Accounting Policies of Challani Capital Ltd. Company

Mar 31, 2025

4. Summary of Significant Accounting Policies

This note provides a list of the significant accounting policies adopted in the preparation of these
financial statements.

These policies have been consistently applied to all the years presented, unless otherwise stated.

(a)lncome

(i) Interest income

The Company recognizes interest income using Effective Interest Rate (EIR) on all financial assets
subsequently measured at amortized cost or fair value through other comprehensive income
(FVOCI). EIR is calculated by considering all costs and incomes attributable to acquisition of a
financial asset or assumption of a financial liability and it represents a rate that exactly discounts
estimated future cash payments/receipts through the expected life of the financial asset/financial
liability to the gross carrying amount of a financial asset or to the amortized cost of a financial
liability.

The Company recognises interest income by applying the EIR to the gross carrying amount of
financial assets other than credit-impaired assets. In case of credit-impaired financial assets [as set
out in note no. 3.4(i)] regarded as''stage 3'', the Company recognises interest income on the
amortised cost net of impairment loss of the financial asset at EIR. If the financial asset is no longer
credit-impaired [as outlined in note no. 3.4(i)], the Company reverts to calculating interest income
on a gross basis.

Delayed payment interest (penal interest) levied on customers for delay in repayments/nonpayment
of contractual cash flows is recognised on realisation.Interest on financial assets subsequently
measured at fair value through profit or loss (FVTPL) is recognised at the contractual rate of interest.

(ii) Dividend income

Dividend income on equity shares is recognised when the Company''s right to receive the payment is
established, which is generally when shareholders approve the dividend.

(iii) Other revenue from operations

The Company recognises revenue from contracts with customers (other than financial assets to
which Ind AS 109''Financial Instruments'' is applicable) based on a comprehensive assessment model
as set out in Ind AS 115

''Revenue from contracts with customers''. The Company identifies contract(s) with a customer and
its performance obligations under the contract, determines the transaction price and its allocation
to the performance obligations in the contract and recognises revenue only on satisfactory
completion of performance obligations. Revenue is measured at fair value of the consideration
received or receivable.

(a) Fees and commission

The Company recognises service and administration charges towards rendering of additional
services to its loan customers on satisfactory completion of service delivery.

Fees on value added services and products are recognised on rendering of services and products to
the customer.

Distribution income is earned by selling of services and products of other entities under distribution
arrangements. The income so earned is recognised on successful sales on behalf of other entities
subject to there being no significant uncertainty of its recovery.

Foreclosure charges are collected from loan customers for early payment/closure of loan and are
recognised on realisation.

(b) Net gain on fair value changes

Financial assets are subsequently measured at fair value through profit or loss (FVTPL) or fair value
through other comprehensive income (FVOCI), as applicable. The Company recognises gains/losses
on fair value change of financial assets measured as FVTPL and realised gains/losses on
derecognition of financial asset measured at FVTPL and FVOCI.

(c) Sale of services

The Company, on de-recognition of financial assets where a right to service the derecognised

financial assets for a fee is retained, recognises the fair value of future service fee income over
service obligations cost on net basis as service fee income in the statement of profit or loss and,
correspondingly creates a service asset in Balance Sheet. Any subsequent increase in the fair value
of service assets is recognised as service income and any decrease is recognized as an expense in the
period in which it occurs. The embedded interest component in the service asset is recognised as
interest income in line with Ind AS 109 ''Financial instruments''.

Other revenues on sale of services are recognised as per Ind AS 115 ''Revenue from Contracts with
Customers'' as articulated above in ''other revenue from operations''.

(d) Recoveries of financial assets written off

The Company recognises income on recoveries of financial assets written off on realisation or when
the right to receive the same without any uncertainties of recovery is established.

(iv) Taxes

Incomes are recognised net of the Goods and Services Tax/Service Tax, wherever applicable.

(b) Expenditures

(i) Finance costs

Borrowing costs on financial liabilities are recognised using the EIR [refer note no. 3.1(i)].

(ii) Fees and commission expenses

Fees and commission expenses which are not directly linked to the sourcing of financial assets, such
as commission/incentive incurred on value added services and products distribution, recovery
charges and fees payable for management of portfolio etc., are recognised in the Statement of Profit
and Loss on an accrual basis.

(iii) Taxes

Expenses are recognised net of the Goods and Services Tax/Service Tax, except where credit for the
input tax is not statutorily permitted.

(c) Cash and cash equivalents

Cash and cash equivalents include cash on hand, other short term, highly liquid investments with
original maturities of three months or less that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value.

(d) Financial instruments

A financial instrument is defined as any contract that gives rise to a financial asset of one entity and
a financial liability or equity instrument of another entity. Trade receivables and payables, loan
receivables, investments in securities and subsidiaries, debt securities and other borrowings,
preferential and equity capital etc. are some examples of financial instruments.

All the financial instruments are recognised on the date when the Company becomes party to the
contractual provisions of the financial instruments. For tradable securities, the Company recognises
the financial instruments on settlement date.

(i) Financial assets

Financial assets include cash, or an equity instrument of another entity, or a contractual right to
receive cash or another financial asset from another entity. Few examples of financial assets are
loan receivables, investment inequity and debt instruments, trade receivables and cash and cash
equivalents.

Initial measurement

All financial assets are recognised initially at fair value including transaction costs that are
attributable to the acquisition of financial assets except in the case of financial assets recorded at
FVTPL where the transaction costs are charged to profit or loss.

Subsequent measurement

For the purpose of subsequent measurement, financial assets are classified into four categories:

• Debt instruments at amortised cost

• Debt instruments at FVOCI

• Debt instruments at FVTPL

• Equity instruments designated at FVOCI

• Debt instruments at amortised cost

Debt Instruments at amortised Cost

The Company measures its financial assets at amortised cost if both the following conditions are
met:

1. The asset is held within a business model of collecting contractual cash flows; and

2. Contractual terms of the asset give rise on specified dates to cash flows that are Sole
Payments of Principal and Interest (SPPI) on the principal amount outstanding.

To make the SPPI assessment, the Company applies judgment and considers relevant factors such as
the nature of portfolio and the period for which the interest rate is set.

The Company determines its business model at the level that best reflects how it manages groups of
financial assets to achieve its business objective. The Company''s business model is not assessed on
an instrument by instrument basis, but at a higher level of aggregated portfolios. If cash flows after
initial recognition are realised in a way that is different from the Company''s original expectations,
the Company does not change the classification of the remaining financial assets held in that
business model, but incorporates such information when assessing newly originated financial assets
going forward.

The business model of the Company for assets subsequently measured at amortised cost category is
to hold and collect contractual cash flows. However, considering the economic viability of carrying
the delinquent portfolios in the books of the Company, it may sell these portfolios to banks and/or
asset reconstruction companies.

After initial measurement, such financial assets are subsequently measured at amortised cost on
effective interest rate (EIR). For further details, refer note no. 3.1(i). The expected credit loss (ECL)
calculation for debt instruments at amortised cost is explained in subsequent notes in this section.

Debt instruments at FVOCI

The Company subsequently classifies its financial assets as FVOCI, only if both of the following
criteria are met:

1. The objective of the business model is achieved both by collecting contractual cash flows
and selling the financial assets; and

2. Contractual terms of the asset give rise on specified dates to cash flows that are Solely
Payments of Principal and Interest (SPPI) on the principal amount outstanding.

_Debt instruments included within the FVOCI category are measured at each reporting date at fair_

value with such changes being recognised in other comprehensive income (OCI). The interest
income on these assets is recognised in profit or loss. The ECL calculation for debt instruments at
FVOCI is explained in subsequent notes in this section.

Debt instruments such as long term investments in Government securities to meet regulatory liquid
asset requirement of the Company''s deposit program and mortgage loans portfolio where the
Company periodically resorts to partially selling the loans by way of assignment to willing buyers are
classified as FVOCI.

On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified to
profit or loss.

Debt instruments at FVTPL

The Company classifies financial assets which are held for trading under FVTPL category. Held for
trading assets are recorded and measured in the Balance Sheet at fair value. Interest and dividend
incomes are recorded in interest income and dividend income, respectively according to the terms
of the contract, or when the right to receive the same has been established. Gain and losses on
changes in fair value of debt instruments are recognised on net basis through profit or loss.

The Company''s investments into mutual funds, Government securities (trading portfolio) and
certificate of deposits for trading and short term cash flow management have been classified under
this category.

