Accounting Policies of Mufin Green Finance Ltd. Company

Mar 31, 2025

2.5 Material Accounting Policies

2.5.1 Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company
and the revenue can be reliably measured and there exists reasonable certainty of its recovery.

2.5.1.1 Interest

Interest income on financial instruments is recognized on a time proportion basis taking into account the
amount outstanding and the effective interest rate ("EIR") applicable.

The EIR is the rate that exactly discounts estimated future cash flows of the financial instrument through
the expected life of the financial instrument or, where appropriate, a shorter period, to the net carrying
amount. The future cash flows are estimated taking into account all the contractual terms of the instrument.

The calculation of the EIR includes all fees paid or received between parties to the contract that are
incremental and directly attributable to the specific lending arrangement, transaction costs, and all other
premiums or discounts. For financial assets measured at fair value through profit and loss ("FVTPL"),
transaction costs are recognized in the standalone statement of profit and loss at initial recognition.

Interest income/ expenses is calculated by applying the EIR to the gross carrying amount (principal not
due) of non-credit impaired financial assets/liabilities (i.e. at the amortized cost of the financial asset before
adjusting for any expected credit loss allowance). For credit-impaired financial assets, interest income is
calculated by applying the EIR to the amortized cost of the credit-impaired financial assets (i.e. the gross
carrying amount less the allowance for expected credit losses). Further, in terms of RBI Guidelines, interest
accrued on credit impaired assets is recognized as and when received.

2.5.1.2 Dividend Income

Dividend income is recognized when the Company''s right to receive dividend is established.

2.5.1.3 Fee and Commission Income

Fee and commission income include fees other than those that are an integral part of EIR. The Company
recognizes the fee and commission income in accordance with the terms of the relevant contracts/
agreement and when it is probable that the Company will collect the consideration.

2.5.1.4 Net gain on fair value change

Any differences between the fair values on the date of acquisition and balance sheet date of the financial
assets classified as fair value through the profit or loss, held by the Company on the balance sheet date
is recognized as an unrealized gain/loss in the standalone statement of profit and loss. In cases there
is a net gain in aggregate, the same is recognized in "Net gains on fair value changes" under revenue
from operations and if there is a net loss, the same is disclosed in "Net loss on fair value changes", in the
standalone statement of profit and loss.

2.5.1.5 Other operational revenue

Other operational revenue represents income earned from the activities incidental to the main business
and is recognized when the right to receive the income is established as per the terms of the contract and
Late payment interest, bouncing charges etc. are accounted on the receipt basis.

2.5.1.6 Other Income

Other Income represents income earned from the activities other than the main business is recognized
when the right to receive the income is established as per the terms of the contract.

2.5.2 Financial Instruments

2.5.2.1 Fair Valuation of Investments

Some of the Company''s Investments are measured at fair value. In determining the fair value of such
Investments, the Company uses quoted prices (unadjusted) in active markets for identical assets or based
on inputs which are observable either directly or indirectly. However, in certain cases, the Company adopts
valuation techniques and inputs which are not based on market data. When Market observable information
is not available, the Company has applied appropriate valuation techniques and inputs to the valuation
model.

2.5.2.2 Recognition and Initial Measurement

All financial assets and liabilities, with the exception of loans and borrowings are initially recognized on
the trade date, i.e., the date that the Company becomes a party to the contractual provisions of the
instrument.

Loans are recognized when fund transfer is initiated or disbursement cheque is issued to the customer. The
Company recognizes debt securities and borrowings (other than debt securities) when funds are received
by the Company.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs and revenues
that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than
financial assets and financial liabilities measured at FVTPL) are added to or deducted from the fair value
of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs and
revenues directly attributable to the acquisition of financial assets or financial liabilities measured at FVTPL
are recognized immediately in the standalone statement of profit and loss.

2.5.2.3 Classification and Subsequent Measurement of Financial Assets and Liabilities

2.5.2.3.1 Financial Assets

The Company classifies and measures all its financial assets based on the business model for managing the
assets and the asset''s contractual terms, either at:

- Amortized cost

- Fair Value through other comprehensive income

- Fair Value through Profit and Loss

2.5.2.3.1.1 Amortized Cost

The Company classifies and measures cash and bank balances, Loans, Trade receivable, certain debt
investments and other financial assets at amortized cost if the following condition is met:

Financial Assets that are held within a business model whose objective is to hold financial assets
in order to collect the contractual cash flows, and that have contractual cash flows that are Solely
Payment of Principal and Interest (SPPI);

2.5.2.3.1.2 Fair value through Other Comprehensive Income ("FVOCI")

The Company classifies and measures certain debt instruments at FVOCI when the investments are
held within a business model, the objective of which is achieved by both, collecting contractual cash
flows and selling the financial instruments and the contractual terms of the financial instruments meet
the Solely Payment of Principal and Interest on principal amount outstanding (''SPPI'') test.

2.5.2.3.1.3 Fair value through Profit and Loss ("FVTPL")

Financial assets at FVTPL are:

- assets with contractual cash flows that are not SPPI; and/or

- assets that are held in a business model other than held to collect contractual cash flows or held
to collect and sell; or

- assets designated at FVTPL using the fair value option.

These assets are measured at fair value, with any gains/ losses arising on remeasurement is recognized
in the standalone statement of profit and loss.

2.5.2.3.1.4 FVOCI- Equity Instruments

The Company subsequently measures all equity investments at fair value through profit or loss,
unless the Company''s management has elected to classify irrevocably some of its equity instruments
at FVOCI, when such instruments meet the definition of Equity under Ind AS 32 Financial Instruments
and are not held for trading.

If the Company elects to classify an equity instrument as at FVTOCI, then all fair value changes on the
instrument, excluding dividends, are recognized in other comprehensive income. This cumulative gain
or loss is not reclassified to standalone statement of profit and loss on disposal of such instruments.
Investments representing equity interest in subsidiary, joint venture and associate are carried at cost
less any provision for impairment.

Financial assets are not reclassified subsequent to their initial recognition, except if and in the period
the Company changes its business model for managing financial assets.

All financial assets not classified as measured at amortised cost or FVOCI are measured at FVTPL.

2.5.2.4 Evaluation of Business Model

Classification and measurement of financial instruments depends on the results of the Solely Payments
of Principal and Interest on the principal amount outstanding ("SPPI") and the business model test
(refer note 2.5.2.4.1). The Company determines the business model at a level that reflects how the
Company''s financial instruments are managed together to achieve a particular business objective.

The Company monitors financial assets measured at amortized cost or fair value through other
comprehensive income that are derecognized prior to their maturity to understand the reason for their
disposal and whether the reasons are consistent with the objective of the business for which the asset was
held. Monitoring is part of the Company''s continuous assessment of whether the business model for which
the remaining financial assets are held continues to be appropriate and if it is not appropriate whether
there has been a change in business model and so a prospective change to the classification of those
instruments.

2.5.2.4.1 Business Model Test

An assessment of business model for managing financial assets is fundamental to the classification of a
financial asset. The Company determines the business model at a level that reflects how financial assets
are managed together to achieve a particular business objective. The Company''s business model does
not depend on management''s intentions for an individual instrument; therefore, the business model
assessment is performed at a higher level of aggregation rather than on an instrument-by-instrument
basis.

The Company considers all relevant information and evidence available when making the business model
assessment such as:

• how the performance of the business model and the financial assets held within that business model
are evaluated and reported to the Company''s key management personnel;

• the risks that affect the performance of the business model (and the financial assets held within that
business model) and, in particular, the way in which those risks are managed; and

• how managers of the business are compensated (e.g. whether the compensation is based on the fair
value of the assets managed or on the contractual cash flows collected).

At initial recognition of a financial asset, the Company determines whether newly recognized financial
assets are part of an existing business model or whether they reflect a new business model. The Company
reassesses its business model at each reporting period to determine whether the business model has
changed since the preceding period. For the current and prior reporting period the Company has not
identified a change in its business model.

Solely Payments of Principal and Interest ("SPPI") on the principal amount outstanding

For an asset to be classified and measured at amortized cost or at FVOCI, its contractual terms should give
rise to cash flows that meet SPPI test.

For the purpose of SPPI test, principal is the fair value of the financial asset at initial recognition. That
principal amount may change over the life of the financial asset (e.g. if there are repayments of principal).
Interest consists of consideration for the time value of money, for the credit risk associated with the
principal amount outstanding during a particular period of time and for other basic lending risks and costs,
as well as a profit margin.

Contractual terms that introduce exposure to risks or volatility in the contractual cash flows that are
unrelated to a basic lending arrangement, such as exposure to changes in equity prices or commodity
prices, do not give rise to contractual cash flows that are SPPI, such financial assets are either classified as
fair value through profit and loss or fair value through other comprehensive income.

2.5.2.4.1.1 Subsequent Measurement and Gain and Losses
Financial Assets at Amortized Cost

These assets are subsequently measured at amortized cost using the effective interest method. The
amortized cost is reduced by impairment losses. Interest income as per EIR and impairment loss are
recognized in standalone statement of profit and loss. Any gain or loss on derecognition is recognized
in standalone statement of profit and loss.

Debt Instrument at FVOCI

These assets are subsequently measured at fair value. Interest income is recognized in standalone
statement of profit and loss. Any gain or loss on subsequent measurement is recognized in OCI
and on derecognition the cumulative gain or loss recognized in OCI will be recycled to standalone
statement of profit and loss.

Equity Instrument at FVOCI

Gains and losses on equity instruments measured at FVOCI are recognized in other comprehensive
income and never recycled to the standalone statement of profit and loss. Dividends are recognized
in profit or loss as dividend income when the right to receive payment has been established, except
when the Company benefits from such proceeds as a recovery of whole or part of the cost of the
instrument, in which case, such gains are recorded in OCI. Equity instruments at FVOCI are fair
valued at each reporting date and not subject to an impairment assessment.

Financial Assets at FVTPL

These assets are subsequently measured at fair value. Net gain or losses, including any interest or
dividend income, are recognized in the standalone statement of profit and loss.

2.5.2.4.1.2 Reclassifications

If the business model under which the Company holds financial assets changes, the financial assets
affected are reclassified. The classification and measurement requirements related to the new
category apply prospectively from the first day of the first reporting period following the change in
business model that result in reclassifying the Company''s financial assets.

2.5.2.4.2.1 Classification as Debt or Equity

Debt and equity instruments that are issued are classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangement.

A financial liability is a contractual obligation to deliver cash or another financial asset or to exchange
financial assets or financial liabilities with another entity under conditions that are potentially
unfavorable to the Company or a contract that will or may be settled in the Company''s own equity
instruments and is a non-derivative contract for which the Company is or may be obliged to deliver
a variable number of its own equity instruments, or a derivative contract over own equity that will or
may be settled other than by the exchange of a fixed amount of cash (or another financial asset) for
a fixed number of the Company''s own equity instruments.

2.5.2.4.2.2 Equity Instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued by the Company are recognized at the face
value and proceeds received in excess of the face value are recognized as Securities Premium.

2.5.2.4.2.3 Subsequent Measurement and Gain and Losses

Financial liabilities are subsequently measured at amortized cost using the effective interest method.
Interest expense is recognized in standalone statement of profit and loss. Any gain or loss on
derecognition is recognized in standalone statement of profit and loss.

2.5.2.5 Impairment and Write-off

The Company recognizes loss allowances for Expected Credit Losses on the following financial instruments
that are not measured at FVTPL:

- Loans and advances to customers;

- Other financial assets;

- Loan commitments

Equity instruments are measured at fair value and not subject to an impairment loss.

ECL is required to be measured through a loss allowance at an amount equal to:

• 12-month ECL, i.e., loss allowance on default events on the financial instrument that are possible
within 12 months after the reporting date, (referred to as Stage 1); or

• Lifetime ECL, i.e. lifetime ECL that results from all possible default events over the life of the financial
instrument, (referred to as Stage 2 and Stage 3).

A loss allowance for lifetime ECL is required for a financial instrument if the credit risk on that financial
instrument has increased significantly since initial recognition. For all other financial instruments, ECL is
measured at an amount equal to the 12-month ECL.

The Company has established a policy to perform an assessment at the end of each reporting period whether
a financial instrument''s credit risk has increased significantly since initial recognition by considering the
change in the risk of default occurring over the remaining life of the financial instruments.

Based on the above process, the Company categorizes its loans into Stage 1, Stage 2 and Stage 3 as
described below:

Stage 1: When loans are first recognized, the Company recognizes an allowance based on 12 months ECL.
Stage 1 loans also include facilities where the credit risk has improved and the loan has been reclassified
from Stage 2 to Stage 1.

Stage 2: When a loan has shown a significant increase in credit risk since origination, the Company records
an allowance for the life time expected credit losses.

Stage 3: When loans are considered credit-impaired, the Company records an allowance for the life
time expected credit losses. Stage 3 loans also include facilities, where the credit risk has improved but
considered as credit impaired assets as per regulatory guidelines.

