2.17 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.

2.18 Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

Where the Company is the lessee -

A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease. All other leases are classified as operating leases. Basis the above principle, all leases entered into by the Company as a lessee have been classified as operating leases.

Lease payments under an operating lease is recognised on an accrual basis in the Statement of Profit and Loss.

Where the Company is the lessor -

The Company has given certain vehicles on lease where it has substantially retained the risks and rewards of ownership and hence these are classified as operating leases. These assets given on operating lease are included in PPE. Lease income is recognised in the Statement of profit and loss as per contractual rental unless another systematic basis is more representative of the time pattern in which the benefit derived from the leased asset is diminished. Cost including depreciation are recognized as an expense in the Statement of profit and loss. Initial direct cost are recognised immediately in Statement of profit and loss.

2.19 Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash on hand, cheques and drafts on hand, balance with banks in current accounts and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of change in value.

2.20 Earnings Per Share

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company’s earnings per share is the net profit for the period after deducting preference dividends and any attributable tax thereto for the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, sub-division of shares etc. that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders is divided by the weighted average number of equity shares outstanding during the period, considered for deriving basic earnings per share and weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.

2.21 Contingent Liabilities and assets

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it can not be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

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 entity. The company does not have any contingent assets in the financial statements.

2.22 Cash Flow statement

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating, investing and financing activities of the Company are segregated.

(i) 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 appropriations to specific reserves.

(ii) Reserve fund in terms of section 45-IC(1) of the Reserve Bank of India 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 and a sum not less than twenty per cent of its net profit every year is transferred each year.

(iii) General reserve

Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of profit for the period at a specified percentage in accordance with applicable regulations. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.

Note- 29 Earnings per share (EPS)

Basic EPS is calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year.

Diluted EPS is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares of the Company.

Note- 30 Segment Information

Disclosure under Indian Accounting Standard 108 - ‘Operating Segments’ is not given as, in the opinion of the management, the entire business activity falls under one segment, viz. financial services. There are no operations outside India and hence there is no external revenue or assets which require disclosure. Also there are no revenue from transactions with a single external customer or counterparty amounting to 10% or more of the Company’s total revenue for the year ended March 31, 2024 or 31 March 31,2023.

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established Asset and Liability Management Committee (ALCO) for the management of the Company’s short, medium and long term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The Company also has Inter corporate deposits line available from holding company & fellow subsidiary companies within its group to meet any short term fund requirements.

B) Market risk

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.

C) Interest rate risk

The Company uses a mix of cash and borrowings to manage the liquidity & fund requirements of its day to- day operations. Further, certain interest bearing liabilities carry variable interest rates.

The sensitivity analyses below have been determined based on exposure to financial instruments at the end of the reporting year. For floating rate liabilities, analysis is prepared assuming the amount of liability outstanding at the end of the reporting year was outstanding for the whole year. The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected.With all other variables held constant, the Company’s profit before tax is affected through the impact on floating rate borrowings, as follows

D) Credit risk

Credit risk is the risk of financial loss the Company may face due to current/potential inability or unwillingness of a customer or counterparty to meet financial/contractual obligations. Credit risk also covers the possibility of losses associated with diminution in the credit quality of counterparties. Inadequate collateral may also lead to financial losses in the event of default. The company has adopted a policy of dealing with creditworthy counterparties and obtain sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.

The maximum exposure to credit risk for each class of financial assets is the carrying amount of that class of financial instruments presented in the financial statements.

Since the company is into retail lending business, there is no significant credit risk of any individual customer that may impact company adversely, and hence the Company has calculated its ECL allowances on a collective basis.The Company’s major classes of financial assets are cash and cash equivalents, loans, term deposits, trade receivables and security deposits. The nature of loan products across 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 metrics for high risk customers.

E) Impairment Assessment

The Company is mainly engaged in the business of providing, consumer loans and unsecured personal loans to salaries individuals, traders and self-employed. The tenure of the personal loans generally ranges from 9 months to 18 months.

F) Classification of financial assets under various stages

The Company considers a financial instrument as defaulted and therefore Stage 3 (credit-impaired) for Expected Credit Loss (ECL) calculations in all cases when the borrower becomes more than 180 days past due on its contractual payments.

It is company’s policy to assess loss allowance calculations ( ECL ) in all cases where borrower becomes 90 days past due on its contractual payment. The Company classifies its financial assets other than trade receivables in three stages having the following characteristics:

The table below summarises the gross carrying values and the associated allowances for expected credit loss (ECL) stage wise for loan portfolio:

During the current year ended 31 March 2024, the Company has earned a net Profit of ^ 32.66 Lakhs and has an accumulated deficit of ^ 1983.60 Lakhs. However, based on the projected operations and the Company’s marketing efforts, the Company expects to generate adequate surplus in the future and consequently does not foresee any difficulty in settling its liabilities as and when they arise or continue as a going concern.

The company, in addition to its advisory services of Trade Finance, has successfully managed to scale its digital platform for priority sector loans. These online loans are provided to prime customers not having access to mainstream banking products with the objective of furthering financial inclusion and bridging the digital divide. The business has demonstrated significant traction growing from Assets Under Management (AUM) of Rs. 2,016.34 Lakhs as on March 2023 to Rs. 2,698.70 Lakhs as on March 2024. The number of loans disbursed in FY 2024 was 7,529 compared to 15,960 loans in FY 2023.

