Accounting Policies of My Mudra Fincorp Ltd. Company

Mar 31, 2025

SIGNIFICANT ACCOUNTING POLICY AND NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31^st MARCH, 2025

A. BACKGROUND

The Company was originally incorporated as a Private Limited Company under the name “My Mudra Fincorp Private Limited” under the Companies Act, 1956 pursuant to a certificate of incorporation dated September 11, 2013 bearing CIN U65191DL2013PTC257611 issued by Registrar of Companies, National Capital Territory of Delhi and Haryana. Subsequently, pursuant to Special Resolution passed by the Shareholders at the Extra Ordinary General Meeting held on August 11, 2023, the Company was converted into a Public Limited Company and consequently the name of the Company was changed from “My Mudra Fincorp Private Limited” to “My Mudra Fincorp Limited” vide a fresh certificate of incorporation dated October 19, 2023, issued by the Registrar of Companies, Delhi. Thereafter, the company came up with the Initial Public Offer and get listed on NSE Emerge on 12th September, 2024 and its revised CIN on getting its securities listed on NSE Emerge is L65191DL2013PLC257611.

B. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements are prepared and presented under the historical cost convention and evaluated on a going-concern basis using the accrual system of accounting in accordance with the accounting principles generally accepted in India (Indian GAAP) and the requirements of the Companies Act, including the Accounting Standards as prescribed by the Section 133 of the Companies Act, 2013 (“the Act”) read with Rule 7 of Companies (Accounts) Rules, 2014. Further financial statements represent a true and fair view of financial position for the period. For this purpose, a major consideration governing the selection and application of accounting policies followed were prudence, substance over the form and materiality.

2. USE OF ESTIMATES

The preparation of financial statements in conformity with Indian GAAP requires judgments, estimates and assumptions to be made that affect the reported amount of assets and liabilities, disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized. Although these estimates are based on management’s best knowledge of current events and actions, uncertainty about these assumptions and estimate could result in outcomes requiring a material adjustment to carrying amount of assets and liabilities in future period.

3. PROPERTY, PLANT AND EQUIPMENTS

Fixed assets are stated at cost of acquisition, which comprise all related expenses upto acquisition and installation of the fixed assets less accumulated depreciation till balance sheet. The items of PPE of the company have been valued by including Purchase price, any direct attributable costs, Decommissioning, Restoration & similar liabilities & excludes costs of opening a new facility, cost of introducing a new product or services, cost of conducting activities in a new location or with a new class of customer, administration and other general overhead costs.

Whereas, depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. Depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual value. Each part of an item of PPE with a cost that is significant in relation to the total cost of the item is depreciated separately. The depreciation method applied to assets is reviewed at each financial year end. And if there is any change in the method then such change is accounted for as a change in accounting estimate in accordance with AS 5, Net Profit or Loss for the period, Prior Period items and changes in Accounting Policies.

4. DEPRECIATION

Depreciation on tangible assets is calculated on a Written down value basis using the rates arrived at, based on the useful lives as per Companies Act 2013. Intangible assets, if any, are amortized on a WDV basis over the useful economic life as per Schedule II of the Company Act, 2013.

5. FOREIGN EXCHANGE TRANSACTIONS:

i. Transactions in foreign currency are recorded at exchange rates prevailing on the dates of respective transactions.

ii. The difference in translation and realized gains and losses on foreign exchange transactions are recognized in the Profit and Loss Account.

iii. The transactions that are due at the end of financial year are revalued at closing rate and the difference of realized gains and losses on foreign exchange transactions are recognized in the Profit and Loss Account.

6. BORROWING COSTS

Borrowing Costs that are directly attributable to acquisition or construction of assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessary takes substantial period of the time to get ready for its intended use. All other borrowing costs are charged to the statement of profit and loss for the period for which they are incurred.

7. IMPAIRMENT OF ASSETS

Wherever events or changes in circumstances indicate that the carrying value of fixed assets may be impaired, such assets are subject to a test of recoverability, based on discounted cash flows expected from use or disposal thereof. If the assets are impaired, loss is recognized.

8. INVESTMENTS

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.

Current investments are carried in the financial statements historical cost only. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.

9. REVENUE RECOGNITION

> Revenue is recognized only when risks and rewards incidental to ownership are transferred to the customer and there is no uncertainty on realization of the revenue and, it can be reliably measured and it is reasonable to expect ultimate collection.

> Interest income is recognized on a time proportion basis considering the amount outstanding and the interest rate applicable.