For financial assets for which the Company has no reasonable expectations of recovering either the entire
outstanding amount, or a proportion thereof, the gross carrying amount of the financial asset is reduced.
This is considered a (partial) derecognition/impairment of the financial asset.

2.5.2.6 Determination of Expected Credit Loss ("ECL")

The measurement of impairment losses (ECL) across all categories of financial assets requires judgement.

In particular, the estimation of the amount and timing of future cash flows based on Company''s historical
experience and collateral values when determining impairment losses along with the assessment of a
significant increase in credit risk. These estimates are driven by a number of factors, changes in which can
result in different levels of allowances.

Elements of the ECL models that are considered accounting judgments and estimates include:

• Bifurcation of the financial assets into different portfolios when ECL is assessed on a collective basis.

• Company''s criteria for assessing if there has been a significant increase in credit risk.

• Development of ECL models, including choice of inputs/ assumptions used.

The various inputs used and the process followed by the Company in measurement of ECL has been
detailed below:

2.5.2.6.1 Measurement of Expected Credit Losses

The Company calculates ECL based on probability-weighted scenarios to measure expected cash shortfalls,
discounted at an approximation to the portfolio. A cash shortfall is a difference between the cash flows that
are due to the Company in accordance with the contract and the cash flows that the Company expects to
receive.

When estimating ECL for undrawn loan commitments, the Company estimates the expected portion of the
loan commitment that will be drawn down over its expected life. The ECL is then based on the present
value of the expected shortfalls in cash flows if the loan is drawn down. The expected cash shortfalls are
discounted at an approximation to the Interest rate on the loan.

The Company measures ECL on an individual basis, or on a collective basis for portfolios of loans that share
similar economic risk characteristics. The measurement of the loss allowance is based on the present value
of the asset''s expected cash flows using the asset''s original EIR, regardless of whether it is measured on
an individual basis or a collective basis.

The mechanics of the ECL calculations are outlined below and the key elements are, as follows:

Exposure at Default (EAD) is based on the amounts the Company expects to be owed at the time of default.
For a revolving commitment, the Company includes the current drawn balance plus any further amount
that is expected to be drawn up to the current contractual limit by the time of default, should it occur.

Probability of Default (PD) represents the likelihood of a borrower defaulting on its financial obligation (as
per ''''Definition of default and credit-impaired'''') either over the next 12 months (12 months PD), or over
the remaining lifetime (Lifetime PD) of the obligation.

Loss Given Default (LGD) represents the Company''s expectation of the extent of loss on a defaulted
exposure. LGD varies by type of counterparty, type and preference of claim and availability of collateral or
other credit support.

Forward-looking economic information (including management overlay) is included in determining the
12-month and lifetime PD, EAD and LGD. The assumptions underlying the expected credit loss are monitored
and reviewed on an ongoing basis.

2.5.2.6.2 Significant Increase in Credit Risk

The Company monitors all financial assets, including loan commitments contracts issued that are subject to
impairment requirements, to assess whether there has been a significant increase in credit risk since initial
recognition. If there has been a significant increase in credit risk the Company measures the loss allowance
based on lifetime rather than 12-month ECL. The Company monitors all financial assets, issued loan
commitments and financial guarantee contracts that are subject to impairment for a significant increase in
credit risk.

In assessing whether the credit risk on a financial instrument has increased significantly since initial
recognition, the Company compares the risk of a default occurring on the financial instrument at the
reporting date based on the remaining maturity of the instrument with the risk of a default occurring that
was anticipated for the remaining maturity at the current reporting date when the financial instrument
was first recognized. In making this assessment, the Company considers both quantitative and qualitative
information that is reasonable and supportable, including historical experience that is available without
undue cost or effort.

The quantitative factors that indicate a significant increase in credit risk are reflected in PD models on a
timely basis. However, the Company still considers separately some qualitative factors to assess if credit
risk has increased significantly. For corporate lending, there is a particular focus on assets that are included
on a ''watch list'' Given an exposure is on a watch list once, there is a concern that the credit worthiness
of the specific counterparty has deteriorated. ECL assessment for watch list accounts is done on a case by
case approach after considering the probability of weighted average in a different recovery scenario. For
individual loans the Company considers the expectation of forbearance, payment holidays, and events
such as unemployment, bankruptcy, divorce, or death.

Given that a significant increase in credit risk since initial recognition is a relative measure, a given change,
in absolute terms, in the PD is more significant for a financial instrument with a lower initial PD than
compared to a financial instrument with a higher PD.

2.5.2.6.3 Credit-Impaired Financial Assets

A financial asset is ''credit-impaired'' when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred. Credit-impaired financial assets are
referred to as Stage 3 assets. Evidence of credit-impairment includes observable data about the following
events:

• significant financial difficulty of the borrower or issuer;

• a breach of contract such as a default or past due event;

• restructuring of loans due to financial difficulty of the borrowers;

• the disappearance of an active market for a security because of financial difficulties; or

• the purchase of a financial asset at a deep discount that reflects the incurred credit losses.

It may not be possible to identify a single discrete event. Instead the combined effect of several events may
have caused financial assets to become credit-impaired. The Company assesses whether debt instruments
that are financial assets measured at amortized cost are credit-impaired at each reporting date. To assess if
corporate debt instruments are credit impaired, the Company considers factors such as bond yields, credit
ratings and the ability of the borrower to raise funds.

A loan is considered credit-impaired when a concession is granted to the borrower due to deterioration in
the borrower''s financial condition. The definition of default includes unlikeliness to pay indicators and a
back-stop if amounts are overdue for more than 90 days.

2.5.2.6.4 Definition of Default

The definition of default is used in measuring the amount of ECL and in the determination of whether the
loss allowance is based on 12-month or lifetime ECL.

The Company considers the following as constituting an event of default:

• the borrower is past due more than 90 days Accounts Identified by the Company as NPA as per
regulatory guidelines Objective Evidence for impairment (Qualitative Overlay); or

• the borrower is unlikely to pay its credit obligations to the Company.

When assessing if the borrower is unlikely to pay its credit obligation, the Company takes into account
both qualitative and quantitative indicators. The information assessed depends on the type of the asset,
for example in corporate lending a qualitative indicator used is the breach of covenants, which is not
as relevant for individual lending. Quantitative indicators, such as overdue status and non-payment on
another obligation of the same counterparty are key inputs in this analysis.

Loans are written off when the Company has no reasonable expectations of recovering the financial
asset (either in its entirety or a portion of it). This is the case when the Company determines that the
borrower does not have assets or sources of income that could generate sufficient cash flows to repay
the amounts subject to the write-off. A write-off constitutes a derecognition event. The Company may
apply enforcement activities to financial assets written off/ may assign/ sell loan exposure to ARC/ Bank/ a
financial institution for a negotiated consideration. Balance loan outstanding after expected recovery from
sale of vehicles, security deposit, settlement etc. are written off in the standalone statement of profit and
Loss. Recoveries resulting from the Company''s enforcement activities could result in impairment gains and
same is adjusted in Impairment on financial instruments.

2.5.2.7 Modification and Derecognition of Financial Assets

A modification of a financial asset occurs when the contractual terms governing the cash flows of a financial
asset are renegotiated or otherwise modified between the initial recognition and maturity of the financial
asset. A modification affects the amount and/or timing of the contractual cash flows either immediately
or at a future date. In addition, the introduction or adjustment of existing covenants of an existing loan
would constitute a modification even if these new or adjusted covenants do not yet affect the cash flows
immediately but may affect the cash flows depending on whether the covenant is or is not met (e.g. a
change to the increase in the interest rate that arises when covenants are breached).

The Company renegotiates loans to customers in financial difficulty to maximize collection and minimize
the risk of default. Loan forbearance is granted in cases where although the borrower made all reasonable
efforts to pay under the original contractual terms, there is a high risk of default or default has already
happened and the borrower is expected to be able to meet the revised terms. The revised terms in most of
the cases include an extension of the maturity of the loan, changes to the timing of the cash flows of the
loan (principal and interest repayment), reduction in the amount of cash flows due (principal and interest
forgiveness) and amendments to covenants.

When a financial asset is modified the Company assesses whether this modification results in derecognition.
In accordance with the Company''s policy, a modification results in derecognition when it gives rise to
substantially different terms. To determine if the modified terms are substantially different from the original
contractual terms the Company considers the following:

Qualitative factors, such as contractual cash flows after modification, are no longer SPPI, change in currency
or change of counterparty, the extent of change in interest rates, maturity, covenants, if these do not clearly
indicate a substantial modification, then; a quantitative assessment is performed to compare the present
value of the remaining contractual cash flows under the original terms with the contractual cash flows
under the revised terms, both amounts discounted at the original EIR. If there is a significant difference in
present value, the Company deems the arrangement substantially different, leading to derecognition.

In the case where the financial asset is derecognized the loss allowances for ECL is remeasured at the date
of derecognition to determine the net carrying amount of the asset at that date. The difference between
this revised carrying amount and the fair value of the new financial asset with the revised terms may lead
to a gain or loss on derecognition. The new financial asset may have a loss allowance measured based on
12-month ECL except where the new loan is considered to be originated-credit impaired. This applies only
in the case where the fair value of the new loan is recognized at a significant discount to its revised par
amount because there remains a high risk of default which has not been reduced by the modification. The
Company monitors the credit risk of modified financial assets by evaluating qualitative and quantitative
information, such as if the borrower is in past due status under the new terms.

When the contractual terms of a financial asset are modified and the modification does not result in
derecognition, the Company determines if the financial asset''s credit risk has increased significantly since
initial recognition by comparing:

• The remaining lifetime PD estimated based on data at initial recognition and the original contractual
terms;

• The remaining lifetime PD at the reporting date based on the modified terms.

For financial assets modified, where modification does not result in derecognition, the estimate of PD
reflects the Company''s ability to collect the modified cash flows taking into account the Company''s previous
experience of similar forbearance action, as well as various behavioural indicators, including the borrower''s

payment performance against the modified contractual terms. If the credit risk remains significantly higher
than what was expected at initial recognition, the loss allowance is continued to be measured at an amount
equal to lifetime ECL. The loss allowance on forborne loans is generally measured based on 12-month ECL
when there is evidence of the borrower''s improved repayment behaviour following modification leading to
a reversal of the previous significant increase in credit risk.

Where a modification does not lead to derecognition, the Company calculates the modification gain/loss
comparing the gross carrying amount before and after the modification (excluding the ECL allowance).
Then the Company measures ECL for the modified asset, where the expected cash flows arising from the
modified financial asset are included in calculating the expected cash shortfalls from the original asset.

The Company derecognizes a financial asset only when the contractual rights to the asset''s cash flows expire
(including expiry arising from a modification with substantially different terms), or when the financial asset
and substantially all the risks and rewards of ownership of the asset are transferred to another entity. If the
Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to
control the transferred asset, the Company recognizes its retained interest in the asset and an associated
liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of
ownership of a transferred financial asset, the Company continues to recognize the financial asset and also
recognizes a collateralized borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount
and the sum of the consideration received and receivable and the cumulative gain/loss that had been
recognized in OCI and accumulated in equity is recognized in the standalone statement of profit and loss,
with the exception of equity investment designated as measured at FVOCI, where the cumulative gain/loss
previously recognized in OCI is not subsequently reclassified to the standalone statement of profit and loss.

On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option
to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the
financial asset between the part it continues to recognize under continuing involvement, and the part it
no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The
difference between the carrying amount allocated to the part that is no longer recognized and the sum of
the consideration received for the part no longer recognized and any cumulative gain/loss allocated to it
that had been recognized in OCI is recognized in the standalone statement of profit and loss. A cumulative
gain/loss that had been recognized in OCI is allocated between the part that continues to be recognized
and the part that is no longer recognized on the basis of the relative fair values of those parts. This does
not apply for equity investments designated as measured at FVOCI, as the cumulative gain/loss previously
recognized in OCI is not subsequently reclassified to the standalone statement of profit and loss.

2.5.2.8 Derecognition of Financial Liabilities

The Company derecognizes financial liabilities when, and only when, the Company''s obligations are
discharged, cancelled or have expired. The difference between the carrying amount of the financial liability
derecognized and the consideration paid and payable is recognized in the standalone statement of profit
and loss.

2.5.2.9 Assets acquired under settlement

Asset acquired under settlement are measured at the prevailing market price/fair valuation including cost
of acquisition, whichever is lower, on periodic basis. Any profit or loss arising on the sale of assets acquired
under settlement of claims is recognized in Standalone statement of profit and loss.

2.5.3 Investments in subsidiaries

Investment in subsidiaries are recognised at cost and are not adjusted to fair value at the end of each
reporting period as allowed by Ind AS 27 ''Separate financial statement''. Cost of investment represents
amount paid for acquisition of the said investment.