Equity investments designated under FVOCI

All equity investments in scope of Ind AS 109 ''Financial Instruments'' are measured at fair value. The
Company has strategic investments in equity for which it has elected to present subsequent changes
in the fair value another comprehensive income. The classification is made on initial recognition
and is irrevocable.

All fair value changes of the equity instruments, excluding dividends, are recognised in OCI and not
available for reclassification to profit or loss, even on sale of investments. Equity instruments at
FVOCI are not subject to an impairment assessment.

Derecognition of Financial Assets

The Company derecognises a financial asset (or, where applicable, a part of a financial asset) when:

1. The right to receive cash flows from the asset have expired; or

2. The Company has transferred its right to receive cash flows from the asset or has assumed
an obligation to pay the received cash flows in full without material delay to a third party under an
assignment arrangement and the Company has transferred substantially all the risks and rewards of
the asset. Once the asset is derecognised, the Company does not have any continuing involvement
in the same.

The Company transfers its financial assets through the partial assignment route and accordingly
derecognises the transferred portion as it neither has any continuing involvement in the same nor
does it retain any control. If the Company retains the right to service the financial asset for a fee, it
recognises either a servicing asset or a servicing liability for that servicing contract. A service liability
in respect of a service is recognised at fair value if the fee to be received is not expected to
compensate the Company adequately for performing the service. If the fees to be received is
expected to be more than adequate compensation for the servicing, a service asset is recognised for
the servicing right at an amount determined on the basis of an allocation of the carrying amount of
the larger financial asset.

On derecognition of a financial asset in its entirety, the difference between:

1. the carrying amount (measured at the date of derecognition) and

2. the consideration received (including any new asset obtained less any new liability assumed)
is recognised in profit or loss.

Impairment of financial assets

ECL are recognised for financial assets held under amortised cost, debt instruments measured at
FVOCI, and certain loan commitments.

Financial assets where no significant increase in credit risk has been observed are considered to be
in ''stage 1'' and for which a 12 month ECL is recognised. Financial assets that are considered to have
significant increase in credit risk are considered to be in ''stage 2'' and those which are in default or
for which there is an objective evidence of impairment are considered to be in ''stage 3''. Lifetime ECL
is recognised for stage 2 and stage 3 financial assets.

At initial recognition, allowance (or provision in the case of loan commitments) is required for ECL
towards default events that are possible in the next 12 months, or less, where the remaining life is
less than 12 months.

In the event of a significant increase in credit risk, allowance (or provision) is required for ECL
towards all possible default events over the expected life of the financial instrument (''lifetime ECL'').
Financial assets (and the related impairment loss allowances) are written off in full, when there is no
realistic prospect of recovery.

Treatment of the different stages of financial assets and the methodology of determination of ECL

Credit impaired (stage 3)

The Company recognises a financial asset to be credit impaired and in stage 3 by considering
relevant objective evidence, primarily whether:

1. Contractual payments of either principal or interest are past due for more than 90 days;

2. The loan is otherwise considered to be in default.

Restructured loans, where repayment terms are renegotiated as compared to the original
contracted terms due to significant credit distress of the borrower, are classified as credit impaired.

Such loans continue to be in stage 3 until they exhibit regular payment of renegotiated principal and
interest over a minimum observation period, typically 12 months- post renegotiation, and there are
no other indicators of impairment. Having satisfied the conditions of timely payment over the
observation period these loans could be transferred to stage 1 or 2 and a fresh assessment of the
risk of default is done for such loans.

Interest income is recognised by applying the EIR to the net amortised cost amount i.e. gross
carrying amount less ECL allowance.

Significant increase in credit risk (stage 2)

An assessment of whether credit risk has increased significantly since initial recognition is performed
at each reporting period by considering the change in the risk of default of the loan exposure.
However, unless identified at an earlier stage, 30 days past due is considered as an indication of
_financial assets to have suffered a significant increase in credit risk. Based on other indications such_

as borrower''s frequently delaying payments beyond due dates though not 30 days past due are
included in stage 2 for mortgage loans.

The measurement of risk of defaults under stage 2 is computed on homogenous portfolios,
generally by nature of loans, tenors, underlying collateral, geographies and borrower profiles. The
default risk is assessed usingPD (probability of default) derived from past behavioral trends of
default across the identified homogenous portfolios. These past trends factor in the past customer
behavioral trends, credit transition probabilities and macroeconomic conditions. The assessed PDs
are then aligned considering future economic conditions that are determined to have a bearing on
ECL.

Without significant increase in credit risk since initial recognition (stage 1)

ECL resulting from default events that are possible in the next 12 months are recognised for financial
instruments in stage 1. The Company has ascertained default possibilities on past behavioral trends
witnessed for each homogenous portfolio using application/behavioral score cards and other
performance indicators, determined statistically.

Measurement of ECL

The assessment of credit risk and estimation of ECL are unbiased and probability weighted. It
incorporates all information that is relevant including information about past events, current
conditions and reasonable forecasts of future events and economic conditions at the reporting date.
In addition, the estimation of ECLtakes into account the time value of money. Forward looking
economic scenarios determined with reference to external forecasts of economic parameters that
have demonstrated a linkage to the performance of our portfolios over a period of time have been
applied to determine impact of macro economic factors.

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). ECL is calculated by multiplying the PD, LGD
and EAD and adjusted for time value of money using a rate which is a reasonable approximation of
EIR.

1. Determination of PD is covered above for each stages of ECL.

2. EAD represents the expected balance at default, taking into account the repayment of
principal and interest from the Balance Sheet date to the date of default together with any expected
drawdowns of committed facilities.

3. LGD represents expected losses on the EAD given the event of default, taking into account,
among other attributes, the mitigating effect of collateral value at the time it is expected to be
realised and the time value of money.

(ii) Financial liabilities

Financial liabilities include liabilities that represent a contractual obligation to deliver cash or
another financial assets to another entity, or a contract that may or will be settled in the entities
own equity instruments. Few examples of financial liabilities are trade payables, debt securities and
other borrowings and subordinated debts.

Initial measurement

All financial liabilities are recognised initially at fair value and, in the case of borrowings and
payables, net of directly attributable transaction costs. The Company''s financial liabilities include
trade payables, other payables, debt securities and other borrowings.

Subsequent measurement

After initial recognition, all financial liabilities are subsequently measured at amortised cost using
the EIR. Any gains or losses arising on derecognition of liabilities are recognised in the Statement of
Profit and Loss.

Derecognition

The Company derecognises a financial liability when the obligation under the liability is discharged,
cancelled or expired.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the Balance
Sheet only if there is an enforceable legal right to offset the recognised amounts with an intention
to settle on a net basis or to realise the assets and settle the liabilities simultaneously.

(e) Investment in subsidiaries

Investment in subsidiaries is recognised at cost and are not adjusted to fair value at the end of each
reporting period.

Cost of investment represents amount paid for acquisition of the said investment.

The Company assesses at the end of each reporting period, if there are any indications that the said
investment may be impaired. If so, the Company estimates the recoverable value/amount of the
investment and provides for impairment, if any i.e. the deficit in the recoverable value over cost.
The company does not have any subsidiary on the reporting date.

(e) Taxes

(i) Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid
to the taxation authorities, in accordance with the Income Tax Act, 1961 and the Income
Computation and Disclosure Standards (ICDS) prescribed therein. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively enacted, at the reporting date.

Current tax relating to items recognised outside profit or loss is recognised in correlation to the
underlying transaction either in OCI or directly in other equity. Management periodically evaluates
positions taken in the tax returns with respect to situations in which applicable tax regulations are
subject to interpretation and establishes provisions where appropriate.

(ii) Deferred tax

Deferred tax is provided using the Balance Sheet approach on temporary differences between the
tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the
reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets
are recognised for deductible temporary differences to the extent that it is probable that taxable
profits will be available against which the deductible temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part
of the deferred tax asset to be utilized. Unrecognized deferred tax assets, if any, are reassessed at
each reporting date and are recognised to the extent that it has become probable that future

taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the
year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised either in OCI or in other
equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred taxes relate to the same taxable
entity and the same taxation authority.

(g) Investment Property

The Company has classified certain properties as Investment Property in accordance with Ind AS 40
- Investment Property. Investment properties are held to earn rentals and/or for capital
appreciation and are not used in the operations of the Company.

Investment property is initially recognized at cost, including transaction costs. The cost comprises
the purchase price and any directly attributable expenditure related to bringing the property to its
working condition for intended use.