10. EMPLOYEE BENEFITS

i. Short term Employee Benefits:

All employee benefits payable wholly within twelve months of rendering the service are classified as shortterm employee benefits. Benefits such as salaries and other incentives are recognized at the undiscounted amount in the Profit and Loss Account in the period in which the employee renders the related service.

ii. Long term Employee benefits:

The Company has opted to change the policy of accounting of Gratuity, and during the interim financial period, Company has accounted all gratuity expenses on the basis of actuarial valuation certificate as obtained at period ended.

Provident Fund benefit to employees is provided for on accrual basis and charged to Profit and Loss Account. 11. SEGMENT ACCOUNTING

The Company is engaged in providing services through lending partners, insurance partners, credit card providers in the context of Accounting Standard 17 on Segment Reporting. Therefore, no separate segment disclosures are made by the Company.

12 ACCOUNTING FOR TAXES ON INCOME

> Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences that result between taxable profits and accounting profits. Deferred tax in respect to future timing differences which originate during the tax holiday period but reverse after the tax holiday period, is recognized in the period in which the timing differences originate. For this purpose, the timing difference which originates first is considered to reverse first. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. The effect on deferred tax assets and liabilities of change in tax rates is recognized in the period that includes the enactment date. Deferred tax assets on timing differences are recognized only if there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

> However, deferred tax assets on the timing differences when unabsorbed depreciation and losses carried forward exist, are recognized only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are reassessed for the appropriateness of their respective carrying values at each balance sheet date.

13. AMORTIZATION OF INTANGIBLE ASSETS:

> Intangible assets are amortized over the useful life as per the AS -26 “Intangible Assets.

14. CONTINGENT LIABILITIES AND PROVISIONS:

> Provision is recognized in the accounts when there is a present obligation as a result of past event(s) and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

> Contingent liabilities are disclosed unless the possibility of outflow of resources is remote.

> Contingent liabilities are disclosed by way of notes to the accounts.

> Contingent assets are neither recognized nor disclosed in the financial statements.

15. ACCOUNTING FOR OPERATING LEASE:

The Company has various operating leases for premises; the leases are renewable on fixed periodic basis and are cancellable in nature after lock in period.

16. EARNINGS PER SHARE:

In determining the Earnings Per share, the company considers the net profit after tax which does not include any post tax effect of any extraordinary / exceptional item. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period. Further The effect of bonus issue is eliminated by incorporating the bonus shares adjustment in the calculation of weighted average shares.

17. CASH FLOW:

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. Cash flows from operating, investing and financing activities of the Company are segregated, accordingly.

18. PRIOR PERIOD ITEMS:

No prior period items have been recorded during FY 2024-25.

19. CSR EXPENDITURE:

Pursuant to Section 135 of the Companies Act, 2013, the Company is required to spend 2% of the average net profits of the last three financial years towards Corporate Social Responsibility (CSR) activities. During the year, CSR provisions became applicable to the Company for the first time.

The details of CSR expenditure for the financial year are as under:
Particulars	Amount (Rs. in Lakhs)
Amount required to be spent during the year	10.42
Amount actually spent during the year	10.50
Excess of expenditure over requirement	0.08
Unspent amount at the end of the year	Nil

All CSR expenditure has been incurred during the year towards eligible activities specified under Schedule VII of the Companies Act, 2013.

20. IPO EXPENSES:

IPO expenses have been adjusted against the Share Premium account under ‘Reserves and Surplus’.

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Mar 31, 2024

1. BASIS OF PREPARATION OF FINANCIAL SATEMENTS

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2. USE OF ESTIMATES

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4, DEPRECIATION

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11. SEGMENT ACCOUNTING 12 ACCOUNTING FOR TAXES ON INCOME

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aio detenmned based on the best estimate required to settle the- obligation at the reporting date. These estimates die leviewed at each reporting date and adjusted to relied the current best estimates.

> Contingent liabilities are disclosed unless the possibility of outflow of resources is remote

> Contingent liabilities are disclosed bv wav o! notes to the accounts

> Contingent assets die neither recognized nor disclosed in the financial statements.

15. ACCOUNTING FOR OPERATING LEASE:

The Company has various operating leases for premises: the leases are renewable on fixed periodic basis and are cancellable in nature after lock in period.

16. EARNINGS PER SHARE:

In determining the Earnings Per share, the company considers the net profit after tax which does not include any post tax effect of any extraordinary / exceptional item. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period. Further The effect of bonus issue is eliminated by incorporating ihe bonus shares adjustment in the calculation of weighted average shares.

17. CASH FLOW:

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. Cash flows from operating, investing and financing activities of the Company are segregated, accordingly.

18. Prior period Items:

^ Prior period items included LSI and Pi- related expenses paid for previous years Also it includes amount of Security deposit written off. Advances given to employee to write off which is no mote recoverable, IDS receivable written oil related to previous year The written off of the items are related to the assets and expenses of prior periods which are very much related to business and are related and arise in the ordinary course of business

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