Notes to Accounts of Challani Capital Ltd.

Mar 31, 2025

(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 present
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.

(l) Labour 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.

(m) 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) Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of
the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment
of the arrangement is dependent on these of a specific asset or assets and the arrangement conveys
a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
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 Profit
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, maximizing the use of relevant observable inputs
and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorized within the fair value hierarchy into Level I, Level II and Level III based on the lowest level
input that is significant to the fair value 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 determines whether transfers have occurred between levels in the hierarchy by re¬
assessing categorization (based on the lowest level input that is significant to the fair value
measurement as a whole) 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.

(p) Earnings Per Share

The Company reports basic and diluted earnings per share in accordance with 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.

As per our report of even date

For RSM AND ASSOCIATES Padam J Challani Swapna Pawan Kochar

Chartered Accountants Managing Director Director

FRN :002813S DIN :00052216 DIN :02262562

CA RENUKA RAMESH Ramachandran

Partner Chief Financial Officer/Company Secretary

M.No.205295

UDIN: 25205295BMJGNT9099

Place : Chennai
Date : 26.05.2025

---

Mar 31, 2024

• 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 recognized and carried forward only to the extent that there is a reasonable certainty that the asset will be realized in future. While company has made provision for deferred tax no provision has been made for current tax on account of loses. After examining the status of the various tax proceedings at the assessment and appellate levels, the quantum of income tax refund receivable has been revised and the differential amount in this regard amounting to Rs78,66,676 lakhs which is no longer considered as receivable has been written off for the FY 2021-22.

Equity Shares : The Company has one class of equity shares having a face value of Rs.10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

Valuation:

Fixed Assets are stated at historical cost less accumulated depreciation.

Depreciation:

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

Note : 26 - Earnings Per Share

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

The following reflects the income and share data used in the basic and diluted EPS computations:

Note : 27 - Segmental Information

The Company operates in a single reportable segment i.e. financing, since the nature of the loans are exposed to similar risk and return profiles hence they are collectively operating under a single segment. The Company operates in a single geographical segment i.e. domestic.

Note : 28 - Leasing Commitments

The Company''s significant leasing arrangements are in respect of operating leases for premises which are renewable on mutual consent at agreed terms. Certain agreements provide for cancellations by either party or certain agreements contains clause for escalation of lease payments. The non-cancellable operating lease agreements are ranging from 36 to 60 months.

The total future minimum lease rentals payable at the Balance Sheet date for non-cancellable portion of the leases are as under:

Note : 29 - Unhedged Foreign Currency Exposure

The Company operates in domestic area and does not involve any foreign currency. Hence the company does not have any foreign currency exposure

Related parties as defined under clause 9 of the lnd AS 24 ''Related party disclosures'' have been identified based on representations made by key managerial personnel and information available with the Company. All above transactions are in the ordinary course of business and on an arms'' length basis. All outstanding balances are to be settled in cash and are unsecured.

Note : 31 - Capital

The Company actively manages its capital base to cover risks inherent to its business and meet the capital adequacy requirement of RBI. The adequacy of the Company''s capital is monitored using, among other measures, the regulations issued by RBI.

(i) Capital management Objective

The Company''s objective is to maintain appropriate levels of capital to support its business strategy taking into account the regulatory, economic and commercial environment. The Company aims to maintain a strong capital base to support the risks inherent to its business and growth strategies. The Company endeavors to maintain a higher capital base than the mandated regulatory capital at all times.

The Company''s assessment of capital requirement is aligned to its planned growth which forms part of an annual operating plan which is approved by the Board and also a long range strategy. These growth plans are aligned to assessment of risks- which include credit, liquidity and interest rate.

The Company monitors its capital to risk-weighted assets ratio (CRAR) on a monthly basis through its Assets Liability Management Committee [ALCO}

The Company endeavors to maintain its CRAR higher than the mandated regulatory norm.

Accordingly, increase in capital is planned well in advance to ensure adequate funding for its growth.

The Company''s dividend distribution policy states that subject to profit, the Board shall endeavor to maintain a dividend payout [including dividend distribution tax] of around 15% of profits after tax on standalone financials, to the extent possible.

Note : 32 - Events after reporting date

There have been no events after the reporting date that require adjustment/disclosure in these financial statements.