Subsequently, investment property is carried at cost less accumulated depreciation and
impairment losses, if any. Depreciation is provided on a straight-line basis over the estimated useful
life of the asset, in accordance with the useful life prescribed under Schedule II to the Companies
Act, 2013.

Though the company measures investment property using cost based measurement, the fair value
of investment property is disclosed in the notes. Fair values are determined based on an annual
evaluation performed by an external independent valuer applying valuation model.

Investment properties are derecognized either when they have been disposed of or when they are
permanently withdrawn from use and no future economic benefit is expected from their disposal.
The difference between the net disposal proceeds and the carrying amount of the asset is
recognized in the statement of profit and loss in the period of derecognition.

On transition to Ind As the company has elected to continue with the carrying value of investment
property measures as per the previous GAAP and use that carrying value as the deemed cost of
Investment Property.

(g) Property, plant and equipment

Property, plant, and equipment are carried at historical cost of acquisition less accumulated
depreciation and impairment losses, consistent with the criteria specified in Ind AS 16 ''Property,
Plant and Equipment''.

Depreciation on property, plant, and equipment

(a) Depreciation is provided on a pro-rata basis for all tangible assets on straight line method over
the useful life of assets, except buildings which is determined on written down value method.

(b) Useful lives of assets are determined by the Management by an internal technical assessment
except where such assessment suggests a life significantly different from those prescribed by
Schedule II - Part C of the Companies Act,2013 where the useful life is as assessed and certified by a

technical expert.

(c) Depreciation on leasehold improvements is provided on straight line method over the primary
period of lease of premises or 5 years whichever is less.

(d) Depreciation on addition to assets and assets sold during the year is being provided for on a pro
rata basis with reference to the month in which such asset is added or sold as the case may be.

(e) Tangible assets which are depreciated over a useful life that is different than those indicated in
Schedule II areas under:

(f) Assets having unit value up to H 5,000 is depreciated fully in the financial year of purchase of
asset.

(g) An item of property, plant and equipment and any significant part initially recognised is
derecognized upon disposal or when no future economic benefits are expected from its use or
disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the asset) is included under other income in
the Statement of Profit and Loss when the asset is derecognized.

(h) The residual values, useful lives and methods of depreciation of property, plant and equipment
are reviewed at each financial year end and adjusted prospectively, if appropriate.

(h) Intangible assets and Amortisation thereof

Intangible assets, representing software''s are initially recognised at cost and subsequently carried at
cost less accumulated amortization and accumulated impairment. The intangible assets are
amortised using the straight line method over a period of five years, which is the Management''s
estimate of its useful life. The useful lives of intangible assets are reviewed at each financial year
end and adjusted prospectively, if appropriate.

(i) Impairment of non-financial assets

An assessment is done at each Balance Sheet date to ascertain whether there is any indication that
an asset may be impaired. If any such indication exists, an estimate of the recoverable amount of
asset is determined. If the carrying value of relevant asset is higher than the recoverable amount,
the carrying value is written down accordingly.

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Mar 31, 2024

1. CORPORATE INFORMATION

Challani Capital Limited (Previously Indo Asia Finance Limited) (the Company) is a public company domiciled in India and incorporated under the provisions of" the Companies Act, 1956. Its shares are listed on BSE Limited and are primarily engaged in the business of financing commercial vehicles. The Company is registered with the Reserve Bank of India (RBI), Ministry of Corporate Affairs.

The Company is registered with the Reserve Bank of India (RBI) with Registration No. 07-00308 as a non - deposit accepting NBFC and also with the Ministry Of Corporate affairs vide CIN L6519ITN1990PLC019060 operating from its registered office located at No. 15, New Giri Road.TNagar. Chennai - 600 017.

The audited financial statements were subject to review and approval of Board of Directors on 25.05.2024subject to which the same was recommended as the audited financial statements fot consideration and adoption by the shareholders in its annual general meeting.

2. BASIS OF PREPARATION

The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies(lndian Accounting Standards) Rules, 2015 as amended from time to time and notified under section 133 of the Companies Act, 2013 (the Act) along with other relevant provisions of the Act and the Master Direction - Non-Banking Financial Company— Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016(''the NBFC Master Directions’) issued by RBI. The financial statements have been prepared on a going concern basis. The Company uses accrual basis of accounting except in case of significant uncertainties.

3. PRESENTATION OF FINANCIAL STATEMENT

The Company presents its Balance Sheet in order of liquidity.

The Company generally reports financial assets and financial liabilities on a gross basis in the Balance Sheet. They are offset and reported net only when Ind AS specifically permits the same or it has an unconditional legally enforceable right to offset the recognized amounts without being contingent on a future event. Similarly, the Company offsets incomes and expenses and reports the same on a net basis when permitted by Ind AS specifically unless they are material in nature.

4. Summary of Significant Accounting Policies

This note provides a list of the significant accounting policies adopted in the preparation of these financial statements.

These policies have been consistently applied to all the years presented, unless otherwise stated.

(a)lncome

(it Interest income

The Company recognizes interest income using Effective Interest Rate (EIR) on all financial assets subsequently measured at amortized cost or fair value through other comprehensive income (FVOCI). EIR is calculated by considering all costs and incomes attributable to acquisition of a financial assel

or assumption of a financial liability and it represents a rate that exactly discounts estimated future cash payments/receipts through the expected life of the financial asset/financial liability to the gross carrying amount of a financial asset or to the amortized cost of a tinancial liability.

The Company recognises interest income by applying the EIR to the gross carrying amount of financial assets other than credit-impaired assets. In case of credit-impaired financial assets [as set out in note no. 3.4(i)] regarded as‘stagc 3’, the Company recognises interest income on the amortised cost net of impairment loss of the financial asset at EIR. If the financial asset is no longer credit-impaired [as. outlined in note no. 3.4(i)], the Company reverts to calculating interest income on a gross basis.

Delayed payment interest (penal interest) levied on customers for delay in repayments/nonpayment of contractual cash flows is recognised on realisation.Interest on financial assets subsequently measured at fair value through profit or loss (FVTPL) is recognised at the contractual rate of interest.

(ii) Dividend income

Dividend income on equity shares is recognised when the Company’s right to receive the payment is. established, which is generally when shareholders approve the dividend.

(iii) Other revenue from operations

The Company recognises revenue from contracts with customers (other than financial assets to which lnd AS 109‘Financial Instruments’ is applicable) based on a comprehensive assessment model as set out in lnd AS 115

‘Revenue from contracts with customers''. The Company identifies contract(s) with a customer and its performance obligations under the contract, determines the transaction price and its allocation to the performance obligations in the contract and recognises revenue only on satisfactory completion of performance obligations. Revenue is measured at fair value of the consideration received or receivable.

(a) Fees and commission

The Company recognises service and administration charges towards rendering of additional services to its loan customers on satisfactory completion of service delivery.

Fees on value added services and products are recognised on rendering of services and products to the customer.

Distribution income is earned by selling of services and products of other entities under distribution arrangements. The income so earned is recognised on successful sales on behalf of other entities subject to there being no significant uncertainty of its recovery.

Foreclosure charges are collected from loan customers for early payment/closure of loan and are recognised on realisation.

(b) Net nain on fair value chanties

Financial assets are subsequently measured at fair value through profit or loss (FVTPL) or fair value through other comprehensive income (FVOCI), as applicable. The Company recognises gains/losses

on fair value change of financial assets measured as FVTPL and realised gains/losses on derecognition of financial asset measured at FVTPL and FVOCI.

fc) Sale of services

The Company, on de-recognition of financial assets where a right to service the derecognised financial assets for a fee is retained, recognises the fair value of future service fee income over service obligations cost on net basis as service fee income in the statement of profit or loss and. correspondingly creates a service asset in Balance Sheet. Any subsequent increase in the fair value of service assets is recognised as service income and any decrease is recognized as an expense in the period in which it occurs. The embedded interest component in the service asset is recognised as. interest income in line with Ind AS 109 ‘Financial instruments’.

Other revenues on sale of sendees are recognised as per Ind AS 115 "Revenue from Contracts with Customers’ as articulated above in "other revenue from operations’.

(d) Recoveries of financial assets written off

The Company recognises income on recoveries of financial assets written off on realisation or when the right to receive the same without any uncertainties of recovery is established.

(iv) Taxes

Incomes are recognised net of the Goods and Services Tax/Service Tax. wherever applicable.

