Notes to Accounts of National Securities Depository Ltd.

Mar 31, 2025

2.9 Provision and Contingent Liabilities and
Contingent Assets

Provisions

A provision is recognised when the Company has a
present obligation (legal and constructive) as a result
of past events and it is probable that an outflow of
resources will be required to settle the obligation in
respect of which a reliable estimate can be made.

Provisions are discounted to their present value and
are determined based on the best estimate required
to settle the obligation at the Balance Sheet date.
These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates.

Contingent Liabilities and Assets

Contingent liabilities are when there is a possible
obligation arising from past events, the existence
of which will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events
not wholly within the control of the Company or a
present obligation that arises from past events where
it is either not probable that an outflow of resources
will be required to settle or a reliable estimate of the
amount cannot be made. Contingent liabilities are not
recognised but are disclosed in the notes.

Contingent asset is a possible asset that arises from
past events the existence of which will be confirmed
only by the occurrence or non-occurrence of one or
more uncertain future events not wholly within the
control of the enterprise. Contingent assets are neither
recognised nor disclosed in the financial statements.

Contingent liabilities and contingent assets are
reviewed at each Balance Sheet date.

2.10 Foreign Currency Transactions and Balances

Transactions in foreign currency are translated
into the respective functional currencies using the
exchange rates prevailing at the dates of the respective
transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and
from the translation at the exchange rates prevailing
at reporting date of monetary assets and liabilities
denominated in foreign currencies are recognised in
the Statement of Profit and Loss and reported within
foreign exchange gains/ (losses).

2.11 Investments in Subsidiaries and Associates

Investments in subsidiaries and associates are
measured at cost less impairment loss, if any.

2.12 Financial Instruments

Financial assets and financial liabilities are recognised
when the Company becomes a party to the contractual
provisions of the instruments. All financial instruments
are recognised initially at fair value.

2.13 Financial Assets

Financial assets are (Investment in Mutual Funds,
Non- Convertible Debentures, Bonds, and Government
Securities) classified into the following specified
categories: financial assets "at amortised cost", "fair
value through other comprehensive income", "fair value
through Profit or Loss". The classification depends on
the entity''s business model for managing the financial
assets and the contractual cash flow characteristics of
the financial asset at the time of initial recognition.

Financial assets are recognised by the Company as per
its business model. All Financial Assets are recognized
initially at fair value plus, in the case of financial
assets not recorded at fair value through profit or loss,
transaction cost that are attributable to the acquisition
of the Financial Asset. However, trade receivables
that do not contain a significant financing component
are measured at transaction price. Transaction costs
directly attributable to the acquisition of financial
assets measured at fair value through profit or loss
are recognized immediately in the Statement of
Profit and Loss.

All equity instruments are measured at fair value
other than investments in unquoted equity shares
including investment in subsidiaries and associates.
Equity instruments held for trading is classified as
FVTPL. For all other equity instruments, the Company
may make an irrevocable election to present subsequent
changes in the fair value in OCI. The Company makes
such election on an instrument-by-instrument basis.

Income and expense is recognised on an effective
interest basis for debt instrument. All other investments
are classified as Fair Value Through Profit or Loss
(FVTPL). The Company uses valuation techniques that
are appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.

Impairment of Financial Assets

I n accordance with Ind AS 109, the Company applies
expected credit loss (ECL) model for measurement
and recognition of impairment loss. Financial assets
are assessed for indicators of impairment at the end
of each reporting period. Financial assets are impaired
where there is objective evidence that, as a result of
one or more events that occurred after the initial
recognition of the financial asset, the estimated future
cash flows of the investment have been impacted.

Objective evidence of impairment could include -

• Significant financial difficulty of the users or
counterparty; or

• Default or delinquency in interest or principal
payments; or

^• It becoming probable that the borrower will enter
bankruptcy or financial reorganization.

The carrying amount of the financial asset is reduced
by the impairment loss directly for all financial assets
with the exception of trade and other receivables.
For financial assets measured at amortised cost, if, in a
subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively
to an event occurring after the impairment loss was
recognised, the previously recognised impairment
loss is reversed through profit or loss to the extent
the carrying amount of the investment at the date
the impairment is reversed does not exceed what the
amortised cost would have been had the impairment
not been recognised.

