Notes to Accounts of Paisalo Digital Ltd.

Mar 31, 2025

5.9 Contingent Liabilities and Contingent Assets

Contingent liabilities are disclosed for:

a. possible obligations which will be confirmed only by future events not wholly within the control of the
Company, or

b. present obligations arising from past events where it is not probable that an outflow of resources will be
required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.

c. Contingent assets are disclosed wherein an inflow of economic benefits is probable.

d. The Company has not recognized the Assets & Liability in respect of Arbitration Decree.

5.10 Share Capital

a. Ordinary shares are classified as equity, incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction, net of tax, from proceeds.

b. The Company may capitalize permitted Reserves and Security Premium for Bonus Shares.

c. The Company has issued equity shares under Paisalo ESPS scheme at discounted price which has been
recognized in the Profit & Loss Statements and Reserve & Surplus.

5.11 Segment Reporting Policy

The Chief Executive Officer reviews the operation at the Company level. Therefore, the operations of the
Company fall under "Financing activities" business only, which is considered to be the only segment in
accordance with the provisions of Ind AS 108- Operating segment.

5.12 Business Model

During the previous year, the company entered into bilateral assignment transactions against outstanding
loans. But the value of these loans are trivial in light of the Company''s AUM, thus Company''s business model
continue to be ''Hold to collect'' as per Ind AS 109- Financial Instruments.

5.13 Employee Retirement Benefits

Contributions to Provident Fund and Super Annuation Fund made during the year, are charged to Statement
of Profit and Loss.

Employees Gratuity liabilities has been calculated on the basis of Projected Unit Credit method adopted by
LIC of India at the time of renewal of gratuity policy. Accordingly, Company has made contribution in line of
that which is charged to Statement of Profit & Loss Account in the year of contribution.

5.14 Borrowing Cost

Borrowing costs, which are directly attributable to the acquisition /construction of fixed assets, till the time
such assets are ready for intended use, are capitalized as a part of the cost of assets.

All borrowing costs other than mentioned above are expensed in the period they are incurred. In case of
unamortized identified borrowing cost is outstanding at the year end, it is classified under loans and advances
as unamortized cost of borrowings.

In case any loan is prepaid/ cancelled then the unamortized borrowing cost, if any, is fully expensed off on the
date of prepayment/cancellation.

5.15 Related Party

A related party is a person or an entity that is related to the reporting entity. A related party transaction is a
transfer of resources, services or obligations between a reporting entity and a related party, regardless of
whether a price is charged.

A person or a close family member is related if he:

• Has control/joint control;

• Has significant influence;

• Is a member of the Key Managerial Personnel (KMP);

of the reporting entity or its parent.

Close members of the family of a person are those family members who may be expected to influence, or be
influenced by, that person in their dealings with the entity including:

• that person''s children, spouse or domestic partner, brother, sister, father and mother;

• children of that person''s spouse or domestic partner; and

• dependants of that person or that person''s spouse or domestic partner.

Key Management Personnel are those persons having authority and responsibility for planning, directing
and controlling the activities of the entity, directly or indirectly, including any director (whether executive or
otherwise) of that entity.

Company has duly complied with all the disclosure requirements of Ind AS 24 "Related Party Disclosures"

5.16 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. Company follows accrual basis for all revenue recognition.
Interest income is recognized on due basis and penal income is recognized on receipt basis. For recognition
of revenue, the valuation of listed shares is considered at market price and that of security receipts as per the
valuation report as at Balance Sheet date.

Processing fees received from customer was recognized as income in the year of receipt under India GAAP.
But, as per Ind AS, the same is now amortized over the period of relevant loan.

5.17 Earnings Per Share

The Earning per Share (Basic as well as Diluted) is calculated based on the net profit or loss for the period
attributable to equity shareholders i.e. the net profit or loss for the period.

For the purpose of calculating (Basic and Diluted EPS), the number of equity shares taken are the weighted
average number of equity shares outstanding during the period.

b) Contingent Assets:

In March 2020, Paisalo Digital Limited engaged in a significant transaction involving the transfer of book-
debts amounting to Rs. 23.29 Crores. These debts primarily consisted of loans extended to ''Bottom of Pyramid''
customers, in accordance with a 10:90 risk and rewards sharing arrangement with Central Bank of India. This
strategic move adhered to the regulatory guidelines set forth by the Reserve Bank of India (RBI), reflecting the
company''s commitment to prudent financial practices.

However, the unforeseen emergence of the Covid-19 Pandemic shortly thereafter precipitated unforeseen
challenges within this demographic segment, resulting in a notable increase in loan defaults. Despite the
company''s proactive measures to mitigate these challenges, a portion of the loans turned non-performing,
impacting both Paisalo Digital Limited and Central Bank of India.

Of particular concern was Central Bank of India''s unilateral action on March 31, 2023, whereby they debited
Paisalo Digital Limited''s Cash Credit account by Rs. 5.38 Crores. This action, which deviated from the agreed
terms of the transaction, has raised legal and operational concerns. Since the requests for resolution of
dispute through negotiation have not been considered by the Bank hence the Company is in the process of
filing pre-litigation mediation petition before the Hon''ble Court.

As a prudent accounting measure, the company has already charged this disputed amount to the profit
and loss statement in the previous year as an exceptional item. However, given the merits of the company''s
position in contesting this debit, the amount continuous to be classified as a contingent asset pending
resolution.

Notes:

(1) Related party relationship is as identified by the Company on the basis of information available with them and
accepted by the auditors as correct.

(2) No amount has been written off or written back during the year in respect of debt due from or to related
parties.

(3) Company has entered into transactions with certain parties as listed above during the year under
consideration. Full disclosures have been made and the Board/Audit Committee considers such transactions
to be in normal course of business and at rates agreed between the parties.

(4) The key management personnel and their relatives have given personal guarantees and collaterals for
loans raised by the Company but Company has not provided any guarantee to these persons nor paid any
consideration for furnishing such guarantees.

(5) Company has extended its guarantee to Banks/ Financial Institutions for credit facilities availed by the wholly
owned subsidiary Nupur Finvest Pvt. Ltd.

38. Working Capital, Working Capital Demand Loan and Term Loan Borrowings:

The Company has an arrangement with a consortium of Eight banks under the leadership of Bank of Baroda for
its working capital requirements. The facility is primarily secured by the hypothecation of book-debts / receivables
of the Company and collaterally by mortgage of immovable properties including office premises, a flat owned by
the Company and four commercial properties by third parties as well as personal and corporate guarantees. The
outstanding details of the member banks in the consortium is as under:

39. During the year 2024-25, the Company has issued 50,000 7.50% Foreign Currency Convertible Bonds (FCCBs) of
USD 1000 each aggegate amount USD 50 million equivalent to Rs. 423.30 crores. Out of such FCCBs, FCCBs of USD
2 million has been converted into 37,01,792 equity share at Re.1 each at a premium of Rs. 44.74 per equity share.
Further, USD 48 million FCCBs (ISIN-XS2952463086) has also been listed on Afrinex Exchange, Mauritius of AFRINEX
Limited w.e.f. March 24, 2025. FCCB has also been revalued on the fair market value as on 31.03.2025.

Further during the financial year 2024-25, the Company has allotted 3,72,517 equity shares of face value of Re.
1/- each (Rupee One Only) fully paid up for cash at a premium of Rs. 33.69 (at a discounted rate of 18% on the
market price of Rs.42.30 per share) to the employees of the Company and its wholly owned Subsidiary i.e. Nupur
Finvest Private Limited pursuant to exercise of options granted to them under the Paisalo Employee Share Purchase
Scheme 2024 in compliance with SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. These
shares shall rank pari passu with the existing equity shares of the Company in all respects. These shares have lock-
in period pf 18 months from the date of issue.

45. The Company had not taken any exposure in Derivatives during the financial year 2024-25.

46. Disclosure relating to Securitization:

i) The Company has not done securitization of any of its loans & advances to any organization during the
financial year 2024-25 and there is no outstanding amount as on Balance Sheet date. Also, the Company has
not sold its financial assets to any Securitization/Reconstruction Company for Asset Reconstruction. Further
the Company has not undertaken new assignment transactions during the Financial Year 2024-25.

ii) The Company has not purchased any non-performing assets (NPAs) from other NBFCs or financial institutions.

a) Disclosures pursuant to RBI Notification- RBI/2020-21/16 DOR.No.BP.BC/3/21.04.048/2020-21 dated 6^th
August 2020 and RBI/2021-22/31/DOR.STR.REC.11 /21.04.048/2021-22 dated 5^th May 2021.

There were no borrower accounts where resolution plans had been implemented under RBI ''s Resolution
Framework 2.0 dated 5^th May 2021 during the year.

b) Disclosures pursuant to RBI Notification- RBI /DOR/2021-22/86 DOR.STR.REC.51 /21.04.048/2021-22 dated
24^th September 2021.

(i) Details of transfer through assignment in respect of loans not in default during the financial year
ended 31^st March, 2025.

In addition to above the Company has transferred written off loans amounting to Rs. Nil for a
consideration of Rs. Nil.

(iv) The Company has not acquired any stressed loan during the financial year ended 31^st March, 2025.

c) Pursuant to the RBI circular dated 12^th November 2021 - "Prudential norms on Income Recognition, Asset
Classification and Provisioning pertaining to Advances - Clarifications'', the Company has aligned its
definition of default from number of instalments outstanding approach to Days Past Due approach. On
15^th February 2022, RBI allowed deferment till 30^th September 2022 of Para 1 of this circular pertaining to
upgrade of Non-performing accounts. However, the Company has not opted for this deferment and
such alignment does not have any significant impact on the financial results for the quarter and year
ended 31^st March 2025.

iii) Co-Lending Operations with Banks

Paisalo Digital Ltd. has forged strategic Co-Lending partnerships with five prominent banking institutions-State
Bank of India, Bank of Baroda, UCO Bank, Punjab National Bank, and Karnataka Bank. These collaborations are
anchored in the shared objective of advancing financial inclusion by extending timely and accessible credit
to underserved segments, notably in the agriculture (AGRI) sector, micro, small, and medium enterprises
(MSMEs), and other small business ecosystems.

Under the Reserve Bank of India''s regulated Co-Lending Model (CLM), Paisalo Digital Ltd. contributes 20% of the
loan amount while the partner banks provide the remaining 80%. This model enables an equitable sharing of
risk and return, and allows both parties to leverage their respective strengths-Paisalo''s deep penetration into
rural and semi-urban markets, and the banks'' robust funding capabilities and regulatory frameworks.

The Co-Lending arrangement is designed to streamline credit delivery through end-to-end digital processes,
ensuring faster loan disbursal and minimal friction for the borrower. By integrating operational workflows and
aligning underwriting criteria, Paisalo and its banking partners are able to optimize risk assessment, improve
cost efficiency, and provide competitive interest rates. While the banks'' rates remain aligned with prevailing

benchmarks, Paisalo retains flexibility within regulatory limits to determine its own rates, thereby maintaining
a fair and transparent pricing mechanism for borrowers.

Recent regulatory developments and clarifications from the Reserve Bank of India have further bolstered
the Co-Lending framework, providing increased clarity and operational confidence to participating entities.
Paisalo continues to invest in digital infrastructure to support seamless onboarding, documentation, and
disbursement processes-positioning itself as a key enabler of last-mile credit delivery.

In essence, Co-Lending reflects a transformative shift in credit distribution strategy, one that synergizes
institutional capital with grassroots reach. For Paisalo Digital Ltd., it is not merely a business model but a core
pillar of its mission to democratize credit and foster inclusive economic development. The company''s forward¬
looking alliances in this space are expected to remain a significant growth driver, contributing meaningfully to
both financial performance and social impact.

50. Bank borrowings and Long Term Debt Securites of the Company have been assigned rating of "IVR AA/STABLE
OUTLOOK” by Infomerics Valuation and Rating Pvt. Ltd. which denotes "Instruments with this rating are considered
to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low
credit risk". Similarly, the Company has been assigned rating of "IVR A1 (IVR A One Plus)" for Commercial Paper
by Infomerics Valuation and Rating Pvt Ltd which denotes "Securities with this rating are considered to have very
strong degree of safety regarding timely payment of financial obligation. Such instruments carry lowest credit risk."

d) The Company has issued Foreign currency convertible bonds of USD 50 millions, which are duly hedged
against repayment of interest and maturity value, out of these FCCBs of USD 2 million has been converted into
equity share during the year. The profit/(loss) on exchange rate fluctuation have been duly recongnised in
Profit & Loss Statements.

e) Concentration of NPAs

Provisioning for Substandard Assets/Doubtful Assets/Loss Assets has been made in compliance with the
directions of Reserve Bank of India. As per decision of the Board of Directors in the cases where loan installments
are overdue for more than 90 days past due and management is of the opinion that its recovery chances are
very remote or negligible, the Company writes off these accounts (Net of Future Interest Charges) as bad debts.
In all other cases where loan installments are overdue for more than 90 days past due the provisioning for
non-performing assets is made in compliance with Non-Banking Financial Company Systemically Important
Non-Deposit Taking Company and Deposit Taking Company (Reserve Bank) Directions 2016, as applicable to
the company. As per the RBI Directions dated 1st September 2016 updated as on 23rd February 2018 Company
has made general provision of 0.40% of Standard assets. Other directives of Reserve Bank of India have been
duly complied with. The details of top 4 NPA''s written off during the year are given below:

59. Uncertainty relating to the global health pandemic from COVID-19 ("Covid-19"):

a) The global landscape remains fraught with challenges, chiefly stemming from the widespread COVID-19
pandemic. This unprecedented crisis has precipitated multifaceted repercussions, including sweeping
governmental interventions, a resilient economic rebound post a severe global recession, surging inflation
rates, geopolitical tensions such as the conflict in Ukraine, and substantial economic sanctions imposed on
Russia.

b) In light of the enduring ramifications of the global pandemic, Paisalo Digital Ltd. has proactively instituted
alternative work modalities to safeguard the health and well-being of its workforce and business associates.
These measures encompass the facilitation of remote work arrangements, particularly for operations and call
centers during periods of enforced lockdowns. Equipping employees with requisite technological infrastructure
has ensured the secure and efficient delivery of services to borrowers.

Throughout the fiscal year, the company has fostered robust communication channels via virtual sessions
with branches, employees, and business associates, thereby sustaining proactive engagement with
customers. Services such as Door Step Sourcing and Servicing have been meticulously executed, adhering to
stringent safety protocols and implementing essential non-pharmaceutical interventions. Despite prevailing
challenges, the majority of branches, employees, and business associates have remained operational,
playing a pivotal role in extending essential credit to borrowers.

Furthermore, Paisalo Digital Ltd. has swiftly adapted to evolving circumstances, innovating digital and analog
tools to facilitate credit requests and optimize loan recovery mechanisms.

c) During the financial year 2024-25, no significant governmental, regulatory, or banking frameworks were
introduced explicitly targeting COVID-19 relief or aid for Non-Banking Financial Companies (NBFCs) like
Paisalo Digital Ltd. However, NBFCs have increasingly served as conduits for governmental and major banking
institutions, leveraging their local presence to directly support households in need.

The stability in funding and liquidity afforded to Paisalo Digital Ltd. is fortified by its entrenched local footprint,
robust credit and risk assessment methodologies, and enduring partnerships with esteemed banking entities.

60. In the financial year 2024-25, Paisalo Digital Ltd. delivered a robust non-fund based income of ^701.23 lakhs. This
income segment, comprising fees, commissions, and revenue from ancillary services, illustrates the company''s
focus on building a diversified and resilient revenue base beyond traditional interest income.

Paisalo implemented several targeted initiatives to strengthen its non-fund based income portfolio:

a) Business Correspondent (BC) Services: Acting as a Business Correspondent for leading banks such as State
Bank of India and Bank of India, Paisalo extended formal banking and financial services to unbanked and
underbanked geographies. As a BC, the company facilitated a range of banking transactions-including
account openings, deposits, withdrawals, and loan processing-on behalf of its partner banks. In return,
Paisalo earned transaction-based fees and service commissions, establishing a recurring revenue stream
with minimal credit risk exposure.

b) Ancillary Financial Services: In addition to its core lending operations, Paisalo expanded into ancillary
services designed to complement and enhance its financial offerings. These include transaction facilitation,
documentation support, and financial advisory services. Revenues in this segment are typically fee-based
and linked to transaction volumes, allowing the company to scale non-fund income in tandem with customer
activity and asset volumes.

c) Cross-Selling of Financial Products: Capitalizing on its extensive customer base and high engagement
levels, Paisalo adopted a cross-selling strategy to offer supplementary financial products such as insurance,
investment-linked services, and savings instruments. These initiatives aim to deepen customer relationships,
increase lifetime value, and unlock incremental income streams. This strategy also aligns with the company''s
long-term vision of becoming a holistic financial services provider in rural and semi-urban India.

These strategic efforts have contributed significantly to enhancing the company''s non-fund based income,
while also reinforcing its value proposition to customers and partners alike. As part of its ongoing evolution,
Paisalo continues to identify and implement innovative methods to expand its fee-based income, improve
profitability, and create long-term value for shareholders.

62. Risk Management Framework:

The company operates within a landscape of diverse risks that could significantly impact its business, operations,
and financial performance. These risks include Credit Risk, Liquidity & Funding Risk, Market Risk, and Operational Risk.
To address these challenges, the management has developed a comprehensive risk management framework
aimed at identifying, analyzing, and mitigating potential threats while ensuring adherence to predefined risk limits.

i) Creating a Stable Business Planning Environment

One of the primary objectives of the risk management framework is to establish a stable business planning

environment by minimizing the impact of interest rate fluctuations on the company''s business plan. This
involves assessing the potential effects of interest rate changes on the company''s financial position and
operations, enabling more accurate forecasting and strategic decision-making.

ii) Achieving Greater Predictability to Earnings

Another key goal is to achieve greater predictability in earnings by determining the financial value of
expected earnings in advance. This entails forecasting future earnings based on various factors such as
market conditions, customer behavior, and economic trends. By accurately predicting earnings, the company
can better allocate resources, plan investments, and manage its financial performance effectively.

A) Credit Risk

Credit risk represents the potential financial loss to the company if a customer or counterparty fails to
fulfill its contractual obligations. This risk primarily emanates from trade and other receivables, cash
equivalents, and bank balances. To assess credit risk, the company utilizes various metrics such as
installment default rate, overdue position, and debt management efficiency.