(h) expenditures

lit Finance costs

Borrowing costs on financial liabilities are recognised using the EIR [refer note no. 3.1 (i)].

(ii> Fees and commission expenses

Fees and commission expenses which are not directly linked to the sourcing of financial assets, such as commission/incentive incurred on value added services and products distribution, recovery charges-and fees payable for management of portfolio etc., are recognised in the Statement of Profit and Loss, on an accrual basis.

(iii) Taxes

Expenses are recognised net of the Goods and Services Tax/Service Tax, except where credit for the input tax is not statutorily permitted.

(c) Cash and cash equivalents

Cash and cash equivalents include cash on hand, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(>l) Financial instruments

A financial instrument is defined as any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Trade receivables and payables, loan receivables, investments in securities and subsidiaries, debt securities and other borrowings, preferential and equity capital etc. are some examples of financial instruments.

All the financial instruments are recognised on the date when the Company becomes party to the contractual provisions of the financial instruments. For tradable securities, the Company recognises the financial instruments on settlement date.

(i) Financial assets

Financial assets include cash, or an equity instrument of another entity, or a contractual right to receive cash or another financial asset from another entity. Few examples of financial assets are loan receivables, investment inequity and debt instruments, trade receivables and cash and cash equivalents.

Initial measurement

All financial assets are recognised initially at fair value including transaction costs that are attributable to the acquisition of financial assets except in the case of financial assets recorded at FVTPL where the transaction costs are charged to profit or loss.

Subsequent measurement

For the purpose of subsequent measurement, financial assets are classified into four categories:

• Debt instruments at amortised cost

• Debt instruments at FVOCI

• Debt instruments at FVTPI.

• Equity instruments designated at FVOCI

• Debt instruments at amortised cost

Debt Instruments at amortised Cost

The Company measures its financial assets at amortised cost if both the following conditions are met:

1. The asset is held within a business model of collecting contractual cash flows; and

2. Contractual terms of the asset give rise on specified dates to cash flows that are Sole Payments of Principal and Interest (SPPI) on the principal amount outstanding.

To make the SPPI assessment, the Company applies judgment and considers relevant factors such as the nature of portfolio and the period for which the interest rate is set.

The Company determines its business model at the level that best reflects how it manages groups of financial assets to achieve its business objective. The Company’s business model is not assessed on an instrument by instrument basis, but at a higher level of aggregated portfolios. If cash flows after initial recognition are realised in a way that is different from the Company’s original expectations, tho

Company does not change the classification of the remaining financial assets held in that business model, but incorporates such information when assessing newly originated financial assets going forward.

The business model of the Company for assets subsequently measured at amortised cost category is to hold and collect contractual cash flows. However, considering the economic viability of carrying the delinquent portfolios in the books of the Company, it may sell these portfolios to banks and/or asset reconstruction companies.

After initial measurement, such financial assets are subsequently measured at amortised cost on effective interest rate (EIR). For further details, refer note no. 3.1 (i). The expected credit loss (ECL) calculation for debt instruments at amortised cost is explained in subsequent notes in this section.

Debt instruments at FV''OCI

The Company subsequently classifies its financial assets as FVOCI, only if both of the following criteria are met:

1. The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets: and

2. Contractual terms of the asset give rise on specified dates to cash flows that are Solely Payments of Principal and Interest (SPPI) on the principal amount outstanding.

Debt instruments included within the FVOCI category are measured at each reporting date at fair value with such changes being recognised in other comprehensive income (OCI). The interest income on these assets is recognised in profit or loss. The ECL calculation for debt instruments at FVOCI is explained in subsequent notes in this section.

Debt instruments such as long term investments in Government securities to meet regulator)'' liquid asset requirement of the Company’s deposit program and mortgage loans portfolio where the Company periodically resorts to partially selling the loans by way of assignment to willing buyers arc classified as FVOCI.

On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified to profit or loss.

Debt instruments at FVTPL

The Company classifies financial assets which are held for trading under FVTPL category. Held for trading assets are recorded and measured in the Balance Sheet at fair value. Interest and dividend incomes arc recorded in interest income and dividend income, respectively according to the terms of the contract, or when the right to receive the same has been established. Gain and losses on changes in fair value of debt instruments are recognised on net basis through profit or loss.

The Company’s investments into mutual funds, Government securities (trading portfolio) and certificate of deposits for trading and short term cash flow management have been classified under this category''.

Etiuitv investments designated under FVOC''I

All equity investments in scope of Ind AS 109 ‘Financial Instruments’ are measured at fair value. The Company has strategic investments in equity for which it has elected to present subsequent changes in the fair value another comprehensive income. The classification is made on initial recognition and is irrevocable.

All fair value changes of the equity instruments, excluding dividends, are recognised in OCI and not available for reclassification to profit or loss, even on sale of investments. Equity instruments at FVOCI are not subject to an impairment assessment.

Derecognition of Financial Assets

The Company derecognises a financial asset (or, where applicable, a part of a financial asset) when:

1. The right to receive cash flows from the asset have expired; or

2. The Company has transferred its right to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under an assignment arrangement and the Company has transferred substantially all the risks and rewards of the asset. Once the asset is derecognised, the Company does not have any continuing involvement in the same.

The Company transfers its financial assets through the partial assignment route and accordingly derecognises the transferred portion as it neither has any continuing involvement in the same nor does, it retain any control. If the Company retains the right to service the financial asset for a fee, it recognises either a servicing asset or a servicing liability for that servicing contract. A service liability in respect of a service is recognised at fair value if the fee to be received is not expected to compensate the Company adequately for performing the service. If the fees to be received is expected to be more than adequate compensation for the servicing, a service asset is recognised for the servicing right at an amount determined on the basis of an allocation of the carrying amount of the larger financial asset.

On derecognition of a financial asset in its entirety, the difference between:

1. the carrying amount (measured at the date of derecognition) and

2. the consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss.

Impairment of financial assets

ECL are recognised for financial assets held under amortised cost, debt instruments measured at FVOCI, and certain loan commitments.

Financial assets where no significant increase in credit risk has been observed are considered to be in ‘stage I’ and for which a 12 month ECL is recognised. Financial assets that are considered to have significant increase in credit risk are considered to be in ‘stage 2’ and those which are in default or for

which there is an objective evidence of impairment are considered to be in ‘stage 3’. Lifetime ECL is recognised for stage 2 and stage 3 financial assets.

At initial recognition, allowance (or provision in the case of loan commitments) is required for ECL towards default events that are possible in the next 12 months, or less, where the remaining life is less than 12 months.

In the event of a significant increase in credit risk, allowance (or provision) is required for ECL towards all possible default events over the expected life of the financial instrument (‘lifetime ECL’).

Financial assets (and the related impairment loss allowances) are written off in full, when there is nc realistic prospect of recovery.

Treatment of the different stages of financial assets and the methodology of determination of ECL Credit impaired (stage 3)

The Company recognises a financial asset to be credit impaired and in stage 3 by considering relevanl objective evidence, primarily whether:

1. Contractual payments of either principal or interest are past due for more than 90 days;

2. The loan is otherwise considered to be in default.

Restructured loans, where repayment terms are renegotiated as compared to the original contracted terms due to significant credit distress of the borrower, are classified as credit impaired. Such loans continue to be in stage 3 until they exhibit regular payment of renegotiated principal and interest over a minimum observation period, typically 12 months- post renegotiation, and there arc no other indicators of impairment. Having satisfied the conditions of timely payment over the observation period these loans could be transferred to stage 1 or 2 and a fresh assessment of the risk of default is done for such loans.

Interest income is recognised by applying the EIR to the net amortised cost amount i.e. gross carrying amount less ECL allowance.

Significant increase in credit risk (stage 2)

An assessment of whether credit risk has increased significantly since initial recognition is performed at each reporting period by considering the change in the risk of default of the loan exposure. However, unless identified at an earlier stage. 30 days past due is considered as an indication of financial assets to have suffered a significant increase in credit risk. Based on other indications such as borrower’s frequently delaying payments beyond due dates though not 30 days past due are included in stage 2 for mortgage loans.

The measurement of risk of defaults under stage 2 is computed on homogenous portfolios, generally by nature of loans, tenors, underlying collateral, geographies and borrower profiles. The default risk is assessed usingPD (probability of default) derived from past behavioral trends of default across the

identified homogenous portfolios. These past trends factor in the past customer behavioral trends, credit transition probabilities and macroeconomic conditions. The assessed PDs are then aligned considering future economic conditions that are determined to have a bearing on ECL.