Expected Credit Losses on Trade Receivables

For trade receivables the Company measures the loss
allowance at an amount equal to life time expected
credit losses. Further, for the purpose of measuring
life time expected credit losses for trade receivables,
the company follows simplified approach as permitted
under IndAS 109.

De-recognition of Financial Assets

The Company derecognises a financial asset only when
the contractual rights to the cash flows from the asset

expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership
of the asset 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 recognises 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 recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received.

2.14 Impairment of Non-Financial Assets

The Company assesses at each reporting date whether
there is any observable evidence that a non-financial
asset or a company of non-financial assets is impaired.
If any such indication exists, the Company estimates
the amount of impairment loss. An impairment loss
is calculated as the difference between an asset''s
carrying amount and recoverable amount. Losses are
recognised in Statement of profit and loss and reflected
in an allowance account. When the Company considers
that there are no realistic prospects of recovery of
the asset, the relevant amounts are written off. If the
amount of impairment loss subsequently decreases
and the decrease can be related objectively to an event
occurring after the impairment loss was recognised,
then the previously recognised impairment loss is
reversed through statement of profit and loss.

2.15 Financial Liabilities and Equity Instruments
Classification as Debt or Equity

Financial liabilities and equity instruments issued
by the Company are classified according to the
substance of the contractual arrangements entered
into and the definitions of a financial liability and an
equity instrument.

Equity Instruments

An equity instrument is any contract that evidences
a residual interest in the assets of an entity after
deduction all of its liabilities.

Financial Liabilities

i. Initial Recognition and Measurement

Financial liabilities are recognised when the
Company becomes a party to the contractual
provisions of the instrument. Financial liabilities
are initially measured at the amortised cost
unless at initial recognition, they are classified as
fair value through profit and loss.

ii. Subsequent Measurement

Financial liabilities are subsequently measured
at amortised cost using the effective interest rate
method. Financial liabilities carried at fair value
through profit or loss are measured at fair value
with all changes in fair value recognised in the
statement of profit and loss.

iii. Derecognition of Financial Liabilities

The Company derecognises financial liabilities
when, and only when, the Company''s obligations
are discharged, cancelled or they expire.

2.16 Cash and Cash Equivalents

Cash and cash equivalents comprise of cash on hand,
balances in current account and demand deposits with
banks having an original maturity of three months or
less. These do not include bank balances earmarked/
restricted for specific purposes

Bank balances other than cash and cash equivalents
comprises of demand deposits with banks having an
original maturity of more than three months.

2.17 Use of Estimates and Judgement

The preparation of financial statements in conformity
with Ind AS requires management to make judgments,
estimates and assumptions that affect the
application of accounting policies and the reported
amounts of assets, liabilities, incomes, expenses,
disclosure of contingent assets and disclosure of
contingent liabilities. Actual results may differ from
these estimates.

Estimates and underlying assumptions are reviewed
on a periodic basis. Revisions to accounting estimates
are recognised in the period in which the estimates
are revised and in any future periods affected.
In particular, information about significant areas
of estimation, uncertainty and critical judgments
in applying accounting policies that have the most
significant effect on the amounts recognised in the
financial statements :

i. Useful lives of Property, Plant and Equipment/
Intangible Assets

Property, Plant and Equipment/ Intangible Assets
are depreciated/amortised over their estimated
useful lives, after taking into account estimated
residual value. The useful lives and residual values
are based on the Company''s historical experience
with similar assets and taking into account
anticipated technological changes or commercial

obsolescence. Management reviews the
estimated useful lives and residual values of the
assets annually in order to determine the amount
of depreciation / amortisation to be recorded
during any reporting period. The depreciation /
amortisation for future periods is revised, if there
are significant changes from previous estimates
and accordingly, the unamortised/depreciable
amount is charged over the remaining useful
life of the assets.

ii. Contingent Liabilities and Assets

Contingent Liabilities are disclosed when there is
a possible obligation arising from the past events,
the existence of which will be confirmed only by
the occurrence or non - occurrence of one or
more uncertain future events not wholly within
the control of the company or a present obligation
that arises from the past events where it is either
not probable that an outflow of resources will
be required to settle or a reliable estimate of the
amount cannot be made.