Credit risk is closely monitored through the analysis of credit exposures, portfolio monitoring, and
evaluation of customer and portfolio concentration risk. Moreover, the risk management unit employs
a robust control framework to manage credit risk effectively. This framework involves aligning credit
and debt management policies, leveraging external data from credit bureaus, and conducting regular
reviews of portfolios and delinquencies by senior and middle management teams.

By implementing these strategies, Paisalo Digital Ltd aims to proactively identify and mitigate credit risks,
thereby safeguarding its financial stability and ensuring the continuity of its operations.

(a) Loans, Trade & Other Receivables

Managing credit risk from loans, trade, and other receivables is a multifaceted process that involves

a comprehensive approach to mitigate potential financial losses and uphold the company''s

financial stability. Here''s a detailed overview of how the company manages credit risk:

1. Establishing Credit Limits: The company meticulously sets credit limits for each customer,
taking into account various factors such as creditworthiness, financial history, and repayment
capacity. These credit limits serve as a safeguard against excessive borrowing and minimize
the risk of default.

2. Credit Approvals Process: Every credit request undergoes a stringent approval process that
evaluates the creditworthiness of the customers and assesses associated risks. This process
involves analyzing financial statements, credit reports, and other relevant information to
determine the likelihood of repayment. Only credit requests meeting predefined risk criteria
are approved.

3. Continuous Creditworthiness Monitoring: The company continuously monitors the
creditworthiness of its customers to identify any changes in their financial circumstances that
may impact their ability to repay loans or fulfill obligations. This ongoing monitoring involves
regular reviews of credit reports, financial statements, and market trends to assess credit risk
profiles accurately.

4. Regular Monitoring of Receivables: The company maintains a vigilant stance by regularly
monitoring outstanding receivables to ensure timely repayment by customers. This includes
tracking payment schedules, identifying overdue accounts, and implementing effective
collection strategies for delinquent accounts. By closely monitoring receivables, the company
can promptly identify potential credit risks and take appropriate actions to mitigate them.

5. Ageing Analysis: The company conducts thorough ageing analysis of loans and trade
receivables to categorize outstanding receivables based on their ageing profile. This analysis
helps identify accounts that are overdue or at risk of default, enabling the company to
prioritize collection efforts and allocate resources efficiently. By understanding the ageing
profile of receivables, the company can implement targeted credit management strategies
to minimize credit risk exposure.

(b) Cash & Cash Equivalents & Other Bank Balances

Regarding the management of cash and cash equivalents, the company maintains a robust
evaluation process for assessing the creditworthiness of banks and financial institutions where funds
are held. This evaluation occurs regularly and involves comprehensive assessments of financial
stability, regulatory compliance, and risk management practices. By ensuring the creditworthiness
of banking partners, the company mitigates the risk associated with cash holdings and safeguards
its liquidity position. The company holds cash and cash equivalents and other bank balances of Rs.
10,366.77 Lakh at 31^st March 2025.

B) Liquidity & Funding Risk

Liquidity risk poses a substantial threat to the Company''s ability to fulfill its financial obligations, particularly

those settled through cash or other financial assets. This risk encompasses several dimensions, including

funding risk, which manifests in various scenarios:

1. Inability to Raise Incremental Funds: The company faces the risk of being unable to secure additional
borrowings or deposits to meet its operational needs or fulfill repayment obligations. This could
arise due to limitations in accessing capital markets or reluctance from lenders amidst uncertain
economic conditions.

2. Cash Flow Mismatches: Funding risk also emerges when long-term assets cannot be financed
over their expected term, leading to discrepancies in cash flows. Such mismatches may arise from
unexpected changes in market conditions or disruptions in the funding environment.

3. Market Volatility Impacting Funding: Volatility in financial markets can further exacerbate funding
risk by hindering the company''s ability to source funds from banks and money markets. Fluctuations
in interest rates, credit spreads, or investor sentiment may impede access to funding avenues,
heightening liquidity concerns.

Measuring liquidity risk involves several key metrics and assessments:

1. Identification of Structural and Dynamic Liquidity Gaps: The company analyzes structural and
dynamic liquidity statements to identify gaps between available funds and near-term liabilities.
This entails assessing the maturity profile of assets and liabilities to gauge liquidity adequacy.

2. Assessment of Incremental Borrowing Needs: Evaluating the incremental borrowings required to
fulfill repayment obligations and support the company''s business plan amidst prevailing market
conditions is crucial. This assessment considers factors such as interest rate environment, credit
availability, and funding costs.

3. Monitoring Liquidity Coverage Ratio (LCR): The company tracks its liquidity coverage ratio in
adherence to regulatory guidelines, ensuring sufficient high-quality liquid assets are held to cover
short-term liquidity needs under stress scenarios.

Managing liquidity risk involves proactive measures implemented by the treasury team:

1. Gap Analysis and Scenario Testing: The company continuously assesses the gap between
fund visibility and near-term liabilities, considering evolving liquidity conditions and regulatory
requirements for non-banking financial companies (NBFCs). Stress tests and scenario analyses are
conducted to evaluate potential liquidity shortfalls and compare them against available buffers.

2. Adaptive Funding Strategies: A dynamic approach to funding involves aligning funding sources
with emerging market conditions in banking and money markets. The company adjusts its funding
mix and borrowing strategies to optimize liquidity and mitigate funding risks.

3. Maintaining Liquidity Buffers: Building and maintaining liquidity buffers is essential to mitigate
liquidity risk. These buffers serve as a cushion during periods of funding stress and provide resilience
against unexpected liquidity shocks.

4. Strategic Asset-Liability Management: The company employs positive asset-liability management
practices to match asset and liability durations, reducing the risk of cash flow mismatches. This
entails aligning asset maturities with liability obligations to minimize funding gaps.

5. Diversification and Relationship Management: Diversifying funding sources and cultivating strong
relationships with banks and financial institutions enhance the company''s ability to access funding
under diverse market conditions. Maintaining a robust pipeline of sanctions and approvals ensures
access to funding avenues when needed.

In essence, the management of liquidity risk is a dynamic and multifaceted endeavor, requiring
a proactive and strategic approach from the treasury team. Through the judicious application of
liquidity buffers, long-term funding strategies, asset-liability management, pipeline management,
and prudent loan assignments, the treasury team fortifies the Company''s liquidity position,
safeguards against funding uncertainties, and fosters financial resilience in an ever-evolving
financial landscape.

C) Market Risk

Market risk, a critical facet of financial risk management, underscores the potential for future earnings,

fair values, or cash flows to incur losses due to adverse fluctuations in market rates and prices, or the

values of market risk-sensitive instruments. This encompasses Currency Risk, Interest Rate Risk, and Price

Risk, each demanding meticulous assessment and proactive management strategies.

1. Measurement Techniques: Market risk is quantified through a suite of sophisticated metrics and
methodologies, including Value at Risk (VaR), basis point value (PV01), and modified duration
analysis. These tools facilitate a comprehensive evaluation of portfolio dynamics and the potential
impact on income streams, particularly in terms of net interest income. The Company''s exposure to
market risk is analyzed across various dimensions, encompassing equity investments, interest rate
fluctuations within investment portfolios, and the implications of floating rate assets and liabilities
with varying maturity profiles.

2. Monitoring Protocols: Rigorous monitoring protocols are employed to track fluctuations in equity
prices and interest rate sensitivities under diverse stress test scenarios. Through simulated
simulations of probable interest rate movements, both fixed and floating assets and liabilities
are scrutinized to gauge resilience under adverse market conditions. This proactive monitoring
framework enables the identification of vulnerabilities and informs timely risk mitigation strategies.

3. Management Strategies: The management of market risk is entrusted to the Company''s treasury
team, operating under the guidance of the Board. This dedicated team implements a multi-faceted
approach tailored to address specific risk exposures:

- Currency Risk: Given the Company''s exclusive operations within India, exposure to foreign
currency risk is mitigated. The Company has issued Foreign currency convertible bonds of
USD 50 millions, which are duly hedged against repayment of interest and maturity value, out
of these FCCBs of USD 2 million has been converted into equity share during the year.

- Interest Rate Risk: The Company actively manages interest rate risk by closely monitoring
market interest rate movements and their potential impact on interest-bearing liabilities and
assets. This proactive stance enables the Company to adapt swiftly to changing interest rate
environments and optimize its interest rate exposure.

- Price Risk: Equity price risk arising from investments is managed through prudent portfolio
diversification strategies. The Company strategically diversifies its investment portfolio within
predefined limits to mitigate concentration risk and optimize risk-adjusted returns.

4. Governance Framework: The management of market risk is conducted under the oversight of
the Board of Directors. The treasury team, comprising seasoned professionals with expertise in
financial risk management, implements risk mitigation strategies in alignment with the Board''s
directives and risk appetite. This ensures that market risk management practices are consistent
with the Company''s strategic objectives and regulatory compliance obligations.

In essence, the management of market risk requires a judicious blend of quantitative analysis,
robust monitoring mechanisms, and proactive risk mitigation strategies. By leveraging sophisticated
measurement techniques, rigorous monitoring protocols, and strategic management frameworks,
the Company navigates the complexities of market risk dynamics while safeguarding its financial
stability and optimizing long-term performance.

D) Operational Risk

Operational risk, a multifaceted challenge inherent in the company''s operational landscape, arises from
a spectrum of sources, encompassing internal processes, human resources, technological systems, and
external factors. To effectively manage operational risks, the Company has instituted a comprehensive
framework of internal controls and procedures, meticulously designed to govern critical activities across
various functional domains, including loan acquisition, customer service, IT operations, and finance
functions.

1. Internal Control Systems: At the heart of operational risk management lies a robust system of
internal controls, meticulously crafted to mitigate the risk of inadequate or failed internal processes,
people, or systems. These controls span a myriad of functions, facilitating proactive identification
and remediation of potential vulnerabilities. Through continuous monitoring and assessment, the
Company endeavors to strengthen its internal control environment, ensuring operational resilience
and efficiency.

2. Internal Audit Oversight: Internal Audit plays a pivotal role in operational risk management,
conducting comprehensive reviews of all operational functions at least annually. This diligent
scrutiny serves to unearth process gaps and deficiencies in a timely manner, enabling corrective
actions to be implemented promptly. By providing independent assurance and insights, Internal
Audit reinforces the Company''s commitment to sound governance practices and operational
excellence.

3. Compliance and Control Units: Within the IT and Operations functions, dedicated compliance and
control units operate in tandem to uphold the integrity and security of internal processes. Through
continuous monitoring and evaluation, these units assess adherence to regulatory requirements
and internal policies, proactively identifying and addressing operational risks. By fostering a culture
of compliance and risk awareness, these units contribute to the Company''s resilience in the face of
evolving operational challenges.

4. Disaster Recovery and Business Continuity Planning: Recognizing the imperative of business
continuity in the face of unforeseen events, the Company has established robust Disaster Recovery
(DR) and Business Continuity Plans (BCP). These plans are meticulously crafted to ensure the
seamless continuation of operations and services to customers in the event of natural disasters,
technological outages, or other disruptive incidents. Regular testing and analysis of these plans
enable the Company to identify and rectify any gaps in the framework, bolstering its readiness to
navigate unforeseen disruptions effectively.

In essence, operational risk management is woven into the fabric of the Company''s governance

framework, underpinned by a relentless commitment to process excellence, regulatory compliance,
and business continuity. Through the concerted efforts of internal control systems, audit oversight,
compliance units, and robust disaster recovery planning, the Company strives to fortify its
operational resilience and safeguard its business operations against a spectrum of potential risks
and contingencies.

63. Additional information pursuant to Ministry of Corporate Affairs notification dated March 24, 2021 with respect

to amendments in Schedule iii of Companies Act, 2013:

i) The Company has made provision for dividend @ Rs. 0.10 each per share and the same will be declared & paid
after the approval of the shareholders in their Annual General Meeting.

ii) All the borrowings of the Company are used for the specific purpose for which it was taken.

iii) There are no proceedings which have been initiated or pending against the Company for holding any benami
property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

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

v) The Company does not have any transactions with the companies struck off under section 248 of Companies
Act, 2013 or Section 560 of Companies Act, 1956.

vi) There are no charges or satisfaction yet to be registered with Registrar of Companies (ROC) beyond the
statutory period.

vii) 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.

viii) There are no transactions which are 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 (such as, search
or survey or any other relevant provisions of the Income Tax Act, 1961).

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

Notes:

1. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial Company-Systemically
Important Non-Deposit Taking Company and Deposit Taking Company (Reserve Bank) Direction, 2016.

2. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of
investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect
of quoted investments and break up/fair value/NAV in respect of unquoted investments shall be disclosed
irrespective of whether they are classified as long term or current in column (5) above.

Signed in terms of our Report of even date For and on behalf of the Board

Sd/-

For Saket Jain & Co. (SUNIL AGARWAL)

Chartered Accountants Managing Director

Firm Reg. No. 014685N DIN : 00006991

Sd/-

(CA. ASHISH JAIN) Sd/-

Partner (HARISH SINGH)

Membership No. 400599 Executive Director & CFO

UDIN : 25400599BMIGVH1618 DIN : 00039501

Sd/-

(MANENDRA SINGH)

Place : New Delhi Company Secretary

Date : 9^th May 2025 Membership No. : F7868

---

Mar 31, 2024

Expected Credit Loss model:

Company''s Credit loss system is based on its credit risk function and the risk perceives. Under Ind AS, credit loss provisioning is mainly based on past trends and judgment of the entity. Implementation of expected credit losses not only consider historical data but also incorporates consideration to forward looking information.

4.4 Provision

Provision is recognized when the Company has a present obligation as a result of past event 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 not discounted to its present value and are determined based on best estimate required to settle the obligation as at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

4.5 Cash Flow Statement

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

5. ACCOUNTING POLICIES

5.1 CASH & CASH EQUIVALENTS

Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

5.2 Financial Instruments

The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument.

Company has a business model of ''Hold to collect'' with sole purpose of collecting principal and interest from loans, thus as per Ind AS 109- ''Financial Instruments'' Loans are measured at amortized cost.

Other financial assets or liabilities maturing within one year from the balance sheet date are measured at the carrying value as the same approximate the fair value due to the short maturity of these instruments.

The valuation of listed shares is considered at market price and that of security receipts as per the valuation report as at Balance Sheet date.

5.3 Impairment of Financial Assets

In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss of the financial assets on the basis of their credit risk exposure.

For the same, ECL is measured as per the management policy after performing due diligence of Company''s historical data in regards to the respective asset. Also, since company is a RBI registered ND-SI- NBFC and as per RBI guidelines, a 0.4% provision for Standard Assets is created against Company''s credit exposures.

The Company shows overdue installment amount of customers under trade receivables.

Determining significant increase in credit risk

It is very judgmental to determine the significant increase in credit risk, which enable entity to move from stage 1 to stage 2. i.e. to move from 12 month expected losses to life time expected losses. Entity need to assess significant increase in credit risk as compared to its initial recognition level by considering significant changes in financial position of a borrower, expected or current delay in payment, historical trend of the repeat borrowers etc.

Company also has a policy to perform an assessment, at the end of each reporting period, of whether a financial instrument''s credit risk has increased significantly since initial recognition.

Forward looking information

ECL is based on history of financial asset and includes forward-looking statement; however, it is a forecast about future conditions over the entire expected life of a financial instrument. The forward-looking information is based on:

• Internal historical credit loss experience and the period of time over which its historical data has been captured and the corresponding economic conditions represented in the past

• Effects that were not present in the past or to remove the effects that are not relevant for the future

• Macroeconomic factors such as interest rates

The Calculations of ECL

Company calculates ECL on the basis of probability-weighted average scenarios on the basis of historical data.

The calculation of ECL has following key elements of Company''s internal estimates:

Probability of default (PD):

It is an estimate of the likelihood of default over a given time horizon.

Exposure at default:

Estimate of an exposure at a future default date -expected changes in exposure after the reporting date.

Loss Given Default:

Estimate of the loss arising on default. It is based on the difference between contractual cash flows that are due and expected to receive including from collateral. It is generally referred as a percentage of exposure at default.

Discount rate:

Used to discount an expected loss to a present value at the reporting date using the effective interest rate.

ECL system:

Stage 1: At stage one 12 months ECL is recognized which is calculated as the portion of total outstanding advances, that are overdue till 30 days, that result from a default event on the financial instrument that are possible within 12 months after the reporting date. Company calculates the 12 months ECL provision based on the expectation of default occurring in 12 months following the reporting date. These expected 12 month default probabilities are applied to an EAD and multiplied by the expected LGD.

Stage 2: When a loan has shown a significant increase in the credit risk, i.e., where the same is overdue till 90 days, PDL records a provision for life time ECL. PDs and LGDs in this case are estimated over life span of the financial instrument.

Stage 3: When a loan is considered credit-impaired, i.e., where the same is overdue for past 90 days, Company recognize the lifetime expected credit losses. In this scenario PD is estimated at 100%. For Company, stage 3 incorporates the loans which are due past 90 days but, in certain cases where the internal assessment of the individual borrowers reflects that the overdue amount can be recovered in the near future then the same is subjected to some additional provision other than the prescribed provisioning.

Conclusion:

ECL concept is to recognize the expected loss on the defaulted advances on timely basis so as to present a true and fair view of financial position of the Company. Also, Ind AS states that entity can adopt any ECL model to present its historical trends adjusted for its forward-looking information. However, as per Company''s internal policy, the Company follows a policy of writing off 100% of Sub-Standard Assets in respect of these cases where possibility of recoveries are remote which does incorporate the requirements of Ind AS of better presentation of financial position.

Company ECL model is subjected to review every year.

5.4 Derecognition of Financial Instruments

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognised from the balance sheet when the obligation specified in the contract is discharged or cancelled or expires.

5.5 Investments

Investments are carried at cost in the separate financial statements. Investments in subsidiary is measured at the previous GAAP carrying amount as per the provisions of Ind AS 27 - ''Separate Financial Statements''.

5.6 Property, Plant and Equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if any or at fair market value if the same present a better presentation of Company''s financial position.

Costs directly attributable to acquisition are capitalized until the property, plant and equipment are ready for use, as intended by the Management. If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment. 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 on disposal of an item of property, plant and equipment is recognized in the statement of profit and loss.