Note : 33 - Fair Values

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal [or most advantageous) market at the measurement date under current market conditions [i.e., an exit price), regardless of whether that price is directly observable or estimated using a valuation technique.

In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques. This note describes the fair value measurement of both financial and non-financial instruments.

Valuation framework

The Company has an internal fair value assessment team which assesses the fair values for assets qualifying for fair valuation.

The Company''s valuation framework includes:

1. Benchmarking prices against observable market prices or other independent sources;

2. Development and validation of fair valuation models using model logic, inputs, outputs and adjustments.

These valuation models are subject to a process of due diligence and validation before they become operational and are continuously calibrated. These models are subject to approvals by various functions including risk, treasury and finance functions. Finance function is responsible for establishing procedures, governing valuation and ensuring fair values are in compliance with accounting standards.

Fair values of financial assets, other than those which are subsequently measured at amortised cost, have been arrived at as under:

Fair Value of investments held in the long run by the entity for which the company has adopted to value he same to fair value through Profit and Loss Account as the same is not having a more effect on the financial position of the entity

The Company has determined that the carrying values of cash and cash equivalents, bank balances, trade receivables, short term loans, floating rate loans, investments in equity instruments designated at FVOC1, trade payables, short term debts, borrowings, bank overdrafts and other current liabilities are a reasonable approximation of their fair value and hence their carrying value are deemed to be fair value.

Note : 34 - Risk Management objectives and Policies

A summary of the major risks faced by the Company, its measurement monitoring and management are described as under:

Liquidity Risk

Liquidity risk arises from mismatches in the timing of cash flows.

Funding risk arises:

1. when long term assets cannot be funded at the expected term resulting in cashflow mismatches;

2. Amidst volatile market conditions impacting sourcing of funds from banks and money markets

The company actively measures the gap and held meetings to mitigate and overcome this risk factor. A separate responsibility is held with the treasure team which overseas and manages this risk

Interest Rate Risk

Interest rate risk stems from movements in market factors, such as interest rates, credit spreads which impacts investments, income and the value of portfolios.

Interest rate risk is:

1. measured using Valuation at Risk (''VaR''], and modified duration analysis and other measures, including the sensitivity of net interest income.

2. Monitored by assessment of probable impacts of interest rate sensitivities under simulated stress test scenarios given range of probable interest rate movements on both fixed and floating assets and liabilities.

The same is managed by the Company''s treasury team under the guidance of ALCO.

Credit Risk

Credit risk is the risk of financial loss arising out of a customer or counterparty failing to meet their repayment obligations to the Company. The company assesses the credit quality of all financial instruments that are subject to credit risk.

Credit risk is:

1. Measured as the amount at risk due to repayment default of a customer or counterparty to the Company. Various matrics such as EMI default rate, overdue position, collection efficiency, customers non performing loans etc. are used as leading indicators to assess credit risk.

2. Monitored by Risk Management Committee using level of credit exposures, portfolio monitoring, repurchase rate, bureau data of portfolio performance and industry, geographic, customer and portfolio concentration risks.

3. Managed by a robust control framework by the risk department which continuously align credit policies, obtaining external data from credit bureaus and reviews of portfolios and delinquencies by senior and middle Management team comprising of risk, analytics, collection and fraud containment along with business.

Classification of financial assets under various stages

The Company classifies its financial assets in three stages having the following characteristics:

Stage 1: unimpaired and without significant increase in credit risk since initial recognition on which a 12 month allowance for ECL is recognised;

Stage 2: a significant increase in credit risk since initial recognition on which a lifetime ECL is recognised;

Stage 3: objective evidence of impairment, and are therefore considered to be in default or otherwise credit impaired on which a lifetime ECL is recognised.

Unless identified at an earlier stage, all financial assets are deemed to have suffered a significant increase in credit risk when they are 30 days past due [DPDJ and are accordingly transferred from stage 1 to stage 2. For stage 1 an ECL allowance is calculated based on a 12 month Point in Time [PIT} probability weighted probability of default [PD}.

For stage 2 and 3 assets a life time ECL is calculated based on a lifetime PD. The Company has calculated ECL using three main components: a probability of default (PD}, a loss given default (LGD} and the exposure at default (EAD) along with an adjustment considering forward macro economic conditions

For a detailed note for methodology of computation of ECL please refer to significant accounting policies to the financial statements. Financial instruments other than loans were subjected to simplified ECL approach under Ind AS 109 ''Financial Instruments* and accordingly were not subject to sensitivity of future economic conditions.