The Company reviews the carrying amounts of its investments in subsidiaries at the end of each reporting
period, to determine whether there is any indication that those investments have impaired. If any such
indication exists, the recoverable amount of the investment is estimated in order to determine the extent
of the impairment loss (if any) and provided for accordingly. Such impairment loss is reduced from the
carrying value of investments

2.5.4 Property, Plant and Equipment ("PPE")

PPE held for use are stated in the Standalone Balance Sheet at cost less accumulated depreciation and
accumulated impairment losses.

PPE is recognized when it is probable that future economic benefits associated with the item is expected
to flow to the Company and the cost of the item can be measured reliably. PPE is stated at original cost
net of tax/duty credits availed, if any, less accumulated depreciation and cumulative impairment, if any.
Administrative and other general overhead expenses that are specifically attributable to acquisition of PPE
are allocated and capitalized as a part of the cost of the PPE.

An item of property, plant and equipment is derecognized upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal
or retirement of an item of property, plant and equipment is determined as the difference between the
sales proceeds and the carrying amount of the asset and is recognized in the standalone statement of profit
and loss.

2.5.5 Intangible Assets

Intangible assets are recognized when it is probable that the future economic benefits that are attributable
to the asset will flow to the Company and the cost of the asset can be measured reliably. Intangible
assets are stated at original cost net of tax/duty credits availed, if any, less accumulated amortization
and cumulative impairment. Administrative and other general overhead expenses that are specifically
attributable to acquisition of intangible assets are allocated and capitalized as a part of the cost of the
intangible assets.

Intangible assets not ready for the intended use on the date of Balance Sheet are disclosed as "Intangible
assets under development".

An intangible asset is derecognized on disposal, or when no future economic benefits are expected from
use or disposal. Gains and losses arising from derecognition of an intangible asset, measured as the
difference between the net disposal proceeds and the carrying amount of the assets are recognized in the
standalone statement of profit and loss when the asset is derecognized.

2.5.6 Capital work-in-progress

Capital work in progress includes assets not ready for the intended use and is carried at cost, comprising
direct cost and related incidental expenses.

2.5.7 Depreciation and Amortization

Depreciation is recognized using written down value method so as to write off the cost of the assets less
their residual values over their estimated useful lives specified in Schedule II to the Act. Depreciation
method is reviewed at each financial year end to reflect expected pattern of consumption of the future
economic benefits embodied in the asset. The estimated useful life and residual values are also reviewed
at each financial year end with the effect of any change in the estimates of useful life/residual value is
recognized on prospective basis.

Intangible assets with finite useful lives are amortized on written down value basis over the estimated
useful life. The method of amortization and useful life are reviewed at the end of each accounting year with
the effect of any changes in the estimate being accounted for on a prospective basis.

Intangible assets with indefinite useful lives are tested for impairment by comparing its recoverable amount
with its carrying amount annually and whenever there is an indication that the intangible asset may be
impaired.

2.5.8 Impairment of Assets other than Financial Instruments

As at the end of each accounting year, the Company reviews the carrying amounts of its PPE and intangible
assets to determine whether there is any indication that those assets have suffered an impairment loss.
If such indication exists, the PPE and intangible assets are tested for impairment so as to determine the
impairment loss, if any.

2.5.9 Employee Benefits

Short term Employee Benefits

Employee benefits falling due within twelve months of rendering the service are classified as short-term
employee benefits and are expensed in the period in which the employee renders the related service.
Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount
of the benefits expected to be paid in exchange for the related service.

Defined Contribution Plans

Contributions to defined contribution schemes such as employees'' state insurance, employee provident
fund and employee pension scheme etc. are charged as an expense based on the amount of contribution
required to be made as and when services are rendered by the employees. Company''s provident fund
contribution is made to a government administered fund and charged as an expense to the standalone
statement of profit and Loss. The above benefits are classified as Defined Contribution Schemes as the
Company has no further defined obligations beyond the monthly contributions.

Post-employment Benefits

The Company operates defined benefit plan in the form of gratuity and compensated absence. The liability
or asset recognized in the Standalone Balance Sheet in respect of its defined benefit plans is the present
value of the defined benefit obligation at the end of the reporting period. The defined benefit obligation
is calculated annually by actuaries using the projected unit credit method. The present value of the
said obligation is determined by discounting the estimated future cash out flows, using market yields
of government bonds that have tenure approximating the tenures of the related liability. The interest
expenses are calculated by applying the discount rate to the net defined benefit liability or asset. The net
interest expense on the net defined benefit liability or asset is recognized in the standalone statement of
profit and loss. Remeasurement gains and losses arising from experience adjustments and changes in
actuarial assumptions are recognized in the period in which they occur, directly in Other Items of Other
Comprehensive Income. They are included in Other Equity in the Standalone Statement of Change in
Equity and in the Standalone Balance Sheet. Changes in the present value of the defined benefit obligation
resulting from plan amendments or curtailments are recognized immediately in profit or loss as past
service cost.

2.5.10 Leases

The Company as Lessee

The Company''s lease asset classes primarily consist of leases for office premises. The Company assesses
whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the use of an identified asset, the
Company assesses whether:

(i) the contract involves the use of an identified asset

(ii) the Company has substantially all of the economic benefits from use of the asset through the period
of the lease and

(iii) the Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a
corresponding lease liability for all lease arrangements in which it is a lessee.

Certain lease arrangements include the options to extend or terminate the lease before the end of the lease
term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be
exercised.

The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or prior to the commencement date of the lease plus
any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated
depreciation and impairment losses.

Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter
of the lease term and useful life of the underlying asset.

The lease liability is initially measured at amortized cost at the present value of the future lease payments.
The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable,
using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are
remeasured with a corresponding adjustment to the related right of use asset if the Company changes its
assessment if whether it will exercise an extension or a termination option.

Lease liability and ROU asset have been separately presented in the Standalone Balance Sheet and lease
payments have been classified as financing cash flows.

The Company as Lessor

The Company as a lessor, classifies leases as either operating lease or finance lease. A lease is classified as
a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying
asset. Initially asset held under finance lease is recognized in Standalone Balance Sheet and presented as
a receivable at an amount equal to the net investment in the lease. Finance income is recognized over the
lease term, based on a pattern reflecting a constant periodic rate of return on Company''s net investment
in the lease.

A lease which is not classified as a finance lease is an operating lease. Accordingly, the Company recognizes
lease payments as income on a straight-line basis in case of assets given on operating leases. The Company
presents underlying assets subject to operating lease in its Standalone Balance Sheet under the respective
class of asset.

2.5.11 Securities Premium

(i) Securities premium includes the difference between the face value of the equity shares and the
consideration received in respect of shares issued under preferential allotment as equity shares by
the company.

(ii) The issue expenses of securities which qualify as equity instruments are adjusted against securities
premium.

2.5.12 Share-based payment arrangements

The stock options to be granted to employees by the company under MGFL Employee Stock Option Plan
2023'' ("ESOP 2023"/" Plan"), will be measured at the fair value of the options at the grant date.

The fair value of the options is treated as discount and accounted as employee compensation cost over the
vesting period on a straight line basis.

The amount recognized as expense in each year is arrived at based on the number of grants expected to vest.

2.5.13 Dividends on Equity Shares

The Company recognizes a liability to make cash distributions to equity shareholders of the Company
when the dividend is authorized and the distribution is no longer at the discretion of the Company and
a corresponding amount is recognized directly in equity. As per the corporate laws in India, an interim
dividend is authorized when it is approved by the Board of Directors and final dividend is authorized when
it is approved by the shareholders.

2.5.14 Cash and Cash Equivalents

Cash comprises of cash on hand and demand deposits with banks. Cash equivalents are short-term deposits
with banks (with an original maturity of three months or less from the date of placement) and cheques on
hand. Short term and liquid investments being subject to more than insignificant risk of change in value,
are not included as part of cash and cash equivalents.

2.5.15 Finance Costs

Finance costs include interest expense calculated using the EIR on respective financial instruments and
borrowings is measured at amortized cost, amortization of ancillary costs incurred in connection with the
arrangement of borrowings and exchange differences arising from foreign currency borrowings to the
extent they are regarded as an adjustment to the interest cost.

2.5.16 Foreign Currencies

(i) Functional currency of the Company and foreign operations has been determined based on the
primary economic environment in which the Company and its foreign operations operate considering
the currency in which funds are generated, spent and retained.

(ii) Transactions in currencies other than the Company''s functional currency are recorded on initial
recognition using the exchange rate at the transaction date. At each Balance Sheet date, foreign
currency monetary items are reported at the rates prevailing at the year-end. Non-monetary items
that are measured in terms of historical cost in foreign currency are not retranslated.

Exchange differences that arise on settlement of monetary items or on reporting of monetary items at each
Balance Sheet date at the closing spot rate are recognized in the standalone statement of profit and Loss
in the period in which they arise.

2.5.17 Segments

Operating segments are those components of the business whose operating results are regularly reviewed
by the Chief Operating Decision making body in the Company to make decisions for performance assessment
and resource allocation. Operating Segment are reported in a manner consistent with the internal reporting
provided to accounting policies are in line with the internal reporting provided to the Chief Operating
Decision maker.

2.5.18 Earnings Per Share

The Company presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per
share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by
the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is
determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average
number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential
ordinary shares.

2.5.19 Taxes on Income

The Company''s tax jurisdiction is in India. Significant judgements are involved in determining the provision
for income taxes, including amount expected to be paid/recovered for certain tax positions.

Income tax expense comprises current and deferred taxes. Income tax expense is recognized in the
standalone statement of profit and loss except when they relate to items that are recognized outside
standalone statement of profit and loss (whether in other comprehensive income or directly in equity), in
which case tax is also recognized outside standalone statement of profit and loss.

Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences
between the carrying values of assets and liabilities and their respective tax bases, and unutilized business
loss and depreciation carry-forwards. Deferred tax assets are recognized to the extent that it is probable
that future taxable income will be available against which the deductible temporary differences, unused tax
losses and depreciation carry-forwards could 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 are re-assessed at each reporting date, and are
recognized 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 based on the tax rates that are expected to apply in the
period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been
enacted or substantively enacted by the balance sheet date.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities and when they relate to income taxes levied by the same taxation
authority and the Company intends to settle its current tax assets and liabilities on a net basis.

The Company provides for current tax liabilities at the best estimate that is expected to be paid to the tax
authorities where an outflow is probable.

2.5.20 Goods and Services Tax Input Credit

Goods and Services tax input credit is recognized in the books of account in the period in which the supply
of goods or service received is recognized and when there is no uncertainty in availing/utilizing the credits.

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Mar 31, 2024

2.5 Material Accounting Policies

2.5.1 Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured and there exists reasonable certainty of its recovery.

2.5.1.1 Interest

Interest income on financial instruments is recognized on a time proportion basis taking into account the amount outstanding and the effective interest rate ("EIR") applicable.

The EIR is the rate that exactly discounts estimated future cash flows of the financial instrument through the expected life of the financial instrument or, where appropriate, a shorter period, to the net carrying amount. The future cash flows are estimated taking into account all the contractual terms of the instrument.

The calculation of the EIR includes all fees paid or received between parties to the contract that are incremental and directly attributable to the specific lending arrangement, transaction costs, and all other premiums or discounts. For financial assets measured at fair value through profit and loss ("FVTPL"), transaction costs arerecognized in the standalone statement of profit and loss at initial recognition.

Interest income/expenses is calculated by applying the EIR to the gross carrying amount (principal not due) of noncredit impairedfinancial assets/liabilities (i.e. at the amortized cost of the financial asset before adjusting for any expected credit loss allowance). For credit-impaired financial assets, interest income is calculated by applying the EIR to the amortized cost of the credit-impaired financial assets (i.e. the gross carrying amount less the allowance for expected credit losses). Further, in terms of RBI Guidelines, interest accrued on credit impaired assets is recognized as and when received.

2.5.1.2 Dividend Income

Dividend income is recognized when the Company''s right to receive dividend is established.

2.5.1.3 Fee and Commission Income

Fee and commission income include fees other than those that are an integral part of EIR. The Company recognizes the fee and commission income in accordance with the terms of the relevant contracts / agreement and when it is probable that the Company will collect the consideration.

2.5.1.4 Net gain on fair value change

Any differences between the fair values on the date of acquisition and balance sheet date of the financial assets classified as fair value through the profit or loss, held by the Company on the balance sheet date is recognized as an unrealized gain/loss in the standalone statement of profit and loss. In cases there is a net gain in aggregate, the same is recognized in "Net gains on fair value changes" under revenue from operations and if there is a net loss, the same is disclosed in "Net loss on fair value changes", in the standalone statement of profit and loss.

2.5.1.5 Other operational revenue

Other operational revenue represents income earned from the activities incidental to the main business and is recognized when the right to receive the income is established as per the terms of the contract and Late payment interest, bouncing charges etc. are accounted on the receipt basis.

