3.16 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 past events,
and 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. When the effect of the time value of money is
material, the Company determines the level of provision
by discounting the expected cash flows at a pre-tax rate
reflecting the current rates specific to the liability. The expense
relating to any provision is presented in the statement of profit
and loss net of any reimbursement.
B. Contingent liability
A possible obligation that arises from past events and the
existence of which will be confirmed only by the occurrence
or non-occurrence of one or more uncertain future events
not wholly within the control of the Company or; present
obligation that arises from past events where it is not probable
that an outflow of resources embodying economic benefits
will be required to settle the obligation; or the amount of the
obligation cannot be measured with sufficient reliability are
disclosed as contingent liability and not provided for.
C. Contingent asset
A contingent asset is a possible asset that arises from past
events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the Company.
Contingent assets are neither recognised not disclosed in the
financial statements.
3.17 Taxes
A. Current tax
Current tax assets and liabilities for the current and prior
years are measured at the amount expected to be recovered
from, or paid to, the taxation authorities. Current tax is the
amount of tax payable on the taxable income for the period
as determined in accordance with the applicable tax rates
and the provisions of the Income Tax Act, 1961.
Current income tax relating to items recognised outside profit
or loss is recognised outside profit or loss (either in other
comprehensive income or in equity). Current tax items are
recognised in correlation to the underlying transaction either
in OCI or equity.
B. Deferred tax
Deferred tax is recognised on temporary differences between
the carrying amounts of assets and liabilities in the standalone
financial statements and the corresponding tax bases used in
the computation of taxable profit.
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 carrying amount of
deferred tax liabilities and assets are reviewed at the end of
each reporting period.
A deferred tax asset is recognised for the carryforward of
unused tax losses and accumulated depreciation to the extent
that it is probable that future taxable profit will be available
against which the unused tax losses and accumulated
depreciation can be utilised.
Deferred tax relating to items recognised outside profit
or loss is recognised outside profit or loss (either in other
comprehensive income or in equity). Deferred tax items are
recognised in correlation to the underlying transaction either
in OCI or equity.
Deferred tax assets and liabilities are offset if such items relate
to taxes on income levied by the same governing tax laws and
the Company has a legally enforceable right for such set off.
C. Goods and services tax paid on acquisition of
assets or on incurring expenses
Expenses and assets are recognised net of the goods and
services tax paid, except when the tax incurred on a purchase
of assets or availing of services is not recoverable from the
taxation authority, in which case, the tax paid is recognised
as part of the cost of acquisition of the asset or as part of the
expense item, as applicable.
3.18 Earnings per share
Basic earnings per share ('EPS') is computed by dividing
the profit after tax (i.e. profit attributable to ordinary equity
holders) by the weighted average number of equity shares
outstanding during the year.
Diluted EPS is computed by dividing the profit after tax (i.e.
profit attributable to ordinary equity holders) as adjusted
for after-tax amount of dividends and interest recognised in
the period in respect of the dilutive potential ordinary shares
and is adjusted for any other changes in income or expense
that would result from the conversion of the dilutive potential
ordinary shares, by the weighted average number of equity
shares considered for deriving basic earnings per share as
increased by the weighted average number of additional
ordinary shares that would have been outstanding assuming
the conversion of all dilutive potential ordinary shares.
Potential equity shares are deemed to be dilutive only if their
conversion to equity shares would decrease the net profit per
share from continuing ordinary operations. Potential dilutive
equity shares are deemed to be converted as at the beginning
of the period, unless they have been issued at a later date.
Dilutive potential equity shares are determined independently
for each period presented. The number of equity shares
and potentially dilutive equity shares are adjusted for share
splits/reverse share splits, right issue and bonus shares, as
appropriate.
3.19 Dividends on ordinary shares
The Company recognises a liability to make cash or non¬
cash distributions to equity holders of the Company when the
distribution is authorised and the distribution is no longer at
the discretion of the Company. As per the Act, final dividend
is authorised when it is approved by the shareholders and
interim dividend is authorised when the it is approved by the
Board of Directors of the Company. A corresponding amount
is recognised directly in equity.
Non-cash distributions are measured at the fair value of
the assets to be distributed with fair value re-measurement
recognised directly in equity.
Upon distribution of non-cash assets, any difference between
the carrying amount of the liability and the carrying amount of
the assets distributed is recognised in the statement of profit
and loss.