Note : 35

Amounts less than Rs. 50,000 have been shown at actuals against respective line items statutorily required to be disclosed.

Note 36.

The pending litigations as on 31 st March 2024 have been compiled by the company and reviewed by the Statutory Auditors. The current position of the litigation has been evaluated and there is no likely adverse impact on the financial position.

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Mar 31, 2023

(j) 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 present 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.

(l) Labour 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.

(m) 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) Leases

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

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 the above principle, all leases entered into by the
Company as a lessee have been classified as operating leases.

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

(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
determines 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 whole) 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.

(p) Earnings Per Share

The Company reports basic and diluted earnings per share in accordance with 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.

Note : 27 - Earnings Per Share

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

The following reflects the income and share data used in the basic and diluted EPS
computations:

Note : 28 - Segmental Information

The Company operates in a single reportable segment i.e. financing, since the nature of the
loans are exposed to similar risk and return profiles hence they are collectively operating
under a single segment. The Company operates in a single geographical segment i.e. domestic.

Note : 29 - Leasing Commitments

The Company''s significant leasing arrangements are in respect of operating leases for
premises which are renewable on mutual consent at agreed terms. Certain agreements
provide for cancellations by either party or certain agreements contains clause for escalation
of lease payments. The non-cancellable operating lease agreements are ranging from 36 to 60
months. There are no sub-leases.

An amount of Rs.2.10 Lakhs (Previous year Rs.4.46 Lakhs) has been charged as lease
payments to the Statement of Profit and Loss.

Note : 30 - Unhedged Foreign Currency Exposure

The Company operates in domestic area and does not involve any foreign currency. Hence the
company does not have any foreign currency exposure

Related parties as defined under clause 9 of the Ind AS 24 ''Related party disclosures’ have
been identified based on representations made by key managerial personnel and information
available with the Company. All above transactions are in the ordinary course of business and
on an arms'' length basis. All outstanding balances are to be settled in cash and are unsecured.

Note : 32 - Capital

The Company actively manages its capital base to cover risks inherent to its business and
meet the capital adequacy requirement of RBI. The adequacy of the Company’s capital is
monitored using, among other measures, the regulations issued by RBI.

(i) Capital management
Objective

The Company’s objective is to maintain appropriate levels of capital to support its business
strategy taking into account the regulatory, economic and commercial environment The
Company aims to maintain a strong capital base to support the risks inherent to its business
and growth strategies. The Company endeavours to maintain a higher capital base than the
mandated regulatory capital at all times.

The Company’s assessment of capital requirement is aligned to its planned growth which
forms part of an annual operating plan which is approved by the Board and also a long range
strategy. These growth plans are aligned to assessment of risks- which include credit,
liquidity and interest rate.

The Company monitors its capital to risk-weighted assets ratio (CRAR) on a monthly basis
through its Assets Liability
Management Committee (ALCO)

The Company endeavours to maintain its CRAR higher than the mandated regulatory norm.

Accordingly, increase in capital is planned well in advance to ensure adequate funding for its
growth.

The Company’s dividend distribution policy states that subject to profit, the Board shall
endeavour to maintain a dividend payout (including dividend distribution tax) of around 15%
of profits after tax on standalone financials, to the extent possible.

Note : 33 - Events after reporting date

There have been no events after the reporting date that require adjustment/disclosure in
these financial statements.

Note : 34- Fair Values

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction in the principal (or most advantageous) market at the measurement date
under current market conditions (i.e., an exit price), regardless of whether that price is
directly observable or estimated using a valuation technique.

In order to show how fair values have been derived, financial instruments are classified based
on a hierarchy of valuation techniques. This note describes the fair value measurement of
both financial and non-financial instruments.

Valuation framework

The Company has an internal fair value assessment team which assesses the fair values for
assets qualifying for fair valuation.

The Company’s valuation framework includes:

1. Benchmarking prices against observable market prices or other independent sources;

2. Development and validation of fair valuation models using model logic, inputs, outputs and
adjustments.

These valuation models are subject to a process of due diligence and validation before they
become operational and are continuously calibrated. These models are subject to approvals by
various functions including risk, treasury and finance functions. Finance function is
responsible for establishing procedures, governing valuation and ensuring fair values are in
compliance with accounting standards.