iii. Income Taxes

The Company''s tax jurisdiction is in India.
Significant judgments are involved in determining
the provision for income taxes, deferred tax
assets and liabilities including the amount
expected to be paid or recovered in connection
with uncertain tax positions.

iv. Expected Credit Losses on Trade Receivables

The Company estimates the probability of
collection of trade receivable by analyzing
historical payment patterns, customer status,
customer credit-worthiness and current economic
trends. If the financial condition of a customer
deteriorates, additional allowances are made.

v. Employee Benefits

Defined employee benefit assets / liabilities
determined based on the present value of future
obligations using assumptions determined by
the Company with advice from an independent
qualified actuary.

2.18 Earnings / Loss per share

The basic Earnings Per Share ("EPS") is computed
by dividing the net profit/(loss) after tax for the year
attributable to the equity shareholders by the weighted
average number of equity shares outstanding
during the year.

Diluted earnings per share is calculated by dividing the
net profit or loss (after tax) for the year attributable to
equity shareholders and the weighted average number
of equity shares outstanding during the year, both
adjusted for the effects dilutive potential equity shares.

2.19 Rounding of amounts

All amounts disclosed in the financial statement and
notes have been rounded off to the nearest lakhs as per
the requirement of schedule III, unless otherwise stated.

2.20 Recent Pronouncements

Ministry of Corporate Affairs ("MCA") notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards)
Rules as issued from time to time. For the year ended
March 31, 2025, MCA has notified Ind AS - 117
"Insurance Contracts” and amendments to Ind AS 116
- "Leases", relating to sale and leaseback transactions,
applicable w.e.f. April 1, 2024. The Company has
reviewed the new pronouncements and based on its
evaluation has determined that the Company has not
entered into transactions covered under Ind 117 &
amendments to Ind AS 116 and therefore, there is no
impact on the standalone financial statements.

d) The Company has preferred two civil appeals before Hon''ble Supreme Court challenging the Order of Securities
Appellant Tribunal ("SAT") dated December 20, 2023 in the matter of Karvy Stock Broking Limited ("Karvy")
wherein Securities and Exchange Board of India ("SEBI"), National Stock Exchange of India Limited ("NSE") and
National Securities Depositories Limited ("NSDL") were directed to either (i) permit Axis Bank (one of the lenders
to Karvy) to invoke the shares pledged in its favour by Karvy, as available in the Demat account and (ii) restore
the pledge of shares in favour of other appellant Banks & NBFC; or compensate them with the value of underlined
securities which were pledged by Karvy in their favour, along with interest. It was alleged in SEBI interim order
dated November 22, 2019 ("Interim Order")that Karvy pledged clients'' shares unlawfully in order to avail loan
facilities from various Banks and NBFC. The said SEBI order was quashed by SAT vide its above referred order.
The SEBI''s order issued in December 13, 2019 recorded that the total dues payable to Banks & NBFC by Karvy
amounted to approx. ''1,435.05 crore. However, the amount of Karvy''s current outstanding dues towards these
Banks & NBFC is not known.

Further, both SEBI and NSE have also independently filed their appeals before the Hon''ble Supreme Court against
SAT Order. The Hon''ble Supreme Court has directed that no coercive steps be taken against SEBI, NSE and NSDL
in respect of SAT order and status quo to be maintained in respect of shares pledged with Axis Bank, as available
in the Demat account. Although SAT passed an order implicating SEBI, NSE and NSDL collectively, the Company''s
management maintains the stand that the Company''s actions of releasing the pledge and also returning the
securities to Karvy''s Clients were strictly as per SEBI''s Interim Order (as a Regulator) and were taken under the
supervision of NSE and as a result, the Company cannot be held liable towards the Banks and NBFC and no liability
can be attributed to the Company. However, the outcome of the matter is contingent upon Hon''ble Supreme Court''s
verdict and the financial obligations on the Company, if there would be any, would be known once the verdict is
pronounced by Hon''ble Supreme Court since the same cannot be reliably estimated at present stage. The Civil
Appeals were listed on April 07, 2025 before the Registrar Court of Supreme Court of India wherein several other
matters were tagged alongwith the present appeal. All the matters are now scheduled to be listed on July 15, 2025
before the Registrar''s Court. In the assessment of the management and based on legal opinion obtained in the
matter, the Company believes that it has strong case on merits to challenge the SAT Order and hence, no provision
is required to be made in the books of account.

