(b) Terms/rights/restrictions attached to equity shares
(i) The company has one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend in Indian Rupees. The dividend if any proposed by the Board of Director is subject to the approval of the share holders in the ensuing Annual General Meeting.
(ii) In the event of Liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders..
Nature and Purpose of Reserves
a) Capital Redemption Reserve
It is created in accordance with Section 55 of the Companies Act, 2013, the Company had created capital redemption reserve of an amount equal to the nominal value of the shares redeemed as an appropriation from profits.
b) 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.
c) Reserve fund in terms of section 45-IC(1) of the Reserve Bank of India Act, 1934
Section 45IC of Reserve Bank of India Act, 1934 ("RBI Act,1934") defines that every non banking financial institution which is a Company shall create a reserve fund and transfer therein a sum not less than twenty percent of its net profit every year as disclosed in the statement of profit and loss before any dividend is declared. The Company has transferred an amount of Rs. 35.84 Lakhs (PY: Rs. 18.73 Lakhs) to Reserve Fund pursuant to Section 45-IC of RBI Act, 1934.
d) Retained Earnings
Retained earnings represents profits that the company earned till date, less any transfers to General Reserve, Statutory Reserves, Dividends and other distributions paid to the shareholders.
e) Other Comprehensive Income/(Loss)
Other comprehensive income consist of remeasurement gains / losses on defined benefit plans, gain / (loss) of equity instruments carried through FVTOCI.
22. Contingent Liabilities and Commitments
Claims not acknowledged as debts Rs. 1.50 lakhs (Previous year Rs. 33.78 lakhs). The company has been advised that the demand is likely to be either deleted or substantially reduced and accordingly no provision is considered.
23. Impairment of Assets
There are no such impairable assets at the year ended in term of Ind AS - 36. Hence company has not made any provision for impairment loss.
24. Asset Received under settlement
The company had received under settlement from debtors, an immovable property which is shown under the head Investment Property.
Prior to March 31, 2005 this asset was treated as fixed asset (now Property, Plant and Equipments) as per Accounting Standards and depreciation was charged on it. However, it was transferred to Investment in Immovable property from April 01, 2005 under the head non-current investment, which is now re-classified as Investment Property as per IND AS.
25. Inventories
During the earlier years, company had written off loss on account of non-availability of share certificates of own securities. Subsequently, whenever the shares certificates were available and it is substantially established that the shares belong to the company, they have been included as part of stock of security and shown under Inventories by assigning a value of Re. 1 to each of such securities by crediting to profit & loss account of such year. Such value of Re. 1 is considered as cost for the purpose of valuation of relevant securities.
The sensitivity analysis have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
The sensitivity analysis presented above may not be representative of the actual change in the projected benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the projected benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same method as applied in calculating the projected benefit obligation as recognised in the balance sheet.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
Notes:
i) Gratuity is payable as per entity's scheme as detailed in the report.
ii) Actuarial gains/losses are recognized in the period of occurrence under Other Comprehensive Income (OCI). All above reported figures of OCI are gross of taxation.
iii) Salary escalation & attrition rate are considered as advised by the entity; they appear to be in line with the industry practice considering promotion and demand & supply of the employees
iv) Maturity Analysis of Benefit Payments is undiscounted cashflows considering future salary, attrition & death in respective year for members as mentioned above for forseable future of next 10 years.
v) Average Expected Future Service represents Estimated Term of Post - Employment Benefit Obligation.
vi) Weighted Average Duration of the Defined Benefit Obligation is the Weighted average of cash flow timing, where weights are derived from the present value of each cash flow to the total present value.
vii) Any benefit payment and contribution to plan assets is considered to occur end of the year to depict liability and fund movement in the disclosures.
viii) Value of asset provided by the entity is not audited by us and the same is considered as unaudited fair value of plan asset as on the reporting date.
ix) In absence of specific communication as regards contribution by the entity, Expected Contribution in the Next Year is considered as the sum of net liability/assets at the end of the current year and current service cost for next year, subject to maximum allowable contribution to the Plan Assets over the next year as per the Income Tax Rules.
Qualitative Disclosures
Para 139 (a) Characteristics of defined benefit plan
The entity has a defined benefit gratuity plan in India (funded). The entity’s defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund. The fund is managed by a trust which is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy.
Para 139 (b) Risks associated with defined benefit plan
Gratuity is a defined benefit plan and entity is exposed to the Following Risks:
Interest rate risk: A fall in the discount rate which is linked to the G. Sec. Rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.
Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan’s liability.
Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.
Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.
Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.
Concentration Risk: Plan is having a concentration risk as all the assets are invested with the insurance company and a default will wipe out all the assets. Although probability of this is very low as insurance companies have to follow stringent regulatory guidelines which mitigate risk.
Para 139 (c) Characteristics of defined benefit plans
During the year, there were no plan amendments, curtailments and settlements.
Para 147 (a)
A separate trust fund is created to manage the Gratuity plan and the contributions towards the trust fund is done as guided by rule 103 of Income Tax Rules, 1962.
28. Segment Reporting
The company has only single reportable segment, viz. Income from Investing and Financial activities and the Company operates in a single geographical segment i.e. domestic. Hence no additional disclosures are made as required under Indian Accounting Standard 108 “Segment Reporting”.
32. Refund from Income Tax Department under Vivad se Vishwas Scheme
The company had a long pending litigation for AY 1993-94 which was pending before the High Court of Mumbai. During the FY 2020-21, the company has opted for Vivad se Vishwas Scheme to settle the said litigation and accordingly have filed the respective Forms before the department. During the FY 2021-22, the company had received Form 5 which is Order for Full and Final Settlement of Tax Arrears determining a refund of Rs. 1,10,84,481. The said refund was kept on hold and an intimation u/s 245 was issued for proposal to adjust the said refund against the outstanding tax liability of the company. During the current financial year, the company has received the said refund after adjusting an amount of Rs. 6,48,142 against the old outstanding demands.