The Company depreciates property, plant and equipment over their estimated useful lives using the straightline method. The estimated useful lives of assets are as follows:

Advances, if any, paid towards the acquisition of property, plant and equipment outstanding at each Balance Sheet date is classified as capital advances under other non-current assets and the cost of assets not ready to use before such date are disclosed under ''Capital Work-in-Progress''. Subsequent expenditures relating to property, plant and equipment are capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized in the Statement of Profit and Loss when incurred. The cost and related accumulated depreciation are eliminated from the Financial Statements upon sale or retirement of the asset and the resultant gains or losses are recognized in the Statement of Profit and Loss.

5.7 Impairment of Tangible Assets

Property, plant and equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If such assets are considered to be impaired, the impairment is to be recognized in the Statement of Profit and Loss and is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the Statement of Profit and Loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated depreciation) had no impairment loss been recognized for the asset in prior years.

5.8 Intangible Assets

Intangible assets are stated at cost less accumulated amortization and impairment or fair market value if the same present a better presentation of Company''s financial position. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand, competition and other economic factors (such as the stability of the industry and known technological advances). Amortization methods and useful lives are reviewed periodically including at each financial year end.

Software product development costs are also expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic benefits are probable. The cost during the development phase shall be capitalized as the cost of the app. The costs which can be capitalized include the cost of material, direct labour and overhead costs that are directly attributable to preparing the asset for its intended use. Over the period of time the Company has developed its own ERP software which is a core strength of the Company, the revaluation of which shall be taken up at later stage.

5.9 Contingent Liabilities and Contingent Assets

Contingent liabilities are disclosed for:

a. possible obligations which will be confirmed only by future events not wholly within the control of the Company, or

b. present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.

c. Contingent assets are disclosed wherein an inflow of economic benefits is probable.

d. The Company has not recognized the Assets & Liability in respect of Arbitration Decree.

5.10 Share Capital

a. Ordinary shares are classified as equity, incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds.

b. The Company may capitalize permitted Reserves and Security Premium for Bonus Shares.

5.11 Segment Reporting Policy

The Chief Executive Officer reviews the operation at the Company level. Therefore, the operations of the Company fall under "Financing activities" business only, which is considered to be the only segment in accordance with the provisions of Ind AS 108- Operating segment.

5.12 Business Model

During the previous year, the company entered into bilateral assignment transactions against outstanding loans. But the value of these loans are trivial in light of the Company''s AUM, thus Company''s business model continue to be ''Hold to collect'' as per Ind AS 109- Financial Instruments.

5.13 Employee Retirement Benefits

Contributions to Provident Fund and Super Annuation Fund made during the year, are charged to Statement of Profit and Loss.

Employees Gratuity liabilities has been calculated on the basis of Projected Unit Credit method adopted by LIC of India at the time of renewal of gratuity policy. Accordingly, Company has made contribution in line of that which is charged to Statement of Profit & Loss Account in the year of contribution.

5.14 Borrowing Cost

Borrowing costs, which are directly attributable to the acquisition /construction of fixed assets, till the time such assets are ready for intended use, are capitalized as a part of the cost of assets.

All borrowing costs other than mentioned above are expensed in the period they are incurred. In case of unamortized identified borrowing cost is outstanding at the year end, it is classified under loans and advances as unamortized cost of borrowings.

In case any loan is prepaid/cancelled then the unamortized borrowing cost, if any, is fully expensed off on the date of prepayment/cancellation.

5.15 Related Party

A related party is a person or an entity that is related to the reporting entity. A related party transaction is a transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged.

A person or a close family member is related if he:

• Has control/joint control;

• Has significant influence;

• Is a member of the Key Managerial Personnel (KMP); of the reporting entity or its parent.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity including:

• that person''s children, spouse or domestic partner, brother, sister, father and mother;

• children of that person''s spouse or domestic partner; and

• dependents of that person or that person''s spouse or domestic partner.

Key Management Personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any Director (whether executive or otherwise) of that entity.

Company has duly complied with all the disclosure requirements of Ind AS 24 "Related Party Disclosures"

5.16 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. Company follows accrual basis for all revenue recognition. Interest income is recognized on due basis and penal income is recognized on receipt basis. For recognition of revenue, the valuation of listed shares is considered at market price and that of security receipts as per the valuation report as at Balance Sheet date.

Processing fees received from customer was recognized as income in the year of receipt under India GAAP. But, as per Ind AS, the same is now amortized over the period of relevant loan.

5.17 Earnings Per Share

The Earning per Share (Basic as well as Diluted) is calculated based on the net profit or loss for the period attributable to equity shareholders i.e. the net profit or loss for the period.

For the purpose of calculating (Basic and Diluted EPS), the number of equity shares taken are the weighted average number of equity shares outstanding during the period.

b) Contingent Assets:

In March 2020, Paisalo Digital Limited engaged in a significant transaction involving the transfer of book-debts amounting to Rs. 23.29 Crores. These debts primarily consisted of loans extended to ''Bottom of Pyramid'' customers, in accordance with a 10:90 risk and rewards sharing arrangement with Central Bank of India. This strategic move adhered to the regulatory guidelines set forth by the Reserve Bank of India (RBI), reflecting the company''s commitment to prudent financial practices.

However, the unforeseen emergence of the Covid-19 Pandemic shortly thereafter precipitated unforeseen challenges within this demographic segment, resulting in a notable increase in loan defaults. Despite the company''s proactive measures to mitigate these challenges, a portion of the loans turned non-performing, impacting both Paisalo Digital Limited and Central Bank of India.

Of particular concern was Central Bank of India''s unilateral action on March 31, 2023, whereby they debited Paisalo Digital Limited''s Cash Credit account by Rs. 5.38 Crores. This action, which deviated from the agreed terms of the transaction, has raised legal and operational concerns. Since the requests for resolution of dispute through negotiation have not been considered by the Bank hence the Company is in the process of filing pre-litigation mediation petition before the Hon''ble Court.

As a prudent accounting measure, the company has already charged this disputed amount to the profit and loss statement in the previous year as an exceptional item. However, given the merits of the company''s position in contesting this debit, the amount continuous to be classified as a contingent asset pending resolution.

iv) Co-Lending done by the company with Banks

Paisalo Digital Ltd. has strategically partnered with a five esteemed banks, including State Bank of India, Bank of Baroda, UCO Bank, Punjab National Bank and Karnataka Bank, to facilitate Co-Lending agreements. This symbiotic alliance underscores the company''s commitment to fostering financial inclusivity and empowering underserved segments such as the agriculture (AGRI) sector, micro, small and medium enterprises (MSMEs) and small businesses.

The essence of this collaboration lies in the seamless provision of easy and hassle-free loans with a quick turnaround time, addressing the diverse financing needs of these critical sectors. By pooling resources and expertise, Paisalo Digital Ltd. and its banking partners are able to leverage synergies, capitalize on operational efficiencies and optimize risk management practices.

Under the Co-Lending model, both Paisalo Digital Ltd. and its partner banks share the responsibility of disbursing loans, with the former contributing 20% of the total loan amount and the latter contributing the remaining 80%. This equitable distribution of risk and rewards is underpinned by a robust regulatory framework established by the RBI, ensuring compliance and adherence to best practices.

One of the key advantages of this collaborative approach is the ability to offer competitive interest rates to borrowers, thereby enhancing affordability and accessibility to credit. While the bank''s interest rates are benchmarked against prevailing sectoral norms, Paisalo Digital Ltd. retains the flexibility to set its own rates within regulatory constraints, ensuring a fair and transparent lending process.

Furthermore, the recent policy directives issued by the Reserve Bank of India on Co-Lending have provided greater clarity and impetus to this innovative financing model. By harnessing digital technologies and embracing end-to-end digitalization, Paisalo Digital Ltd. and its banking partners are poised to revolutionize the lending landscape, driving financial inclusion and fostering economic empowerment at the grassroots level.

In summary, Co-Lending represents a paradigm shift in collaborative finance, offering a compelling value proposition for both borrowers and lenders alike. As Paisalo Digital Ltd. continues to chart new frontiers in inclusive finance, its strategic partnerships and innovative initiatives are set to redefine the contours of sustainable growth and development in the financial services sector

d) Details of financing of parent company products : NIL

e) Details of Single Borrower Limit and Group Borrower Limit exceeded by NBFC

The company has adhered to the Prudential Exposure norms as prescribed by RBI and has not given any advances exceeding the limits as prescribed for Single borrower and Group Borrower.

f) Unsecured Advances

The unsecured advances outstanding as at Balance Sheet date are Rs. 36,206.27 Lakhs. The Company does not have any loan or advances which are partially secured against any sort of licenses, rights, authorizations charged to the company.

49. Registration obtained from other financial sector regulators:

RBI Registration No. : B-14.02997

Company Identification No. : L65921DL1992PLC120483

The company has never been penalized for any non-compliance by financial sector regulators.

50. Bank borrowings and Long Term Debt Securities of the Company have been assigned rating of "IVR AA/STABLE OUTLOOK" by Infomerics Valuation and Rating Pvt. Ltd. which denotes "Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk". Similarly, the Company has been assigned rating of "IVR A1 (IVR A One Plus)" for Commercial Paper by Infomerics

e) Concentration of NPAs

Provisioning for Substandard Assets/Doubtful Assets/Loss Assets has been made in compliance with the directions of Reserve Bank of India. As per decision of the Board of Directors in the cases where loan installments are overdue for more than 180 days past due and management is of the opinion that its recovery chances are very remote or negligible, the Company writes off these accounts (Net of Future Interest Charges) as bad debts. In all other cases where loan installments are overdue for more than 180 days past due the provisioning for non-performing assets is made in compliance with Non-Banking Financial Company Systemically Important Non-Deposit Taking Company and Deposit Taking Company (Reserve Bank) Directions 2016, as applicable to the company. As per the RBI Directions dated 1st September 2016 updated as on 23rd February 2018 Company has made general provision of 0.40% of Standard assets. Other directives of Reserve Bank of India have been duly complied with. The details of top 4 NPA''s written off during the year are given below:

59. Uncertainty relating to the global health pandemic from COVID-19 ("Covid-19”):

a) The global landscape remains fraught with challenges, chiefly stemming from the widespread COVID-19 pandemic. This unprecedented crisis has precipitated multifaceted repercussions, including sweeping governmental interventions, a resilient economic rebound post a severe global recession, surging inflation rates, geopolitical tensions such as the conflict in Ukraine and substantial economic sanctions imposed on Russia.

b) In light of the enduring ramifications of the global pandemic, Paisalo Digital Ltd. has proactively instituted alternative work modalities to safeguard the health and well-being of its workforce and business associates. These measures encompass the facilitation of remote work arrangements, particularly for operations and call centres during periods of enforced lockdowns. Equipping employees with requisite technological infrastructure has ensured the secure and efficient delivery of services to borrowers.

Throughout the fiscal year, the company has fostered robust communication channels via virtual sessions with branches, employees and business associates, thereby sustaining proactive engagement with customers. Services such as Door Step Sourcing and Servicing have been meticulously executed, adhering to stringent safety protocols and implementing essential non-pharmaceutical interventions. Despite prevailing challenges, the majority of branches, employees and business associates have remained operational, playing a pivotal role in extending essential credit to borrowers.

Furthermore, Paisalo Digital Ltd. has swiftly adapted to evolving circumstances, innovating digital and analog tools to facilitate credit requests and optimize loan recovery mechanisms.

c) During the financial year 2023-24, no significant governmental, regulatory, or banking frameworks were introduced explicitly targeting COVID-19 relief or aid for Non-Banking Financial Companies (NBFCs) like Paisalo Digital Ltd. However, NBFCs have increasingly served as conduits for governmental and major banking institutions, leveraging their local presence to directly support households in need.

The stability in funding and liquidity afforded to Paisalo Digital Ltd. is fortified by its entrenched local footprint, robust credit and risk assessment methodologies and enduring partnerships with esteemed banking entities.

60. Paisalo Digital Ltd demonstrated robust performance in the fiscal year 2023-2024, achieving a notable non-fund based

income of Rs. 1102.288 Lakhs. This income category encompasses various revenue streams such as fees, commissions

and ancillary activities, reflecting the company''s diversified approach towards income generation.

In its pursuit of optimizing non-fund based income, Paisalo Digital Ltd strategically deployed a range of initiatives:

a) Business Correspondent Services: Acting as a Business Correspondent for esteemed institutions like State Bank of India and Bank of India, Paisalo Digital extended comprehensive banking and financial services to underbanked or unbanked regions and demographics. By serving as an intermediary, facilitating banking transactions and providing services on behalf of partner institutions, the company garnered commissions and fees, thereby enhancing its non-interest income.

b) Ancillary Financial Services: Complementing its core lending operations, Paisalo Digital Ltd ventured into ancillary financial services. These encompass a spectrum of activities such as transaction-based services, which generate fees and commissions based on the value of transactions or assets under management. This diversification strategy contributed significantly to the augmentation of non-fund based income.

c) Cross-Selling of Products: Recognizing the potential for revenue growth within its existing customer base, Paisalo Digital implemented targeted cross-selling strategies. By promoting additional financial products and services to its clientele, the company aimed to capitalize on existing relationships and deepen customer engagement. This strategic approach not only fosters customer loyalty but also serves as a lucrative avenue for increasing nonfund based income.

These initiatives underscore Paisalo Digital Ltd''s commitment to innovation and diversification, positioning the company for sustained growth and profitability in the dynamic financial landscape. Through strategic foresight and proactive market engagement, Paisalo Digital Ltd continues to explore avenues for maximizing revenue generation and creating long-term value for stakeholders.

62. Risk Management Framework:

The company operates within a landscape of diverse risks that could significantly impact its business, operations and financial performance. These risks include Credit Risk, Liquidity & Funding Risk, Market Risk and Operational Risk. To address these challenges, the management has developed a comprehensive risk management framework aimed at identifying, analyzing and mitigating potential threats while ensuring adherence to predefined risk limits.

i) Creating a Stable Business Planning Environment

One of the primary objectives of the risk management framework is to establish a stable business planning environment by minimizing the impact of interest rate fluctuations on the company''s business plan. This involves assessing the potential effects of interest rate changes on the company''s financial position and operations, enabling more accurate forecasting and strategic decision-making.

ii) Achieving Greater Predictability to Earnings

Another key goal is to achieve greater predictability in earnings by determining the financial value of expected earnings in advance. This entails forecasting future earnings based on various factors such as market conditions, customer behaviour and economic trends. By accurately predicting earnings, the company can better allocate resources, plan investments and manage its financial performance effectively.

A) Credit Risk

Credit risk represents the potential financial loss to the company if a customer or counterparty fails to fulfill its contractual obligations. This risk primarily emanates from trade and other receivables, cash equivalents and bank balances. To assess credit risk, the company utilizes various metrics such as installment default rate, overdue position and debt management efficiency.

Credit risk is closely monitored through the analysis of credit exposures, portfolio monitoring and evaluation of customer and portfolio concentration risk. Moreover, the risk management unit employs a robust control framework to manage credit risk effectively. This framework involves aligning credit and debt management policies, leveraging external data from credit bureaus and conducting regular reviews of portfolios and delinquencies by senior and middle management teams.

By implementing these strategies, Paisalo Digital Ltd aims to proactively identify and mitigate credit risks, thereby safeguarding its financial stability and ensuring the continuity of its operations.

(a) Loans, Trade & Other Receivables

Managing credit risk from loans, trade and other receivables is a multifaceted process that involves a

comprehensive approach to mitigate potential financial losses and uphold the company''s financial

stability. Here''s a detailed overview of how the company manages credit risk:

1. Establishing Credit Limits: The company meticulously sets credit limits for each customer, taking into account various factors such as creditworthiness, financial history and repayment capacity. These credit limits serve as a safeguard against excessive borrowing and minimize the risk of default.

2. Credit Approvals Process: Every credit request undergoes a stringent approval process that evaluates the creditworthiness of the customers and assesses associated risks. This process involves analyzing financial statements, credit reports and other relevant information to determine the likelihood of repayment. Only credit requests meeting predefined risk criteria are approved.

3. Continuous Creditworthiness Monitoring: The company continuously monitors the creditworthiness of its customers to identify any changes in their financial circumstances that may impact their ability to repay loans or fulfill obligations. This ongoing monitoring involves regular reviews of credit reports, financial statements and market trends to assess credit risk profiles accurately.

4. Regular Monitoring of Receivables: The company maintains a vigilant stance by regularly monitoring outstanding receivables to ensure timely repayment by customers. This includes tracking payment schedules, identifying overdue accounts and implementing effective collection strategies for delinquent accounts. By closely monitoring receivables, the company can promptly identify potential credit risks and take appropriate actions to mitigate them.

5. Ageing Analysis: The company conducts thorough ageing analysis of loans and trade receivables to categorize outstanding receivables based on their ageing profile. This analysis helps identify

(b) Cash & Cash Equivalents & Other Bank Balances

Regarding the management of cash and cash equivalents, the company maintains a robust evaluation process for assessing the creditworthiness of banks and financial institutions where funds are held. This evaluation occurs regularly and involves comprehensive assessments of financial stability, regulatory compliance and risk management practices. By ensuring the creditworthiness of banking partners, the company mitigates the risk associated with cash holdings and safeguards its liquidity position. The company holds cash and cash equivalents and other bank balances of Rs. 1356.32 Lakh at 31^st March 2024.

B) Liquidity & Funding Risk

Liquidity risk poses a substantial threat to the Company''s ability to fulfill its financial obligations, particularly those settled

through cash or other financial assets. This risk encompasses several dimensions, including funding risk, which manifests

in various scenarios:

1. “Inability to Raise Incremental Funds**: The company faces the risk of being unable to secure additional borrowings or deposits to meet its operational needs or fulfill repayment obligations. This could arise due to limitations in accessing capital markets or reluctance from lenders amidst uncertain economic conditions.

2. **Cash Flow Mismatches**: Funding risk also emerges when long-term assets cannot be financed over their expected term, leading to discrepancies in cash flows. Such mismatches may arise from unexpected changes in market conditions or disruptions in the funding environment.

3. “Market Volatility Impacting Funding**: Volatility in financial markets can further exacerbate funding risk by hindering the company''s ability to source funds from banks and money markets. Fluctuations in interest rates, credit spreads, or investor sentiment may impede access to funding avenues, heightening liquidity concerns.