2.5.1.6 Other Income

Other Income represents income earned from the activities other than the main business is recognized when the right to receive the income is established as per the terms of the contract.

2.5.2 Financial Instruments

2.5.2.1 Fair Valuation of Investments

Some of the Company''s Investments are measured at fair value. In determining the fair value of such Investments, the Company uses quoted prices (unadjusted)in active markets for identical assets or based on inputs which are observable either directly or indirectly. However, in certain cases, the Company adopts valuation techniques and inputs which are not based on market data. When Market observable information is not available, the Company has applied appropriate valuation techniques and inputs to the valuation model.

2.5.2.2 Recognition and Initial Measurement

All financial assets and liabilities, with the exception of loans and borrowings are initially recognized on the trade date, i.e., the date that the Company becomes a party to the contractual provisions of the instrument.

Loans are recognized when fund transfer is initiated or disbursement cheque is issued to the customer. The Company recognizes debt securities and borrowings (other than debt securities) when funds are received by the Company.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs and revenues that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities measured at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs and revenues directly attributable to the acquisition of financial assets or financial liabilities measured at FVTPL are recognized immediately in the standalone statement of profit and loss.

2.5.2.3 Classification and Subsequent Measurement of Financial Assets and Liabilities

2.5.2.3.1 Financial Assets

The Company classifies and measures all its financial assets based on the business model for managing the assets and the asset''s contractual terms, either at:

- Amortized cost

- Fair Value through other comprehensive income

- Fair Value through Profit and Loss

2.5.2.3.1.1 Amortized Cost

The Company classifies and measures cash and bank balances, Loans, Trade receivable, certain debt investments and other financial assets at amortized cost if the following condition is met:

Financial Assets that are held within a business model whose objective is to hold financial assets inorder to collect the contractual cash flows, and that have contractual cash flows that are Solely Payment of Principal and Interest (SPPI);

2.5.2.3.1.2 Fair value through Other Comprehensive Income ("FVOCI")

The Company classifies and measures certain debt instruments at FVOCI when the investments are held within a business model, the objective of which is achieved by both, collecting contractual cash flows and selling the financial instruments and the contractual terms of the financial instruments meet the Solely Payment ofPrincipal and Interest on principal amount outstanding (''SPPI'') test.

2.5.2.3.1.3 Fair value through Profit and Loss ("FVOCI")

Financial assets at FVTPL are:

- assets with contractual cash flows that are not SPPI; and/or

- assets that are held in a business model other than held to collect contractual cash flows or held to collect and sell; or

- assets designated at FVTPL using the fair value option.

These assets are measured at fair value, with any gains/losses arising on remeasurement is recognized in the standalone statement of profit and loss.

2.5.2.3.1.4 FVOCI- Equity Instruments

The Company subsequently measures all equity investments at fair value through profit or loss, unless the Company''s management has elected to classify irrevocably some of its equity instruments at FVOCI, when such instruments meet the definition of Equity under Ind AS 32 Financial Instruments and are not held for trading.

If the Company elects to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in other comprehensive income. This cumulative gain or loss is not reclassified to standalone statement of profit and loss on disposal of such instruments. Investments representing equity interest in subsidiary, joint venture and associate are carried at cost less any provision for impairment.

Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.

All financial assets not classified as measured at amortised cost or FVOCI are measured at FVTPL.

2.5.2.4 Evaluation of Business Model

Classification and measurement of financial instruments depends on the results of the Solely Payments of Principal and Interest on the principal amount outstanding ("SPPI") and the business model test (refer note 2.5.2.4.1). The Company determines the business model at a level that reflects how the Company''s financial instruments are managed together to achieve a particular business objective.

The Company monitors financial assets measured at amortized cost or fair value through other comprehensive income that are derecognized prior to their maturity to understand the reason for their disposal and whether the reasons

are consistent with the objective of the business for which the asset was held. Monitoring is partof the Company''s continuous assessment of whether the business model for which the remaining financial assets are held continues to be appropriate and if it is not appropriate whether there has been a change in business model and so a prospective change to the classification of those instruments.

2.5.2.4.1 Business Model Test

An assessment of business model for managing financial assets is fundamental to the classification of a financial asset. The Company determines the business model at a level that reflects how financial assets are managed together to achieve a particular business objective. The Company''s business model does not depend on management''s intentions for an individual instrument; therefore, the business model assessment Eperformed at a higher level of aggregation rather than on an instrument-by-instrument basis.

The Company considers all relevant information and evidence available when making the business model assessment such as:

• how the performance of the business model and the financial assets held within that business model are evaluated and reported to the Company''s key management personnel;

• the risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way in which those risks are managed; and

• how managers of the business are compensated (e.g. whether the compensation is based on the fair value of the assets managed or on the contractual cash flows collected).

At initial recognition of a financial asset, the Company determines whether newly recognized financial assets are part of an existing business model or whether they reflect a new business model. The Company reassesses its business model at each reporting period to determine whether the business model has changed since the preceding period. For the current and prior reporting period the Company has not identified a change in its business model.

Solely Payments of Principal and Interest ("SPPI") on the principal amount outstanding

For an asset to be classified and measured at amortized cost or at FVOCI, its contractual terms should give rise to cash flows that meet SPPI test.

For the purpose of SPPI test, principal is the fair value of the financial asset at initial recognition. That principal amount may change over the life of the financial asset (e.g. if there are repayments of principal). Interest consists of consideration for the time value of money, for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.

Contractual terms that introduce exposure to risks or volatility in the contractual cash flows that are unrelated to a basic lending arrangement, such as exposure to changes in equity prices or commodity prices, do not give rise to contractual cash flows that are SPPI, such financial assets are either classified as fair value through profit and loss or fair value through other comprehensive income.

2.5.2.4.1.1 Subsequent Measurement and Gain and Losses Financial Assets at Amortized Cost

These assets are subsequently measured at amortized cost using the effective interest method. The amortizedcost is reduced by impairment losses. Interest income as per EIR and impairment loss are recognized in standalone statement of profit and loss. Any gain or loss on derecognition is recognized in standalone statement of profit and loss.

Debt Instrument at FVOCI

These assets are subsequently measured at fair value. Interest income is recognized in standalone statement of profit and loss. Any gain or loss on subsequent measurement is recognized in OCI and on derecognition the cumulative gain or loss recognized in OCI will be recycled to standalone statement of profit and loss.

Equity Instrument at FVOCI

Gains and losses on equity instruments measured at FVOCI are recognized in other comprehensive income and never recycled to the standalone statement of profit and loss. Dividends are recognized in profit or loss as

dividend income when the right to receive payment has been established, except when the Company benefits from such proceeds as a recovery of whole or part of the cost of the instrument, in which case, such gains are recorded in OCI. Equity instruments at FVOCI are fair valued at each reporting date and not subject to an impairment assessment.

Financial Assets at FVTPL

These assets are subsequently measured at fair value. Net gain or losses, including any interest or dividend income, are recognized in the standalone statement of profit and loss.

2.5.2.4.1.2 Reclassifications

If the business model under which the Company holds financial assets changes, the financial assets affected are reclassified. The classification and measurement requirements related to the new category apply prospectively from the first day of the first reporting period following the change in business model that resultin reclassifying the Company''s financial assets.

2.5.2.4.2 Financial Liabilities and Equity Instruments

2.5.2.4.2.1 Classification as Debt or Equity

Debt and equity instruments that are issued are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

A financial liability is a contractual obligation to deliver cash or another financial asset or to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavorable to the Company or a contract that will or may be settled in the Company''s own equity instruments andis a non-derivative contract for which the Company is or may be obliged to deliver a variable number of its own equity instruments, or a derivative contract over own equity that will or may be settled other than by the exchange of a fixed amount of cash (or another financial asset) for a fixed number of the Company''s own equity instruments.

2.5.2.4.2.2 Equity Instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the face value and proceeds received in excess of the face value are recognized as Securities Premium.

2.5.2.4.2.3 Subsequent Measurement and Gain and Losses

Financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense is recognized in standalone statement of profit and loss. Any gain or loss on derecognition is recognized in standalone statement of profit and loss.

2.5.2.5 Impairment and Write-off

The Company recognizes loss allowances for Expected Credit Losses on the following financial instruments that are not measured at FVTPL:

- Loans and advances to customers;

- Other financial assets;

- Loan commitments

Equity instruments which are measured at fair value are not subject to an impairment loss.

ECL is required to be measured through a loss allowance at an amount equal to:

• 12-month ECL, i.e., loss allowance on default events on the financial instrument that are possible within 12 months after the reporting date, (referred to as Stage 1); or

• Lifetime ECL, i.e. lifetime ECL that results from all possible default events over the life of the financial instrument, (referred to as Stage 2 and Stage 3).

A loss allowance for lifetime ECL is required for a financial instrument if the credit risk on that financial instrument has increased significantly since initial recognition. For all other financial instruments, ECL is measured at an amount equal to the 12-month ECL.

The Company has established a policy to perform an assessment at the end of each reporting period whether a financial instrument''s credit risk has increased significantly since initial recognition by consideringthe change in the risk of default occurring over the remaining life of the financial instruments.

Based on the above process, the Company categorizes its loans into Stage 1, Stage 2 and Stage 3 as described below:

Stage 1: When loans are first recognized, the Company recognizes an allowance based on 12 months ECL.Stage 1 loans also include facilities where the credit risk has improved and the loan has been reclassified from Stage 2/3 to Stage 1.

Stage 2: When a loan has shown a significant increase in credit risk since origination, the Company records an allowance for the life time expected credit losses.

Stage 3: When loans are considered credit-impaired, the Company records an allowance for the life time expected credit losses. Stage 3 loans also include facilities, where the credit risk has improved but considered as credit impaired assets as per regulatory guidelines.

For financial assets for which the Company has no reasonable expectations of recovering either the entire outstanding amount, or a proportion thereof, the gross carrying amount of the financial asset is reduced. This is considered a (partial) derecognition/impairment of the financial asset.

2.5.2.6 Determination of Expected Credit Loss ("ECL")

The measurement of impairment losses (ECL) across all categories of financial assets requires judgement.

In particular, the estimation of the amount and timing of future cash flows based on Company''s historical experience and collateral values when determining impairment losses along with the assessment of a significant increase in credit risk. These estimates are driven by a number of factors, changes in which can result in different levels of allowances.

Elements of the ECL models that are considered accounting judgments and estimates include:

• Bifurcation of the financial assets into different portfolios when ECL is assessed on a collective basis.

• Company''s criteria for assessing if there has been a significant increase in credit risk.

• Development of ECL models, including choice of inputs / assumptions used.

The various inputs used and the process followed by the Company in measurement of ECL has been detailed below:

2.5.2.6.1 Measurement of Expected Credit Losses

The Company calculates ECL based on probability-weighted scenarios to measure expected cash shortfalls, discounted at an approximation to the portfolio. A cash shortfall is a difference between the cash flows that are due to the Company in accordance with the contract and the cash flows that the Company expects to receive.

When estimating ECL for undrawn loan commitments, the Company estimates the expected portion of the loan commitment that will be drawn down over its expected life. The ECL is then based on the present value of the expected shortfalls in cash flows if the loan is drawn down. The expected cash shortfalls are discounted at an approximation to the Interest rate on the loan.

The Company measures ECL on an individual basis, or on a collective basis for portfolios of loans that share similar economic risk characteristics. The measurement of the loss allowance is based on the present value of the asset''s expected cash flows using the asset''s original EIR, regardless of whether it is measured on an individual basis or a collective basis.

The mechanics of the ECL calculations are outlined below and the key elements are, as follows:

Exposure at Default (EAD) is based on the amounts the Company expects to be owed at the time of default. For a revolving commitment, the Company includes the current drawn balance plus any further amount that is expected to be drawn up to the current contractual limit by the time of default, should it occur.

Probability of Default (PD) represents the likelihood of a borrower defaulting on its financial obligation (as per ''''Definition of default and credit-impaired'''') either over the next 12 months (12 months PD), or over the remaining lifetime (Lifetime PD) of the obligation.

Loss Given Default (LGD) represents the Company''s expectation of the extent of loss on a defaulted exposure. LGD varies by type of counterparty, type and preference of claim and availability of collateral or other credit support.

Forward-looking economic information (including management overlay) is included in determining the 12-month and lifetime PD, EAD and LGD. The assumptions underlying the expected credit loss are monitored and reviewed on an ongoing basis.

2.5.2.6.2 Significant Increase in Credit Risk

The Company monitors all financial assets, including loan commitments contracts issued that are subject to impairment requirements, to assess whether there has been a significant increase in credit risk since initial recognition. If there has been a significant increase in credit risk the Company measures the loss allowance based on lifetime rather than 12-month ECL. The Company monitors all financial assets, issued loan commitments and financial guarantee contracts that are subject to impairment for a significant increase in credit risk.

