Employee Benefits (Ind AS-19)
(a) Defined Benefit plans:
Gratuity : Payable on separation as per the Payment of Gratuity Act, 1972, as amended @ 15 days pay, for each completed year of service to eligible employees who render continuous service of 5 years or more. The Company's liability towards Gratuity is funded / managed by Life Insurance Corporation of India (LIC).
(b) Other Long-Term Benefit:
Compensated Absences : Employees of the Company are entitled to accumulate their earned/privilege leave up to a maximum of 30 days which can be availed / utilized in coming year/s, while in service. During the current year, the amount of Rs. 0.15 lakhs has been debited (previous year: Rs. 0.61 lakhs has been credited) in the Statement of Profit and Loss towards creation of the provision (Previous Year: reversal of excess provision) based on actuarial valuation.
31.4 Operating Segments (Ind AS - 108):
The Company is primarily engaged only in the business of providing loans to Small and Medium Enterprises ('SME') customers and has no overseas operations/units and as such, no segment reporting is required under Ind AS- 108 dealing with the Segment Reporting.
31.5 Related Party Disclosures (Ind AS-24):
A. List of Related Parties and relationships, having transactions during the year: a) Subsidiary Company
Amulet Technologies Limited
• Transaction values are excluding taxes and duties.
• Related parties as defined under Ind AS 24 'Related Party Disclosures' have been identified based on representations made by key managerial personnel and information available with the Company. All above transactions are in the ordinary course of business and on arm's length basis.
• Provisions for gratuity, compensated absences and other long-term service benefits are made for the Company as a whole and the amounts pertaining to the Key Managerial Personnel are not specifically identified and hence are not included above.
31.6 Leases Company's significant leasing arrangements are in respect of the premises (commercial premises, offices etc.) which contain extension option after the initial contract period, the amounts recognized on account of leases are as under:
31.8 Corporate Social Responsibility (CSR):
The Company had constituted a CSR committee as required under Section 135 of the Companies Act, 2013, together with relevant rules as prescribed in Companies (Corporate Social Responsibility Policy) Rules, 2014 ('CSR rules'). The CSR Committee had approved the CSR Policy and also identified the broad areas of CSR activities which it propose to carry out viz. Child Education and Women Empowerment. The Company has made serious deliberations and chosen the CSR programs which would be undertaken on a long term and continuous basis. Such programs will benefit communities where the Company operates or likely to operate and create goodwill for the Company. As the Company has incurred average net losses during the last three years, no amount is required to be spent on account of CSR during the year ended 31 March, 2025 / 31 March, 2024.
31.9 Going Concern:
The accumulated losses of the Company which are mainly due to non-carrying out the lending activities and substantial reduction in the recoveries from the borrowers / customers, have resulted in erosion of substantial net worth and significant financial crunch being faced by the Company, and there are defaults in the repayments of its borrowings, delays in payments of other liabilities/commitments including employees and statutory dues etc. Also, Company's Net Owned Fund and Leverage Ratio are not in compliance of the Master Direction - Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023 as amended from time to time issued vide notification no. RBI/DOR/2023-24/106 DoR.FIN.REC.No.45/03.10.119 / 2023-24 dated October 19, 2023, as updated / amended from time to time (“RBI Master Directions”). These events / conditions indicate the existence of uncertainty on the Company's ability to continue as a going concern. However, the financial statements have been prepared on a going concern basis on the strength of continued support from the promoters (including the granting of the unsecured loan to the Company and meeting of its financial commitments directly) and considering the ongoing implementation of One Time Settlements (OTS) of borrowings with the lender banks and Company's ability to generate adequate resources for the foreseeable future.
31.10 Disclosures as required under Master Direction-Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023 as amended from time to time and other applicable directions/circulars are enclosed vide Annexure - I.
31.11 Capital
The Company maintains an actively managed capital base to cover risks inherent in the business which includes issued equity capital and other reserves attributable to equity holders of the Company. As an NBFC, the RBI requires the Company to maintain a minimum capital to risk weighted assets ratio (“CRAR”) consisting of Tier 1 and Tier 2 capital of 15% of the aggregate risk weighted assets. Further, the total of the Tier 2 capital cannot exceed 100% of the Tier 1 capital at any point of time. The capital management process of the Company ensures to maintain a healthy CRAR at all the times.
Capital Management
The primary objectives of the Company's capital management policy is to maintain appropriate levels of capital to support its business strategy taking into account the regulatory, economic and commercial environment. The Company aims to maintain a strong capital base to support the risks inherent to its business and growth strategies. The Company endeavors to maintain a higher capital base than the mandated regulatory capital at all times.