Measuring liquidity risk involves several key metrics and assessments:

1. “Identification of Structural and Dynamic Liquidity Gaps**: The company analyzes structural and dynamic liquidity statements to identify gaps between available funds and near-term liabilities. This entails assessing the maturity profile of assets and liabilities to gauge liquidity adequacy.

2. “Assessment of Incremental Borrowing Needs**: Evaluating the incremental borrowings required to fulfill repayment obligations and support the company''s business plan amidst prevailing market conditions is crucial. This assessment considers factors such as interest rate environment, credit availability and funding costs.

3. “Monitoring Liquidity Coverage Ratio (LCR)**: The company tracks its liquidity coverage ratio in adherence to regulatory guidelines, ensuring sufficient high-quality liquid assets are held to cover short-term liquidity needs under stress scenarios.

Managing liquidity risk involves proactive measures implemented by the treasury team:

1. **Gap Analysis and Scenario Testing**: The company continuously assesses the gap between fund visibility and near-term liabilities, considering evolving liquidity conditions and regulatory requirements for non-banking financial companies (NBFCs). Stress tests and scenario analyses are conducted to evaluate potential liquidity shortfalls and compare them against available buffers.

2. “Adaptive Funding Strategies**: A dynamic approach to funding involves aligning funding sources with emerging market conditions in banking and money markets. The company adjusts its funding mix and borrowing strategies to optimize liquidity and mitigate funding risks.

3. “Maintaining Liquidity Buffers**: Building and maintaining liquidity buffers is essential to mitigate liquidity risk. These buffers serve as a cushion during periods of funding stress and provide resilience against unexpected liquidity shocks.

4. “Strategic Asset-Liability Management**: The company employs positive asset-liability management practices to match asset and liability durations, reducing the risk of cash flow mismatches. This entails aligning asset maturities with liability obligations to minimize funding gaps.

5. “Diversification and Relationship Management**: Diversifying funding sources and cultivating strong relationships with banks and financial institutions enhance the company''s ability to access funding under diverse market conditions. Maintaining a robust pipeline of sanctions and approvals ensures access to funding avenues when needed.

In essence, the management of liquidity risk is a dynamic and multifaceted endeavour, requiring a proactive and strategic approach from the treasury team. Through the judicious application of liquidity buffers, longterm funding strategies, asset-liability management, pipeline management and prudent loan assignments, the treasury team fortifies the Company''s liquidity position, safeguards against funding uncertainties and fosters financial resilience in an ever-evolving financial landscape.

C) Market Risk

Market risk, a critical facet of financial risk management, underscores the potential for future earnings, fair values,

or cash flows to incur losses due to adverse fluctuations in market rates and prices, or the values of market

risk-sensitive instruments. This encompasses Currency Risk, Interest Rate Risk and Price Risk, each demanding

meticulous assessment and proactive management strategies.

1. “Measurement Techniques**: Market risk is quantified through a suite of sophisticated metrics and methodologies, including Value at Risk (VaR), basis point value (PV01) and modified duration analysis. These tools facilitate a comprehensive evaluation of portfolio dynamics and the potential impact on income streams, particularly in terms of net interest income. The Company''s exposure to market risk is analyzed across various dimensions, encompassing equity investments, interest rate fluctuations within investment portfolios and the implications of floating rate assets and liabilities with varying maturity profiles.

2. **Monitoring Protocols**: Rigorous monitoring protocols are employed to track fluctuations in equity prices and interest rate sensitivities under diverse stress test scenarios. Through simulated simulations of probable interest rate movements, both fixed and floating assets and liabilities are scrutinized to gauge resilience under adverse market conditions. This proactive monitoring framework enables the identification of vulnerabilities and informs timely risk mitigation strategies.

3. “Management Strategies**: The management of market risk is entrusted to the Company''s treasury team, operating under the guidance of the Board. This dedicated team implements a multi-faceted approach tailored to address specific risk exposures:

- “Currency Risk**: Given the Company''s exclusive operations within India, exposure to foreign currency risk is mitigated.

- “Interest Rate Risk**: The Company actively manages interest rate risk by closely monitoring market interest rate movements and their potential impact on interest-bearing liabilities and assets. This proactive stance enables the Company to adapt swiftly to changing interest rate environments and optimize its interest rate exposure.

- “Price Risk**: Equity price risk arising from investments is managed through prudent portfolio

diversification strategies. The Company strategically diversifies its investment portfolio within predefined limits to mitigate concentration risk and optimize risk-adjusted returns.

4. “Governance Framework**: The management of market risk is conducted under the oversight of the Board of

Directors. The treasury team, comprising seasoned professionals with expertise in financial risk management, implements risk mitigation strategies in alignment with the Board''s directives and risk appetite. This ensures that market risk management practices are consistent with the Company''s strategic objectives and regulatory compliance obligations.

In essence, the management of market risk requires a judicious blend of quantitative analysis, robust monitoring mechanisms and proactive risk mitigation strategies. By leveraging sophisticated measurement techniques, rigorous monitoring protocols and strategic management frameworks, the Company navigates the complexities of market risk dynamics while safeguarding its financial stability and optimizing long-term performance.

D) Operational Risk

Operational risk, a multifaceted challenge inherent in the company''s operational landscape, arises from a spectrum of sources, encompassing internal processes, human resources, technological systems and external factors. To effectively manage operational risks, the Company has instituted a comprehensive framework of internal controls and procedures, meticulously designed to govern critical activities across various functional domains, including loan acquisition, customer service, IT operations and finance functions.

1. “Internal Control Systems**: At the heart of operational risk management lies a robust system of internal controls, meticulously crafted to mitigate the risk of inadequate or failed internal processes, people, or systems. These controls span a myriad of functions, facilitating proactive identification and remediation of potential vulnerabilities. Through continuous monitoring and assessment, the Company endeavours to strengthen its internal control environment, ensuring operational resilience and efficiency.

2. “Internal Audit Oversight**: Internal Audit plays a pivotal role in operational risk management, conducting comprehensive reviews of all operational functions at least annually. This diligent scrutiny serves to unearth process gaps and deficiencies in a timely manner, enabling corrective actions to be implemented promptly. By providing independent assurance and insights, Internal Audit reinforces the Company''s commitment to sound governance practices and operational excellence.

3. “Compliance and Control Units**: Within the IT and Operations functions, dedicated compliance and control units operate in tandem to uphold the integrity and security of internal processes. Through continuous monitoring and evaluation, these units assess adherence to regulatory requirements and internal policies, proactively identifying and addressing operational risks. By fostering a culture of compliance and risk awareness, these units contribute to the Company''s resilience in the face of evolving operational challenges.

4. “Disaster Recovery and Business Continuity Planning**: Recognizing the imperative of business continuity in the face of unforeseen events, the Company has established robust Disaster Recovery (DR) and Business Continuity Plans (BCP). These plans are meticulously crafted to ensure the seamless continuation of operations and services to customers in the event of natural disasters, technological outages, or other disruptive incidents. Regular testing and analysis of these plans enable the Company to identify and rectify any gaps in the framework, bolstering its readiness to navigate unforeseen disruptions effectively.

In essence, operational risk management is woven into the fabric of the Company''s governance framework, underpinned by a relentless commitment to process excellence, regulatory compliance and business continuity. Through the concerted efforts of internal control systems, audit oversight, compliance units and robust disaster recovery planning, the Company strives to fortify its operational resilience and safeguard its business operations against a spectrum of potential risks and contingencies.

3. Additional information pursuant to Ministry of Corporate Affairs notification dated March 24, 2021 with respect to amendments in Schedule iii of Companies Act, 2013:

i) The Company has made provision for dividend @ Rs. 0.10 each per share and the same will be declared & paid after the approval of the shareholders in their Annual General Meeting.

ii) All the borrowings of the Company are used for the specific purpose for which it was taken.

iii) There are no proceedings which have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

iv) The Company is not a wilful defaulter as declared by any bank or financial Institution or any other lender.

v) The Company does not have any transactions with the companies struck off under section 248 of Companies Act, 2013 or Section 560 of Companies Act, 1956.

vi) There are no charges or satisfaction yet to be registered with Registrar of Companies (ROC) beyond the statutory period.

vii) 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.

viii) There are no transactions which are 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 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

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

Notes:

1. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial Company-Systemically Important Non-Deposit Taking Company and Deposit Taking Company (Reserve Bank) Direction, 2016.

2. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquoted investments shall be disclosed irrespective of whether they are classified as long term or current in column (5) above.

Signed in terms of our Report of even date For and on behalf of the Board

For Manish Goyal & Co. Sd/-

Chartered Accountants (SUNIL AGARWAL)

Firm Reg. No. 006066C Managing Director

DIN : 00006991

Sd/-

(CA. MANISH GOYAL) Sd/-

Partner (HARISH SINGH)

Membership No. 074778 Executive Director & CFO

UDIN : 24074778BKAPEP5265 DIN : 00039501

Place : New Delhi Sd/-

Date : 26^th April 2024 (MANENDRA SINGH)

Company Secretary Membership No. : F7868

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Mar 31, 2023

Figures for the previous year have been regrouped/rearranged/reclassified and restated wherever considered necessary.

The company has paid all its dues to Small Scale Industrial Undertakings within the due time limit. There are no outstanding due pending more than 45 days under the Micro, Small and Medium Enterprises Act, 2006

a) Contingent Liabilities: The company has given corporate guarantee for the loans taken by its wholly owned subsidiary Company M/s Nupur Finvest Pvt. Ltd. from the following Bank''s / FI''s / NBFCs: ('' in Lakhs)
	Name of Bank / Financial Institution	Facility	Amount o/s
	Karnataka Bank Ltd	Cash Credit	2,000.00
	Indian Bank	Cash Credit	500.00
	State Bank of India	Term Loan	6,919.90
	Bank of Baroda	Term Loan	2,430.56
	Indian Bank	Term Loan	828.76
	Tata Capital Financial Services Limited	Term Loan	956.83
	Satin Credit Care Network Limited	Term Loan	305.15
	Satin Finserv Limited	Term Loan	61.03
	Total		14,002.23

b) Contingent Assets:

The Company assigned book-debts, consisting of loans to ''Bottom of Pyramid'' customers, amounting to Rs. 23.29 Crores to Central Bank of India in March 2020, on 10:90 sharing of risk and rewards. This transaction was based on the concept of true sales as per the RBI guidelines. The Covid 19 Pandemic struck the country immediately thereafter resulting in immense hardships to this segment of society. A moratorium was also accorded by RBI on recovery for six months. In spite of the best efforts a few of these loans became NPAs in the books of Paisalo Digital Limited and Central Bank of India. The Central Bank of India has most arbitrarily and contrary to the agreed terms & very spirit of the transaction of shared Risks and Rewards (10:90), debited our Cash Credit account by Rs. 5.38 Crores towards the outstanding amount along with the accrued interest and penalty thereon, of the subject pool of book-debts on 31st March, 2023. This debit is unauthorised and bad in law. The Company has taken up the matter with the higher authorities of the Bank for reversal of the unlawful debit. The Company has charged this amount to the profit and loss statement as an exceptional item. Considering the merits of the matter in favour of the Company, the amount has been treated as Contingent Assets.

(1) Related party relationship is as identified by the Company on the basis of information available with them and accepted by the auditors as correct.

(2) No amount has been written off or written back during the year in respect of debt due from or to related parties.

(3) Company has entered into transactions with certain parties as listed above during the year under consideration. Full disclosures have been made and the Board/Audit Committee considers such transactions to be in normal course of business and at rates agreed between the parties.

(4) The key management personnel and their relatives have given personal guarantees and collaterals for loans raised by the Company but Company has not provided any guarantee to these persons nor paid any consideration for furnishing such guarantees.

(5) Company has extended its guarantee to Banks/ Financial Institutions for credit facilities availed by the wholly owned subsidiary Nupur Finvest Pvt Ltd.

38. Working Capital, Working Capital Demand Loan and Term Loan Borrowings:

The Company has an arrangement with a consortium of fourteen banks under the leadership of Bank of Baroda for its working capital requirements. The facility is primarily secured by the hypothecation of book-debts / receivables of the Company and collaterally by mortgage of immovable properties including office premises, a flat owned by the Company and five commercial properties by third parties as well as personal and corporate guarantees. The outstanding details of the member banks in the consortium is as under:

39. In financial year 2021-22, Warrant holder applied to exercise their right to convert the 16,20,000 warrants (out of total warrants issued) into equal number of equity shares and paid Rs. 85,65,75,000 (75% of issue price for 16,20,000 shares). Accordingly, Company has allotted 16,20,000 equity shares of Rs. 10 each at a premium of Rs. 695.00 per Share on conversion of warrants.

Equity shares of the Company are listed and are being traded on Bombay Stock Exchange (BSE Limited) and National Stock Exchange of India Limited. In order to improve the liquidity of the Company''s shares and to make it more affordable for small investors as also to broad base the small investors, the Board of Directors of the Company, in their meeting held on May 6, 2022 has recommended to sub-divide (split) the nominal value of each Equity Share having a present face value Rs. 10/- (Rupees Ten Only) each into 10 (Ten) Equity Shares of Re. 1/- (Rupee One Only) each, subject to the approval of the Members.

During the financial year 2022-23, Warrant holders again applied to exercise their right to convert 9,90,000 warrants (out of balance warrants issued) into 99,00,000 equity shares and paid Rs. 52,34,62,500 (75% of issue price). Accordingly, Company has allotted 99,00,000 equity shares of Re. 1.00 each at a premium of Rs 69.50 per share on conversion of warrants.

45. The Company had not taken any exposure in Derivatives during the financial year 2022-23.

46. Disclosure relating to Securitization:

i) The Company has not done securitization of any of its loans & advances to any organization during the financial year 2022-23 and there is no outstanding amount as on Balance Sheet date. Also, the Company has not sold its financial assets to any Securitization/Reconstruction Company for Asset Reconstruction. Further the Company has undertaken new assignment transactions during the Financial Year 2022-23.

ii) Details of stock assigned / sold during the year prior to RBI Notification dated 24 September, 2021

iii) The Company has not purchased any non-performing assets (NPAs) from other NBFCs or financial institutions.

a) Disclosures pursuant to RBI Notification - RBI/2020-21/16 DOR.No.BP.BC/3/21.04.048/20 20-21 dated 6 August 2020 and RBI/2021-22/31/DOR.STR.REC.11 /21.04.048/2021-22 dated 5 May 2021.

There were no borrower accounts where resolution plans had been implemented under RBI ''s Resolution Framework 2.0 dated 5 May 2021 during the year.

b) Disclosures pursuant to RBI Notification - RBI /DOR/2021-22/86 DOR.STR.REC.51 /21.04.048/2021-22 dated 24 September 2021.

(a) Details of transfer through assignment in respect of loans not in default during the financial year ended 31 March, 2023.

(d) The Company has not acquired any stressed loan during the financial year ended 31 March, 2023.

c) Pursuant to the RBI circular dated 12 November 2021 - "Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances - Clarifications'', the Company has aligned its definition of default from number of instalments outstanding approach to Days Past Due approach. On 15 February 2022, RBI allowed deferment till 30 September 2022 of Para 1 of this circular pertaining to upgrade of Non-performing accounts. However, the Company has not opted for this deferment and such alignment does not have any significant impact on the financial results for the quarter and year ended 31 March 2023.

iv) Co-Origination/Co-Lending done by the company with Banks

Co-Origination/Co-Lending is a financing model where a non-banking financial company (NBFC) or a financial institution partners with a bank to jointly provide loans to borrowers. In this case, Paisalo Digital Ltd.

has entered into Co-Origination/Co-Lending loan agreements with several banks, including State Bank of India, Bank of Baroda, UCO Bank, Punjab National Bank, and Karnataka Bank.

The objective of this partnership is to empower the agriculture (AGRI) sector, micro, small, and medium enterprises (MSMEs), and small businesses by offering them easy and hassle-free online loans with a quick turnaround time. The loan ticket size ranges from Rs 10,000 to 5 lakh, catering to the financing needs of these segments.

Under the Co-Lending model, both Paisalo Digital Ltd. and the partner banks contribute to the loan disbursement. Paisalo Digital Ltd. contributes 20% of the total loan amount, while the bank''s contribution is 80%. This partnership capitalizes on Paisalo Digital''s extensive distribution network and the bank''s lower cost of funds, allowing for increased lending to the priority sectors that generate income.

The interest rate charged by the bank is based on the prevailing rate for priority sector loans, while Paisalo Digital Ltd. is allowed to charge its own rate of interest. However, the blended rate of interest charged to the customer should not exceed the priority sector criteria defined by the Reserve Bank of India (RBI). This enables Paisalo Digital to maintain its usual lending rate while benefiting from the significantly lower lending rate of the bank, resulting in a reduced effective lending cost due to cost averaging. As a result, borrowers receive loans at a lower blended rate compared to other financial institutions in the market.

The Reserve Bank of India released a new policy on Co-Lending on November 5, 2020, which incorporated the concept of Co-Origination introduced in a previous circular dated September 21, 2018. The new policy clarified the framework for Co-Lending arrangements. This move by the RBI aims to leverage the unhindered reach and low-cost operations of NBFCs in conjunction with the low-cost funds of banks to benefit customers at the bottom of the socioeconomic ladder. This aligns with the government''s efforts to extend credit facilities to economically weaker sections of society.

By digitally processing and disbursing loans up to INR 5,00,000 (5 lakh) under the 80-20 Co-Lending Model, better monitoring and surveillance of borrowers can be achieved. The transparent credit process enables comprehensive oversight of NBFC operations, while end-to-end digitalization ensures greater reach and lower operational costs. Additionally, compliance control is enhanced to meet RBI norms. The fully digital and scalable business model also provides end-to-end risk mitigation.

Paisalo Digital Ltd. believes that Co-Lending, as guided by the RBI circulars in 2018 and 2020, and implemented by the partner banks through a transparent and user-friendly digital credit process, is a revolutionary step benefiting small loan customers and banks alike, particularly for loans up to INR 5,00,000.

b) Capital Market Exposure

The Company holds the capital market exposure of Rs. 6,742.51 Lakhs as at 31st March 2023. The Company has financed Rs. 1,500.00 Lakhs for which Company has taken security which inter alia includes equity shares.

c) Details of financing of parent company products: NIL

d) Details of Single Borrower Limit and Group Borrower Limit exceeded by NBFC

The company has adhered to the Prudential Exposure norms as prescribed by RBI and has not given any advances exceeding the limits as prescribed for Single borrower and Group Borrower.

e) Unsecured Advances

The unsecured advances outstanding as at Balance Sheet date are Rs. 7,740.69 Lakhs. The Company does not have any loan or advances which are partially secured against any sort of licenses, rights, authorizations charged to the company.