Without siiHiificant increase in credit risk since initial recouiiition (stage 1)

ECL resulting from default events that are possible in the next 12 months are recognised for financial instruments in stage 1. The Company has ascertained default possibilities on past behavioral trends witnessed

for each homogenous portfolio using application/behavioral score cards and other performance indicators, determined statistically.

Measurement of ECL

The assessment of credit risk and estimation of ECL are unbiased and probability weighted. It incorporates all information that is relevant including information about past events, current conditions and reasonable forecasts of future events and economic conditions at the reporting date. In addition, the estimation of ECLtakes into account the time value of money. Forward looking economic scenarios determined with reference to external forecasts of economic parameters that have demonstrated a linkage to the performance of our portfolios over a period of time have been applied to determine impact of macro economic factors.

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). ECL is calculated by multiplying the PD, LGD and EAD and adjusted for time value of money using a rate which is a reasonable approximation of E1R.

1. Determination of PD is covered above for each stages of ECL.

2. EAD represents the expected balance at default, taking into account the repayment of principal and interest from the Balance Sheet date to the date of default together with any expected drawdowns of committed facilities.

3. LGD represents expected losses on the EAD given the event of default, taking into account, among other attributes, the mitigating effect of collateral value at the time it is expected to be realised and the time value of money.

(ii) Financial liabilities

Financial liabilities include liabilities that represent a contractual obligation to deliver cash or another financial assets to another entity, or a contract that may or will be settled in the entities own equity instruments. Few examples of financial liabilities are trade payables, debt securities and other borrowings and subordinated debts.

Initial measurement

All financial liabilities are recognised initially at fair value and, in the case of borrowings and payables, net of directly attributable transaction costs. The Company’s financial liabilities include trade payables, other payables, debt securities and other borrowings.

Subsequent measurement

After initial recognition, all financial liabilities are subsequently measured at amortised cost using the EIR. Any gains or losses arising on derecognition of liabilities arc recognised in the Statement of Protil and Loss.

l)c recognition

The Company derecognises a financial liability when the obligation under the liability is discharged, cancelled or expired.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet only if there is an enforceable legal right to offset the recognised amounts with an intention to settle on a net basis or to realise the assets and settle the liabilities simultaneously.

(e) Investment in subsidiaries

Investment in subsidiaries is recognised at cost and are not adjusted to fair value at the end of each reporting period.

Cost of investment represents amount paid for acquisition of the said investment.

The Company assesses at the end of each reporting period, if there are any indications that the said investment may be impaired. If so, the Company estimates the recoverable value/amount of the investment and provides for impairment, if any i.e. the deficit in the recoverable value over cost. The company does not have any subsidiary on the reporting date.

(f) Taxes

(it Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, in accordance with the Income Tax Act, 1961 and the Income Computation and Disclosure Standards (ICDS) prescribed therein. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Current tax relating to items recognised outside profit or loss is recognised in correlation to the underlying transaction either in OCI or directly in other equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

(ii) Deferred tax

Deferred tax is provided using the Balance Sheet approach on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognisedfor deductible temporary differences to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets, if any, arc reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised either in OCI or in other equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(lO Property, plant and equipment

Property, plant, and equipment are carried at historical cost of acquisition less accumulated depreciation and impairment losses, consistent with the criteria specified in Ind AS 16 ‘Property, Plant and Equipment''.

Depreciation on property, plant, and equipment

(a) Depreciation is provided on a pro-rata basis for all tangible assets on straight line method over the useful life of assets, except buildings which is determined on written down value method.

(b) Useful lives of assets arc determined by the Management by an internal technical assessment except where such assessment suggests a life significantly different from those prescribed by Schedule II - Part C of the Companies Act,2013 where the useful life is as assessed and certified by a technical expert.

(c) Depreciation on leasehold improvements is provided on straight line method over the primary period of lease of premises or 5 years whichever is less.

(d) Depreciation on addition to assets and assets sold during the year is being provided for on a pro rata basis with reference to the month in which such asset is added or sold as the case may be.

(e) Tangible assets which are depreciated over a useful life that is different than those indicated in. Schedule II areas under:

(f) Assets having unit value up to H 5,000 is depreciated fully in the financial year of purchase of asset.

(g) An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included under other income in the Statement of Profit and Loss when the asset is derecognised.

(h) The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

(h) Intangible assets and Amortisation thereof

Intangible assets, representing software’s are initially recognised at cost and subsequently carried al cost less accumulated amortisation and accumulated impairment. The intangible assets are amortised using the straight line method over a period of five years, which is the Management’s estimate of its useful life. The useful lives of intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.

(i) Impairment of non-financial assets

An assessment is done at each Balance Sheet date to ascertain whether there is any indication that an asset may be impaired. If any such indication exists, an estimate of the recoverable amount of asset is determined. If the carrying value of relevant asset is higher than the recoverable amount, the carrying value is written down accordingly.

(i) Provisions and contingent liabilities

The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation.

A disclosure for a contingent liability is made when there is a possible obligation or a presenl obligation that may, but probably will not, require an outflow of resources. The Company also discloses present obligations for which a reliable estimate cannot be made. 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.

(k) Foreign currency translation

The Company’s financial statements are presented in Indian Rupee, which is also the Company’s functional currency. The recognition and conversion process of foreign currency are not been mentioned here as the company doesn’t deal with any foreign currency transactions during the aforesaid period.

(BLnbour Law Coverage

The Company have analyzed the applicability'' and recognition of Gratuity liability. Provident Fund. Superannuation Payments, Employee State Insurance Schemes, etc. ''and have observed that the number of employees engaged in the business operations are less than the statutory limits to make the entity covered under the provisions of the respective Act.

With respect to payments of Provident Fund the entity ensures to discharge the statutory liability within the due dates by creating a liability on the period ending monthly for the relevant months.

(nit Employee Stock Option Scheme

The Company does not operate Employee Stock Option Scheme hence there is no recognition or revaluation pertaining to the ESOP Scheme.

(n) Lcascs

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 fulfillment of the arrangement is dependent on these of a specific asset or assets and the arrangement conveys a right tc use the asset or assets, even if that right is not explicitly specified in an arrangement.

Company acting as a 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 of 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 Profil and Loss.

(o) Fair value measurement

The Company measures its qualifying financial instruments at fair value on each Balance Sheet date.

Fair value is the price that would be received against sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place in the accessible principal market or the most advantageous accessible market as applicable.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy into Level I, Level II and Level III based on the lowest

level input that is significant to the fairvalue measurement as a whole. For a detailed information on the fair value hierarchy.

For assets and liabilities that are fair valued in the financial statements on a recurring basis, the Company detemiines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a w hole) at the end of each reporting period.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy.

(n) Earnings Per Share

The Company reports basic and diluted earnings per share in accordance w ith Ind AS 33 on Earnings per share. Basic EPS is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting preference dividend and attributable taxes) by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless they have been issued at a later date. In computing the dilutive earnings per share, only potential equity shares that are dilutive and that either reduces the earnings per share or increases loss per share are included.

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Mar 31, 2023

4. Summary of Significant Accounting Policies

This note provides a list of the significant accounting policies adopted in the preparation of these financial
statements.

These policies have been consistently applied to all the years presented, unless otherwise stated.

(a)Income

(i) Interest income

The Company recognizes interest income using Effective Interest Rate (EIR) on all financial assets
subsequently measured at amortized cost or fair value through other comprehensive income (FVOCI). EIR is
calculated by considering all costs and incomes attributable to acquisition of a financial asset or assumption
of a financial liability and it represents a rate that exactly discounts estimated future cash payments/receipts
through the expected life of the financial asset/financial liability to the gross carrying amount of a financial
asset or to the amortized cost of a financial liability.

The Company recognises interest income by applying the EIR to the gross carrying amount of financial assets
other than credit-impaired assets. In case of credit-impaired financial assets [as set out in note no. 3.4(i)]
regarded as''stage 3'', the Company recognises interest income on the amortised cost net of impairment loss of
the financial asset at EIR. If the financial asset is no longer credit-impaired [as outlined in note no. 3.4(i)], the
Company reverts to calculating interest income on a gross basis.

Delayed payment interest (penal interest) levied on customers for delay in repayments/nonpayment of
contractual cash flows is recognised on realisation.Interest on financial assets subsequently measured at fair
value through profit or loss (FVTPL) is recognised at the contractual rate of interest.