Planning
The Company's assessment of capital requirement is aligned to its planned growth which forms part of an annual operating plan which is approved by the ALCO and also a long-range strategy. These growth plans are aligned to assessment of risks- which include credit, liquidity and interest rate.
The Company monitors its capital to risk-weighted assets ratio (CRAR) on a yearly basis through its Assets Liability Management Committee (ALCO).
The Company endeavors to maintain its CRAR higher than the mandated regulatory norm. Accordingly, increase in capital is planned well in advance to ensure adequate funding for its growth.
The Company is also the provider of equity capital to its wholly owned subsidiary and associates and also provides
them with non-equity capital where necessary. These investments are funded by the Company through its equity share capital and other equity which inter alia includes securities premium and retained earnings.
Regulatory capital consists of Tier 1 capital, which comprises share capital, securities premium and retained earnings. Certain adjustments are made to Ind AS based results and reserves, as prescribed by the Reserve Bank of India. The other component of regulatory capital is Tier 2 Capital, which includes subordinated debt. The Company is trying to meet the capital adequacy requirements of Reserve Bank of India (RBI).
31.12 Events after Reporting Date
There have been no events after the reporting date that require disclosure in these standalone financial statements.
31.13 Fair Values
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.
This note describes the fair value measurement of both financial and non-financial instruments.
Valuation framework
The Company has an internal fair value assessment team which assesses the fair values for assets qualifying for fair valuation.
The Company's valuation framework includes:
• Benchmarking prices against observable market prices or other independent sources;
• Development and validation of fair valuation models using model logic, inputs, outputs and adjustments. These valuation models are subject to a process of due diligence and validation before they become operational and are continuously calibrated. These models are subject to approvals by various functions of the Company. Finance function is responsible for establishing procedures, governing valuation and ensuring fair values are in compliance with Indian accounting standards.
Valuation methodologies adopted
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
a. Fair values of strategic investments in equity instruments designated under FVOCI have been measured under level 3.
b. Fair value of loans held under a business model that is achieved by both collecting contractual cash flows and partially selling the loans through partial assignment to willing buyers and which contain contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest are measured
at FVOCI. The fair value of these loans has been determined under level 3.
c. The Company has disclosed financial instruments such as cash and cash equivalents, other bank balances, other financial assets and liabilities at carrying value because their carrying amounts are a reasonable approximation of the fair values due to their short-term nature.
31.14 Fair Values Hierarchy
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: Valuation based on quoted market price: financial instruments with quoted prices for identical instruments in active markets that the Company can access at the measurement date.
Level 2: Valuation based on using observable inputs: financial instruments with quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in inactive markets and financial instruments valued using models where all significant inputs are observable.
Level 3: Valuation technique with significant unobservable inputs: - financial instruments valued using valuation techniques where one or more significant inputs are unobservable.
Liquidity and funding risk
The Company monitors asset liability mismatches to ensure that there are no imbalances or excessive concentrations on either side of the Balance Sheet.
The Company continuously monitors liquidity in the market; and as a part of its strategy, the Company maintains a liquidity buffer managed by an active investment desk to reduce this risk.
The Company is managing its fund requirements mainly from banks and financial institutions. The Company emphasis on long term borrowings, however, presently its short term borrowing are more than the long term borrowing, which has helped the Company to manage and meet its fund requirements, considering that presently the Company is not disbursing new / further loans to its customers and its focus is on recovery and to improve its assets quality. The table below summaries the maturity profile of the undiscounted cashflow of the Company's financial liabilities:
Market risk is the risk that the fair value of future cash flow of financial instruments will fluctuate due to changes in the market variables such as interest rates, foreign exchange rates and equity prices. The Company do not have any exposure to foreign exchange rate and equity price risk.
Interest rate risk On investments
The interest rate risk on the investment portfolio and corresponding fair value change impact is monitored using Valuation at Risk ('VaR') and modified duration analysis and other measures, including the sensitivity of net interest income. The Company do not have any investment which is exposed to interest risk.
On assets and liabilities
Interest rate sensitivity on fixed and floating rate assets and liabilities with differing maturity profiles is measured by using the duration gap analysis. The same is computed periodically and sensitivity of the market value of equity assuming varied changes in interest rates are presented and monitored.