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Company compares the risk of a default occurring on the financial instrument at the reporting date based on the remaining maturity of the instrument with the risk of a default occurring that was anticipated for the remaining maturity at the current reporting date when the financial instrument was first recognized. In making this assessment, the Company considers both quantitative and qualitative information that is reasonable and supportable, including historical experience that is available without undue cost or effort.

The quantitative factors that indicate a significant increase in credit risk are reflected in PD models on a timelybasis. However, the Company still considers separately some qualitative factors to assess if credit risk has increased significantly. For corporate lending, there is a particular focus on assets that are included on a ''watchlist''. Given an exposure is on a watch list once, there is a concern that the credit worthiness of the specific counterparty has deteriorated. ECL assessment for watch list accounts is done on a case by case approach after considering the probability of weighted average in a different recovery scenario. For individual loans theCompany considers the expectation of forbearance, payment holidays, and events such as unemployment,bankruptcy, divorce, or death.

Given that a significant increase in credit risk since initial recognition is a relative measure, a given change, in absolute terms, in the PD is more significant for a financial instrument with a lower initial PD than comparedto a financial instrument with a higher PD.

2.5.2.6.3 Credit-Impaired Financial Assets

A financial asset is ''credit-impaired'' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Credit-impaired financial assets are referred to as Stage3 assets. Evidence of credit-impairment includes observable data about the following events:

• significant financial difficulty of the borrower or issuer;

• a breach of contract such as a default or past due event;

• restructuring of loans due to financial difficulty of the borrowers;

• the disappearance of an active market for a security because of financial difficulties; or

• the purchase of a financial asset at a deep discount that reflects the incurred credit losses.

It may not be possible to identify a single discrete event. Instead the combined effect of several events may have caused financial assets to become credit-impaired. The Company assesses whether debt instruments that are financial assets measured at amortized cost

are credit-impaired at each reporting date.To assess if corporate debt instruments are credit impaired, the Company considers factors such as bond yields, credit ratings and the ability of the borrower to raise funds.

A loan is considered credit-impaired when a concession is granted to the borrower due to deterioration in the borrower''s financial condition. The definition of default includes unlikeliness to pay indicators and a back-stopif amounts are overdue for more than 90 days.

2.5.2.6.4 Definition of Default

The definition of default is used in measuring the amount of ECL and in the determination of whether the loss allowance is based on 12-month or lifetime ECL.

The Company considers the following as constituting an event of default:

• the borrower is past due more than 90 days Accounts Identified by the Company as NPA as per regulatory guidelines Objective Evidence for impairment (Qualitative Overlay); or

• the borrower is unlikely to pay its credit obligations to the Company.

When assessing if the borrower is unlikely to pay its credit obligation, the Company takes into account both qualitative and quantitative indicators. The information assessed depends on the type of the asset, for example in corporate lending a qualitative indicator used is the breach of covenants, which is not as relevantfor individual lending. Quantitative indicators, such as overdue status and non-payment on another obligation of the same counterparty are key inputs in this analysis.

2.5.2.6.5 Write-off

Loans are written off when the Company has no reasonable expectations of recovering the financial asset (either in its entirety or a portion of it). This is the case when the Company determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the writeoff. A write-off constitutes a derecognition event. The Company may apply enforcement activities to financial assets written off/ may assign / sell loan exposure to ARC / Bank / a financial institution for a negotiated consideration. Balance loan outstanding after expected recovery from sale of vehicles, security deposit, settlement etc. are written off in the standalone statement of profit and Loss. Recoveries resulting from the Company''s enforcement activities could result in impairment gains and same is adjusted in Impairment on financial instruments.

2.5.2.7 Modification and Derecognition of Financial Assets

A modification of a financial asset occurs when the contractual terms governing the cash flows of a financial asset are renegotiated or otherwise modified between the initial recognition and maturity of the financial asset. A modification affects the amount and/or timing of the contractual cash flows either immediately or at a future date. In addition, the introduction or adjustment of existing covenants of an existing loan would constitute a modification even if these new or adjusted covenants do not yet affect the cash flows immediately but may affect the cash flows depending on whether the covenant is or is not met (e.g. a change to the increase in the interest rate that arises when covenants are breached).

The Company renegotiates loans to customers in financial difficulty to maximize collection and minimize the risk of default. Loan forbearance is granted in cases where although the borrower made all reasonable efforts to pay under the original contractual terms, there is a high risk of default or default has already happened and the borrower is expected to be able to meet the revised terms. The revised terms in most of the cases include an extension of the maturity of the loan, changes to the timing of the cash flows of the loan (principal and interest repayment), reduction

in the amount of cash flows due (principal and interest forgiveness) and amendments to covenants.

When a financial asset is modified the Company assesses whether this modification results in derecognition. In accordance with the Company''s policy, a modification results in derecognition when it gives rise to substantially different terms. To determine if the modified terms are substantially different from the original contractual terms the Company considers the following:

Qualitative factors, such as contractual cash flows after modification, are no longer SPPI, change in currencyor change of counterparty, the extent of change in interest rates, maturity, covenants, if these do not clearly indicate a substantial modification, then; a quantitative assessment is performed to compare the present value of the remaining contractual cash flows under the original terms with the contractual cash flows underthe revised terms, both amounts discounted at the original EIR. If there is a significant difference in present value, the Company deems the arrangement substantially different, leading to derecognition.

In the case where the financial asset is derecognized the loss allowances for ECL is remeasured at the date of derecognition to determine the net carrying amount of the asset at that date. The difference between this revised carrying amount and the fair value of the new financial asset with the revised terms may lead to a gain or loss on derecognition. The new financial asset may have a loss allowance measured based on 12-month ECL except where the new loan is considered to be originated-credit impaired. This applies only in the case where the fair value of the new loan is recognized at a significant discount to its revised par amount because there remains a high risk of default which has not been reduced by the modification. The Company monitors the credit risk of modified financial assets by evaluating qualitative and quantitative information, such as if the borrower is in past due status under the new terms.

When the contractual terms of a financial asset are modified and the modification does not result in derecognition, the Company determines if the financial asset''s credit risk has increased significantly since initial recognition by comparing:

• The remaining lifetime PD estimated based on data at initial recognition and the original contractual terms;

• The remaining lifetime PD at the reporting date based on the modified terms.

For financial assets modified, where modification does not result in derecognition, the estimate of PD reflects the Company''s ability to collect the modified cash flows taking into account the Company''s previous experience of similar forbearance action, as well as various behavioural indicators, including the borrower''s payment performance against the modified contractual terms. If the credit risk remains significantly higher than what was expected at initial recognition, the loss allowance is continued to be measured at an amount equal to lifetime ECL. The loss allowance on forborne loans is generally measured based on 12-month ECL when there is evidence of the borrower''s improved repayment behaviour following modification leading to a reversal of the previous significant increase in credit risk.

Where a modification does not lead to derecognition, the Company calculates the modification gain/loss comparing the gross carrying amount before and after the modification (excluding the ECL allowance). Then the Company measures ECL for the modified asset, where the expected cash flows arising from the modified financial asset are included in calculating the expected cash shortfalls from the original asset.

The Company derecognizes a financial asset only when the contractual rights to the asset''s cash flows expire (including expiry arising from a modification with substantially different terms), or when the financial asset and substantially all the risks and rewards of ownership of the asset are transferred to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain/loss that had been recognized in OCI and accumulated in equity is recognized in the standalone statement of profit and loss, with the exception of equity investment designated as measured at FVOCI, where the cumulative gain/loss previously recognized in OCI isnot subsequently reclassified to the standalone statement of profit and loss.

On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum ofthe consideration received for the part no longer recognized and any cumulative gain/loss allocated to it that had been recognized in OCI is recognized in the standalone statement of profit and loss. A cumulative gain/loss that had been recognized in OCI is allocated between the part that continues to be recognized and the part thatis no longer recognized on the basis of the relative fair values of those parts. This does not apply for equity investments designated as measured at FVOCI, as the cumulative gain/loss previously recognized in OCI is not subsequently reclassified to the standalone statement of profit and loss.

2.5.2.8 Derecognition of Financial Liabilities

The Company derecognizes financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in the standalone statement of profit and loss.

2.5.2.9 Assets acquired under settlement

Asset acquired under settlement are measured at the prevailing market price/fair valuation including cost of acquisition, whichever is lower, on periodic basis. Any profit or loss arising on the sale of assets acquired under settlement of claims is recognized in Standalone statement of profit and loss.

2.5.3 Investments in subsidiaries

Investment in subsidiaries are recognised at cost and are not adjusted to fair value at the end of each reporting period as allowed by Ind AS 27 ''Separate financial statement''. Cost of investment represents amount paid for acquisition of the said investment.

The Company reviews the carrying amounts of its investments in subsidiaries at the end of each reporting period, to determine whether there is any indication that those investments have impaired. If any such indication exists, the recoverable amount of the investment is estimated in order to determine the extent of the impairment loss (if any) and provided for accordingly. Such impairment loss is reduced from the carrying value of investments

2.5.4 Property, Plant and Equipment ("PPE")

PPE held for use are stated in the Standalone Balance Sheet at cost less accumulated depreciation and accumulated impairment losses.

PPE is recognized when it is probable that future economic benefits associated with the item is expected to flow to the Company and the cost of the item can be measured reliably. PPE is stated at original cost net of tax/duty credits availed, if any, less accumulated depreciation and cumulative impairment, if any. Administrative and other general overhead expenses that are specifically attributable to acquisition of PPE are allocated and capitalized as a part of the cost of the PPE.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefitsare expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirementof an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in the standalone statement of profit and loss.

2.5.5 Intangible Assets

Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the asset will flow to the Company and the cost of the asset can be measured reliably. Intangible assetsare stated at original cost net of tax/duty credits availed, if any, less accumulated amortization and cumulative impairment. Administrative and other general overhead expenses that are specifically attributable to acquisition of intangible assets are allocated and capitalized as a part of the cost of the intangible assets.

Intangible assets not ready for the intended use on the date of Balance Sheet are disclosed as "Intangible assets under development".

An intangible asset is derecognized on disposal, or when no future economic benefits are expected from useor disposal. Gains and losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the assets are recognized in the standalone statement of profit and loss when the asset is derecognized.

2.5.6 Capital work-in-progress

Capital work in progress includes assets not ready for the intendeduse and is carried at cost, comprising direct cost and related incidental expenses.

2.5.7 Depreciation and Amortization

Depreciation is recognized using written down value method so as to write off the cost of the assets less their residual values over their estimated useful lives specified in Schedule II to the Act. Depreciation method is reviewed at each financial year end to reflect expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful life and residual values are also reviewed at each financial year end with the effect of any change in the estimates of useful life/residual value is recognized on prospective basis.

Depreciation for additions to/deductions from, owned assets is calculated pro rata to the period of use. The useful life of the property, plant and equipment determined by the Company is as follows:

Intangible assets with finite useful lives are amortized on written down value basis over the estimated useful life. The method of amortization and useful life are reviewed at the end of each accounting year with the effect of any changes in the estimate being accounted for on a prospective basis.

Intangible assets with indefinite useful lives are tested for impairment by comparing its recoverable amount with its carrying amount annually and whenever there is an indication that the intangible asset may be impaired.

The useful life of Intangible Assets held by the Company is as follows:

2.5.8 Impairment of Assets other than Financial Instruments

As at the end of each accounting year, the Company reviews the carrying amounts of its PPE and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If such indication exists, the PPE and intangible assets are tested for impairment so as to determine the impairment loss, if any.

2.5.9 Employee Benefits Short term Employee Benefits

Employee benefits falling due within twelve months of rendering the service are classified as short-term employee benefits and are expensed in the period in which the employee renders the related service. Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

Defined Contribution Plans

Contributions to defined contribution schemes such as employees'' state insurance, employee provident fund and employee pension scheme etc. are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees. Company''s provident fund contribution is made to a government administered fund and charged as an expense to the standalone statement of profit and Loss. The above benefits are classified as Defined Contribution Schemes as the Company has no further defined obligations beyond the monthly contributions.

Post-employment Benefits

The Company operates defined benefit plan in the form of gratuity and compensated absence. The liability or asset recognized in the Standalone Balance Sheet in respect of its defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method. The present value of the said obligation is determined by discounting the estimated future cash out flows, using market yields of government bonds that have tenure approximating the tenures of the related liability. The interest expenses are calculated by applying the discount rate to the net defined benefit liability or asset. The net interest expense on the net defined benefit liability or asset is recognized in the standalone statement of profit and loss. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in Other Items of Other Comprehensive Income. They are included in Other Equity in the

Standalone Statement of Change in Equity and in the Standalone Balance Sheet. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.

2.5.10 Leases

The Company as Lessee

The Company''s lease asset classes primarily consist of leases for office premises. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contractconveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

(i) the contract involves the use of an identified asset

(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and

(iii) the Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee.

Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.

The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.

Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.

The lease liability is initially measured at amortized cost at the present value of the future lease payments. Thelease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.

Lease liability and ROU asset have been separately presented in the Standalone Balance Sheet and lease payments have been classified as financing cash flows.

The Company as Lessor

The Company as a lessor, classifies leases as either operating lease or finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. Initially asset held under finance lease is recognized in Standalone Balance Sheet and presented as a receivable at an amount equal to the net investment in the lease. Finance income is recognized over the lease term, based on a pattern reflecting a constant periodic rate of return on Company''s net investment in the lease.

A lease which is not classified as a finance lease is an operating lease. Accordingly, the Company recognizes lease payments as income on a straight-line basis in case of assets given on operating leases. The Company presents underlying assets subject to operating lease in its Standalone Balance Sheet under the respective class of asset.

2.5.11 Securities Premium

(i) Securities premium includes the difference between the face value of the equity shares and the consideration received in respect of shares issued under preferential allotment as equity shares by the company.

(ii) The issue expenses of securities which qualify as equity instruments are adjusted against securities premium.

2.5.12 Share-based payment arrangements

The stock options to be granted to employees by the company under MGFL Employee Stock Option Plan 2023'' ("ESOP 2023"/" Plan"), will be measured at the fair value of the options at the grant date.

The fair value of the options is treated as discount and accounted as employee compensation cost over the vesting period on a straight line basis.

The amount recognized as expense in each year is arrived at based on the number of grants expected to vest.

2.5.13 Dividends on Equity Shares

The Company recognizes a liability to make cash distributions to equity shareholders of the Company when the dividend is authorized and the distribution is no longer at the discretion of the Company and a corresponding amount is recognized directly in equity. As per the corporate laws in India, an interim dividend is authorized when it is approved by the Board of Directors and final dividend is authorized when it is approved by the shareholders.

2.5.14 Cash and Cash Equivalents

Cash comprises of cash on hand and demand deposits with banks. Cash equivalents are short-term depositswith banks (with an original maturity of three months or less from the date of placement) and cheques on hand. Short term and liquid investments being subject to more than insignificant risk of change in value, are not included as part of cash and cash equivalents.

2.5.15 Finance Costs

Finance costs include interest expense calculated using the EIR on respective financial instrumentsand borrowings is measured at amortized cost, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

2.5.16 Foreign Currencies

(i) Functional currency of the Company and foreign operations has been determined based on the primary economic environment in which the Company and its foreign operations operate considering the currency in which funds are generated, spent and retained.

(ii) Transactions in currencies other than the Company''s functional currency are recorded on initial recognition using the exchange rate at the transaction date. At each Balance Sheet date, foreign currency monetary items are reported at the rates prevailing at the year-end. Non-monetary items that are measured in terms of historical cost in foreign currency are not retranslated.

Exchange differences that arise on settlement of monetary items or on reporting of monetary items at each Balance Sheet date at the closing spot rate are recognized in the standalone statement of profit and Loss in the period in which they arise.

2.5.17 Segments

Operating segments are those components of the business whose operating results are regularly reviewed by the Chief Operating Decision making body in the Company to make decisions for performance assessment and resource allocation. Operating Segment are reported in a manner consistent with the internal reporting provided to accounting policies are in line with the internal reporting provided to the Chief Operating Decision maker.

2.5.18 Earnings Per Share

The Company presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares.

2.5.19 Taxes on Income

The Company''s tax jurisdiction is in India. Significant judgements are involved in determining the provision for income taxes, including amount expected to be paid/recovered for certain tax positions.

Income tax expense comprises current and deferred taxes. Income tax expense is recognized in the standalone statement of profit and loss except when they relate to items that are recognized outside standalone statement of profit and loss (whether in other comprehensive income or directly in equity), in which case tax is also recognized outside standalone statement of profit and loss.

Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases, and unutilized business loss and depreciation carry-forwards. Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses and depreciation carry-forwards could 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 assetto be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date, and are recognized 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 based on the tax rates that are expected to apply in the periodwhen the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

The Company provides for current tax liabilities at the best estimate that is expected to be paid to the tax authorities where an outflow is probable.

2.5.20 Goods and Services Tax Input Credit

Goods and Services tax input credit is recognized in the books of account in the period in which the supply of goods or service received is recognized and when there is no uncertainty in availing/utilizing the credits.

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Mar 31, 2023

Significant Accounting Policies

2.5.1 Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company
and the revenue can be reliably measured and there exists reasonable certainty of its recovery.

2.5.1.1 Interest

Interest income on financial instruments is recognized on a time proportion basis taking into account the
amount outstanding and the effective interest rate ("EIR") applicable.

The EIR is the rate that exactly discounts estimated future cash flows of the financial instrument through
the expected life of the financial instrument or, where appropriate, a shorter period, to the net carrying
amount. The future cash flows are estimated taking into account all the contractual terms of the instrument.

The calculation of the EIR includes all fees paid or received between parties to the contract that are
incremental and directly attributable to the specific lending arrangement, transaction costs, and all other
premiums or discounts. For financial assets measured at fair value through profit and loss ("FVTPL"),
transaction costs are recognized in the statement of profit and loss at initial recognition.

Interest income/expenses is calculated by applying the EIR to the gross carrying amount of non-credit
impaired financial assets/liabilities (i.e. at the amortized cost of the financial asset before adjusting for
any expected credit loss allowance). For credit-impaired financial assets, interest income is calculated
by applying the EIR to the amortized cost of the credit-impaired financial assets (i.e. the gross carrying
amount less the allowance for expected credit losses).

2.5.1.2 Dividend Income

Dividend income is recognized when the Company''s right to receive dividend is established.

2.5.1.3 Fee and Commission Income

Fee and commission income include fees other than those that are an integral part of EIR. The Company
recognizes the fee and commission income in accordance with the terms of the relevant contracts /
agreement and when it is probable that the Company will collect the consideration.

2.5.1.4 Net gain on fair value change

Any differences between the fair values of the financial assets classified as fair value through the profit
or loss, held by the Company on the balance sheet date is recognized as an unrealized gain/loss in the
statement of profit and loss. In cases there is a net gain in aggregate, the same is recognized in "Net
gains on fair value changes" under revenue from operations and if there is a net loss the same is disclosed
"Expenses", in the statement of profit and loss.

2.5.1.5 Other operational revenue

Other operational revenue represents income earned from the activities incidental to the business and is
recognized when the right to receive the income is established as per the terms of the contract.

2.5.1.6 Other Income

Other Income represents income earned from the activities incidental to the business and is recognized
when the right to receive the income is established as per the terms of the contract.

2.5.2 Financial Instruments2.5.2.1 Fair Valuation of Investments

Some of the Company''s Investments are measured at fair value. In determining the fair value of such
Investments, the Company uses quoted prices (unadjusted) in active markets for identical assets or based
on inputs which are observable either directly or indirectly. However, in certain cases, the Company adopts
valuation techniques and inputs which are not based on market data. When Market observable information
is not available, the Company has applied appropriate valuation techniques and inputs to the valuation
model.

2.5.2.2 Recognition and Initial Measurement

All financial assets and liabilities, with the exception of loans and borrowings are initially recognized on
the trade date, i.e., the date that the Company becomes a party to the contractual provisions of the
instrument.

Loans are recognized when fund transfer is initiated or disbursement cheque is issued to the customer. The
Company recognizes borrowings (other than debt securities) when funds are received by the Company.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs and revenues
that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than
financial assets and financial liabilities measured at FVTPL) are added to or deducted from the fair value
of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs and
revenues directly attributable to the acquisition of financial assets or financial liabilities measured at FVTPL
are recognized immediately in the statement of profit and loss.

2.5.2.3 Classification and Subsequent Measurement of Financial Assets and Liabilities2.5.2.3.1 Financial Assets

The Company classifies and measures all its financial assets based on the business model for managing the
assets and the asset''s contractual terms, either at:

- Amortized cost

- Fair Value through other comprehensive income

- Fair Value through Profit and Loss

2.5.2.3.1.1 Amortized Cost

The Company classifies and measures cash and bank balances, Loans, Trade receivable, certain debt
investments and other financial assets at amortized cost if the following condition is met:

Financial Assets that are held within a business model whose objective is to hold financial assets in
order to collect the contractual cash flows, and that have contractual cash flows that are SPPI;

2.5.2.3.1.2 Fair Value through Other Comprehensive Income ("FVOCI")

The Company classifies and measures certain debt instruments at FVOCI when the investments are
held within a business model, the objective of which is achieved by both, collecting contractual cash
flows and selling the financial instruments and the contractual terms of the financial instruments meet
the Solely Payment of Principal and Interest on principal amount outstanding (''SPPI'') test.

The Company measures all equity investments at fair value through profit or loss, unless the
investments is not for trading and the Company''s management has elected to classify irrevocably
some of its equity instruments at FVOCI, when such instruments meet the definition of Equity under
Ind AS 32 ''Financial Instruments: Presentation'' and are not held for trading. Such classification is
determined on an instrument- by-instrument basis.

2.5.2.3.1.3 Fair Value through Profit and Loss ("FVTPL")

Financial assets at FVTPL are:

- assets with contractual cash flows that are not SPPI; and/or

- assets that are held in a business model other than held to collect contractual cash flows or held
to collect and sell; or

- assets designated at FVTPL using the fair value option.

These assets are measured at fair value, with any gains/losses arising on remeasurement is recognized
in the statement of profit and loss.

2.5.2.4 Evaluation of Business Model

Classification and measurement of financial instruments depends on the results of the Solely Payments
of Principal and Interest on the principal amount outstanding ("SPPI") and the business model test (refer
note 2.5.2.4.1). The Company determines the business model at a level that reflects how the Company''s
financial instruments are managed together to achieve a particular business objective.

The Company monitors financial assets measured at amortized cost or fair value through other
comprehensive income that are derecognized prior to their maturity to understand the reason for their
disposal and whether the reasons are consistent with the objective of the business for which the asset was
held. Monitoring is part of the Company''s continuous assessment of whether the business model for which
the remaining financial assets are held continues to be appropriate and if it is not appropriate whether
there has been a change in business model and so a prospective change to the classification of those
instruments.

2.5.2.4.1 Business Model Test

An assessment of business model for managing financial assets is fundamental to the classification of a
financial asset. The Company determines the business model at a level that reflects how financial assets
are managed together to achieve a particular business objective. The Company''s business model does not
depend on management''s intentions for an individual instrument, therefore the business model assessment
is performed at a higher level of aggregation rather than on an instrument-by-instrument basis.

The Company considers all relevant information and evidence available when making the business model
assessment such as:

• how the performance of the business model and the financial assets held within that business model
are evaluated and reported to the Company''s key management personnel;

• the risks that affect the performance of the business model (and the financial assets held within that
business model) and, in particular, the way in which those risks are managed; and

• how managers of the business are compensated (e.g. whether the compensation is based on the fair
value of the assets managed or on the contractual cash flows collected).

At initial recognition of a financial asset, the Company determines whether newly recognized financial
assets are part of an existing business model or whether they reflect a new business model. The Company
reassesses its business model at each reporting period to determine whether the business model has
changed since the preceding period. For the current and prior reporting period the Company has not
identified a change in its business model.

Solely Payments of Principal and Interest ("SPPI") on the principal amount outstanding

For an asset to be classified and measured at amortized cost or at FVOCI, its contractual terms should give
rise to cash flows that meet SPPI test.

For the purpose of SPPI test, principal is the fair value of the financial asset at initial recognition. That
principal amount may change over the life of the financial asset (e.g. if there are repayments of principal).
Interest consists of consideration for the time value of money, for the credit risk associated with the
principal amount outstanding during a particular period of time and for other basic lending risks and costs,
as well as a profit margin.

Contractual terms that introduce exposure to risks or volatility in the contractual cash flows that are
unrelated to a basic lending arrangement, such as exposure to changes in equity prices or commodity
prices, do not give rise to contractual cash flows that are SPPI, such financial assets are either classified as
fair value through profit and loss or fair value through other comprehensive income.

2.5.2.4.1.1 Subsequent Measurement and Gain and Losses
Financial Assets at Amortized Cost

These assets are subsequently measured at amortized cost using the effective interest method. The
amortized cost is reduced by impairment losses. Interest income and impairment loss are recognized
in statement of profit and loss. Any gain or loss on derecognition is recognized in statement of profit
and loss.

Debt Instrument at FVOCI

These assets are subsequently measured at fair value. Interest income and impairment loss are
recognized in statement of profit and loss. Any gain or loss on subsequent measurement is recognized
in OCI and on derecognition the cumulative gain or loss recognized in OCI will be recycled to statement
of profit and loss.