(ii) Dividend income

Dividend income on equity shares is recognised when the Company''s right to receive the payment is
established, which is generally when shareholders approve the dividend.

(iii) Other revenue from operations

The Company recognises revenue from contracts with customers (other than financial assets to which Ind AS
109''Financial Instruments'' is applicable) based on a comprehensive assessment model as set out in Ind AS
115

''Revenue from contracts with customers''. The Company identifies contract(s) with a customer and its
performance obligations under the contract, determines the transaction price and its allocation to the
performance obligations in the contract and recognises revenue only on satisfactory completion of
performance obligations. Revenue is measured at fair value of the consideration received or receivable.

(a) Fees and commission

The Company recognises service and administration charges towards rendering of additional services to its
loan customers on satisfactory completion of service delivery.

Fees on value added services and products are recognised on rendering of services and products to the
customer.

Distribution income is earned by selling of services and products of other entities under distribution
arrangements. The income so earned is recognised on successful sales on behalf of other entities subject to
there being no significant uncertainty of its recovery.

Foreclosure charges are collected from loan customers for early payment/closure of loan and are recognised
on realisation.

(b) Net gain on fair value changes

Financial assets are subsequently measured at fair value through profit or loss (FVTPL) or fair value through
other comprehensive income (FVOCI), as applicable. The Company recognises gains/losses on fair value
change of financial assets measured as FVTPL and realised gains/losses on derecognition of financial asset
measured at FVTPL and FVOCI.

(c) Sale of services

The Company, on de-recognition of financial assets where a right to service the derecognised financial assets
for a fee is retained, recognises the fair value of future service fee income over service obligations cost on net
basis as service fee income in the statement of profit or loss and, correspondingly creates a service asset in
Balance Sheet. Any subsequent increase in the fair value of service assets is recognised as service income and
any decrease is recognized as an expense in the period in which it occurs. The embedded interest component
in the service asset is recognised as interest income in line with Ind AS 109 ''Financial instruments''.

Other revenues on sale of services are recognised as per Ind AS 115 ''Revenue from Contracts with Customers''
as articulated above in ''other revenue from operations''.

(d) Recoveries of financial assets written off

The Company recognises income on recoveries of financial assets written off on realisation or when the right
to receive the same without any uncertainties of recovery is established.

(iv) Taxes

Incomes are recognised net of the Goods and Services Tax/Service Tax, wherever applicable.
b) Expenditures

(i) Finance costs

Borrowing costs on financial liabilities are recognised using the EIR [refer note no. 3.1(i)].

(ii) Fees and commission expenses

Fees and commission expenses which are not directly linked to the sourcing of financial assets, such as
commission/incentive incurred on value added services and products distribution, recovery charges and fees
payable for management of portfolio etc., are recognised in the Statement of Profit and Loss on an accrual
basis.

(iii) Taxes

Expenses are recognised net of the Goods and Services Tax/Service Tax, except where credit for the input tax
is not statutorily permitted.

(c) Cash and cash equivalents

Cash and cash equivalents include cash on hand, other short term, highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.

(d) Financial instruments

A financial instrument is defined as any contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another entity. Trade receivables and payables, loan receivables,
investments in securities and subsidiaries, debt securities and other borrowings, preferential and equity
capital etc. are some examples of financial instruments.

All the financial instruments are recognised on the date when the Company becomes party to the contractual
provisions of the financial instruments. For tradable securities, the Company recognises the financial
instruments on settlement date.

(i) Financial assets

Financial assets include cash, or an equity instrument of another entity, or a contractual right to receive cash
or another financial asset from another entity. Few examples of financial assets are loan receivables,
investment inequity and debt instruments, trade receivables and cash and cash equivalents.

Initial measurement

All financial assets are recognised initially at fair value including transaction costs that are attributable to the
acquisition of financial assets except in the case of financial assets recorded at FVTPL where the transaction
costs are charged to profit or loss.

Subsequent measurement

For the purpose of subsequent measurement, financial assets are classified into four categories:

• Debt instruments at amortised cost

• Debt instruments at FVOCI

• Debt instruments at FVTPL

• Equity instruments designated at FVOCI

• Debt instruments at amortised cost

Debt Instruments at amortised Cost

The Company measures its financial assets at amortised cost if both the following conditions are met:

1. The asset is held within a business model of collecting contractual cash flows; and

2. Contractual terms of the asset give rise on specified dates to cash flows that are Sole Payments of
Principal and Interest (SPPI) on the principal amount outstanding.

To make the SPPI assessment, the Company applies judgment and considers relevant factors such as the
nature of portfolio and the period for which the interest rate is set.

The Company determines its business model at the level that best reflects how it manages groups of financial
assets to achieve its business objective. The Company''s business model is not assessed on an instrument by
instrument basis, but at a higher level of aggregated portfolios. If cash flows after initial recognition are
realised in a way that is different from the Company''s original expectations, the Company does not change the
classification of the remaining financial assets held in that business model, but incorporates such information
when assessing newly originated financial assets going forward.

The business model of the Company for assets subsequently measured at amortised cost category is to hold
and collect contractual cash flows. However, considering the economic viability of carrying the delinquent
portfolios in the books of the Company, it may sell these portfolios to banks and/or asset reconstruction
companies.

After initial measurement, such financial assets are subsequently measured at amortised cost on effective
interest rate (EIR). For further details, refer note no. 3.1(i). The expected credit loss (ECL) calculation for debt
instruments at amortised cost is explained in subsequent notes in this section.

Debt instruments at FVOCI

The Company subsequently classifies its financial assets as FVOCI, only if both of the following criteria are
met:

1. The objective of the business model is achieved both by collecting contractual cash flows and selling
the financial assets; and

2. Contractual terms of the asset give rise on specified dates to cash flows that are Solely Payments of
Principal and Interest (SPPI) on the principal amount outstanding.

Debt instruments included within the FVOCI category are measured at each reporting date at fair value with
such changes being recognised in other comprehensive income (OCI). The interest income on these assets is
recognised in profit or loss. The ECL calculation for debt instruments at FVOCI is explained in subsequent
notes in this section.

Debt instruments such as long term investments in Government securities to meet regulatory liquid asset
requirement of the Company''s deposit program and mortgage loans portfolio where the Company
periodically resorts to partially selling the loans by way of assignment to willing buyers are classified as
FVOCI.

On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified to profit or
loss.

Debt instruments at FVTPL

The Company classifies financial assets which are held for trading under FVTPL category. Held for trading
assets are recorded and measured in the Balance Sheet at fair value. Interest and dividend incomes are
recorded in interest income and dividend income, respectively according to the terms of the contract, or
when the right to receive the same has been established. Gain and losses on changes in fair value of debt
instruments are recognised on net basis through profit or loss.

The Company''s investments into mutual funds, Government securities (trading portfolio) and certificate of
deposits for trading and short term cash flow management have been classified under this category.

Equity investments designated under FVOCI

All equity investments in scope of Ind AS 109 ''Financial Instruments'' are measured at fair value. The
Company has strategic investments in equity for which it has elected to present subsequent changes in the
fair value another comprehensive income. The classification is made on initial recognition and is
irrevocable.

All fair value changes of the equity instruments, excluding dividends, are recognised in OCI and not available
for reclassification to profit or loss, even on sale of investments. Equity instruments at FVOCI are not subject
to an impairment assessment.

Derecognition of Financial Assets

The Company derecognises a financial asset (or, where applicable, a part of a financial asset) when:

1. The right to receive cash flows from the asset have expired; or

2. The Company has transferred its right to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under an
assignment arrangement and the Company has transferred substantially all the risks and rewards of
the asset. Once the asset is derecognised, the Company does not have any continuing involvement in
the same.

The Company transfers its financial assets through the partial assignment route and accordingly derecognises
the transferred portion as it neither has any continuing involvement in the same nor does it retain any
control. If the Company retains the right to service the financial asset for a fee, it recognises either a servicing
asset or a servicing liability for that servicing contract. A service liability in respect of a service is recognised
at fair value if the fee to be received is not expected to compensate the Company adequately for performing
the service. If the fees to be received is expected to be more than adequate compensation for the servicing, a
service asset is recognised for the servicing right at an amount determined on the basis of an allocation of the
carrying amount of the larger financial asset.

On derecognition of a financial asset in its entirety, the difference between:

1. the carrying amount (measured at the date of derecognition) and

2. the consideration received (including any new asset obtained less any new liability assumed) is
recognised in profit or loss.