e) In the matter of inspection conducted by SEBI for FY 23-24, there were certain non-compliances observed by
SEBI viz Freezing/unfreezing of accounts, backdated outsourcing agreements in a few cases, Non-conversion
of eligible demat accounts into BSDA and CUSA/CUSPA related software changes. Subsequently SEBI issued a
Show cause notice on October 11, 2024 and SEBI has initiated Adjudication proceedings under various sections
of SEBI Act as well. The Company filed a settlement application on December 10, 2024 proposing '' 105.60 Lakhs
as the settlement amount. On May 6, 2025, the meeting with IC took place and after due deliberations, the final
settlement amount of '' 1557.60 Lakhs has been proposed. The company is in the process to make submission
with revised settlement terms of an amount of ''. 1557.60 Lakhs and non-monetary terms to settle the proceedings,
accordingly Company has made provision for proposed settlement charges. The final outcome of the matter and
further financial obligation, if any, cannot be reliably estimated at present as the same is contingent upon SEBI''s
acceptance or otherwise of the settlement terms proposed by the Company.

f) The Company is a party in certain legal proceedings filed by beneficial owners / third parties in the normal course
of business. In view of the management the chances of these legal proceedings being decided against the
Company are very remote and it may not have any material adverse impact on its financial conditions, results of
operations and cash flow.

24. Segment Reporting

The Managing Director of the Company has been identified as the Chief Operating Decision Maker (CODM) as defined
by Ind-AS 108, Operating Segments. The Company''s business is to provide depository services to its clients in India
which includes providing various services to the investors like, dematerialisation, re-materialisation, holding, transfer
and pledge of securities in electronic form through close user group network of business partners (viz. Issuers /
Registrars & Transfers Agents and Depository Participants) and providing facility to market intermediaries for "straight
through processing", providing e-voting services to companies. All other activities of the Company revolve around the
main business. Further, all activities are carried in India. As such, there are no reportable segments as per the Ind AS
108-‘Operating Segments''.

34. Financial Instruments
Capital Risk Management

The Company''s objectives when managing capital is to
safeguard continuity as a going concern and provide
adequate return to shareholders through continuing
growth and maintain an optimal capital structure to
reduce the cost of capital. The Company sets the
amount of capital required on the basis of annual
business plan and long-term operating plans which
include capital investments.

Financial Risk Management

A wide range of risks may affect the Company''s
business and financial results. Amongst other risks
that could have significant influence on the Company
are market risk, credit risk and liquidity risk.

The Board of Directors of the Company manage and
review the affairs of the Company by setting up short
term and long term budgets by monitoring the same and
taking suitable actions to minimise potential adverse
effects on its operational and financial performance.

The Company is exposed to the following market risks:

(a) Credit Risk

Credit risk refers to the risk that the counter party
will default on its contractual obligation resulting
in financial loss to the Company. The Company
has adopted a policy of dealing with only credit
worthy counter parties. This risk principally
arises from credit exposures to customers,
deposits with banks and financial institutions and
other receivables.

Trade and Other Receivables: The Company''s
exposure to credit risk is influenced mainly by
the individual characteristics of each customer.
Receivables mainly consist of receivables
from Depository Participants (DP), Issuers of
Securities, Registrar and Transfer Agents (RTA),
Asset Management Companies (AMC) and Stock
Exchanges. Trade receivables consist of a large
number of customers, representing diverse

industries and geographical areas; hence the
Company is not exposed to concentration risks.
With respect to DPs, the Company performs
credit evaluation while on boarding the customer
and security deposits are taken. Ongoing credit
evaluation is performed on the financial conditions
of the accounts receivable.

The Company has a dedicated Credit and Control
team primarily responsible for monitoring credit
risk and receivables. They monitor outstanding
receivables along with ageing on periodic basis.
For receivables pertaining to other streams of
revenues, the credit and collection team regularly
follows up for the collection. The credit risk on
liquid funds, banks and financial institutions is
limited because the counterparties are with high
credit-ratings.