3.20 Cash flow statement
Cash flows are reported using the indirect method as
prescribed under Ind AS 7, whereby profit before tax is
adjusted for the effects of transactions of non-cash nature
and any deferrals or accruals of past or future cash receipts
or payments. The cash flows from operating, investing and
financing activities of the Company are segregated based on
the available information.
3.21 Share Warrants
The Company accounts for share warrants in accordance
with Ind AS 32 - Financial Instruments: Presentation and Ind
AS 109 - Financial Instruments.
Share warrants are classified as equity instruments when they
provide the holder the right to subscribe to a fixed number of
equity shares at a fixed price, with no contractual obligation
for cash settlement. The amount received on issuance is
recognized under equity as "Share Warrants".
Upon exercise, the warrant amount is transferred to share
capital and securities premium, as applicable. If the warrants
expire unexercised, the balance is transferred to general
reserves. Where share warrants do not meet the criteria
for equity classification, they are accounted for as financial
liabilities in accordance with Ind AS 109.
b) Terms and rights attached to equity shares
The Company has only one class of equity shares having a par
value of ' 10 per share. Each holder of equity shares is entitled
to one vote per share. The Company declares and pays
dividend, if any in Indian Rupees. The dividend proposed by
the Board of Directors is subject to approval of shareholders in
the ensuing Annual General Meeting.
During the Year ended 31 March 2025, the amount of per share
dividend recognised as distributions to Equity Shareholders
was Nil (31 March 2024 Nil).
In the event of liquidation of the Company, the holders of
equity shares will be entitled to receive any of the remaining
assets of the Company, after distribution of all preferential
amounts. However, no such preferential amounts exists
currently. The distribution will be in proportion to the number
of equity shares held by the shareholder.
On August 23, 2023, the Board of Directors of the Company
had approved the allotment of 1,75,36,011 (One Crore
Seventy-Five lakhs Thirty-Six Thousand and Eleven only)
warrants, each convertible into, or exchangeable for, 1 (one)
fully paid-up equity share of the Company of face value of
' 10/- each ("Warrants") at a price of ' 45.62/- (Rupees Forty-
Five and Sixty-Two Paisa only) each (including the warrant
subscription price and the warrant exercise price) including
premium of ' 35.62/- (Rupees Thirty-Five and Sixty-Two
Paisa only) each, payable in cash per warrant aggregating
upto ' 79,99,92,821.82 (Rupees Seventy-Nine Crore Ninety-
Nine lakhs Ninety-Two Thousand Eight Hundred Twenty-
One and Eighty-Two paisa only), against the receipt of 25%
of the issue price (i.e. ' 11.405 per warrant) aggregating to
' 19,99,98,205.46 (Ninety Crore Ninety-Nine lakhs Ninety-Eight
Thousand Two Hundred Five and Forty-Six Paisa Only). The
Warrants will be convertible in equal number of equity shares
of face value of ' 10/- each, on receipt of balance 75% of
the issue price (i.e. ' 34.215 per warrant) within a period of
18 months from the date allotment of Warrants. During the
year ended on 31 March 2024, the Company has allotted
6,57,600 equity shares upon receipt of a balance amount
of aggregating to ' 2,24,99,784/- (Rupees Two Crores
Twenty-Four lakhs Ninety-Nine Thousand Seven Hundred
and Eighty-Four Only) from one of the allottee pursuant to
the exercise of his rights of conversion into equity shares in
accordance with the provisions of SEBI (ICDR) Regulations,
2018. During the year ended on 31 March 2025, the Company
has allotted 1,57,82,411 equity shares upon receipt of a balance
amount of aggregating to ' 53,99,95,192.37 (Fifty Three
Crore Ninety Nine lakhs Ninety Five Thousand One Hundred
Ninety Two and Thirty Seven Paisa Only) from some of the
allottees pursuant to the exercise of their rights of conversion.
10,96,000 Warrants were cancelled on February 23, 2025,
due to non-exercise of option to convert warrants into equity
shares within the stipulated eighteen-month period from the
date of allotment. Accordingly, ' 1,25,00,000 being 25% of the
issue price was forfeited and the same was transferred to
General Reserve.
Nature and purpose of the reserve
a) Securities premium
Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes
such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.
b) Retained earnings
Retained earnings represents the deficit in profit and loss account.