Impairment of financial assets

ECL are recognised for financial assets held under amortised cost, debt instruments measured at FVOCI, and
certain loan commitments.

Financial assets where no significant increase in credit risk has been observed are considered to be in ''stage
1'' and for which a 12 month ECL is recognised. Financial assets that are considered to have significant
increase in credit risk are considered to be in ''stage 2'' and those which are in default or for which there is an
objective evidence of impairment are considered to be in ''stage 3''. Lifetime ECL is recognised for stage 2 and
stage 3 financial assets.

At initial recognition, allowance (or provision in the case of loan commitments) is required for ECL towards
default events that are possible in the next 12 months, or less, where the remaining life is less than 12
months.

In the event of a significant increase in credit risk, allowance (or provision) is required for ECL towards all
possible default events over the expected life of the financial instrument (''lifetime ECL'').

Financial assets (and the related impairment loss allowances) are written off in full, when there is no realistic
prospect of recovery.

Treatment of the different stages of financial assets and the methodology of determination of ECL
Credit impaired (stage 3)

The Company recognises a financial asset to be credit impaired and in stage 3 by considering relevant
objective evidence, primarily whether:

1. Contractual payments of either principal or interest are past due for more than 90 days;

2. The loan is otherwise considered to be in default.

Restructured loans, where repayment terms are renegotiated as compared to the original contracted terms
due to significant credit distress of the borrower, are classified as credit impaired. Such loans continue to be
in stage 3 until they exhibit regular payment of renegotiated principal and interest over a minimum
observation period, typically 12 months- post renegotiation, and there are no other indicators of impairment.
Having satisfied the conditions of timely payment over the observation period these loans could be
transferred to stage 1 or 2 and a fresh assessment of the risk of default is done for such loans.

Interest income is recognised by applying the EIR to the net amortised cost amount i.e. gross carrying amount
less ECL allowance.

Significant increase in credit risk (stage 2)

An assessment of whether credit risk has increased significantly since initial recognition is performed at each
reporting period by considering the change in the risk of default of the loan exposure. However, unless
identified at an earlier stage, 30 days past due is considered as an indication of financial assets to have
suffered a significant increase in credit risk. Based on other indications such as borrower''s frequently
delaying payments beyond due dates though not 30 days past due are included in stage 2 for mortgage loans.

The measurement of risk of defaults under stage 2 is computed on homogenous portfolios, generally by
nature of loans, tenors, underlying collateral, geographies and borrower profiles. The default risk is assessed
usingPD (probability of default) derived from past behavioral trends of default across the identified
homogenous portfolios. These past trends factor in the past customer behavioral trends, credit transition
probabilities and macroeconomic conditions. The assessed PDs are then aligned considering future economic
conditions that are determined to have a bearing on ECL.

Without significant increase in credit risk since initial recognition (stage 1)

ECL resulting from default events that are possible in the next 12 months are recognised for financial
instruments in stage 1. The Company has ascertained default possibilities on past behavioral trends
witnessed
for each homogenous portfolio using application/behavioral score cards and other performance indicators,
determined statistically.

Measurement of ECL

The assessment of credit risk and estimation of ECL are unbiased and probability weighted. It incorporates all
information that is relevant including information about past events, current conditions and reasonable
forecasts of future events and economic conditions at the reporting date. In addition, the estimation of
ECLtakes into account the time value of money. Forward looking economic scenarios determined with
reference to external forecasts of economic parameters that have demonstrated a linkage to the performance
of our portfolios over a period of time have been applied to determine impact of macro economic factors.

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). ECL is calculated by multiplying the PD, LGD and EAD and
adjusted for time value of money using a rate which is a reasonable approximation of EIR.

1. Determination of PD is covered above for each stages of ECL.

2. EAD represents the expected balance at default, taking into account the repayment of principal and
interest from the Balance Sheet date to the date of default together with any expected drawdowns of
committed facilities.

3. LGD represents expected losses on the EAD given the event of default, taking into account, among
other attributes, the mitigating effect of collateral value at the time it is expected to be realised and
the time value of money.

(ii) Financial liabilities

Financial liabilities include liabilities that represent a contractual obligation to deliver cash or another
financial assets to another entity, or a contract that may or will be settled in the entities own equity
instruments. Few examples of financial liabilities are trade payables, debt securities and other borrowings
and subordinated debts.

Initial measurement

All financial liabilities are recognised initially at fair value and, in the case of borrowings and payables, net of
directly attributable transaction costs. The Company''s financial liabilities include trade payables, other
payables, debt securities and other borrowings.

Subsequent measurement

After initial recognition, all financial liabilities are subsequently measured at amortised cost using the EIR.
Any gains or losses arising on derecognition of liabilities are recognised in the Statement of Profit and Loss.

Derecognition

The Company derecognises a financial liability when the obligation under the liability is discharged, cancelled
or expired.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet only if
there is an enforceable legal right to offset the recognised amounts with an intention to settle on a net basis
or to realise the assets and settle the liabilities simultaneously.

(e) Investment in subsidiaries

Investment in subsidiaries is recognised at cost and are not adjusted to fair value at the end of each reporting
period.

Cost of investment represents amount paid for acquisition of the said investment.

The Company assesses at the end of each reporting period, if there are any indications that the said
investment may be impaired. If so, the Company estimates the recoverable value/amount of the investment
and provides for impairment, if any i.e. the deficit in the recoverable value over cost. The company does not
have any subsidiary on the reporting date.

(f) Taxes

(i) Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the
taxation authorities, in accordance with the Income Tax Act, 1961 and the Income Computation and
Disclosure Standards (ICDS) prescribed therein. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at the reporting date.

Current tax relating to items recognised outside profit or loss is recognised in correlation to the underlying
transaction either in OCI or directly in other equity. Management periodically evaluates positions taken in the
tax returns with respect to situations in which applicable tax regulations are subject to interpretation and
establishes provisions where appropriate.

(ii) Deferred tax

Deferred tax is provided using the Balance Sheet approach on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are
recognisedfor deductible temporary differences to the extent that it is probable that taxable profits will be
available against which the deductible temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that
it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax
asset to be utilised. Unrecognised deferred tax assets, if any, are reassessed at each reporting date and are
recognised to the extent that it has become probable that future taxable profits will allow the deferred tax
asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised either in OCI or in other equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same
taxation authority.

(g) Property, plant and equipment

Property, plant, and equipment are carried at historical cost of acquisition less accumulated depreciation and
impairment losses, consistent with the criteria specified in Ind AS 16 ''Property, Plant and Equipment''.

Depreciation on property, plant, and equipment

(a) Depreciation is provided on a pro-rata basis for all tangible assets on straight line method over the useful
life of assets, except buildings which is determined on written down value method.

(b) Useful lives of assets are determined by the Management by an internal technical assessment except
where such assessment suggests a life significantly different from those prescribed by Schedule II - Part C of
the Companies Act,2013 where the useful life is as assessed and certified by a technical expert.

(c) Depreciation on leasehold improvements is provided on straight line method over the primary period of
lease of premises or 5 years whichever is less.

(d) Depreciation on addition to assets and assets sold during the year is being provided for on a pro rata basis
with reference to the month in which such asset is added or sold as the case may be.

(e) Tangible assets which are depreciated over a useful life that is different than those indicated in Schedule II
areas under:

(f) Assets having unit value up to H 5,000 is depreciated fully in the financial year of purchase of asset.

(g) An item of property, plant and equipment and any significant part initially recognised is derecognised
upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss
arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included under other income in the Statement of Profit and Loss when the
asset is derecognised.

(h) The residual values, useful lives and methods of depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted prospectively, if appropriate.

(h) Intangible assets and Amortisation thereof

Intangible assets, representing software''s are initially recognised at cost and subsequently carried at cost less
accumulated amortisation and accumulated impairment. The intangible assets are amortised using the
straight line method over a period of five years, which is the Management''s estimate of its useful life. The
useful lives of intangible assets are reviewed at each financial year end and adjusted prospectively, if
appropriate.

(i) Impairment of non-financial assets

An assessment is done at each Balance Sheet date to ascertain whether there is any indication that an asset
may be impaired. If any such indication exists, an estimate of the recoverable amount of asset is determined.
If the carrying value of relevant asset is higher than the recoverable amount, the carrying value is written
down accordingly.