Equity Instrument at FVOCI

Gains and losses on equity instruments measured at FVOCI are recognized in other comprehensive
income and never recycled to the statement of profit and loss. Dividends are recognized in profit or
loss as dividend income when the right to receive payment has been established, except when the
Company benefits from such proceeds as a recovery of whole or part of the cost of the instrument,
in which case, such gains are recorded in OCI. Equity instruments at FVOCI are fair valued at each
reporting date and not subject to an impairment assessment.

Financial Assets at FVTPL

These assets are subsequently measured at fair value. Net gain or losses, including any interest or
dividend income, are recognized in the statement of profit and loss.

2.5.2.4.1.2 Reclassifications

If the business model under which the Company holds financial assets changes, the financial assets
affected are reclassified. The classification and measurement requirements related to the new
category apply prospectively from the first day of the first reporting period following the change in
business model that result in reclassifying the Company''s financial assets.

2.5.2.4.2 Financial Liabilities and Equity Instruments

2.5.2.4.2.1 Classification as Debt or Equity

Debt and equity instruments that are issued are classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangement.

A financial liability is a contractual obligation to deliver cash or another financial asset or to exchange
financial assets or financial liabilities with another entity under conditions that are potentially
unfavorable to the Company or a contract that will or may be settled in the Company''s own equity
instruments and is a non-derivative contract for which the Company is or may be obliged to deliver
a variable number of its own equity instruments, or a derivative contract over own equity that will or
may be settled other than by the exchange of a fixed amount of cash (or another financial asset) for
a fixed number of the Company''s own equity instruments.

2.5.2.4.2.2 Equity Instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued by the Company are recognized at the face
value and proceeds received in excess of the face value are recognized as Securities Premium.

2.5.2.4.2.3 Subsequent Measurement and Gain and Losses

Financial liabilities are subsequently measured at amortized cost using the effective interest method.
Interest expense is recognized in statement of profit and loss. Any gain or loss on derecognition is
recognized in statement of profit and loss.

2.5.2.5 Impairment and Write-off

The Company recognizes loss allowances for Expected Credit Losses on the following financial instruments
that are not measured at FVTPL:

- Loans and advances to customers;

- Other financial assets;

- Loan commitments

Equity instruments are measured at fair value and not subject to an impairment loss.

ECL is required to be measured through a loss allowance at an amount equal to:

• 12-month ECL, i.e., loss allowance on default events on the financial instrument that are possible
within 12 months after the reporting date, (referred to as Stage 1); or

• Lifetime ECL, i.e. lifetime ECL that results from all possible default events over the life of the financial
instrument, (referred to as Stage 2 and Stage 3).

A loss allowance for lifetime ECL is required for a financial instrument if the credit risk on that financial
instrument has increased significantly since initial recognition. For all other financial instruments, ECL is
measured at an amount equal to the 12-month ECL.

The Company has established a policy to perform an assessment at the end of each reporting period whether
a financial instrument''s credit risk has increased significantly since initial recognition by considering the
change in the risk of default occurring over the remaining life of the financial instruments.

Based on the above process, the Company categorizes its loans into Stage 1, Stage 2 and Stage 3 as
described below:

Stage 1: When loans are first recognized, the Company recognizes an allowance based on 12 months ECL.
Stage 1 loans also include facilities where the credit risk has improved and the loan has been reclassified
from Stage 2 to Stage 1.

Stage 2: When a loan has shown a significant increase in credit risk since origination, the Company records
an allowance for the life time expected credit losses. Stage 2 loans also include facilities, where the credit
risk has improved and the loan has been reclassified from Stage 3 to Stage 2.

Stage 3: When loans are considered credit-impaired, the Company records an allowance for the life time
expected credit losses.

For financial assets for which the Company has no reasonable expectations of recovering either the entire
outstanding amount, or a proportion thereof, the gross carrying amount of the financial asset is reduced.
This is considered a (partial) derecognition of the financial asset.

2.5.2.6 Determination of Expected Credit Loss ("ECL")

The measurement of impairment losses (ECL) across all categories of financial assets requires judgement.

In particular, the estimation of the amount and timing of future cash flows based on Company''s historical
experience and collateral values when determining impairment losses along with the assessment of a
significant increase in credit risk. These estimates are driven by a number of factors, changes in which can
result in different levels of allowances.

Elements of the ECL models that are considered accounting judgments and estimates include:

• Bifurcation of the financial assets into different portfolios when ECL is assessed on a collective basis.

• Company''s criteria for assessing if there has been a significant increase in credit risk.

• Development of ECL models, including choice of inputs / assumptions used.

The various inputs used and the process followed by the Company in measurement of ECL has been
detailed below.

2.5.2.6.1 Measurement of Expected Credit Losses

The Company calculates ECL based on probability-weighted scenarios to measure expected cash shortfalls,
discounted at an approximation to the portfolio. A cash shortfall is a difference between the cash flows that
are due to the Company in accordance with the contract and the cash flows that the Company expects to
receive.

When estimating ECL for undrawn loan commitments, the Company estimates the expected portion of the
loan commitment that will be drawn down over its expected life. The ECL is then based on the present
value of the expected shortfalls in cash flows if the loan is drawn down. The expected cash shortfalls are
discounted at an approximation to the Interest rate on the loan.

The Company measures ECL on an individual basis, or on a collective basis for portfolios of loans that share
similar economic risk characteristics. The measurement of the loss allowance is based on the present value
of the asset''s expected cash flows using the asset''s original EIR, regardless of whether it is measured on
an individual basis or a collective basis.

The mechanics of the ECL calculations are outlined below and the key elements are, as follows:

Exposure at Default (EAD) is based on the amounts the Company expects to be owed at the time of default.
For a revolving commitment, the Company includes the current drawn balance plus any further amount
that is expected to be drawn up to the current contractual limit by the time of default, should it occur.

Probability of Default (PD) represents the likelihood of a borrower defaulting on its financial obligation (as
per ''''Definition of default and credit-impaired'''') either over the next 12 months (12 months PD), or over
the remaining lifetime (Lifetime PD) of the obligation.

Loss Given Default (LGD) represents the Company''s expectation of the extent of loss on a defaulted
exposure. LGD varies by type of counterparty, type and preference of claim and availability of collateral or
other credit support.

Forward-looking economic information (including management overlay) is included in determining the
12-month and lifetime PD, EAD and LGD. The assumptions underlying the expected credit loss are monitored
and reviewed on an ongoing basis.

2.5.2.6.2 Significant Increase in Credit Risk

The Company monitors all financial assets, including loan commitments contracts issued that are subject to
impairment requirements, to assess whether there has been a significant increase in credit risk since initial
recognition. If there has been a significant increase in credit risk the Company measures the loss allowance
based on lifetime rather than 12-month ECL. The Company monitors all financial assets, issued loan
commitments and financial guarantee contracts that are subject to impairment for a significant increase in
credit risk.

In assessing whether the credit risk on a financial instrument has increased significantly since initial
recognition, the Company compares the risk of a default occurring on the financial instrument at the
reporting date based on the remaining maturity of the instrument with the risk of a default occurring that
was anticipated for the remaining maturity at the current reporting date when the financial instrument
was first recognized. In making this assessment, the Company considers both quantitative and qualitative
information that is reasonable and supportable, including historical experience that is available without
undue cost or effort.

The quantitative factors that indicate a significant increase in credit risk are reflected in PD models on a
timely basis. However, the Company still considers separately some qualitative factors to assess if credit
risk has increased significantly. For corporate lending, there is a particular focus on assets that are included
on a ''watch list. Given an exposure is on a watch list once, there is a concern that the credit worthiness
of the specific counterparty has deteriorated. ECL assessment for watch list accounts is done on a case by
case approach after considering the probability of weighted average in a different recovery scenario. For
individual loans the Company considers the expectation of forbearance, payment holidays, and events such
as unemployment, bankruptcy, divorce, or death.

Given that a significant increase in credit risk since initial recognition is a relative measure, a given change,
in absolute terms, in the PD is more significant for a financial instrument with a lower initial PD than
compared to a financial instrument with a higher PD.

As a back-stop when a financial asset becomes past due but not Stage 3; the Company considers that
a significant increase in credit risk has occurred and the asset is classified in stage 2 of the impairment
model, i.e. the loss allowance is measured as the lifetime ECL.

2.5.2.6.3 Credit-Impaired Financial Assets

A financial asset is ''credit-impaired'' when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred. Credit-impaired financial assets are
referred to as Stage 3 assets. Evidence of credit-impairment includes observable data about the following
events:

• significant financial difficulty of the borrower or issuer;

• a breach of contract such as a default or past due event;

• restructuring of loans due to financial difficulty of the borrowers;

• the disappearance of an active market for a security because of financial difficulties; or

• the purchase of a financial asset at a deep discount that reflects the incurred credit losses.

It may not be possible to identify a single discrete event. Instead the combined effect of several events may
have caused financial assets to become credit-impaired. The Company assesses whether debt instruments
that are financial assets measured at amortized cost are credit-impaired at each reporting date. To assess if
corporate debt instruments are credit impaired, the Company considers factors such as bond yields, credit
ratings and the ability of the borrower to raise funds.

A loan is considered credit-impaired when a concession is granted to the borrower due to deterioration in
the borrower''s financial condition. The definition of default includes unlikeliness to pay indicators and a
back-stop if amounts are overdue for more than 90 days.

2.5.2.6.4 Definition of Default

The definition of default is used in measuring the amount of ECL and in the determination of whether the
loss allowance is based on 12-month or lifetime ECL.

The Company considers the following as constituting an event of default:

• the borrower is past due more than 90 days Accounts Identified by the Company as NPA as per
regulatory guidelines Objective Evidence for impairment (Qualitative Overlay); or

• the borrower is unlikely to pay its credit obligations to the Company.

When assessing if the borrower is unlikely to pay its credit obligation, the Company takes into account
both qualitative and quantitative indicators. The information assessed depends on the type of the asset,
for example in corporate lending a qualitative indicator used is the breach of covenants, which is not
as relevant for individual lending. Quantitative indicators, such as overdue status and non-payment on
another obligation of the same counterparty are key inputs in this analysis.

2.5.2.6.5 Write-off

Loans are written off when the Company has no reasonable expectations of recovering the financial
asset (either in its entirety or a portion of it). This is the case when the Company determines that the
borrower does not have assets or sources of income that could generate sufficient cash flows to repay the
amounts subject to the write-off. A write-off constitutes a derecognition event. The Company may apply
enforcement activities to financial assets written off/ may assign / sell loan exposure to ARC / Bank / a
financial institution for a negotiated consideration. Recoveries resulting from the Company''s enforcement
activities could result in impairment gains.

2.5.2.7 Modification and Derecognition of Financial Assets

A modification of a financial asset occurs when the contractual terms governing the cash flows of a financial
asset are renegotiated or otherwise modified between the initial recognition and maturity of the financial
asset. A modification affects the amount and/or timing of the contractual cash flows either immediately
or at a future date. In addition, the introduction or adjustment of existing covenants of an existing loan
would constitute a modification even if these new or adjusted covenants do not yet affect the cash flows
immediately but may affect the cash flows depending on whether the covenant is or is not met (e.g. a
change to the increase in the interest rate that arises when covenants are breached).

The Company renegotiates loans to customers in financial difficulty to maximize collection and minimize
the risk of default. Loan forbearance is granted in cases where although the borrower made all reasonable
efforts to pay under the original contractual terms, there is a high risk of default or default has already
happened and the borrower is expected to be able to meet the revised terms. The revised terms in most of
the cases include an extension of the maturity of the loan, changes to the timing of the cash flows of the
loan (principal and interest repayment), reduction in the amount of cash flows due (principal and interest
forgiveness) and amendments to covenants.

When a financial asset is modified the Company assesses whether this modification results in derecognition.
In accordance with the Company''s policy, a modification results in derecognition when it gives rise to
substantially different terms. To determine if the modified terms are substantially different from the original
contractual terms the Company considers the following:

Qualitative factors, such as contractual cash flows after modification, are no longer SPPI, change in currency
or change of counterparty, the extent of change in interest rates, maturity, covenants, if these do not clearly
indicate a substantial modification, then; a quantitative assessment is performed to compare the present
value of the remaining contractual cash flows under the original terms with the contractual cash flows
under the revised terms, both amounts discounted at the original EIR. If there is a significant difference in
present value, the Company deems the arrangement substantially different, leading to derecognition.

In the case where the financial asset is derecognized the loss allowances for ECL is remeasured at the date
of derecognition to determine the net carrying amount of the asset at that date. The difference between
this revised carrying amount and the fair value of the new financial asset with the revised terms may lead
to a gain or loss on derecognition. The new financial asset may have a loss allowance measured based on
12-month ECL except where the new loan is considered to be originated-credit impaired. This applies only
in the case where the fair value of the new loan is recognized at a significant discount to its revised par
amount because there remains a high risk of default which has not been reduced by the modification. The
Company monitors the credit risk of modified financial assets by evaluating qualitative and quantitative
information, such as if the borrower is in past due status under the new terms.