The Company recognises change on account of remeasurement of the net defined benefit liability/(asset) as part of retained
earnings with separate disclosure, which comprises of actuarial gains and losses.
c) Employee stock option reserve
The share options outstanding account reserve is used to recognise the grant date fair value of options issued to employees
under the Company's ESOP 2018 plan. Please refer note 32 for the details of the plan.
d) Special Reserve under Section 45 IC of RBI Act, 1934
Special reserve is created as per the requirement of RBI at the rate of 20% of the profit after tax for the year.
e) General Reserve
Represents appropriation of funds from retained earnings and other free reserves.
35. CORPORATE SOCIAL RESPONSIBILITY ('CSR') EXPENSES
Provisions of Section 135 of the Act are not applicable to the Company.
36. SEGMENT REPORTING
Operating segment are components of the Company whose operating results are regularly reviewed by the Chief Operating
Decision Maker ('CODM') to make decisions about resources to be allocated to the segment and assess its performance and for
which discrete financial information is available.
The Company is engaged primarily on the business of "Financing" only, taking into account the risks and returns, the organization
structure and the internal reporting systems. All the operations of the Company are in India. All non-current assets of the Company
are located in India. Accordingly, there are no separate reportable segments as per Ind AS 108 - "Operating segments".
(b) Defined benefit plan
Gratuity
Financial assets not measured at fair value
The Company operates a defined benefit plan (the 'gratuity
plan') covering eligible employees. The gratuity plan is
governed by the Payment of Gratuity Act, 1972. Under the act,
employee who has completed five years of service is entitled
to specific benefit. The level of benefits provided depends on
the member's length of service and salary at retirement age/
resignation date.
The defined benefit plans expose the Company to risks such
as actuarial risk, liquidity risk, market risk, legislative risk. These
are discussed as follows:
Actuarial risk: It is the risk that benefits will cost more than
expected. This can arise due to one of the following reasons:
Adverse salary growth experience: Salary hikes that are
higher than the assumed salary escalation will result into an
increase in obligation at a rate that is higher than expected.
Variability in mortality rates: If actual mortality rates are
higher than assumed mortality rate assumption than the
gratuity benefits will be paid earlier than expected. Since
there is no condition of vesting on the death benefit, the
acceleration of cash flow will lead to an actuarial loss or
gain depending on the relative values of the assumed salary
growth and discount rate.
Variability in withdrawal rates: If actual withdrawal rates
are higher than assumed withdrawal rate assumption then
the gratuity benefits will be paid earlier than expected. The
impact of this will depend on whether the benefits are vested
as at the resignation date.
Liquidity risk: Employees with high salaries and long durations
or those higher in hierarchy, accumulate significant level of
benefits. If some of such employees resign/retire from the
Company, there can be strain on the cash flows.
Market risk: Market risk is a collective term for risks that
are related to the changes and fluctuations of the financial
markets. One actuarial assumption that has a material effect
is the discount rate. The discount rate reflects the time value
of money. An increase in discount rate leads to decrease in
defined benefit obligation of the plan benefits and vice versa.
This assumption depends on the yields on the government
bonds and hence the valuation of liability is exposed to
fluctuations in the yields as at the valuation date.
Legislative risk: Legislative risk is the risk of increase in the
plan liabilities or reduction in the plan assets due to change
in the legislation/regulation. The government may amend the
Payment of Gratuity Act, 1972, thus requiring the companies to
pay higher benefits to the employees. This will directly affect
the present value of the defined benefit obligation and the
same will have to be recognized immediately in the year
when any such amendment is effective.
Financial instruments valued at carrying value
The respective carrying values of certain on-balance sheet
financial instruments approximated their fair value. These
financial instruments include cash in hand, balances with
Banks, financial institutions and money at call and short notice,
accrued interest receivable, acceptances, deposits payable
on demand, accrued interest payable, and certain other
assets and liabilities that are considered financial instruments.
Carrying values were assumed to be approximate fair values
for these financial instruments as they are short-term in
nature and their recorded amounts approximate fair values
or are receivable or payable on demand.
Financial instruments recorded at fair value
Investments
Securities classified as fair value through profit or loss, are
carried at fair value based on quoted market prices. The
Company records mutual funds at closing NAV.
Fair value of financial instruments carried at
amortised cost.
Loans and advances
The fair values of loans that do not reprice or mature
frequently are estimated using discounted cash flow models.
Loans and advances are fair valued basis the future expected
cash flows discounted at the lending rate.
Security deposits
Security deposits have been accounted at amortised cost
using SBI mClR rates.