49. Registration obtained fromother financial sector regulators:

RBI Registration No. : B-14.02997

Company Identification No. : L65921DL1992PLC120483

The company has never been penalized for any non-compliance by financial sector regulators.

50. Bank borrowings of the Company has been assigned rating of "IVR AA-/STABLE OUTLOOK” by Infomerics Valuation and Rating Pvt. Ltd. which denotes "Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk”. Similarly, the Company has been assigned rating of "IVR A1 (IVR A One Plus)” for Commercial Paper by Infomerics Valuation and Rating Pvt Ltd which denotes "Securities with this rating are considered to have very strong degree of safety regarding timely payment of financial obligation. Such instruments carry lowest credit risk”

d) Concentration of NPAs

Provisioning for Substandard Assets/Doubtful Assets/Loss Assets has been made in compliance with the directions of Reserve Bank of India. As per decision of the Board of Directors in the cases where loan installments are overdue for more than 3 months and management is of the opinion that its recovery chances are very remote or negligible, the Company writes off these accounts (Net of Future Interest Charges) as bad debts. In all other cases where loan installments are overdue for more than 3 months the provisioning for nonperforming assets is made in compliance with Non-Banking Financial Company Systemically Important NonDeposit Taking Company and Deposit Taking Company (Reserve Bank) Directions 2016, as applicable to the company. As per the RBI Directions dated 1st September 2016 updated as on 23rd February 2018 Company has made general provision of 0.40% of Standard assets. Other directives of Reserve Bank of India have been duly complied with. The details of top 4 NPA''s written off during the year are given below:

57. Uncertainty relating to the global health pandemic from COVID-19 ("Covid-19"):

a) The world is currently confronted with a range of challenges, including the pervasive global pandemic of COVID-19. This crisis has been accompanied by unprecedented government actions, a robust recovery following a deep global recession, escalating inflation, a conflict in Ukraine, and significant economic sanctions against Russia.

b) I n response to the ongoing global pandemic, Paisalo Digital Ltd. has implemented alternative work arrangements to prioritize the safety and well-being of its employees and business associates. This includes enabling work-from-home arrangements for operations and call centers during periods of lockdown. The company has equipped its workforce with the necessary technological tools to ensure the secure and efficient servicing of borrowers. Throughout the year, virtual sessions have been conducted with branches, employees, and business associates, maintaining proactive communication with customers. Services such as Door Step Sourcing and Servicing have been provided, adhering to safe distancing protocols and implementing essential non-pharmaceutical interventions. The majority of branches, employees, and business associates have access to updated technology and continue to operate, playing a vital role in providing essential credit to borrowers. Paisalo Digital Ltd. has also swiftly adapted and developed new digital and analog tools to facilitate credit requests and ensure effective loan recovery.

c) During the financial year 2022-23, no significant new frameworks were introduced by the Government of India, Reserve Bank of India, or banks specifically targeting COVID-19 relief or aid for NBFCs like Paisalo Digital Ltd. However, NBFCs are increasingly serving as conduits for governments and major banks, leveraging their local presence to directly support households. The stability in funding and liquidity provided to Paisalo Digital Ltd. is bolstered by its well-established local presence, robust credit and risk assessment practices, and the ongoing support of its partner banks.

58. Paisalo Digital Ltd, for the financial year 2022-2023, generated a non-fund based income amounting to Rs.

242.68 Lakhs It typically includes fees, commissions, and other related activities.

Paisalo Digital Ltd adopted various strategies and undertook specific activities to increase its non-fund based

income. Some of these activities include:

1. Business Correspondent Services: Paisalo Digital Ltd acted as a Business Correspondent for State Bank of India and UCO bank. As a Business Correspondent, the company extended banking and financial services to underbanked or unbanked areas and populations. By facilitating banking transactions and providing services on behalf of partner institutions, Paisalo Digital earned commissions and fees, contributing to its non-interest income.

60. Risk Management Framework:

A wide range of risks may affect the company''s business and operational or financial performance. The risks that could have significant influence on the Company are Credit Risk, Liquidity & Funding Risk, Market Risk and Operational Risk. The management has a process to identify and analyze the risks faced by the Company, to set appropriate risk limits and to control and to monitor risks and adherence to these limits. The risk management framework aims to:

2. Ancillary Financial Services: Apart from lending activities, Paisalo Digital Ltd has offered other financial services. These services often generate fees and commissions based on the assets under management or the value of transactions, contributing to the non-interest income.

3. Cross-Selling of Products: To increase its non-fund based income, Paisalo Digital has implemented crossselling strategies. This involves promoting additional financial products and services to existing customers.

These are some potential activities that Paisalo Digital Ltd have undertaken to increase its non-fund based income for the FY 2022-2023.

i) create a stable business planning environment by reducing the impact of interest rate fluctuations on the company''s business plan.

ii) achieve greater predictability to earnings by determining the financial value of the expected earnings in advance.

A) Credit Risk

Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the trade and other receivables, cash and cash equivalents and other bank balances.

I t is measured as the amount at risk due to repayment default by customers or counterparties to the company. Various metrics such as instalment default rate, overdue position, instalment moratorium, restructuring, one-time resolution plan, debt management efficiency, credit bureau information etc. are used as leading indicators to assess credit risk.

It is monitored using level of credit exposures, portfolio monitoring, contribution of repeat customers, bureau data, concentration risk of geography, customer and portfolio; and assessment of any major change in the business environment including economic, political as well as natural calamity/pandemic.

I t is managed by a robust control framework by the risk and debt management unit. This is achieved by continuously aligning credit and debt management policies and resourcing, obtaining external data from credit bureaus and reviews of portfolios and delinquencies by senior and middle management team comprising of risk, analytics, debt management and risk containment along with business.

(b) Cash & Cash Equivalents & Other Bank Balances

The company holds cash and cash equivalents and other bank balances of Rs. 2824.63 Lakh at 31 March 2023. The credit worthiness of such banks and financial institutions is evaluated by the management on an ongoing basis and is considered to be good.

B) Liquidity & Funding Risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset.

Funding risk arises from:

- I nability to raise incremental borrowings and deposits to fund business requirement or repayment obligations

- When long term assets cannot be funded at the expected term resulting in cash flow mismatches

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

It is measured by:

- Identification of gaps in the structural and dynamic liquidity statements.

- Assessment of incremental borrowings required for meeting the repayment obligation, the Company''s business plan and prevailing market conditions.

- Liquidity coverage ratio (LCR) in accordance with guidelines.

It is monitored by:

- Assessment of the gap between visibility of funds and the near term liabilities given current liquidity conditions and evolving regulatory framework for NBFCs.

- A constant calibration of sources of funds in line with emerging market conditions in banking and money markets.

- Periodic reviews of liquidity position, LCR and stress tests assuming varied ''what if'' scenarios and comparing probable gaps with the liquidity buffers maintained by the Company

It is managed by the Company''s treasury team under liquidity risk management framework through various means like liquidity buffers, sourcing of long term funds, positive asset liability mismatch, keeping strong pipeline of sanctions and approvals from banks and assignment of loans under the guidance of Board.

C) Market Risk

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices or in the price of market risk-sensitive instruments as a result of such adverse changes in market rates & prices. Market risk comprises Currency Risk, Interest Risk & Price Risk.

It is measured using changes in equity prices, and sensitivities like Value at Risk (''VaR''), basis point value (PV01), modified duration analysis and other measures to determine movements in our portfolios and impact on our income, including the sensitivity of net interest income. Market risks for the Company encompass exposures to Equity investments, Interest rate risks on investment portfolios as well as the floating rate assets and liabilities with differing maturities.

It is monitored by assessments of fluctuation in the equity price, interest rate sensitivities under simulated stress test scenarios given range of probable interest rate movements on both fixed and floating assets and liabilities.

It is managed by the Company''s treasury team under the guidance of Board.

(a) Currency Risk

The Company''s operations are only in India which results in no foreign currency risk exposure.

(b) Interest Risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk through the impact of rate changes on interest-bearing liabilities and assets. The Company manages its interest rate risk by monitoring the movements in the market interest rates closely.

(c) Price Risk

The Company is exposed to equity price risk arising from Investments held by the Company To manage its price risk arising from investment in equity securities, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company.

D) Operational Risk

Operational risk is the risk arising from inadequate or failed internal processes, people or systems, or from external events. The Company manages operational risks through comprehensive internal control systems and procedures laid down around various key activities in the Company viz. loan acquisition, customer service, IT operations, finance function etc. Internal Audit also conducts a detailed review of all the functions at least once a year, this helps to identify process gaps on timely basis. Further IT and Operations have a dedicated compliance and control units within the function who on continuous basis review internal processes. This enables the Management to evaluate key areas of operational risks and the process to adequately mitigate them on an ongoing basis.

The Company has put in place a robust Disaster Recovery (DR) plan and Business Continuity Plan (BCP) to ensure continuity of operations including services to customers, if any eventuality is to happen such as natural disasters, technological outage etc. Robust periodic testing is carried, and results are analyzed to address gaps in the framework, if any.

61. Additional information pursuant to Ministry of Corporate Affairs notification dated March 24, 2021 with

respect to amendments in Schedule iii of Companies Act, 2013:

i) The Company has made provision for dividend @ Rs. 0.10 each per share and the same will be declared & paid after the approval of the shareholders in their Annual General Meeting.

ii) All the borrowings of the Company are used for the specific purpose for which it was taken.

iii) There are no proceedings which have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

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

v) The Company does not have any transactions with the companies struck off under section 248 of Companies Act, 2013 or Section 560 of Companies Act, 1956.

vi) There are no charges or satisfaction yet to be registered with Registrar of Companies (ROC) beyond the statutory period.

vii) 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.

viii) There are no transactions which are 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 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

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

1. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial Company-Systemi-cally Important Non-Deposit Taking Company and Deposit Taking Company (Reserve Bank) Direction, 2016.

2. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquoted investments shall be disclosed irrespective of whether they are classified as long term or current in column (5) above.

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Mar 31, 2018

1. Disclosure of related party transactions:

A. Wholly owned Subsidiary Nupur Finvest Pvt. Limited

B. List of related parties and relationship

Related Party (Relation)

Key Managerial Personnel

Mr. Sunil Agarwal (Managing Director)

Mr. Harish Singh (Executive Director)

Mr. Anoop Krishna (Executive Director)

Relatives of K M P

Mr. Purushottam Agrawal (Father of Mr. Sunil Agarwal)

Mrs. Raj Agarwal (Mother of Mr. Sunil Agarwal)

Mrs. Neetu Agarwal (Spouse of Mr. Sunil Agarwal)

Mrs. Priti Chauhan (Spouse of Mr. Harish Singh)

Mrs. Sushila Devi Chauhan (Mother of Mr. Harish Singh)

Ms. Suniti Agarwal (Daughter of Mr. Sunil Agarwal)

Mr. Shantanu Agarwal (Son of Mr. Sunil Agarwal)

Mr. Pranav Chauhan (Son of Mr. Harish Singh)

C. Enterprises over which significant influence exercised by Key Managerial Personnel/Relatives of Key Managerial Personnel

1. Agarwal Meadows Pvt. Limited 2. Aerotech Aviation India Pvt. Limited

3. Baba Herbals Pvt. Limited 4. Bhavya Electronics and Networks Pvt. Limited

5. Diamond Infradev Pvt. Limited 6. Helios Aviation Pvt. Limited

7. Repartee Infrastructures Pvt. Limited 8. Radiance Techno Powers Company Pvt. Limited

9. SCS Educational Foundation 10. Raj Shiksha Foundation

1 1. Sunil Agarwal HUF 12. Harish Singh HUF

13. P N Agarwal & Sons HUF

Notes:

1. Related party relationship is as identified by the Company on the basis of information available with them and accepted by the auditors as correct.

2. No amount has been written off or written back during the year in respect of debt due from or to related parties.

3. Company has entered into transactions with certain parties as listed above during the year under consideration. Full disclosures have been made and the Board considers such transactions to be in normal course of business and at rates agreed between the parties.

4. The key management personnel and their relatives have given personal guarantees and collaterals for loans raised by the Company but Company has not provided any guarantee to these persons nor paid any consideration for furnishing such guarantees.

The management has recognized the Decretal Amount as asset and it is classified under the head ‘Current Assets’ as ‘Arbitration Decree Receivable’ and I00% provision is made against such assets under the head Short Term Provisions. However there is no income accrued or received from such assets during the year.

5. The Company had not taken any exposure in Derivatives during the financial year 2017-18.

6. Disclosure relating to Securitization:

i. The Company has not done securitization of any of its loans & advances to any organization during the financial year 2017-18 and there is no outstanding amount as on Balance Sheet date. Also, the Company has not sold its financial assets to any Securitization/Reconstruction Company for Asset Reconstruction. Further the Company has not undertaken any new assignment transaction during the Financial Year 20I7-I8.

ii. The Company has not purchased any non-performing assets (NPAs) from other NBFCs or financial institutions. However, the Company has repurchased portfolio of ?93.37 Crore from NBFC’s wherein Decree has been awarded against ''65.02 crore by the Arbitrator.

iii. Details of stock sold during the year

b. Capital Market Exposure

The company has not taken any exposure in capital market during the financial year 2017-18, and also the inventory of the company as at 3I^st March 20I8 does not contain any exposure to capital market

c. Details of financing of parent company products : NIL

d. Details of Single Borrower Limit and Group Borrower Limit exceeded by NBFC

The company has adhered to the Prudential Exposure norms as prescribed by RBI and has not given any advances exceeding the limits as prescribed for Single borrower and Group Borrower.

e. Unsecured Advances

The unsecured advances outstanding as at Balance Sheet date are '' 22,259 Lakhs. The Company does not have any loan or advances which are partially secured against any sort of licenses, rights, authorizations charged to the company.

7. Registration obtained from other financial sector regulators:

RBI Registration No. : B-14.02997

Company Identification No. : L6592IDLI992PLCI20483

The company has never been penalized for any non-compliance by financial sector regulators.

8. Bank borrowings of the Company has been assigned rating of “IND A-” by M/s India Ratings & Research Private Limited (A Fitch Group Company) which denotes “Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk”. An additional strength to the Company financials has been added by vouching & assignment of “IVR A/STABLE OUTLOOK” rating by Infomerics Valuation and Rating Private Limited.

9. Unlisted Unsecured Non-Convertible Redeemable Debentures (NCDs):

On 23^rd January 20I8 Company has made allotments of ‘I2.00% Unlisted Unsecured Redeemable INR Denominated Non-Cumulative Non-Convertible Debenture’ of ''I,00,00,000/-(Rupees One Crore) each for an aggregating amount of ''28,00,00,000/- (Rupees Twenty Eight Crores). Term of such NCDs is 60 months from the date of allotment with the call option available with the Company to redeem NCDs after expiry of One Year from the date of allotment in full or part as may be decided by the Board of Directors of the Company.

10. Concentration of Deposits, Advances, Exposures and NPAs:

a. Concentration of Deposits

The Company has not taken any deposits from public

d. Concentration of NPAs

Provisioning for Substandard Assets/Doubtful Assets/Loss Assets has been made in compliance with the directions of Reserve Bank of India. As per decision of the Board of Directors in the cases where loan instalments are overdue for more than 3 months and management is of the opinion that its recovery chances are very remote or negligible, the Company writes off these accounts (Net of Future Interest Charges) as bad debts. In all other cases where loan instalments are overdue for more than 3 months the provisioning for non-performing assets is made in compliance with Non-Banking Financial Company Systemically Important Non Deposit Taking Company and Deposit Taking Company (Reserve Bank) Directions 20I6, as applicable to the company. As per the RBI Directions dated I^st September 20I6 updated as on 23^rd February 20I8 Company has made general provision of 0.40% of Standard assets. Other directives of Reserve Bank of India have been duly complied with.

11. The Company is domiciled in India and does not have any joint venture, associate or subsidiary abroad.

12. Off Balance Sheet SPVs sponsored:

The Company has not sponsored off Balance Sheet SPVs

Notes:

1. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial Company-Systemically Important Non-Deposit Taking Company and Deposit Taking Company (Reserve Bank) Direction, 20I6.

2. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquoted investments shall be disclosed irrespective of whether they are classified as long term or current in column (5) above.

---

Mar 31, 2017

Note 1 : No amount is payable to Small Scale Industrial Undertakings. The Company has not received any intimation from suppliers regarding their status under the Micro, Small and Medium Enterprises Act, 2006 and hence disclosures, if any relating to amounts unpaid as at the yearend together with interest paid/payable as required under the Act cannot be furnished.

Note 2 : Figures for the previous year have been regrouped/rearranged/reclassified wherever considered necessary

Note 3. : The company has given corporate guarantee for the loan of Rs. 2,000 Lakhs and Rs. 4,247 Lakhs taken by its wholly owned subsidiary Company from Karnataka Bank and Reliance Capital Limited respectively.

Note 4.: Disclosure of related party transactions

A. Wholly owned Subsidiary - Nupur Finvest Pvt. Ltd.

B. List of related parties and relationship

Related Party (Ration)

Key Managerial Personnel

Mr. Sunil Agarwal (M^anagmg D^irect°^r)

Mr. Harish Singh (Executive Director)

Relatives of K M P

Mr. Purushottam Agrawal (Father of Mr. Sunil Agarwal)

^Mrs. ^{Raj Agarwal} (Mother of Mr. Sunil Agarwal)

^Mrs. ^{Neetu Agarwal} (Spouse of Mr. Sunil Agarwal)

M^rs. u u (Spouse of Mr.Harish Singh)

Mrs. Sushila Devi Chauhan

(Mother of Mr.Harish Singh)

Ms. Suniti Agarwal

Mr. Shantanu Agarwal (^Daug^{hter of} M^r. ^{Sunil A}g^arwal)

(Son of Mr. Sunil Agarwal)

C. Enterprises over which significant influence exercised by Key Managerial Personnel/ Relatives of Key Managerial Personnel

1. Agrim Marketing Pvt. Ltd 2. Agarwal Meadows Pvt. Ltd.

3. Aradhna Infradev Pvt. Ltd. 4. Aerotech Aviation India Pvt. Ltd.

5. Athens Computer Technologies Pvt. Ltd. 6. Baba Herbals Pvt. Ltd.

7. Bhavya Electronics and Networks Pvt. Ltd. g Balram Retails Pvt Ltd

9 D^{iamond Infradev P}yt. Lrt.

_10.Gajodhari Chemicals Pvt. Ltd.