Fair values of financial assets, other than those which are subsequently measured at
amortised cost, have been arrived at as under:

Fair Value of investments held in the long run by the entity for which the company has
adopted to valuet he same to fair value through Profit and Loss Account as the same is not
having a more effect on the financial position of the entity

The Company has determined that the carrying values of cash and cash equivalents, bank
balances, trade receivables, short term loans, floating rate loans, investments in equity
instruments designated at FVOCI, trade payables, short term debts, borrowings, bank
overdrafts and other current liabilities are a reasonable approximation of their fair value and
hence their carrying value are deemed to be fair value.

Note : 35 - Risk Management objectives and Policies

A summary of the major risks faced by the Company, its measurement monitoring and
management are described as under:

Liquidity Risk

Liquidity risk arises from mismatches in the timing of cash flows.

Funding risk arises:

1. when long term assets cannot be funded at the expected term resulting in cashflow
mismatches;

2. Amidst volatile market conditions impacting sourcing of funds from banks and money
markets

The company actively measures the gap and helds meetings to mitigate and overcome this
risk factor. A separate responsibility is held with the treasure team which overseas and
mangaes this risk

Interest Rate Risk

Interest rate risk stems from movements in market factors, such as interest rates, credit
spreads which impacts investments, income and the value of portfolios.

Interest rate risk is:

1. measured using Valuation at Risk (‘VaR’), and modified duration analysis and other
measures, including the sensitivity of net interest income.

2. Monitored by assessment of probable impacts of interest rate sensitivities under simulated
stress test scenarios given range of probable interest rate movements on both fixed and
floating assets and liabilities.

The same is managed by the Company’s treasury team under the guidance of ALCO.

Credit Risk

Credit risk is the risk of financial loss arising out of a customer or counterparty failing to meet
their repayment obligations to the Company. The company assesses the credit quality of all
financial instruments that are subject to credit risk.

Credit risk is:

1. Measured as the amount at risk due to repayment default of a customer or counterparty to
the Company. Various matrics such as EMI default rate, overdue position, collection efficiency,
customers non performing loans etc. are used as leading indicators to assess credit risk.

2. Monitored by Risk Management Committee using level of credit exposures, portfolio
monitoring, repurchase rate, bureau data of portfolio performance and industry, geographic,
customer and portfolio concentration risks.

3. Managed by a robust control framework by the risk department which continuously align
credit policies, obtaining external data from credit bureaus and reviews of portfolios and
delinquencies by senior and middle Management team comprising of risk, analytics, collection
and fraud containment along with business. The same is periodically reviewed by the Board
appointed Risk Management Committee.

Classification of financial assets under various stages

The Company classifies its financial assets in three stages having the following characteristics:

Stage 1: unimpaired and without significant increase in credit risk since initial recognition on
which a 12 month allowance for ECL is recognised;

Stage 2: a significant increase in credit risk since initial recognition on which a lifetime ECL is
recognised;

Stage 3: objective evidence of impairment, and are therefore considered to be in default or
otherwise credit impaired on which a lifetime ECL is recognised.

Unless identified at an earlier stage, all financial assets are deemed to have suffered a
significant increase in credit risk when they are 30 days past due (DPD) and are accordingly
transferred from stage 1 to stage 2. For stage 1 an ECL allowance is calculated based on a 12
month Point in Time (PIT) probability weighted probability of default (PD).

For stage 2 and 3 assets a life time ECL is calculated based on a lifetime PD. The Company has
calculated ECL using three main components: a probability of default (PD), a loss given default
(LCD) and the exposure at default (EAD) along with an adjustment considering forward
macro economic conditions

For a detailed note for methodology of computation of ECL please refer to significant
accounting policies to the financial statements. Financial instruments other than loans were
subjected to simplified ECL approach under Ind AS 109 ''Financial Instruments'' and
accordingly were not subject to sensitivity of future economic conditions.

Note: 36

Amounts less than Rs. 50,000 have been shown at actuals against respective line items
statutorily required to be disclosed.