This online lending platform holds tremendous growth potential. The company is in the process of raising additional debt and equity capital including Rights/Preferential issue etc. for financing the growth opportunity. The financial statements have been prepared on a going concern basis and the assets and liabilities have been recorded in the financial statements on the basis that the Company will be able to realise its assets and discharge its liabilities in the normal course of the business.

Note- 39 Employee Stock Option Plam

Pursuant to approval of the members at the Annual General meeting held on 27th September, 2019, the company adopted the “ Employees Stock Option Plan 2019 (ESOP 2019). As per the said plan, the Company granted 24,99,728 equity shares of Rs.10 each on 10th December, 2019.

The vesting period is over five years from the date of grant, commencing after one year from the date of grant.

Excersise period would commence one year from the date of grant, commencing after one year from the date of grant.

The options will be settled in equity shares of the company.

The Exercise price of the Vested Option shall be higher of (a) the market price of the shares or (b) the face value of the share. Consequently no compensation cost has been recogonised by the Company in accordance with the Guidance Note on “Accounting for Employee share based payments “ issued by the Institute of Chartered Accountants of India”.

Note- 40

During the current year ended 31 March 2024, the Company has earned a net Profit of ^ 32.66 Lakhs and has an accumulated deficit of ^ 1983.60 Lakhs.

Note- 41

In terms of Letter of Offer dated November 7, 2022, the Company made a Right issue of 2,44,60,568 Partly Paid-Up Equity shares of Face Value of Rs. 10/- each at an issue price of Rs. 10/- on rights basis in the ratio of 1:1 to the existing equity shareholders of the Company as on the record date i.e. November 4, 2022. Accordingly, the Company received an application money of Rs. 3/- per Equity Share and 2,44,60,568 partly paid-up Equity Shares were allotted on December 7, 2022 to the shareholders. Subsequently, the First and Final Call of Rs. 7/- per partly paid-up Equity Share was made on February 20, 2023 against which the Company received Call money in respect of 2,38,02,466 Equity Shares which were converted into Fully Paid Equity Shares on March 15, 2023. The company made first reminder to shareholder in July 2023 in which shareholders of 5,38,895 shares paid the first and final call. Further, The company made Final reminder cum forfeiture notice on November 08, 2023 in which holders of 72608 Equity Shares paid the first and final call. The remaining 46599 Equity shares were forfeited by the company pursuant to resolution passed by the Board of Directors on February 14, 2024.

Note- 42 Title deeds of the Immovable Property not held in the name of the company

The company shall provide the details of all the immovable property (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) whose title deeds are not held in the name of the company in format given below and where such immovable property is jointly held with others, details are required to be given to the extent of the company’s share - NIL

Note- 43 Ageing wise analysis of Intangible Assets under development

(a) Intangible assets under development - There are no Intangible Assets under Development

(b) For Intangible assets under development, whose completion is overdue or has exceeded its cost compared to its original plan, following Intangible assets under development completion schedule shall be given - NOT APPLICABLE

Note- 44 Details of Benami Property held - There are no Benami Property Transactions.

Where any proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder, the company shall disclose the following:-

a. Details of such property, including year of acquisition,

b. Amount thereof,

c. Details of Beneficiaries,

d. If property is in the books, then reference to the item in the Balance Sheet,

e. If property is not in the books, then the fact shall be stated with reasons,

f. Where there are proceedings against the company under this law as an abetter of the transaction or as the transferor then the details shall be provided,

g. Nature of proceedings, status of same and company’s view on same.

Note- 45 Capital Work In Progress

There is no Capital Work in Progress required to be maintained by the company.

Note- 46 Relationship with Struck off Companies

The Company does not have any relationship with any of the Struck Off Companies whether under section 248 of the Companies Act or Section 560 of Companies Act, 1956.

Note- 47 Wilful Defaulter

The company is not declared as Wilful Defaulter by any Bank or Financial Institution or any other lender.

Note- 48 Corporate Social Responsibility (CSR)

The provisions of Corporate Social Responsibility (CSR) are not applicable to the company.

Note- 49 DETAILS OF CRYPTO CURRENCY OR VIRTUAL CURRENCY

The company has not traded or invested in Crypto Currency or Virtual Currency during the Financial Year.

Note- 50 UNDISCLOSED INCOME

There are no transactions which are 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). Further, there was no unrecorded income and related assets which are required to be recorded in the books of accounts during the year.

Note- 51 NO OF LAYERS OF COMPANIES

The company has not made any default on No of layers of companies through which it has invested.

Note - 52

Figures have been regrouped and rearranged wherever necessary.

As per our attached report of even date For and on Behalf of Board of Directors

For S.S. Khan & Co For Transwarranty Finance Limited

Chartered Accountants

ICAI Firm registration number : FRN: 13334W

Kumar Nair Ramachandran U.

^{Sarfaraz Khan} Managing Director Director & CFO

Proprietor DIN: 00320541 DIN: 00493707

Membership No. 144212

Place: Mumbai Suhas Borgaonkar Place: Mumbai

Date : May 02, 2024 Company Secretary Date : May 02, 2024