12. Repartee Infrastructures Pvt. Ltd.

13. Radiance Techno Powers Company Pvt. Ltd. .

15. SCS Educational Foundation ¹⁴ SE. ^{Micro Housin}g ^{Finance Pvt}. ^Ltd.

17. Sunil Agarwal HUF ¹⁶- ^{Raj Shiksha} F^oundation

19. P N Agarwal & Sons HUF ¹⁸. ^{Harish Sin}g^{h H}UF

Notes :

(1) Related party relationship is as identified by the Company on the basis of information available with them and accepted by the auditors as correct.

(2) No amount has been written off or written back during the year in respect of debt due from or to related parties.

(3) Company has entered into transactions with certain parties as listed above during the year under consideration.

Full disclosures have been made and the Board considers such transactions to be in normal course of business and at rates agreed between the parties.

(4) The key management personnel and their relatives have given personal guarantees and collaterals for loans raised by the Company but Company has not provided any guarantee to these persons nor paid any consideration for furnishing such guarantees.

Note 5. : Working Capital Borrowings

The Company has an arrangement with a consortium of fifteen banks under the leadership of Central Bank of India for its working capital requirements. The facility is primarily secured by the hypothecation of book-debts / receivables of the Company and collaterally by mortgage of immovable properties including office premises, a flat, six commercial properties of the Company and third party as well as personal and corporate guarantees. The share pattern of the member banks in the consortium is as under:

* Union Bank of India has sanctioned credit line of Rs. 5,000.00 Lakhs but the same has not been utilized till now.

Note 6.: Term Loans

Small Industries Development Bank of India

Term loan assistance secured by hypothecation of book debts, term deposits and equitable mortgage of immovable property in the name of guarantors, Personal guarantee of directors and their relatives, and corporate guarantee of the Company who has stood as guarantor.

Note 7. : During the Current year, few Arbitration Awards have become executable Decrees. Total amount of Decrees available for execution stands to Rs. 10,411.95 Lakhs as on the date of Balance Sheet. The Accounting treatment has been done as per Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets" Issued by The Institute of Chartered Accountants of India.

Note 8. : The Company had not taken any exposure in Derivatives during the financial year 2016-17.

Note 9 : Disclosure relating to Securitization

I) The Company has not done securitization of any of its loans & advances to any organization during the financial year 2016-17 and there is no outstanding amount as on Balance Sheet date. Also, the Company has not sold its financial assets to any Securitization/Reconstruction Company for Asset Reconstruction. Further the Company has not undertaken any new assignment transaction during the Financial Year 2016-17.

ii) The Company has not purchased any non-performing assets (NPAs) from other NBFCs or financial institutions.

b) Capital Market Exposure

The company has not taken any exposure in capital market during the financial year 2016-17, and also the inventory of the company as at 31st March 2017 does not contain any exposure to capital market

c) Details of financing of parent company products : NIL

d) Details of Single Borrower Limit and Group Borrower Limit exceeded by NBFC

The company has adhered to the Prudential Exposure norms as prescribed by RBI and has not given any advances exceeding the limits as prescribed for Single borrower and Group Borrower.

e) Unsecured Advances

The unsecured advances outstanding as at Balance Sheet date are Rs,27,295Lakhs. The Company does not have any loan or advances which are partially secured against any sort of licenses, rights, authorizations charged to the company.

Note 10 : Registration obtained from other financial sector regulators:

RBI Registration No. : B-14.02997

Company Identification No. : L65921DL1992PLC120483

The company has never been penalized for any non-compliance by financial sector regulators.

Note 11 : Bank borrowings of the Company has been assigned rating of "IND A-" by M/s India Ratings & Research Private Limited (A Fitch Group Company) which denotes "Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk". The Company has already initiated the surveillance exercise for the financial year 2016-17.

Note 12 : Unlisted Unsecured Non-Convertible Redeemable Debentures (NCDs)

During the current year on 17th September, 2016 Company has made allotments of ''14.50% Unlisted Unsecured Redeemable INR Denominated Non-Cumulative Non-Convertible Debenture'' of Rs. 1,00,00,000/-(Rupees One Crore) each for an aggregating amount of Rs. 95,00,00,000/- (Rupees Ninety Five Crores). Term of such NCDs is 60 months from the date of allotment with the call option available with the Company to redeem NCDs after expiry of One Year from the date of allotment in full or part as may be decided by the Board of Directors of the Company.

d) Concentration of NPAs

Provisioning for Substandard Assets/Doubtful Assets/Loss Assets has been made in compliance with the directions of Reserve Bank of India. As per decision of the Board of Directors in the cases where loan installments (Net of future interest receivable) are overdue for more than 4 months and management is of the opinion that its recovery chances are very remote or negligible, the Company first treats these overdue and future installments as bad debts and after this treatment the provisioning for non performing assets is made in compliance with the NonBanking Financial Company-Systemically Important Non-Deposit Taking Company and Deposit Taking Company (Reserve Bank) Direction, 2016, as applicable to the company.

Note 13 : The Company is domiciled in India and does not have any joint venture, associate or subsidiary abroad.

Note 14 : Off Balance Sheet SPVs sponsored

The Company has not sponsored off Balance Sheet SPVs

*As business practice the cash collection (our''s is being a NBFC) and deposit in the banks at different locations is part of routine working. Accordingly there are certain points where SBN & Non-SBN currency was deposited through the same pay-in-slips.

Notes:

15. Provisioning norms have been duly adhered to as prescribed in the Non-Banking Financial Company-Systemically Important Non-Deposit Taking Company and Deposit Taking Company (Reserve Bank) Direction, 2016.

16. All Accounting Standards and Guidance Notes issued by ICAI as applicable have been followed including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquoted investments have been disclosed irrespective of whether they are classified as long term or current in column (5) above.

---

Mar 31, 2016

Notes:

(1) Related party relationship is as identified by the Company on the basis of information available with them and accepted by the auditors as correct.

(2) No amount has been written off or written back during the year in respect of debt due from or to related parties.

(3) Company has entered into transactions with certain parties as listed above during the year under consideration. Full disclosures have been made and the Board considers such transactions to be in normal course of business and at rates agreed between the parties.

(4) The key management personnel and their relatives have given personal guarantees and collaterals for loans raised by the Company but Company has not provided any guarantee to these persons nor paid any consideration for furnishing such guarantees.

Note 1 : Working Capital Borrowings

The Company has availed a working capital facilities provided by consortium of twelve Bankers in which the Lead Bank is Central Bank of India Delhi. This facility is secured by hypothecation of books debts / receivables, equitable mortgage on office premises and a flat belonging to the Company, equitable mortgage of five commercial properties in the name of the guarantors, personal guarantee of directors and their relatives and corporate guarantee of the companies who have stood as guarantor. The proportions of the Bankers in the consortium are as follows:

Note 2 : The Company had not taken any exposure in Derivatives during the financial year 2015-16.

Note 3 : Disclosure relating to Securitization

i) The Company has not done securitization of any of its loans & advances to any organization during the financial year 2015-16 and there is no outstanding as on Balance Sheet date. Also, the Company has not sold its financial assets to any Securitization/ Reconstruction Company for Asset Reconstruction. Further the Company has not undertaken any assignment transaction during the Financial Year 2015-16

ii) The Company has not purchased any non-performing assets (NPAs) from other NBFCs or financial institutions.

iii) Details of stock sold during the year:

b) Capital Market Exposure

The company has not taken any exposure in capital market during the financial year 2015-16, and also the inventory of the company as at 31^stMarch 2016 does not contain any exposure to capital market

c) Details of financing of parent company products : NIL

d) Details of Single Borrower Limit and Group Borrower Limit exceeded by NBFC

The company has adhered to the Prudential Exposure norms as prescribed by RBI and has not given any advances exceeding the limits as prescribed for Single borrower and Group Borrower.

e) Unsecured Advances

The unsecured advances outstanding as at Balance Sheet date are '' 17863 lacs. The Company does not have any loan or advances which are partially secured against any sort of licenses, rights, authorizations charged to the company.

Note 4 : Registration obtained from other financial sector regulators:

RBI Registration No. : B-14.02997

Company Identification No. : L65921DL1992PLC120483

The company has never been penalized for any non-compliance by financial sector regulators.

Note 5 : Bank borrowings of the Company has been assigned rating of "IND A-" by M/s India Ratings & Research Private Limited (A Fitch Group Company) which denotes "Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk"

Note 6 : The company is consistent in earning profits and paying dividend to its shareholders. During the year, the Company has redeemed 2,500,000 10% Preference Shares of Rs. 10/- each fully paid up @ Rs. 200/- each. The Company has utilized Rs. 4,750 lacs from the balance available in security premium reserve for re-paying the premium on redemption of preference shares & Rs. 250 lacs from profit & loss account for creating Capital Redemption Reserve during the financial year 2015-16 and relevant provision of Companies Act, 2013, and other applicable laws have been complied with.

Note 7 : Concentration of Deposits, Advances , Exposures and NPAs

a) Concentration of Deposits

The Company has not taken any deposits from public.

b) Concentration of Advances

d) Concentration of NPAs

Provisioning for Substandard Assets/Doubtful Assets/Loss Assets has been made in compliance with the directions of Reserve Bank of India. As per decision of the Board of Directors in the cases where loan installments are overdue for more than 5 months and management is of the opinion that its recovery chances are very remote or negligible, the Company first treats these overdue and future installments as bad debts and after this treatment the provisioning for non performing assets is made in compliance with Systemically Important Non-Banking financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015, as applicable to the company.

Note 8 : The Company is domiciled in India and does not have any joint venture, associate or subsidiary abroad.

Note 9: Off Balance Sheet SPVs sponsored

The Company has not sponsored off Balance Sheet SPVs.

Notes:

1. Provisioning norms shall be applicable as prescribed in the Systemically Important Non-Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015.

2. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/ NAV in respect of unquoted investments should be disclosed irrespective of whether they are classified as long te

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Mar 31, 2015

1. Notes:

(1) Related party relationship is as identified by the Company on the basis of information available with them and accepted by the auditors as correct.

(2) No amount has been written off or written back during the year in respect of debt due from or to related parties.

(3) Company has entered into transactions with certain parties as listed above during the year under consideration. Full disclosures have been made and the Board considers such transactions to be in normal course of business and at rates agreed between the parties.

(4) The key management personnel and their relatives have given personal guarantees and collaterals for loans raised by the Company but Company has not provided any guarantee to these persons nor paid any consideration for furnishing such guarantees.

2. Working Capital Borrowings:

During the year, the Company has availed a working capital facility provided by consortium of Nine Bankers in which the Lead Bank is Central Bank of India. This facility is secured by hypothecation of books debts / receivables. The credit facilities are secured by equitable mortgage on office premises and a flat belonging to the Company and equitable mortgage of four commercial properties in the name of the guarantors and personal guarantee of directors and their relatives, and corporate guarantee of the companies who have stood as guarantor. The proportions of the Bankers in the consortium are as follows:

3. Term Loans:

Small Industries Development Bank of India

Term loan assistance secured by hypothecation of book debts, term deposits and equitable mortgage of immovable property in the name of guarantors, Personal guarantee of directors and their relatives, and corporate guarantee of the Company who has stood as guarantor.

4. The Company had not taken any exposure in Derivatives during the financial year 2014-15.

5. Disclosure relating to Securitization:

i) The Company has not done securitization of any of its loans & advances to any organization during the financial year 2014-15 and there is no outstanding as on Balance Sheet date. Also, the Company has not sold its financial assets to any Securitization/Reconstruction Company for Asset Reconstruction. Further the company has not undertaken any assignment transaction during the financial year 2014-15.

ii) The Company has not purchased any non-performing assets (NPAs) from other NBFCs or financial

b) Capital Market Exposure

The company has not taken any exposure in capital market during the financial year 2014-15, and also the inventory of the company as at 31st March 2015 does not contain any exposure to capital market.

c) Details of Single Borrower Limit and Group Borrower Limit exceeded by NBFC

The company has adhered to the Prudential Exposure norms as prescribed by RBI and has not given any advances exceeding the limits as prescribed for Single borrower and Group Borrower.

d) Unsecured Advances

The unsecured advances outstanding as at Balance Sheet date are 7 18152 lacs. The Company does not have any loan or advances which are partially secured against any sort of licenses, rights, authorizations charged to the company.

6. The Company is a listed NBFC ND-SI regulated by RBI, and is not governed by any other financial regulator. The company has never been penalized for any non-compliance.

7. Bank borrowings of the Company has been assigned rating of "Care A-" by CARE Limited which denotes "ADEQUATE SAFETY"

39. Provisions and Contingencies:

(Rs,in Lacs)

Break up ol Provisions and contingencies 2014-15 2013-14

Provisions for depreciation on investment Nil Nil

Provision towards NPA Nil Nil

Provision made towards income tax 2261 2668

Other provision and contingencies (Contingent Liability- Interest Tax Matter) Nil 60.81

Provision for Standard Assets at the Balance Sheet date 246 218

8. The company is consistent in earning profits and paying dividend to its shareholders. There has been no draw down from Reserves during the financial year 2014-15.

9. Concentration of Deposits, Advances , Exposures and NPAs:

a) Concentration of Deposits

The Company has not taken any deposits from public.

d) Concentration of NPAs

Provisioning for Substandard Assets/Doubtful Assets/Loss Assets has been made in compliance with the directions of Reserve Bank of India. As per decision of the Board of Directors in the cases where loan installments are overdue for more than 6 months and management is of the opinion that its recovery chances are very remote or negligible, the Company first treats these overdue and future installments as bad debts and after this treatment the provisioning for non performing assets is made in compliance with Systemically Important Non-Banking financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015, as applicable to the company.

10. The Company is domiciled in India and does not have any joint venture, associate or subsidiary abroad.

11. Off Balance Sheet SPVs sponsored:

The Company has not sponsored off Balance Sheet SPVs.

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Mar 31, 2014

Notes Forming Integral Part of the Financial Statements as at 31 st March 2014

1. Contingent Liabilities: (in Rs.) 2013-14 2012-13 Interest Tax matters in appeal 60,81,168 60,81,168

(However Company has already deposited the above amount with Income Tax Authority)

2. No amount is payable to Small Scale Industrial Undertakings. The Company has not received any intimation from suppliers regarding their status under the Micro, Small and Medium Enterprises Act, 2006 and hence disclosures, if any relating to amounts unpaid as at the year end together with interest paid/ payable as required under the Act can not be furnished.

3. Figures for the previous year have been regrouped/ rearranged/ reclassified wherever considered necessary.

Notes :

(1) Related party relationship is as identified by the Company on the basis of information available with them and accepted by the auditors as correct.

(2) No amount has been written off or written back during the year in respect of debt due from or to related parties.

(3) Company has entered into transactions with certain parties as listed above during the year under consideration. Full disclosures have been made and the Board considers such transactions to be in normal course of business and at rates agreed between the parties.

(4) The key management personnel and their relatives have given personal guarantees and collaterals for loans raised by the Company but Company has not provided any guarantee to these persons nor paid any consideration for furnishing such guarantees.

4. Term Loans:

A. Small Industries Development Bank of India: Term loan assistance secured by hypothecation of book debts, term deposits and equitable mortgage of immovable property in the name of guarantors, Personal guarantee of directors and corporate guarantee of the Company who has stood as guarantor.

B. Punjab National Bank: Term loan assistance for on lending to small loans clients is secured by hypothecation of book debts arising out of the Bank assistance and personal guarantee of the directors.

Notes:

1. As defined in Paragraph 2(1) (xii) of the Non-Banking financial companies acceptance of Public Deposits (Reserve Bank) Directions, 1998.

2. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank of India) Directions, 2007.

3. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/ fair value/ NAV in respect of unquoted investments should be disclosed irrespective of whether they are classified as long term or current in column (5) above.

---

Mar 31, 2013

1. Contingent Liabilities:

Interest Tax matters in appeal Rs. 60,81,168 Rs. 49,23,788

2. There are two unclaimed matured deposits amounting to Rs. 1.02 lacs lying with the company as on 31st March 2013.

3. No amount is payable to Small Scale Industrial Undertakings. The Company has not received any intimation from suppliers regarding their status under the Micro, Small and Medium Enterprises Act, 2006 and hence disclosures, if any relating to amounts unpaid as at the year end together with interest paid/payable as required under the Act can not be furnished.

4. Figures for the previous year have been regrouped/rearranged/reclassifed wherever considered necessary.

5. Working Capital Borrowings

A. punjab National bank: The facilities from Punjab National Bank are secured by hypothecation of book debts pertaining to advances. The credit facilities are secured by equitable mortgage of two offce premises and a fat belonging to the Company and equitable mortgage of one house and one shop belonging to a Director and his wife, and three commercial buildings and land and two fats in the name of the guarantors and personal guarantee of directors and corporate guarantee of the companies who have stood as guarantor.

B. bank of India: The facilities from Bank of India, is secured by hypothecation of book debts pertaining to advances. The credit facilities are secured by equitable mortgage of offce premises in the name of the guarantor, personal guarantee of directors and corporate guarantee of the company who have stood as guarantor.

C. uCO bank: The facilities from UCO Bank, is secured by hypothecation of book debts pertaining to advances. The credit facilities are secured by equitable mortgage of fat in the name of the guarantor, personal guarantee of directors and corporate guarantee of the company who have stood as guarantor.

D. united bank of India: The facilities from United Bank of India, is secured by hypothecation of book debts pertaining to advances. The credit facilities are secured by equitable mortgage of commercial building in the name of the guarantor, personal guarantee of directors and corporate guarantee of the company who have stood as guarantor and cash collateral given by the company.

E. Corporation bank: The facilities from Corporation Bank, is secured by hypothecation of book debts pertaining to advances. The credit facilities are secured by equitable mortgage of immovable properties in the name of the guarantors, personal guarantee of directors and corporate guarantee of the companies who have stood as guarantor.

F. Central bank of India: The facilities from Central Bank of India is secured by hypothecation of Book Debts pertaining to advances. The credit facilities are secured by equitable mortgage of property in the name of guarantor, personal guarantee of the directors and corporate guarantee of the company who have stood as guarantor and cash collateral given by the company.