Credit risk is the risk of financial loss arising out of a customer or counterparty failing to meet their repayment obligations to the Company. It has a diversified lending model and focuses on broad categories viz: business, mortgages, and commercial lending. The Company assesses the credit quality of all financial instruments that are subject to credit risk. Classification of financial assets under various stages
The Company classifies its financial assets in three stages having the following characteristics:
Stage 1: unimpaired and without significant increase in credit risk since initial recognition on which a 12-month allowance for ECL is recognised;
Stage 2: a significant increase in credit risk since initial recognition on which a lifetime ECL is recognised;
Stage 3: objective evidence of impairment, and are therefore considered to be in default or otherwise credit impaired on which a lifetime ECL is recognised.
Unless identified at an earlier stage, all financial assets are deemed to have suffered a significant increase in credit risk when they are 90 days past due (DPD) and are accordingly transferred from stage 1 to stage 2. For stage 1 an ECL allowance is calculated based on a 12-month Point in Time (PIT) probability weighted probability of default (PD). For stage 2 and 3 assets a life time ECL is calculated based on a lifetime PD.
The Company has calculated ECL using three main components: a probability of default (PD), a loss given default (LGD) and the exposure at default (EAD) along with an adjustment considering forward macro-economic conditions [for a detailed note for methodology of computation of ECL please refer to material accounting policies note no 4.3(i) to the financial statements].
Financial instruments other than loans were subjected to simplified ECL approach under Ind AS 109 'Financial Instruments' and accordingly were not subject to sensitivity of future economic conditions.
The table below summarises the approach adopted by the Company for various components of ECL viz. PD, EAD and LGD across product lines using empirical data where relevant
Collateral Valuation
The nature of products across these broad categories are either unsecured or secured by collateral. Although collateral is an important risk mitigant of credit risk, the Company's practice is to lend on the basis of assessment of the customer's ability to repay rather than placing primary reliance on collateral. Based on the nature of product and the Company's assessment of the customer's credit risk, a loan may be offered with suitable collateral. Depending on its form, collateral can have a significant financial effect in mitigating the Company's credit risk.
The Company periodically monitors the market value of collateral and evaluates its exposure and loan to value matrix for high risk customers. The Company exercises its right of repossession across all secured products, and also resorts to judicial remedies available against its mortgages and commercial lending business. The repossessed assets are either sold or released to delinquent customers in case they come forward to settle their dues, but are not recorded in the accounts. The assets possessed / received in settlement of the loan are recorded as non-current assets held for sale (refer note 15).
Analysis of Concentration Risk
Credit concentration risk is the risk associated with any single exposure or group of exposures with the potential to produce large enough losses to threaten Company's core operation. The Company's exposure to various borrowers is constantly monitored to mitigate the credit concentration risk. The detail of advances to the top 20 largest borrowers and its percentage to the total advances is as under:
Company's loans exposure are within the geographic area of National Capital Region, New Delhi.
Measurement uncertainty and sensitivity analysis of ECL estimates
Expected credit loss impairment loss allowances recognised in the financial statements reflect the effect of a range of possible economic outcomes, calculated on a probability-weighted basis, based on the economic scenarios. Key assumptions used in measurement of ECL:
- The Company considers the date of initial recognition as the base date from which significant increase in credit risk is determined.
- Since the Company has a right to cancel any sanctioned but undrawn limits to any of its borrowers, EAD is assumed to be outstanding balance as on the reporting date.
31.20 The Company uses accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software except in certain components where the audit trail were not operating due to system limitations. Further at no instance the Audit Trail feature was tempered with and the audit trail has been preserved by the Company as per the statutory requirements for record retention.
31.21 Impairment on financial instruments during the previous year ended 31 March, 2024, included the impairment loss allowance of Rs. 811.01 lakhs on the investment and loan given to the Subsidiary Company, based on assessment of its recoverability conducted by the Company.
31.22 In absence of virtual uncertainty regarding availability of the sufficient taxable income in future, the deferred tax assets has not been recognised on accumulated brought forwarded and current tax losses.
31.23 Wilful Defaulter:
The Company has not been declared wilful defaulter by any bank or financial institution or other lender company, as such the declaration as wilful defaulter is not applicable.
31.26 The Company did not have any transaction which had not been recorded in the books of accounts, which had been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.
31.27 The Company has not traded or invested in crypto currency or virtual currency during the year.
31.28 The Company has not advanced or loaned or invested any funds (either from borrowed funds or share premium or any other sources or kind of funds) to or in any other person or entity, including foreign entity (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, 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 provided any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
31.29 The Company has not received any funds from any person or entity, including foreign entity (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, 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 provided any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
31.30 Previous year's figures have been reclassified / regrouped wherever necessary to conform to current year classification.
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