---

Mar 31, 2015

1. BALANCE SHEET

Secured Loans:

a) Cash Credit from Banks are secured against hypothecation of specified assets covered by tire hypothecation/hire purchase agreements and personal guarantees of whole time Directors, apart from Equitable mortgage by deposit of title deeds of immovable property situated at No.87, G N Chetty Road, T Nagar, Chennai - 17, measuring 5775 Sq.Ft. on pari-passu basis, in favour of Consortium of Banks. However the company has pursuant to the agreement with M/s.Saravana Holdings Limited have transfered the substantial portion of Non Performing hypothecation debtors which are given as primary security to the banks. The company has also entered into Joint development agreement with M/s.Baashyaam Properties for development of the above said property for which equitable mortgage is created by deposit of its title deeds. Subsequently during the year the company have said the substantial protion of the above property given as security and repaid the substantial portion of cash credit facility, and the remaining balance outstanding on account of cash credit facility is closed out of fixed deposit proceeds after te blance sheet date.

c) Other secured loans are secured against the specific assets purchased under hire purchase scheme/securitisation.

d) The stock on hire represents installments & other dues Net of advance hire charges, and the cost of repossessed assets.

e) The sundry debtors and creditors balances are subject to confirmation and reconciliation.

f) The company has entered into an agreement with M/s.Saravana Global Holdings Limited for transfer of non performing hypothecation debtors of the company which is due for the period of more than six months, the arrangement of transfer of such non performing hypothecation debtors are effected with the view to transferring such debts to an asset reconstruction company or other companies on as is wher in basis, in consideration of such transfer the company has acquired 5.00,000 equity shares of Rs.10 each fully paid up amounting to Rs.27.35 crores in M/s.Saravana Realty Private Limited and balance amount of Rs.2.88 Crores being receivable is not recoverable and hence written off as bad debts in the books of account ns at the year end. The said investment is treated as long term and non current investment.

2. PROFIT AND LOSS ACCOUNT

i) Since no commission is paid/payable to any director, the Computation of net profit in accordance with Section 349 of the companies Act, 1956 has not been made.

ii) Managerial remuneration has been made within the limits prescribed under section 198 read with Schedule XIII of the Companies Act, 1956.

3. Related Party Transactions:

As per Accounting Standard 18, issued by The Institute of Chartered Accountant of India, the disclosures of transactions with the related parties as defined in the accounting standard are given below:

List of Related Parties with whom transactions have taken place & relationship

SNO. Name of the related party Relationship Remarks

1 PADHAM J CHALLANI Key Managemcnt Director Personnel

2 N.Subramanian Key Management Director

3 Saravana Global Exim Pvt Ltd Associate

4 Saravana Global Properities Lip Associate

5 Saravana Global Ventures Pvt Ltd Associate

6 Saravana Global Housing Finance Ltd Associate

7 Saravana Global Energy Limited Associate

Relatives of Key

9 Padham J Challani (Huf) Management Relatives Personnel of Managing Director

4. The Company has unclaimed dividend of Rs.3.47 lakhs as on the balance sheet date out. of which a sum of Rsl .94 lakhs are to be tranferred to Investor Education &, Protection Fund, however the company has defaulted in transfer of the sid unclaimed dividend

5. As identified by management and relied upon by the auditors there is no amount due to Small Scale Industries in terms of "The Micro, Small and Medium Enterprises Development. Act,2006'.

6. Previous year figures are regrouped/reclassified/rearranged wherever necessary.

7. The company has made an application before the Registrar of Companies for extension of financial year from 31.03.2014 to 30.09.2014 and accordingly the accounts are for the period of eighteen months from 01.04.2013 to 30,09.2014, The figures for the previous year are for twelve months hence the same is not comparable with the current year figures.

8. Previous year figures are for the period of 18 months and current year figures are for the period of 6 months.

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Sep 30, 2014

Balance sheet

Secured Loans:

1) Cash Credit from Banks are secured against hypothecation of specified assets covered by the hypothecation/hire purchase agreements and personal guarantees of whole time Directors, apart from Equitable mortgage by deposit of title deeds of immovable property situated at No.87, G N Chetty Road, T Nagar, Chennai - 17, measuring 5775 Sq.Ft. on pari-passu basis, in favour of Consortium of Banks. However the company has pursuant to the agreement with M/s.Saravana Holdings Limited have transfered the substantial portion of Non Performing hypothecation debtors which are given as primary security to the banks. The company has also entered into Joint development agreement with M/s.Baashyaam Properties for development of the above said property for which equitable mortgage is created by deposit of its title deeds.