6. Term Loans

A. Small Industries Development Bank of India: Term loan assistance secured by hypothecation of book debts, term deposits and equitable mortgage of immovable property in the name of guarantors, Personal guarantee of directors and corporate guarantee of the Company who has stood as guarantor and cash collateral given by the company.

B. reliance Capital Limited: Term loan assistance is secured by hypothecation of book debts, personal guarantee of two directors and cash collateral given by the Company.

C. punjab National bank: Term loan assistance is secured by hypothecation of book debts arising out of the Bank assistance and personal guarantee of the directors.

D. Central bank of India: The term loan facility from the Bank is secured by exclusive charge on receivables fnanced by the Company and is secured by lien on deposit, Equitable Mortgage of land belonging to the guarantor, personal guarantee of directors of the Company and Corporate guarantee of the company who has stood as guarantor.

E. Syndicate bank: Term loan assistance is secured by hypothecation of book debts pertaining to advances and personal guarantee of the directors and cash collateral given by the company.

F. ICICI bank Ltd.: Term loan assistance for on lending to micro fnance clients is secured by hypothecation of book debts and personal guarantee of the directors. terms of repayment of the above mentioned loan is monthly except Central Bank of India.

7. Assignment details

A. hDfC bank: Assignment transactions are secured by hypothecation of book debts, Cash collateral given by Company in the form of FDR and personal Guarantee given by the directors of the Company.

B. punjab National bank: Assignment transactions are secured by hypothecation of book debts, cash collateral given by Company in the form of FDR and personal guarantee given by the Directors of the Company.

C. reliance Capital Limited: Assignment transactions was secured by hypothecation of book debts, personal guarantee of directors and cash collateral given by the Company.

D. uCO bank Ltd: Assignment transactions are secured by hypothecation of book debts, Cash collateral given by Company in the form of FDR.

E. fullerton India Credit Company Ltd: Assignment transactions was secured by hypothecation of book debts, Cash collateral given by Company in the form of FDR and Personal Guarantee of the director of the Company.

E. Development Credit bank Ltd. : Assignment transactions are secured by hypothecation of book debts, cash collateral given by Company in the form of FDR and Personal Guarantee given by the director of the Company.

Terms of repayment of the above mentioned assignments are monthly.

8. The company has made provision of tax on its declared dividend after adjusting the amount of dividend received from its wholly owned subsidiary, M/s Nupur Finvest Pvt. Ltd.

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Mar 31, 2012

Current Year Previous Year 31/03/2012 31/03/2011

1. Contingent Liabilities:

Interest Tax matters in appeal Rs. 4,923,788 Rs. 4,923,788

2. There are no unclaimed matured deposits lying with the company as on 31st March, 2012.

3. No amount is payable lo Small Scale Industrial Undertakings. The Company has not received any intimation from suppliers regarding their status under the Micro, Small and Medium Enterprises Act, 2006 and hence disclosures, if any relating to amounts unpaid as at the yearend together with interest paid/payable as required under the Act cannot be furnished.

4. During the year the Company has sold by way of assignment 3675 cases of loan contract to the Scheduled Banks and Non Banking Financial Companies amounting to Rs. 8,731 lacs.

5. Figures for the previous year have been regrouped/rearranged/reclassified wherever considered necessary.

6. Disclosure of related party transaction

A. Wholly owned Subsidiary Nupur Finvest Pvt. Ltd.

B. List of related parties and relationship

RELATED PARTY (RELATION)

Key Managerial Personnel

Mr. Sunil Agarwal (Managing Director)

Mr. Harish Singh (Executive Director)

Mr. Sachin Agarwal (Whole Time Director)

Mr. Purushottan Agrawal (Director)

Relative of KMP

Mrs. Raj Agarwal (wife of Mr. Purushottam Agrawal)

Mrs. Neetu Agarwal (wife of Mr. Sunil Agarwal)

Mrs. Shikha Agarwal (wife of Mr. Sachin Agarwal)

Mrs. Preeti Chauhan (wife of Mr. Harish Singh)

Mrs. Sushila Devi Chauhan (Mother of Mr. Harish Singh)

C. Enterprises over which significant influence exercised by key Managerial Personnel/Relatives of Key Managerial Personnel.

1. Siyaram Motors Pvt. Ltd.

2. Spring Infradev Ltd.

3. Siyaram Infrastructure Pvt. Ltd.

4. Helios Aviation Pvt. Ltd.

5. Spring Education Venture Pvt. Ltd.

6. S. E. Micro Housing Finance Ltd.

7. Spring Resorts Pvt. Ltd.

8. Spring Communication Pvt. Ltd.

9. Natansh Pvt. Ltd.

10. Ujala Securities Pvt. Ltd.

11. Deepesh Consultancy Pvt. Ltd.

12. Stellar Constellation Pvt. Ltd.

13. Blessing Builders Pvt. Ltd.

14. Eastern Star Infradev Pvt. Ltd.

15. Asset# Infrahomes LLP

16. Athens Computer Technologies Pvt. Ltd.

17. S. E. Homefin Pvt. Ltd.

18. S. E. Power Ltd.

19. Stellar Spring Projects Pvt. Ltd.

20. Baba Herbals Pvt. Ltd.

21. Aradhna Infradev Pvt. Ltd.

22. Balram Retails Pvt. Ltd.

23. Agrim Marketing Pvt. Ltd.

24. Gajodhari Chemicals Pvt. Ltd.

25. Bhavya Electronics and Networks Pvt. Ltd.

26. Diamond Infradev Pvt. Ltd.

27. Shri Radhey Govind Infradev Pvt. Ltd.

28. Aerotech Aviation India Pvt. Ltd.

29. Mor Mukut Infradev Pvt. Ltd.

30. Aerotech Aviation India Pvt. Ltd.

31. Siyaram Shelters Pvt. Ltd.

32. Spring Trading Pvt. Ltd.

33. Aanjneya Motor Pvt. Ltd.

34. Osprey E-Commerce Pvt. Ltd.

35. Dauji Infradev Pvt. Ltd.

36. RNR Infosolution Pvt. Ltd.

37. Aanjneya Vayusutra Pvt. Ltd.

38. Sake Buildcon Pvt. Ltd.

39. P. N. Agarwal & Sons

40. Sunil Agarwal HUF

41. Sachin Agarwal HUF

42. Harish Singh HUF

Notes :

(1) Related party relationship is as identified by the Company on the basis of information available with them and accepted by the auditors as correct.

(2) No amount has been written off or written back during the year in respect of debt due from or to related parties.

(3) Company has entered into transactions with certain parties as listed above during the year under consideration. Full disclosures have been made and the Board considers such transactions to be in normal course of business and at rates agreed between the parties.

(4) The key management personnel and their relatives have given personal guarantees and collaterals for loans raised by the Company but Company has not provided any guarantee to these persons nor paid any consideration for furnishing such guarantees.

7. Working Capital Borrowings

A. Punjab National Bank: The facilities from Punjab National Bank are secured by hypothecation of book debts pertaining to advances. The credit facilities are secured by equitable mortgage of two office premises and a flat belonging to the Company and equitable mortgage of one house and one shop belonging to a Director and his wife, and three commercial buildings and land and two flats in the name or the guarantors and personal guarantee of directors and corporate guarantee of the companies who have stood as guarantor.

B. Bank of India: The facilities from Bank of India, is secured by hypothecation of book debts pertaining to Microfinance business. The credit facilities are secured by equitable mortgage of office premises in the name of the guarantor, personal guarantee of directors and corporate guarantee of the company who have stood as guarantor.

C. AXIS Bank Ltd.: The overdraft facilities from AXIS Bank are secured.

8. Term Loans

A. Small Industries Development Bank of India: Term loan assistance secured by hypothecation of book debts, term deposits and equitable mortgage of immovable property in the name of guarantors, Personal guarantee of directors and corporate guarantee of the Company who has stood as guarantor.

B. Reliance Capital Limited: Term loan assistance is secured by hypothecation of book debts, personal guarantee of two directors and cash collateral given by the Company.

C. Punjab National Bank: Term loan assistance for on lending to micro finance clients is secured by hypothecation of book debts arising out of the Bank assistance and personal guarantee of the directors.

D. Central Bank of India: The term loan facility from the Bank is secured by exclusive charge on receivables of SME's, Micro Finance and Priority Sector financed by the Company and is secured by lien an deposit, Equitable Mortgage of land belonging to the guarantor, personal guarantee of directors of the Company and Corporate guarantee of the company who has stood as guarantor.

E. Syndicate Bank: Term loan assistance is secured by hypothecation of book debts pertaining to micro finance and business loans and personal guarantee of the directors.

F. United Bank of India: The term loan facility from the Bank is secured by exclusive charge on book debts and is secured by cash collateral given by Company in the form of FDR, Equitable Mortgage of land belonging to the guarantor, personal guarantee of directors of the Company and Corporate guarantee of the company who has stood as guarantor.

G. ICICI Bank Ltd.: Term loan assistance for on lending to micro finance clients is secured by hypothecation of book debts and personal guarantee of the directors.

Terms of Repayment of the above mentioned loan is monthly except BOI, UBI and CBI.

9. Assignment details

A. HDFC Bank:- Assignment transactions are secured by hypothecation of book debts. Cash collateral given by Company in the form of FDR and personal Guarantee given by the directors of the Company.

B. IClCI Bank.:- Assignment transactions are secured by hypothecation of book debts pertaining to micro finance. Cash collateral given by Company in the form of FDR and Personal Guarantee given by the directors of Company.

C. Punjab National Bank:- Assignment transactions are secured by hypothecation of book debts pertaining to micro finance, cash collateral given by Company in the form of FDR and personal guarantee given by the Directors of the Company.

D. Reliance Capital Limited:- Assignment transactions are secured by hypothecation of book debts, personal guarantee of directors are collateral given by the Company.

E. Development Credit Bank:- Assignment transactions are secured by hypothecation of book debts pertaining to micro finance. Cash collateral given by Company in the form of FDR and Personal Guarantee given by the director of the Company.

F. Nupur Finest Pvt. Ltd.:- Alignment transactions are secured by hypothecation of book debts pertaining to micro finance and personal guarantee given by the Directors of the Company.

G. Fullerton India Credit Company Ltd.:- Assignment transactions are secured by hypothecation of book debts pertaining to micro finance, cash collateral given by Company in the form of FDR and Personal Guarantee given by the Directors of the Company.

H. UCO Bank Ltd.:- Assignment transactions are secured by hypothecation of book debts. Cash collateral given by Company in the form of FDR and Personal Guarantee of the director of the Company.

Terms of Repayment of the above mentioned assignments are monthly.

10. The Scheme of Arrangement under section 391-394 of the Companies Act, 1956 (the scheme) to transfer Non-Conventional Energy Division of S. E. Investments Ltd. (SEIL) on going concern basis to S. E. Power Ltd., (SEPL) w.e.f. 30th Sep., 2010. The appointed date has become effective on 21st Dec., 2011 on getting requisite approval and completion of necessary formalities.

All the assets and liabilities of the Non-Conventional Energy Division of the Company, on the appointed date, have been transferred to SEPL. The excess of assets over liabilities relating to Non Conventional Energy Division has been adjusted in terms of Scheme against the General Reserve of the Company for the amount Rs. 4,063.72 Lacs.

The effect of Demerger pursuant to Scheme sanctioned by the Hon'ble Delhi High Court with Appointed and Effective date has been given during the current financial year and the incorporation has been done in above financial statements as decided by the Management in consultation with Statutory Auditors.

11. Due to demerger of Non Conventional Energy Division there is only one segment left i.e. Finance Activities. Hence Segment Reporting is not applicable.

Notes:

1. As defined in Paragraph 2(1) (xiii) of the Non-Banking financial companies acceptance of Public Deposits (Reserve Bank) Directions, 1998.

2. Provisioning norms shall be applicable as prescribed in the Non Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank of India) Directions, 2007.

3. All Accounting Standards and Guidance Notes Issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquoted investments should be disclosed irrespective of whether they are classified as long term or current in column (5) above.

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Mar 31, 2011

1. Contigent liabilities:

Interests Tax matters in appeal Rs 4,923,788 Rs4,923,788 Stamp Dutry on increased Authorized Share Capital (write petition and pending application have been disposed off in our favour) NIL Rs1,747,500

2. There are eight unclaimed matured deposits lying with the Company amounting to Rs. 297,196 as on 31st March 2011.

3. Information pursuant to the provisions of Paragraph 3 and 4D of part II & IV of Schedule VI to the Companies Act, 1956, is given in Schedule 15 & 16 respectively.

4. No amount is payable to Small Scale Industrial Undertakings. The Company has not received any intimation from suppliers regarding their status under the Micro, Small and Medium Enterprises Act, 2006 and hence disclosures, if any relating to amounts unpaid as at the year end together with interest paid/payable as required under the Act can not be furnished.

5. During the year the Company has sold by way of assignment 62014 cases of loan contract to the Scheduled Banks and Non Banking Financial Companies amounting to Rs. 12,213 Lacs.

6. Figures for the previous year have been regrouped/rearranged/ reclassified wherever considered necessary.

7. Disclosure of related party transactions

A. Wholly owned Subsidiary: —Nupur Finvest Pvt. Ltd

B. List of related parties and relationship:

RELATED PARTY RELATION

Key Managerial Personnel

Mr. Sunil Agarwal Managing Director

Mr. Harish Singh Executive Director

Mr. Sachin Agarwal Whole time Director

Mr. Purushottam Agrawal, Mrs. Raj Agarwal,

Mrs. Neetu Agarwal, Mrs. Shikha Agarwal, Mrs. Preeti Chauhan and

Mrs. Sushila Devi Chauhan Relatives of key managerial personnel

C. Enterprises over which significant influence exercised by Key Managerial Personnel/Directors/Relatives of Key Managerial Personnel

I Siyaram Motors Pvt. Ltd. 2 Spring Infradev Ltd.

3 Siyaram Infrastructure Pvt. Ltd. 4 Helios Aviation Pvt. Ltd.

5 Spring Education Venture Pvt. Ltd. 6 S. E. Micro Housing Finance Ltd. 7 Spring Resorts Pvt. Ltd. 8 C Voter Broad Cast Pvt. Ltd.

9 UNI Television Pvt. Ltd. 10 Spring Communication Pvt. Ltd.

11 Natansh Finlease Pvt. Ltd. 12 Ujala Securities Pvt. Ltd.

13 Deepesh Consultancy Pvt. Ltd. 14 Stellar Constellation Projects Pvt. Ltd.

15 Blessing Builders Pvt. Ltd. 16 Eastern Star Infradev Pvt. Ltd.

17 Assetz Infrahomes LLP 18 Athens Computer Technologies Pvt. Ltd.

19 S. E. Homefin Pvt. Ltd. 20 S. E. Power Ltd.

21 Stellar Spring Projects Pvt. Ltd. 22 Baba Herbals Pvt. Ltd.

23 Aradhna Infradev Pvt. Ltd. 24 Balram Retails Pvt. Ltd.

25 Agrim Marketing Pvt. Ltd. 26 Gajodhari Chemicals Pvt. Ltd.

27 Bhavya Electronics and Networks Pvt. Ltd. 28 Diamond Infradev Pvt. Ltd.

29 Shri Radhey Govind Infradev Pvt. Ltd. 30 Sarin & Sarin Investments Pvt. Ltd.

31 Mor Mukut Infradev Pvt. Ltd. 32 Aerotech Aviation India Pvt. Ltd.

Notes :

(1) Related party relationship is as identified by the Company on the basis of information available with them and accepted by the auditors as correct.

(2) No amount has been written off or written back during the year in respect of debt due from or to related parties.

(3) Company has entered into transactions with certain parties as listed above during the year under consideration. Full disclosures have been made and the Board considers such transactions to be in normal course of business and at rates agreed between the parties.

(4) The key management personnel and their relatives have given personal guarantees and collaterals for loans raised by the Company but Company has not provided any guarantee to these persons nor paid any consideration for furnishing such guarantees.

9. Working Capital Borrowings

A. Punjab National Bank: The facility from Punjab National Bank are secured by hypothecation of book debts pertaining to advances. The credit facilities are secured by equitable mortgage of two office premises and a flat belonging to the Company and equitable mortgage of one house and one shop belonging to a Director and his wife, and three commercial buildings and land and two flats in the name of the guarantors and personal guarantee of directors and corporate guarantee of the companies who have stood as guarantor.

B. Bank of India: The facilities from Bank of India, is secured by hypothecation of book debts pertaining to Microfinance business. The credit facilities are secured by equitable mortgage of office premises in the name of the guarantor, personal guarantee of directors and corporate guarantee of the company who have stood as guarantor.

C. AXIS Bank Ltd.: The facilities from AXIS Bank are secured by hypothecation of book debts pertaining to Micro Finance business and personal guarantee of directors.

10 Term Loans

A. Indian Renewal Energy Development Agency Ltd.: Term loan assistance for 'Wind Energy Generation Machines (wind mills) being secured by first charge mortgage on the projects, projects receivables through "Trust and Retention A/C" and personal guarantee of the directors and bank guarantee.

B. Small Industries Development Bank of India: Term loan assistance secured by hypothecation of book debts, term deposits and equitable mortgage of immovable property of a director and personal guarantee of the directors.

C. HDFC Bank Ltd.: Term Loan assistance secured by hypothecation of books debts, term deposits and personal guarantee of the Directors.

D. Reliance Capital Limited:- Term loan assistance is secured by hypothecation of book debts, personal guarantee of two directors and cash collateral given by the Company.

E. Punjab National Bank: Term loan assistance for on lending to micro finance clients is secured by hypothecation of book debts arising out of theBank assistance and personal guarantee of the directors.

F. AXIS Bank Ltd.: Term loan assistance for on lending to micro finance clients is secured by hypothecation of book debts (receivables) funded out of Bank assistance and collateral securities of term deposit receipts.

G. Central Bank of India: The term loan facility from the Bank is secured by exclusive charge on receivables of SME's, Micro Finance and Priority Sector financed by the Company and is secured by lien on deposit, Equitable Mortgage of land belonging to the guarantor, personal guarantee of directors of the Company and Corporate guarantee of the company who has stood as guarantor.

H. Syndicate Bank:- Term loan assistance is secured by hypothecation of book debts pertaining to micro finance and business loans and personal guarantee of the directors.