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Mar 31, 2015

A) These financial statements are prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. Pursuant to Section 133 of the Companies Act, 20.13 read with Rule 7 of the Companies (Accounts) Rules, 2034, till the Standards of Accounting or any addendum thereto are prescribed by Central Government in consultation and recommendation of the National Financial. Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 (the 'Act') shall continue to apply. Consequently, these financial statements are prepared to comply in all material aspects with the Accounting Standards notified under sub-section (3C) of Section 211 of the Act [Companies (Accounting Standards) Rules, 2006] and the other relevant provisions of the Companies Act, 2013.

All assets and liabilities are classified as current or non current as per the company's normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of services and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the company has ascertained its operating cycle as 12 months for the purpose of current. non-current classification of assets and liabilities.

b) Income Recognition:

(i) Income from Hypothecation loan transaction is accounted on accrual basis as per the Internal Rate of Return method

(ii) The company has followed prudential norms prescribed by the Reserve Bank of India in respect of income recognition, valuation of investments, capital adequacy and provisioning for non performing assets.

(iii) The company have entered into an Joint Development agreement with M/s.Baashyaam Properties for construction and development of its property situated at No.87, GN Chetty Road, T.Nagar, Chennai-600 017. As per the terms of Joint develoment the company has recognised income of Rs. 13.94 crorcs on transfer of 50% of undivided share of land and buildup area as against 75% of the buildup area.

c) Expenditure:

Expenses are accounted on accrual basis except in the case of bonus to employees and contingent liabilities, which are accounted in the year of payment.

d) Fixed Assets:

Fixed Assets are stated at historical cost less accumulated depreciation.

e) Depreciation:

Depreciation on owned assets have been provided under Straight Line Method at the rates prescribed in Schedule 11 of the Companies Act, 2013. Pursuant to schedule 11 of the Companies Act, 2013 the changes in the usefull life of the assets are adjusted against reserves & surplus.

f) Valuation of Investments:

Long-term investments are stated at cost and provision for diminution in value, other than temporary, is considered wherever necessary. Current investments are valued at lower of cost and market vaiue/net asset value.

g) Taxes on Income:

Provision for current tax is made after taking into consideration benefits admissible under provisions of Income Tax Act, 1961. Deferred Tax resulting from 'timing difference' between book profit and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The Deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the asset will be realised in future.

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Sep 30, 2014

A) System of Accounting: The financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting and comply with the provisions of Companies Act,1956 and in accordance with the generally accepted accounting principles in India. The Company follows the directions prescribed by the Reserve Bank of India for Non Banking Financial Companies from time to time.

b) Income Recognition:

(i) Income from Hypothecation loan transaction is accounted on accrual basis as per the Internal Rate of Return method .

(ii) The company has followed prudential norms prescribed by the Reserve Bank of India in respect of income recognition, valuation of investments, capital adequacy and provisioning for non-performing assets.

(iii) The company have entered into an Joint Development agreement with M/s.Baashyaam Properties for construction and development of its property situated at No.87, GN Chetty Road, T.Nagar, Chennai-600 017. As per the terms of Joint development the company has recognised income of Rs.3.67 crores on transfer of 25% of undivided share of land and buildup area as against 75% of the buildup area.

(iv) The company has entered into an agreement to transfer its non performing hypothecation assets amounting to Rs.27.35 crores for consideration of Rs.30.23 crores the said purchase consideration is discharged by acquisition of equity shares amounting to Rs.27.35 crores in M/s.Saravana Realty Private Limited and the balance consideration of Rs.2.88 crores being income on such transfer is recognised as income

c) Expenditure:

Expenses are accounted on accrual basis except in the case of bonus to employees and contingent liabilities, which are accounted in the year of payment.

d) Fixed Assets:

Fixed Assets are stated at historical cost less accumulated depreciation.

e) Depreciation:

Depreciation on owned assets have been provided under Straight Line Method at the rates prescribed in Schedule XIV of the Companies Act, 1956.

f) Valuation of Investments:

Long-term investments are stated at cost and provision for diminution in value, other than temporary, is considered wherever necessary.

Current investments are valued at lower of cost and market value/net asset value.

g) Taxes on Income:

Provision for current tax is made after taking into consideration benefits admissible under provisions of Income Tax Act, 1961. Deferred Tax resulting from ''timing difference'' between book profit and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The Deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the asset will be realised in future.

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Mar 31, 2013

A) System of Accounting:

Th e financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting and comply with the provisions of Companies Act,1956 and in accordance with the generally accepted accounting principles in India. Th e Company follows the directions prescribed by the Reserve Bank of India for Non Banking Financial Companies from time to time.

b) Income Recognition:

(i) Income from Hypothecation loan transaction is accounted on accrual basis as per the Internal Rate of Return method .

(ii) The company has follows prudential norms prescribed by the Reserve Bank of India in respect of income recognition, valuation of investments, capital adequacy and provisioning for non-performing assets.

c) Expenditure:

Expenses are accounted on accrual basis except in the case of bonus to employees and contingent liabilities, which are accounted in the year of payment.

d) Fixed Assets:

Fixed Assets are stated at historical cost less accumulated depreciation.

e) Depreciation:

Depreciation on owned assets have been provided under Straight Line Method at the rates prescribed in Schedule XIV of the Companies Act, 1956.

f) Valuation of Investments:

Long-term investments are stated at cost and provision for diminution in value, other than temporary, is considered wherever necessary. Current investments are valued at lower of cost and market value/net asset value.

g) Taxes on Income:

Provision for current tax is made after taking into consideration benefits admissible under provisions of Income Ta x Act, 1961. Deferred Ta x resulting from ''timing difference'' between book profit and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The Deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the asset will be realised in future.

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Mar 31, 2012

A) System of Accounting: The financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting and comply with the provisions of Companies Act, 1956 and in accordance with the generally accepted accounting principles in India. The Company follows the directions prescribed by the Reserve Bank of India for Non Banking Financial Companies from time to time.

b) Income Recognition :

(i) Income from Hypothecation loan transaction is accounted on accrual basis as per the Internal Rate of Return method.

(ii) The company has follows prudential norms prescribed by the Reserve Bank of India in respect of income recognition, valuation of investments, capital adequacy and provisioning for non- performing assets.

c) Expenditure:

Expenses are accounted on accrual basis except in the case of bonus to employees and contingent liabilities, which are accounted in the year of payment.

d) Fixed Assets:

Fixed Assets are stated at historical cost less accumulated depreciation.

e) Depreciation:

Depreciation on owned assets have been provided under Straight Line Method at the rates prescribed in Schedule XIV of the Companies Act, 1956.

f) Valuation of Investments :

Long-term investments are stated at cost and provision for diminution in value, other than temporary, is considered wherever necessary. Current investments are valued at lower of cost and market value/net asset value.

g) Taxes on Income:

Provision for current tax is made after taking into consideration benefits admissible under provisions of Income Tax Act, 1961. Deferred Tax resulting from 'timing difference' between book profit and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The Deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the asset will be realised in future.

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Mar 31, 2010

A) System of Accounting: The financial statements ore prepared and presented under the historical cost convention on the accrual basis of accounting and comply with the provisions of Companies Act,I956 and in accordance with the generally accepted accounting principles in India. The Company follows the directions prescribed by the Reserve Bank of India for Non

b) Income Recognition:

(i) Income from Hire Purchase and Hypothecaton loan transaction is accounted on the basis of the Internal Rate of Return method.

(ii)The company has fodows prudential norms prescribed by the Reserve Bank of India in respect of income recognition, valuation of investments, capital odequacy and provisioning for non-performing assets

c) Expenditure

Expenses are accounted on accrual basis except in the cose of bonus to employees and contingent liabilities, which are accounted in the year of payment.

d) Fixed Assets;

Fuced Assets are stoted at historical cost less accumulated depreciation

e) Depreciation;

Depreciation on owned assets have been provided under Straight Line Method at the rates prescribed in Schedule XIV of the Companies Act. 1956.

f) Valuation of Investments:

Long term investments are stated at cost and provision for diminution in year, other than temporary, is considered wherever necessary.

g) Taxes on Income

Provision for current tax is made after taking into consideration benefits admissible under provisions of Income Tax Act. 1961 Deferred Tax resulting from timing difference between book profit and taxable profit is accounted for using the tax rates and laws that hove been enacted or substantively enacted as on the balance sheet date The Deferred tax asset is recognised and earned forward only to the extent that there s a reasonable certainty that the asset will be realised in future