2) The company has issued secured redeemable Non Convertible Debentures redeemable at par at the end of one year, the detail thereof as under:

Amount Rate of Interest Security

315.90 12 % Floating Charge on the receivables Lacs from unencumbered Hire Purchase and Leasing Assets

3) Other secured loans are secured against the specific assets purchased under hire purchase scheme/securitisation.

4) The stock on hire represents installments & other dues Net of advance hire charges, and the cost of repossessed assets.

5) The sundry debtors and creditors balances are subject to confirmation and reconciliation.

6) The company has entered into an agreement with M/s.Saravana Global Holdings Limited for transfer of non performing hypothecation assets of the company which is due for the period of more than six months, the arrangement of transfer of such non performing hypothecation debtors are effected with the view to transferring such debts to an asset reconstruction company or other companies on as is wher in basis, in consideration of such transfer the company has acquired 5,00,000 equity shares of Rs.10 each fully paid up amounting to Rs.27.35 crores in Mfs.Saravana Realty Private Limited and balance amount of Rs.2.88 Crores by way of cash. The said investment is treated as long term and non current investment

7) Contingent Liabilities:

S.No. Particulars 30.09.2014 31.03.2013

1 Estimated amount of contracts remaining to be executed on NIL NIL Capital Account and not provided for

2 Disputed Sales Tax liability 92,120 92,120 of Rs. 92,120/- fully covered by deposit with the department Rs.92,120/-

8) Earning in Foreign Currency : NIL

9) Expenditure in Foreign Currency : NIL

10) As identified by management and relied upon by the auditors there is no amount due to Small Scale Industries in terms of "The Micro, Small and Medium Enterprises Development Act,2006

11) Previous year figures are regrouped/reclassified/rearronged wherever necessary.

12) The company has made an application before the Registrar of Companies for extension of financial year from 31.03.2014 to 30.09.2014 and accordingly the accounts are for the period of eighteen months from 01.04.2013 to 30.09.2014. The figures for the previous year are for twelve months hence the same is not comparable with the current year figures.

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Mar 31, 2013

A) Cash Credit and term loan from Banks are secured against hypothecation of specified assets covered by the hypothecation/hire purchase agreements and personal guarantees of whole time Directors, apart from Equitable Mortgage by Deposit of Title Deeds of immovable property situated at No.87, G N Chetty Road, T Nagar, Chennai - 17, measuring 5775 Sq.Ft. on pari-passu basis, in favour of Consortium of Banks.

b) Other secured loans are secured against the specific assets purchased under hire purchase scheme/securitization.

c) The stock on hire represents installments & other dues Net of advance hire charges. and the cost of repossessed assets.

d) The sundry debtors and creditors balances are subject to confirmation and reconciliation.

e) Since no commission is paid/payable to any director, the Computation of net profit in accordance with Section 349 of the companies Act, 1956 has not been made.

f) Managerial remuneration has been made within the limits prescribed under section 198 read with Schedule XIII of the Companies Act, 1956.

g) As identified by management and relied upon by the auditors there is no amount due to Small Scale Industries in terms of "The Micro, Small and Medium Enterprises Development Act, 2006.

h) Previous year figures are regrouped/reclassified/rearranged wherever necessary.

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Mar 31, 2012

1 BALANCE SHEET

Secured Loans:

a) Cash Credit and term loan from Banks are secured against hypothecation of specified assets covered by the hypothecation/hire purchase agreements and personal guarantees of whole time Directors, apart from Equitable mortgage by deposit of title deeds of immovable property situated at No.87, G N Chetty Road, T Nagar, Chennai -17, measuring 5775 Sq.Ft. on pari-passu basis, in favour of Consortium of Banks.

b) The company has issued secured redeemable Non Convertible Debentures redeemable at par at the end of one year, the detail thereof as under:

c) Other secured loans are secured against the specific assets purchased under hire purchase scheme/securitisation.

d) The stock on hire represents installments & other dues Net of advance hire charges, and the cost of repossessed assets.

e) The sundry debtors and creditors balances are subject to confirmation and reconciliation.