I. United Bank of India: The term loan facility from the Bank is secured by exclusive charge on book debts and is secured by cash collateral given by Company in the form of FDR, Equitable Mortgage of land belonging to the guarantor, personal guarantee of directors of the Company and Corporate guarantee of the company who has stood as guarantor.

J. ICICI Bank Ltd.: Term loan assistance for on lending to micro finance clients is secured by hypothecation of book debts and personal guarantee of the directors.

13. Assignment details

A. HDFC Bank:- Assignment transactions are secured by hypothecation of book debts, Cash collateral given by Company in the form of FDR and personal Guarantee given by the directors of the Company.

B. ICICI Bank.:- Assignment transactions are secured by hypothecation of book debts pertaining to micro finance, Cash collateral given by Company in the form of FDR and Personal Guarantee given by the directors of Company.

C. Punjab National Bank:- Assignment transactions are secured by hypothecation of book debts pertaining to micro finance, cash collateral given by Company in the form of FDR and personal guarantee given by the Directors of the Company.

D. Reliance Capital Limited:- Assignment transactions are secured by hypothecation of book debts, personal guarantee of directors and cash collateral given by the Company.

E. Development Credit Bank :- Assignment transactions are secured by hypothecation of book debts pertaining to micro finance ,Cash collateral given by Company in the form of FDR and Personal Guarantee given by the director of the Company.

F. Nupur Finvest Pvt. Ltd.:- Assignment transactions are secured by hypothecation of book debts pertaining to micro finance and personal guarantee given by the Directors of the Company.

G. Fullertone India Credit Company Ltd.:- Assignment transactions are secured by hypothecation of book debts pertaining to micro finance, cash collateral given by Company in the form of FDR and Personal Guarantee given by the Directors of the Company.

14. Effective from 20th May 2010 the Company has issued 152,100,000 Bonus shares amounting to Rs. 304,200,000 out of General Reserve of the Company after obtaining the Board approval in the meeting held on 8th May 2010 in the ratio of 3 fully paid up equity shares of Rs. 2 each for every 1 Equity Share of Rs. 2 each.

15. Effective from 1st November 2010 the Company has subdivided its Equity share of the face value of Rs. 2 each in to 2 equity shares of Re. 1 each (share split), after, obtaining shareholders approval vide special resolution in their meeting held on 13th September 2010 accordingly, the figures for number of equity shares and price of shares disclosed elsewhere in the financial statements have been adjusted for the impact of share split. Further, the basic and diluted earnings per share disclosed have been computed for the current year and recomputed for the previous year based on the revised face value of Re. 1 each.

16. The Company has filed a petition for demerger of its Non-Conventional Energy division and transfer and vest them into S. E. Power Ltd. before the Hon'ble Delhi High Court. As directed by the Hon'ble Delhi High Court the meeting of the share holders, secured creditors and unsecured creditors including fixed deposit holders were convened for approving the scheme and they have approved the scheme of Demerger at their respective meetings. The Petition is still pending before Hon'ble Delhi High Court for disposal, hence no effect of the demerger is required to be incorporated in the annual accounts for F. Y. 2010-11.

17. During the year, an amount of Rs. 613,053/- has been incurred on foreign traveling expenses of the Director of the Company.

18. In accordance with Accounting Standard-22 "Accounting for Taxes on Income" issued by "The Institute of Chartered Accountants of India" the deferred tax for timing differences between the book and tax profits for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted or substantively enacted as on the balance sheet date. Deferred tax assets/liabilities arising from temporary timing difference are recognized to the extent there is reasonable certainty that the assets can be realized in future or liabilities are to be provided for in the future. According to the provisions of AS-22 and Tax shield available u/s 80IA/80JJA of Income Tax Act, 1961, in the opinion of the management and expert opinion obtained, no provision of deferred tax is required to be created with respect to BIO GAS PLANT and WINDMILL.

19. In order for proper monitoring and regulation of micro financing business, the Company has acquired 100% equity shares of M/S Nupur Finvest Private Limited, a RBI registered NBFC, by purchasing equity shares from existing shareholders and further allotment of shares of M/S Nupur Finvest Private Limited to carry on micro finance business according to modified guidelines. After this acquisition M/S Nupur Finvest Private Limited has become the wholly owned Subsidiary of the Company.

20. As the Equity Shares of the subsidiary Company Nupur Finvest Pvt. Ltd. has been acquired on the 23rd March, 2011 and during accounting year 2010-11 these were held only for 8 days. Since it is a 100% subsidiary, the bifurcation of item of Income and Expenses for the purpose of Consolidated financial statement is neither material nor significant. Hence the same has been ignored and Consolidated financial statement has been prepared in respect of Balance Sheet only. However according to average method i.e. dividing the whole year of 365 days into period of holding of 8 days the Net Profit comes to Rs. 1.29 Lacs only.

25. Preliminary expenses and amalgamation expenses are written off over a period of 5 Years.

Notes:

1. As defined in Paragraph 2(1) (xii) of the Non-Banking financial companies acceptance of Public Deposits (Reserve Bank) Directions, 1998.

2. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank of India) Directions, 2007.

3. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquoted investments should be disclosed irrespective of whether they are classified as long term or current in column (5) above.

---

Mar 31, 2010

1. No remuneration has been paid to directors except remuneration to Whole time Director, Executive Director and Managing Director. The remuneration paid to Whole time Director, Executive Director and Managing Director during the F.Y. 2009-2010 is Rs.10,373,552/- (last year Rs.8,218,128/- ) which is less than that permitted under Section 309 read with Schedule XIII of the Companies Act, 1956.

2. Contingent Liabilities:

Current Year Previous Year

31/03/2010 31/03/2009

Interest Tax matters in appeal Rs. 4,923,788 Rs. 4,923,788

Stamp Duty on increased Authorised Rs. 1,747,500 Rs. - Capital (Writ Petition Pending before Delhi High Court, stay has been granted)

3. There is only one unclaimed matured deposit lying with the company amounting to Rs.1.14 lacs.

4. Information pursuant to the provisions of Paragraph 3 and 4D of part II & IV of Schedule VI to the Companies Act, 1956, is given in Schedule 15 & 16 respectively.

5. No amount is payable to Small Scale Industrial Undertakings as the company has not received any intimation from suppliers regarding their status under the Micro, Small and Medium Enterprises Act, 2006 and hence disclosures, if any relating to amount unpaid as at the year end together with interest paid/payable as required under the Act can not be furnished.

6. (i) During the year the Company has sold by way of assignment 53206 cases of loan contracts to the Scheduled Banks and Non Banking Financial Companies amounting to Rs.15913 Lacs.

(ii) During the year the company has sold by way of assignment 172 cases of loan contracts to Assignee Company amounting to Rs.54 lacs.

7. Disclosure of Related Party Transactions

List of related parties and relationship:—

A. Key Managerial Personnel

PARTY RELATION

Mr. Sunil Agarwal Managing Director

Mr. Harish Singh Executive Director

Mr. Sachin Agarwal Whole time Director

Mr. Purushottam Agrawal, Mrs. Raj Agarwal, Relatives of Key Managerial Personnel

Mrs. Neetu Agarwal, Mrs. Shikha Agarwal,

Mrs. Preeti Chauhan, Mrs. Sushila Devi Chauhan

B. Enterprises over which Significant Influence exercised by Key Managerial Persons/Directors/Relatives of Key Managerial persons.

1 Siyaram Motors Pvt. Ltd. Company controlled by Mr. Sunil Agarwal and Mr. Sachin Agarwal

2 Spring Infradev Pvt. Ltd. Company controlled by Mr. Purushottam Agrawal,

Mr. Sunil Agarwal and Mr. Sachin Agarwal

3 Nupur Finvest Pvt Ltd. Company controlled by Mr. Sunil Agarwal and Mr. Sachin Agarwal

4. Siyaram Infrastructure Pvt. Ltd. Company controlled by Mrs. Neetu Agarwal and Mrs. Shikha Agarwal

5. Helios Aviation Pvt. Ltd. Company controlled by Mr. Sunil Agarwal and Mr. Sachin Agarwal

6. Spring Education Ventures Pvt. Ltd. Company controlled by Mr. Sunil Agarwal and Mr. Sachin Agarwal

7. S. E. Micro Housing Finance Ltd. Company controlled by Mr. Sunil Agarwal, Mrs. Neetu Agarwal and Mrs. Shikha Agarwal

8. Ravitel Agri Industriale Pvt. Ltd. Company controlled by Mr. Sunil Agarwal and Mr. Sachin Agarwal

9. Spring Resorts Pvt. Ltd. Company controlled by Mr. Purushottam Agrawal and Mr. Sunil Agarwal

10. CVoter Broad Cast Pvt. Ltd. Company controlled by Mr. Sunil Agarwal

11. UNI Television Pvt. Ltd. Company controlled by Mr. Sunil Agarwal

12. Spring Communication Pvt. Ltd. Company controlled by Mr. Sunil Agarwal and Mr. Sachin Agarwal

13. Natansh Finlease Pvt. Ltd. Company controlled by Mr. Sunil Agarwal and Mr. Sachin Agarwal

14. Ujala Securities Pvt. Ltd. Company controlled by Mr. Sunil Agarwal and Mr. Sachin Agarwal

15. Deepesh Consultancy Pvt. Ltd. Company controlled by Mr. Sachin Agarwal

16 Stellar Constellation Projects Pvt. Ltd. Company controlled by Mr. Sunil Agarwal

8. Working Capital Borrowing

A. PUNJAB NATIONAL BANK: The facilities from Punjab National Bank, Surya Nagar, Agra are secured by hypothecation of book debts pertaining to advances. The credit facilities are secured by equitable mortgage of office premises and a flat belonging to the company and equitable mortgage of one house and one shop belonging to a director and his wife, and lien on FDR of the company and three commercial buildings and land and two flats in the name of the guarantors and personal guarantee of directors and corporate guarantee of the companies who have stood as guarantors.

B. AXIS BANK LTD.: The Facilities from AXIS Bank are secured by hypothecation of book debts pertaining to Micro Finance business and personal guarantee of three directors.

9. Term Loans

A. INDIAN RENEWAL ENERGY DEVELOPMENT AGENCY LTD.: Term loan assistance for Wind Energy Generation Machines" (wind mills) being secured by first charge mortgage of the projects and personal guarantee of the directors, PDCs towards payment of installments of principal and interest and bank guarantee.

B. SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA: Term loan assistance secured by hypothecation of book debts, term deposits and equitable mortgage of immovable property of the company which stood as guarantor and personal guarantee of the directors.

C. HDFC BANK LTD.: Term Loan assistance secured by hypothecation of book debts, term deposits and personal guarantee of the Directors and equitable mortgage of land and building belonging to the company.

D. AXIS BANK LTD.: Term loan assistance for on lending to micro finance clients is secured by hypothecation of book debts (receivables) funded out of bank assistance and collateral securities of term deposit receipts and equitable mortgage of a flat belonging to the director of the company.

E. ICICI BANK LTD.: Term loan assistance for on lending to micro finance clients is secured by hypothecation of book debts arising out of the bank assistance and collateral securities of term deposit receipts and personal guarantee of the directors.

F. HSBC BANK LTD.: Term loan assistance for on lending to micro finance customers secured by hypothecation of book debts arising out of the bank assistance and personal guarantee of the directors .

G. PUNJAB NATIONAL BANK: Term loan assistance for on lending to micro finance clients is secured by hypothecation of book debts arising out of the bank assistance and personal guarantee of the directors.

H. Central Bank of India: The term loan facilities from the bank are secured by exclusive assignment charge on receivables of SMEs, Micro Finance and Priority Sector, financed by the company and is secured by lien on Deposit, Equitable Mortgage of land belonging to the guarantor, personal guarantee of Directors of the Company and Corporate guarantee of the Company who has stood as guarantor.

I. JANMANGAL FINANCE PVT. LTD.: Term loan assistance for setting up "Bio Gas Plants" being secured by first charge mortgage on the plants.

10. On 10 March, 2010 the Company raised 2,450,000 GDRs at the offer price of USD 15.86 per GDR equivalent to Rs.360.10 per share. Through this the Company has raised total proceeds of USD 38.86 million (equivalent to Rs.1764 million). Each GDR represents 2 equity shares of face value of Rs. 10 each fully paid up of the company. The pricing of GDRs is governed by Issue of "Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993" and guidelines issued by Central Government there under from time to time, various notifications and regulations issued by Reserve Bank of India under Foreign Exchange Management Act, 1999 on any other authorities or regulators.

Out of the total proceeds, sum of USD 28.86 million equivalent to Rs.1302.61 million was lying with Bank as on 31 March, 2010. These GDRs are listed at Luxemburg Stock Exchange. The Equity Shares underlying the GDRs are listed on the Bombay Stock Exchange and National Stock Exchange.

11. Pursuant to the Scheme of Amalgamation (the scheme) of the erstwhile Unnati Financial Services Private Limited with the Company as approved by the members, secured creditors and unsecured creditors in their meetings held on 25th April, 2009 and subsequently sanctioned by Delhi High Court vide its order dated 24th Sep. 2009, which became effective on 4th Nov. 2009, the assets and liabilities of erstwhile Unnati Financial Services Private Limited stand transferred to and vested in the Company with effect from the appointed date i.e. 31st Aug. 2008. Accordingly the scheme has been given effect to in the accounts.

The Amalgamation has been accounted for under the "Purchase Method" as prescribed by Accounting Standard-14 on "Accounting for Amalgamations" issued by "The Institute of Chartered Accountants of India". Accordingly, the assets and liabilities of the erstwhile Unnati Financial Services Private Limited as at 31st Aug. 2008 along with subsequent addition/deletion up to 31st March, 2009 have been transferred in accordance with the said scheme. The profit of Rs.285.73 lacs of the amalgamating company during the period 1st Sep. 2008 to 31st March, 2009 have been transferred to the General Reserve of the Company without opening the accounts of the Company for the previous years. Current year transactions are duly incorporated in the books of the Company.

Based on the approved swap ratio as provided in the scheme, 2,100,000 (Twenty One Lacs) equity shares have been issued to the equity share holders of erstwhile Unnati Financial Services Private Limited in the ratio of 1 (One) equity share of the face value of Rs.10 each in the Company for every 10 (Ten) equity shares of Re.1 each held in erstwhile Unnati Financial Services Private Limited. In terms of the scheme, the said equity shares, shall rank, in all respects pari-passu with the existing equity shares of the Company.

The difference between the amount of share capital of the erstwhile Unnati Financial Services Private Limited and the amount of fresh share capital issued by the company on amalgamation amounting Rs.24.15 crore is treated as Capital Reserve and has been added to the capital reserve of the Company.

12. The Authorised Capital of the Company was increased from Rs.60,000,000/- (Rupees Six Crore) divided into 3,500,000 (Thirty Five Lacs) equity shares of Rs.10 each and 2,500,000 (Twenty Five Lacs) preference shares of Rs.10/- each to Rs.85,000,000(Rupees Eight Crore Fifty Lacs) divided into 6,000,000 (Sixty lacs) Equity Shares of Rs.10 (Rupees Ten) each and 2,500,000 (Twenty Five Lacs) preference shares of Rs.10 (Rupees Ten) each vide Delhi High Court Order dated 09.10.2009 approving the Scheme of Amalgamation of Unnati Financial Services Private Limited (Transferor Company) with S. E. Investments Limited (Transferee Company). The authorised share capital of the company was further increased from 85,000,000/- (Rupees Eight Crore Fifty Lacs) divided into 6,000,000 (Sixty lacs) Equity Shares of Rs.10 (Rupees Ten) each and 2,500,000 (Twenty Five Lacs) preference shares of Rs.10 (Rupees Ten) to Rs.1,250,000,000/- (Rupees One Hundred and Twenty Five Crores Only) divided into 120,000,000 (Twelve Crore) Equity Shares of Rs.10/- (Rupees Ten) each and 5,000,000 (Fifty Lacs) preference shares of Rs.10/- (Rupees Ten) each. The Company is authorised to vary, increase or reduce the share capital and attach such privileges and rights to the shares as it may be authorised to do in accordance with the provisions of Companies Act, 1956. Pursuant to such increment the necessary amendments in the Memorandum and Articles of Association of the Company has been made.

13. The Equity Shares of the Company were Sub-divided from Rs.10 per share to five Equity Shares of Rs.2 per share by Board of Directors of the Company in their Meeting held on 20th March, 2010 pursuant to the Special Resolution Passed by the Shareholders of the Company on 15th January, 2010. The effect of sub- division has not been reflected in the Balance Sheet because the record date for conversion was fixed on 6th April, 2010 after the close of Financial Year.

14. In accordance with Accounting Standard-22 "Accounting for Taxes on Income" issued by "The Institute of Chartered Accountants of India" the Deferred Tax for timing differences between the book and tax profits for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax assets/liabilities arising from temporary timing difference are recognized to the extent there is reasonable certainty that the assets can be realized in future or liabilities are to be provided for in future. During the current year the company has installed and put to use "Bio Gas Plant" amounting to Rs.1057 lacs and according to the provisions of AS-22 and Tax shield benefits available u/s 80IA of Income Tax Act, 1961, in the opinion of the Management and expert opinion obtained, no provision of deferred tax is required to be created with respect to Bio Gas Plant and Wind Mill.

15. Preliminary Expenses and Amalgamation Expenses are written off over a period of Five years.

16. The Investment made by the company in the shares of Spring Infradev Pvt. Ltd. has been netted off against the advance received under specific contracts for those investments.

17. The Company has raised Share Capital by issuing 2,450,000 Global Depository Receipts underlying 4,900,000 Equity Shares of Rs.10 each. The raising of Share Capital is translated in our books in definite terms of money as on date of issue on the basis of conversion rate of USD to Indian Rupees. As on 31st March, 2010 the foreign currency lying with the Foreign Bank forms part of Companys Cash and Bank balance. The Net Investment in Bank balance has been translated using the closing rates of currency conversion as on the Balance Sheet date as per AS-11 and the difference has been accumulated in "Foreign Currency Translation Reserve" Account.

With respect to foreign currency repatriated to India upto 31st March 2010, the difference has been accounted for in "Foreign Currency Translation Reserve" Account and shown under the head "Current Assets, Loans & Advances". The adjustments will be done on Final settlement.

18. Figures for the previous year have been regrouped/rearranged/ reclassified wherever considered necessary.