When the contractual terms of a financial asset are modified and the modification does not result in
derecognition, the Company determines if the financial asset''s credit risk has increased significantly since
initial recognition by comparing:

• The remaining lifetime PD estimated based on data at initial recognition and the original contractual
terms;

• The remaining lifetime PD at the reporting date based on the modified terms.

For financial assets modified, where modification does not result in derecognition, the estimate of PD
reflects the Company''s ability to collect the modified cash flows taking into account the Company''s previous
experience of similar forbearance action, as well as various behavioural indicators, including the borrower''s
payment performance against the modified contractual terms. If the credit risk remains significantly higher
than what was expected at initial recognition, the loss allowance is continued to be measured at an amount
equal to lifetime ECL. The loss allowance on forborne loans is generally measured based on 12-month ECL
when there is evidence of the borrower''s improved repayment behaviour following modification leading to
a reversal of the previous significant increase in credit risk.

Where a modification does not lead to derecognition, the Company calculates the modification gain/loss
comparing the gross carrying amount before and after the modification (excluding the ECL allowance).
Then the Company measures ECL for the modified asset, where the expected cash flows arising from the
modified financial asset are included in calculating the expected cash shortfalls from the original asset.

The Company derecognizes a financial asset only when the contractual rights to the asset''s cash flows expire
(including expiry arising from a modification with substantially different terms), or when the financial asset
and substantially all the risks and rewards of ownership of the asset are transferred to another entity. If the
Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to
control the transferred asset, the Company recognizes its retained interest in the asset and an associated
liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of
ownership of a transferred financial asset, the Company continues to recognize the financial asset and also
recognizes a collateralized borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount
and the sum of the consideration received and receivable and the cumulative gain/loss that had been
recognized in OCI and accumulated in equity is recognized in the statement of profit and loss, with
the exception of equity investment designated as measured at FVOCI, where the cumulative gain/loss
previously recognized in OCI is not subsequently reclassified to the statement of profit and loss.

On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option
to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the
financial asset between the part it continues to recognize under continuing involvement, and the part it
no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The
difference between the carrying amount allocated to the part that is no longer recognized and the sum of
the consideration received for the part no longer recognized and any cumulative gain/loss allocated to it
that had been recognized in OCI is recognized in the statement of profit and loss. A cumulative gain/loss
that had been recognized in OCI is allocated between the part that continues to be recognized and the part
that is no longer recognized on the basis of the relative fair values of those parts. This does not apply for
equity investments designated as measured at FVOCI, as the cumulative gain/loss previously recognized
in OCI is not subsequently reclassified to the statement of profit and loss.

2.5.2.8 Derecognition of Financial Liabilities

The Company derecognizes financial liabilities when, and only when, the Company''s obligations are
discharged, cancelled or have expired. The difference between the carrying amount of the financial liability
derecognized and the consideration paid and payable is recognized in the statement of profit and loss.

2.5.2.9 Assets acquired under settlement of claims

Assets acquired under settlement of claims are initially recognized on acquisition of the assets based on
the fair value of the assets, including cost of acquisition. Asset acquired under settlement of claims are
subsequently measured at the prevailing market price/fair valuation or acquisition cost, whichever is lower,
on periodic basis. Any profit or loss arising on the sale of complete unit is recognized in Statement of Profit
and Loss.

2.5.3 Property, Plant and Equipment ("PPE")

PPE held for use are stated in the balance sheet at cost less accumulated depreciation and accumulated
impairment losses.

PPE is recognized when it is probable that future economic benefits associated with the item is expected
to flow to the Company and the cost of the item can be measured reliably. PPE is stated at original cost
net of tax/duty credits availed, if any, less accumulated depreciation and cumulative impairment, if any.
Administrative and other general overhead expenses that are specifically attributable to acquisition of PPE
are allocated and capitalized as a part of the cost of the PPE.

An item of property, plant and equipment is derecognized upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal
or retirement of an item of property, plant and equipment is determined as the difference between the
sales proceeds and the carrying amount of the asset and is recognized in the statement of profit and loss.

2.5.4 Intangible Assets

Intangible assets are recognized when it is probable that the future economic benefits that are attributable
to the asset will flow to the Company and the cost of the asset can be measured reliably. Intangible
assets are stated at original cost net of tax/duty credits availed, if any, less accumulated amortization
and cumulative impairment. Administrative and other general overhead expenses that are specifically
attributable to acquisition of intangible assets are allocated and capitalized as a part of the cost of the
intangible assets.

Intangible assets not ready for the intended use on the date of Balance Sheet are disclosed as "Intangible
assets under development".

An intangible asset is derecognized on disposal, or when no future economic benefits are expected from
use or disposal. Gains and losses arising from derecognition of an intangible asset, measured as the
difference between the net disposal proceeds and the carrying amount of the assets are recognized in the
statement of profit and loss when the asset is derecognized.

2.5.5 Capital work-in-progress

Capital work in progress includes assets not ready for the intended use and is carried at cost, comprising
direct cost and related incidental expenses.

2.5.6 Depreciation and Amortization

Depreciation is recognized using written down value method so as to write off the cost of the assets less
their residual values over their estimated useful lives specified in Schedule II to the Act. Depreciation
method is reviewed at each financial year end to reflect expected pattern of consumption of the future
economic benefits embodied in the asset. The estimated useful life and residual values are also reviewed
at each financial year end with the effect of any change in the estimates of useful life/residual value is
recognized on prospective basis.

2.5.7 Impairment of Assets other than Financial Instruments

As at the end of each accounting year, the Company reviews the carrying amounts of its PPE and intangible
assets to determine whether there is any indication that those assets have suffered an impairment loss.
If such indication exists, the PPE and intangible assets are tested for impairment so as to determine the
impairment loss, if any.

2.5.8 Employee BenefitsShort term Employee Benefits

Employee benefits falling due within twelve months of rendering the service are classified as short term
employee benefits and are expensed in the period in which the employee renders the related service.
Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount
of the benefits expected to be paid in exchange for the related service.

Defined Contribution Plans

Contributions to defined contribution schemes such as employees'' state insurance, employee provident
fund and employee pension scheme etc. are charged as an expense based on the amount of contribution
required to be made as and when services are rendered by the employees. Company''s provident fund
contribution is made to a government administered fund and charged as an expense to the Statement of
Profit and Loss. The above benefits are classified as Defined Contribution Schemes as the Company has no
further defined obligations beyond the monthly contributions.

Post-employment Benefits

The Company operates defined benefit plan in the form of gratuity and compensated absence. The liability
or asset recognized in the balance sheet in respect of its defined benefit plans is the present value of the
defined benefit obligation at the end of the reporting period. The defined benefit obligation is calculated
annually by actuaries using the projected unit credit method. The present value of the said obligation is
determined by discounting the estimated future cash out flows, using market yields of government bonds
that have tenure approximating the tenures of the related liability. The interest expenses are calculated by
applying the discount rate to the net defined benefit liability or asset. The net interest expense on the net
defined benefit liability or asset is recognized in the Statement of Profit and loss. Remeasurement gains
and losses arising from experience adjustments and changes in actuarial assumptions are recognized in
the period in which they occur, directly in other items of other comprehensive income. They are included
in Other Equity in the Statement of Changes in Equity and in the Balance Sheet. Changes in the present
value of the defined benefit obligation resulting from plan amendments or curtailments are recognized
immediately in profit or loss as past service cost.

2.5.9 LeasesThe Company as Lessee

The Company''s lease asset classes primarily consist of leases for office premises. The Company assesses
whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the use of an identified asset, the
Company assesses whether:

(i) the contract involves the use of an identified asset

(ii) the Company has substantially all of the economic benefits from use of the asset through the period
of the lease and

(iii) the Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a
corresponding lease liability for all lease arrangements in which it is a lessee.

Certain lease arrangements include the options to extend or terminate the lease before the end of the lease
term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be
exercised.

The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or prior to the commencement date of the lease plus
any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated
depreciation and impairment losses.

Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter
of the lease term and useful life of the underlying asset.

The lease liability is initially measured at amortized cost at the present value of the future lease payments.
The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable,
using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are
remeasured with a corresponding adjustment to the related right of use asset if the Company changes its
assessment if whether it will exercise an extension or a termination option.

Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments
have been classified as financing cash flows.

The Company as Lessor

The Company as a lessor, classifies leases as either operating lease or finance lease. A lease is classified as
a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying
asset. Initially asset held under finance lease is recognized in balance sheet and presented as a receivable
at an amount equal to the net investment in the lease. Finance income is recognized over the lease term,
based on a pattern reflecting a constant periodic rate of return on Company''s net investment in the lease.
A lease which is not classified as a finance lease is an operating lease.

Accordingly, the Company recognizes lease payments as income on a straight-line basis in case of assets
given on operating leases. The Company presents underlying assets subject to operating lease in its
balance sheet under the respective class of asset.

2.5.10 Securities Premium

(i) Securities premium includes the difference between the face value of the equity shares and the
consideration received in respect of shares issued under preferential allotment as equity shares by
the company.

(ii) The issue expenses of securities which qualify as equity instruments are written off against securities
premium.

2.5.11 Share-based payment arrangements

The stock options to be granted to employees by the company under MGFL Employee Stock Option Plan
2022'' ("ESOP 2022"/" Plan"), will be measured at the fair value of the options at the grant date.

The fair value of the options is treated as discount and accounted as employee compensation cost over the
vesting period on a straight line basis.

The amount recognized as expense in each year is arrived at based on the number of grants expected to
vest.

2.5.12 Dividends on Equity Shares

The Company recognizes a liability to make cash distributions to equity shareholders of the Company
when the dividend is authorized and the distribution is no longer at the discretion of the Company and
a corresponding amount is recognized directly in equity. As per the corporate laws in India, an interim
dividend is authorized when it is approved by the Board of Directors and final dividend is authorized when
it is approved by the shareholders.

2.5.13 Cash and Cash Equivalents

Cash comprises of cash on hand and demand deposits with banks. Cash equivalents are short-term deposits
with banks (with an original maturity of three months or less from the date of placement) and cheques on
hand. Short term and liquid investments being subject to more than insignificant risk of change in value,
are not included as part of cash and cash equivalents.

2.5.14 Finance Costs

Finance costs include interest expense calculated using the EIR on respective financial instruments and
borrowings is measured at amortized cost, amortization of ancillary costs incurred in connection with the
arrangement of borrowings and exchange differences arising from foreign currency borrowings to the
extent they are regarded as an adjustment to the interest cost.

2.5.15 Foreign Currencies

(i) Functional currency of the Company and foreign operations has been determined based on the
primary economic environment in which the Company and its foreign operations operate considering
the currency in which funds are generated, spent and retained.

(ii) Transactions in currencies other than the Company''s functional currency are recorded on initial
recognition using the exchange rate at the transaction date. At each Balance Sheet date, foreign
currency monetary items are reported at the rates prevailing at the year-end. Non-monetary items
that are measured in terms of historical cost in foreign currency are not retranslated.

Exchange differences that arise on settlement of monetary items or on reporting of monetary items at each
Balance Sheet date at the closing spot rate are recognized in the Statement of Profit and Loss in the period
in which they arise.

2.5.16 Segments

Operating segments are those components of the business whose operating results are regularly reviewed
by the Chief Operating Decision making body in the Company to make decisions for performance assessment
and resource allocation. Operating Segment are reported in a manner consistent with the internal reporting
provided to accounting policies are in line with the internal reporting provided to the Chief Operating
Decision maker.

2.5.17 Earnings Per Share

The Company presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per
share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by
the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is
determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average
number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential
ordinary shares.

2.5.18 Taxes on Income

The Company''s tax jurisdiction is in India. Significant judgements are involved in determining the provision
for income taxes, including amount expected to be paid/recovered for certain tax positions.

Income tax expense comprises current and deferred taxes. Income tax expense is recognized in the
statement of profit and loss except when they relate to items that are recognized outside statement of
profit and loss (whether in other comprehensive income or directly in equity), in which case tax is also
recognized outside statement of profit and loss.

Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences
between the carrying values of assets and liabilities and their respective tax bases, and unutilized business
loss and depreciation carry-forwards. Deferred tax assets are recognized to the extent that it is probable
that future taxable income will be available against which the deductible temporary differences, unused tax
losses and depreciation carry-forwards could 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 are re-assessed at each reporting date, and are
recognized 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 based on the tax rates that are expected to apply in the
period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been
enacted or substantively enacted by the balance sheet date.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities and when they relate to income taxes levied by the same taxation
authority and the Company intends to settle its current tax assets and liabilities on a net basis.

The Company provides for current tax liabilities at the best estimate that is expected to be paid to the tax
authorities where an outflow is probable.

2.5.19 Goods and Services Tax Input Credit

Goods and Services tax input credit is recognized in the books of account in the period in which the supply
of goods or service received is recognized and when there is no uncertainty in availing/utilizing the credits.