Bonds and debentures
The fair value of bonds and debentures are discounted using
cash flow models. Bonds and debentures are fair valued basis
the future expected cash flows discounted at the interest rate.
The Company's board of directors is the highest decision¬
making body within the organisation. The Board of directors
have overall responsibility for the establishment and oversight
of the Company's risk management framework. The board of
directors has established the Risk Management Committee,
which is responsible for developing and monitoring the
Company's risk management policies. The committee reports
regularly to the board of directors on its activities.
The Company's risk management committee is established
to:
• Recommend changes to the risk Policy for approval by
the Audit Committee.
• Monitors and supervises the ECL process, identifies and
analyses the risks faced by the Company
• Authorize any overrides on the provisioning model of
assets to achieve provisioning objectives in line with the
approval policy
• Reviewing the adequacy of ECL training across the key
departments
• Establishing that the businesses comply with the risk
Policy
• Review and address concerns raised by the internal
Credit Committee, Statutory Auditors or the Internal
Auditors in any ECL exceptions
• Delegate such roles and responsibilities to the Company's
internal Credit Committee to ensure that this policy is in
line with the board approved policy and the applicable
accounting standards.
The audit committee oversees the recommmendations
of the risk management committe and how management
monitors compliance with the Company's risk management
policies and procedures, and reviews the adequacy of the
risk management framework in relation to the risks faced
by the Company. The audit committee ensures adequate
provisioning for the financial statements in line with the
approved policies and ensures that the scope of the External
Auditor covers adequate assurance in complying with the
Company's approved provisioning and risk policy.
A. Credit risk
Credit risk arises from loans and advances, cash and cash
equivalents, investments carried at amortized cost and
deposits held by the Company.
Credit risk is the risk of financial loss to the Company if a
customer or counterparty to a financial instrument fails to
meet its contractual obligations, and arises principally from
the Company's receivables from customers and investments
in debt securities.
i) Credit risk management
The primary organizational groups forming part of the
Company risk governance are Board of Directors, Audit
Committee, Risk committee and Credit committee. In regards
to loans and advances of the Company, the credit risk is
managed in accordance with the ECL policy by monitoring of
credit risk basis the days past dues.
For the investments, the ECL policy provides that the Company
uses the external ratings for estimation of forward looking PDs
to estimate ECL.The Company reviews the creditworthiness
of these counterparties on an on-going basis.
The Company classifies its financial assets in following
category:
Stage 1
As soon as a financial instrument originates or is purchased, it
is categorized as Stage 1. This is applicable across all the loan
facilities, investments and bank balances. Stage 1 would include
all residual facilities, not impaired or, have not experienced a
significant increase in credit risk since initial recognition.
Stage 2 and stage 3
Loans
The following staging criteria based on Days Past Dues (DPDs)
fixed for Loan portfolio as per the Ind AS 109:
Stage 1 to Stage 2: More than 30 Days Past Due as criteria for
Stage 2 classification.
Stage 2 to Stage 3: More than 90 Days Past Due as criteria for
Stage 3 classification.
Investments and Balances with Bank
Following is the staging criteria for investments:
• For facilities with rating grade AAA to B, three notch
downgrades (without modifiers) shall be taken as stage 2.
• Any financial instrument with rating grade CCC or below
classified as Stage 2 at origination.
Investments in NCD, PTC and FD
The Company has invested in NCDs, PTCs and FDs having
Credit rating ranging from AAA to BBB-.
Measurement of Expected Credit Losses
The Company has applied a three-stage approach to
measure expected credit losses (ECL) on debt instruments
accounted for at amortised cost. Assets migrate through
following three stages based on the changes in credit quality
since initial recognition:
(a) Stage 1: 12-months ECL: For exposures where there is no
significant increase in credit risk since initial recognition
and that are not credit-impaired upon origination, the
portion of the lifetime ECL associated with the probability
of default events occurring within the next 12- months is
recognized.
(b) Stage 2: Lifetime ECL, not credit-impaired: For credit
exposures where there has been a significant increase
in credit risk since initial recognition but are not credit-
impaired, a lifetime ECL is recognized. Marginal PDs are
used to compute lifetime ECL.