The primary objectives of the Company’s capital management policy are to ensure that the Company complies with externally imposed capital requirements and maintains strong credit ratings and healthy capital ratios in order to support its business and to maximise shareholder value.
The Company manages its capital structure and makes adjustments to it according to changes in economic conditions and the risk characteristics of its activities. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend payment to shareholders, return capital to shareholders or issue capital securities. No changes have been made to the objectives, policies and processes during the year ended March 31, 2024 and March 31, 2023. However, they are under constant review by the Board. As regards to return of capital to shareholders, the company has not proposed or paid dividend on equity shares during the financial year 2023-24 and 2022-23.
Leverage ratio represents ratio of total outside liabilities by owned funds. During the financial year 2023-24 and 2022-23, at any point of time, the leverage ratio of the company is less than the ceiling limit prescribed by the Reserve bank. As per paragraph 6 of the RBI Master Direction - Non-Banking Financial Company - Non - Systematically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016, the leverage ratio of an NBFC shall not be more than 7 at any point of time.
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.
II) Fair value hierarchy
The Company determines fair values of its financial instruments according to the following hierarchy: Level 1: The fair value of financial instruments traded in active markets (such as debentures, bonds, etc.) is based on quoted market prices at the end of the reporting period. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, mutual funds) is determined using the fair value hence the fair value is determined using observable market data such as latest declared NAV/ recent market deals.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity instruments.
Valuation Techniques used to determine fair values :
Specific valuation techniques used to value financial instruments include :
Mutual Funds - Net asset value (NAV) of the scheme reported by the Asset Management Company as at the reporting date
III) Financial Instruments not measured at fair value
Financial assets not measured at fair value includes cash and cash equivalents, other bank balances, loans, inventories and other financial assets. These are financial assets whose carrying amounts approximate fair value, due to their short-term nature.
Additionally, financial liabilities such as other payables is not measured at FVTPL, whose carrying amount approximate fair value, because of its short-term nature.
36. Financial Risk Management
Risk is an integral part of the Company’s business and sound risk management is critical to the success of Healthy Business Model. As a financial intermediary, the Company is exposed to risks that are particular to its investment and the environment within which it operates and primarily includes liquidity and market risks.
The financial instruments of the company have exposure to the following risks :
I) Liquidity 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 the Company maintains a liquidity buffer to reduce this risk.
Liquidity risk refers to the risk that the Company may not meet its financial obligations. Liquidity risk arises due to the unavailability of adequate funds at an appropriate cost or tenure. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company consistently generates sufficient cash flows from operating and investment activities to meet its financial obligations as and when they fall due.
II) 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. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
(i) Market price risk
The Company is exposed to market price risk, which arises from investments classified at FVTPL. The management monitors the proportion of these investments in its investment portfolio based on market indices. Material investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the appropriate authority.
(ii) Interest rate risk
On investment book
The company holds shorter duration investment portfolio and thus it has a minimum fair value change impact on its investment portfolio. The interest rate risk on the investment portfolio and corresponding fair value change impact is monitored using Value at Risk (VaR) and the parameters for monitoring the same are defined in its investment policy.
Equity Price Sensitivity analysis:
The fair value of mutual funds, non-convertible debentures and bonds as at March 31, 2024 and March 31, 2023 was Rs.2,054.79 Lakhs and Rs. 2,108.77 Lakhs respectively. A 5% change in price of these mutual funds and non-convertible debentures and bonds held as at March 31, 2024 and March 31, 2023 would result in:
39. Ratios:
Since the company is a non-systemically important non-deposit taking NBFC, the ratios prescribed under division III of schedule III are not applicable. Further, as per the master directions issued by the RBI, leverage ratio is applicable which has been disclosed in note no. 34 to the financial statements.
41. During the year, the previous year figure of Fixed Deposit with HDFC Ltd amounting to Rs. 2,000 lakhs has been reclassified from the Bank balance other than cash & cash equivalents to Investments in the financial statements.
42. Disclosure in relation to Undisclosed Income
During the year, the Company has not surrendered or disclosed any income 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). Accordingly, there are no transactions which are not recorded in the books of accounts.
43. Disclosure For Security of Borrowed Funds
The Company has not borrowed any funds from banks or financial institutions.
44. Disclosure Of Transactions with Struck Off Companies
The Company did not have any material transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the financial year.
45. Registration Of Charges or Satisfaction With Registrar Of Companies (ROC)
The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period..
46. Compliance With Number of Layers of Companies
The Company has complied with the requirements of the number of layers prescribed under clause (87) of section 2 of the Companies Act, 2013 read with Companies (Restriction on number of Layers) Rules, 2017.
47. Additional Disclosures
No transactions or disclosures to report against the following disclosure requirements as notified by MCA pursuant to amended Schedule III of the Act:
a) Revaluation of intangible assets
b) Capital Work in Progress and Intangible assets under development ageing schedule
c) Benami Property held under Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder
d) Wilful defaulter
e) Scheme of arrangements in terms of section 230 to 237 of the Act
f) Utilisation of borrowed funds/ share premium
g) Crypto currency or Virtual currency
48. Schedule to Balance sheet of NBFC as required in terms of Paragraph 18 of the ‘Non-Banking Financial Company’ - Non-Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016 is given in Annexure I.
49. Previous year igures have been rearranged, regrouped & recast wherever necessary.
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