(b) Liquidity Risk

Liquidity risk refers to the risk that the Company
may not be in a position to meet its financial
obligations timely. Management monitors rolling
forecasts of the Company''s liquidity position
(comprising of undrawn bank facilities and cash
and cash equivalents) on the basis of expected
cash flows. This monitoring includes financial
ratios and takes into account the accessibility of
cash and cash equivalents.

(c) Market Risk

Market Risk is the risk that the value of on and
off-balance sheet positions of a Company will
be adversely affected by movements in market
rates or prices such as interest rates, prices
resulting in a loss to earnings and capital.
The Company may be exposed to Market Risk
in different ways. The market risk is potential
for loss resulting from adverse movement in
market risk factors such as interest rates and
prices. The Company''s exposure to market risk
is primarily on account of interest rate risk, price
risk. All investment in Debentures and Bonds are
at fixed rate of Interest and does not have material
interest rate risks.

36. Additional Regulatory Disclosures

The Company''s objectives when managing capital is to
safeguard continuity as a going concern and provide
adequate return to shareholders through continuing
growth and maintain an optimal capital structure to
reduce the cost of capital. The Company sets the
amount of capital required on the basis of annual
business plan and long-term operating plans which
include capital investments.

(i) The Company does not have any Benami property,
where any proceeding has been initiated or
pending against the Company for holding any
Benami property.

(ii) The Company has not traded or invested in
Crypto currency or Virtual Currency during the
financial year.

(iii) The Company has not advanced or loaned or
invested funds to any other person(s) or entity(ies),
including foreign entities (Intermediaries) with the
understanding that the Intermediary shall:

(a) Directly or indirectly lend or invest in other
persons or entities identified in any manner
whatsoever by or on behalf of the company
(Ultimate Beneficiaries) or

(b) Provide any guarantee, security or the like to
or on behalf of the Ultimate Beneficiaries.

(iv) The Company has not received any fund from
any person(s) or entity(ies), including foreign
entities (Funding Party) with the understanding
(whether recorded in writing or otherwise) that
the Company shall:

(a) Directly or indirectly lend or invest in other
persons or entities identified in any manner
whatsoever by or on behalf of the Funding
Party (Ultimate Beneficiaries) or

(b) Provide any guarantee, security or the like on
behalf of the Ultimate Beneficiaries.

(v) The Company does not have any such transaction
which is not recorded in the books of accounts
that has been surrendered or disclosed as income
during the year in the tax assessments under the
Income-tax Act, 1961.

(vi) There is no immovable property (other than
properties where the Company is the lessee and
the lease agreements are duly executed in favor
of the lessee) whose title deeds are not held in the
name of the Company.

(vii) There are no loans or advances in the nature of
loans that are granted to promoters, directors,
key managerial personnel (KMPs) and the
related parties either severally or jointly with
any other person, that are: a) Repayable on
demand or b) Without specifying any terms or
period of repayment.

(viii) The Company is not a declared willful defaulter by
any bank or financial Institution or other lender.

The Company has complied with the number of layers
prescribed under clause (87) of section 2 of the Act
read with Companies (Restriction on number of Layers)
Rules, 2017 in respect of investments in subsidiaries.

39. The Code on wages 2019 and Code on Social Security, 2020 ("the Codes") relating to employee compensation and post¬
employment benefits that received Presidential assent have not been notified further the related rules for quantifying
the financial impact have not been notified. The Company will assess the impact of the Codes when the rules are
notified and will record any related impact in the period the Code becomes effective.

40. The previous year''s figures have also been regrouped and rearranged wherever necessary.

41. These financial statements were approved for issue by the board of directors of the company at their meeting held on
23rd May, 2025.

In terms of our report of even date attached

For K C Mehta & Co LLP For and on behalf of the Board of Directors

Chartered Accountants

Firm Registration No. 106237W / W100829

Sd/ Sd/ Sd/

Vishal P Doshi Vijay Chandok Parveen Kumar Gupta

Partner Managing Director & CEO Chairman

Membership No. 101533 DIN: 01545262 DIN: 02895343

Sd/ Sd/

Alen Ferns Jigar Shah

Place : Mumbai Company Secretary Chief Financial Officer

Date : May 23, 2025 M. No. A30633 M. No. 143856