(c) Stage 3: Lifetime ECL, credit-impaired: Financial assets
are assessed as credit impaired upon occurrence of one
or more events that have a detrimental impact on the
estimated future cash flows of that asset. For financial
assets that have become credit-impaired, a lifetime
ECL is recognized and interest revenue is calculated by
applying the effective interest rate to the amortised cost
At each reporting date, the Company assesses whether there
has been a significant increase in credit risk of its financial
assets since initial recognition by comparing the risk of default
occurring over the expected life of the asset. In determining
whether credit risk has increased significantly since initial
recognition, the Company uses information that is relevant
and available without undue cost or effort. This is based on
the historical default rates or delinquency status of account
across various internal rating grades, products or sectors.
The Company assesses whether the credit risk on a financial
asset has increased significantly on an individual and collective
basis. In determining whether the credit risk on a financial
asset has increased significantly, the Company considers the
change in the risk of a default occurring since initial recognition.
The default definition used for such assessment is consistent
with that used for internal credit risk management purposes.
The Company considers defaulted assets as those which are
contractually past due 90 days, other than those assets where
there is empirical evidence to the contrary. Financial assets
which are contractually past due 30 days are classified under
Stage 2 - life time ECL, not credit impaired, barring those
where there is empirical evidence to the contrary. An asset
can move into and out of the lifetime expected credit losses
category (Stage 2 and 3) based on a predefined pattern
obtained from the historical default rates or delinquency
status of account across various internal rating grades,
products or sectors. Credit exposures transition back from
stage 2 to stage 1 when the credit quality of the credit facility
shows significant improvement. Primarily, when factors that
previously triggered an exposure moving to Stage 2 no longer
meet, such exposures move back to Stage 1 and a 12-month
ECL measured instead of Lifetime ECL. Credit exposures may
transition from stage 3 to stage 2/stage 1, if the exposures
are current, no longer meet the definition of default/credit
impaired and if the factors that previously triggered an
exposure to move to stage 3 are no longer met.
The Company measures the amount of ECL on a financial
instrument in a way that reflects an unbiased and probability-
weighted amount. The Company considers its historical loss
experience and adjusts the same for current observable data.
The key inputs into the measurement of ECL are the probability
of default, loss given default and exposure at default. These
parameters are derived from the Company's internally
developed statistical models and other historical data. In
addition, the Company has used reasonable and supportable
information on future economic conditions by using GDP as
suitable macroeconomic factors. Since incorporating these
forward looking information increases the judgment as to how
the changes in these macroeconomic factor will affect ECL,
the methodology and assumptions are reviewed regularly.
B. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities
that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure, as
far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Company's reputation. Due to the dynamic nature of
the underlying businesses, Company's treasury maintains flexibility in funding by maintaining availability under committed credit
lines.
6. The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources
or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding
(whether recorded in writing or otherwise) that the Intermediary shall:
(i) 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
(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;
7. The Company has not received any funds from any other person(s) or entity(ies), including foreign entities (Intermediaries)
with the understanding (whether recorded in writing or otherwise) that the Company shall:
(i) 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
(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
8. The Compliance with number of layers prescribed under clause (87) of Section 2 of the Act read with Companies (Restriction
on number of layers) Rule, 2017 is not applicable as the Company is registered as non banking financial Company with
Reserve Bank India.
(iv) The value of unhedged foreign currency transaction as on March 31, 2025 is 0.86 lakhs which is on account of sitting fees
payable to the directors of the Company.
52. DISCLOSURE OF DETAILS AS REQUIRED BY ANNEX XI - DISCLOSURES IN FINANCIAL
STATEMENTS - NOTES TO ACCOUNTS OF NBFCS OF MASTER DIRECTIONS - RESERVE BANK OF
INDIA (NON-BANKING FINANCIAL COMPANY - SCALE BASED REGULATION) DIRECTIONS, 2023
53. Previous year figures have been regrouped/reclassified to make them comparable with those of current year.
As per our report of even date.
For Pijush Gupta & Co For and on behalf of the Board of Directors of
Chartered Accountants Niyogin Fintech Limited
Firm's Registration No: 309015E CIN: L65910TN1988PLC131102
Pijush Kumar Gupta Amit Rajpal Tashwinder Singh
Partner Chairman & Non-Executive Director Managing Director & Chief Executive Officer
Membership No: 015139 DIN: 07557866 DIN: 06572282
Kolkata London Mumbai
15 May 2025 15 May 2025 15 May 2025
Abhishek Thakkar Neha Daruka
Chief Financial Officer Company Secretary
Membership No: A41425
Mumbai Mumbai
15 May 2025 15 May 2025
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