2 PROFIT AND LOSS ACCOUNT

a) Interest paid/credited to directors on Directors Loans." Rs. NIL (previous year Rs. 5,330/-).

d) Since no commission is paid/payable to any director, the Computation of net profit in accordance with Section 349 of the companies Act, 1956 has not been made.

e) Managerial remuneration has been made within the limits prescribed under section 198 read with Schedule XIII of the Companies Act, 1956.

c) Related Party Transactions:

As per Accounting Standard 18, issued by The Institute of Chartered Accountant of India, the disclosures of transactions with the related parties as defined in the accounting standard are given below:

List of Related Parties with whom transactions have taken place & relationship

d) Contingent Liabilities:

SI. No. Particulars 31.03.2012 31.03.2011

1 Estimated amount of contracts remaining to be Nil Nil executed on Capital Account and not provided for

2 Disputed Sales Tax liability of Rs. 92,120/- fully 92,120 92,120 covered by deposit with the department Rs. 1 Rs.92,120/-

e) Earning in Foreign Currency : NIL

f) Expenditure in Foreign Currency : NIL

g) As identified by management and relied upon by the auditors there is no amount due to Small Scale Industries in terms of "The Micro, Small and Medium Enterprises Development Act,2006'.

h) Previous year figures are regrouped/reclassified/rearranged wherever necessary.

The Company has only one class of equity shares having a par value of Rs. 10/-per share. Each shareholder is eligible for one vote per share held. The Equity shareholders are entitled to receive dividend as and when declared subject to the approval of the shareholders in the Annual General Meeting.

For the year ended March 31,2012,the Directors have not recommended any dividend. For the Previous year the Board of Directors had recommended a dividend of Rs. 0.30 per equity Share but the shareholders have not approved the same and no dividend has been paid.

In the event of liquidation of the Company , the holders of equity shares will be entitled to receive remaining assets of the company , after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Aggregate number of equity shares issued for consideration other than cash during the period of five years immediately proceeding the reporting date :

60,00,000 Equity Shares were issued and allotted as Bonus shares during the year ended 31st March,2010 in the ratio of 2:1 (Two Shares for every one share held)

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Mar 31, 2010

1 BALANCE SHEET

Secured Loans:

a) Cash Credit and term loan from Banks are secured against hypothecation of specified assets cowed by the hypothecation/hire purchase agreements and personal guarantees of whole time Directors, apart from Equitable mortgage by deposit of title deeds of immovable property situated at No 87.6 N Chetty Road. T Nooar, Chennai -17. measuring 5775 Sq Ft on pan-passu basis, in favour of Consortium of Banks.

b) The company has issued secured redeemable Non Convertible Debentures redeemable at par at the end of ore year, the detail thereof as under

c) Other secured loans are secured against the specific assets purchased under hire purchase scheme securitisation

d) The stock on hire represents installments & other dues advance hire charges, and the cost of repossessed assets

e) Deposit with Scheduled banks have been classified as non-trade investments as it forms part of Statutory Liquidity Ratio.

f) The sundry debtors and creditor balances are subject to confirmation and reconciliation,

2 PROFIT AND LOSS ACCOUNT

a) Interest includes Rs. 5,330/- (previous year lis. 72,966/-} poid/credrted to directors on Directors Loans,"

d) 1)Since in commission is poid/payable to any director the Computation of net profit in accordance with Section 349 of the companies Act, 1956 has not been made

c) 11) Monagerial remuneration has been made within the limits prescribed under section 198 read with Schedule XIII of the Compaves Act 1956

3 GENERAL

o) Segmental Information. Company is operating on one brood segment namely hut purchase finance withm the state of Tamilnadu and hence no separate segmental result! have been given

e) Related Party Transactions.

As per Accounting Standard 18. issued by The Institute of Chartered Accountant of India. the disclosures of transactions with the related parties as defined in the accounting standard ore

Contingent Liabilities:

S No. Porticulars 31.03.2010 31.03.2009

1 Estimated amount of contracts remaining to be

executed on Capital Account and not provided for NIl NIL

2 Disputed Sales Tax liability of Rs. 92,120/-fully

covered by outstanding Bank Guarantee Rs

46.060/-ond deposit with the deportment Rs.46.060/- 92.120 92.120

e) Earning Foreign Currency NIL

f) Expenditure in Foreign Currency on account of travel (on payment boas) fts.62.413/-

g) As identified by rrtavagement and relied upon by the auditors there is no amount due to Small Scale Industries tn terms of "The Micro, Small and Medium Enterprises Development Act 2006

h) Previous year figures are itgrouj^/rwlassified/reorrancjed wherever necessary.