Notes to Accounts of Purple Finance Ltd.

Mar 31, 2025

Nature and purpose of reserve

1) Reserve u/s 451C of Reserve Bank India Act 1934

Statutory reserve represents the reserve created as per Section 45IC of the RBI Acl, 1934, pursuant to which a Non-Bank ng Financial Company shall create a reserve fund and transfer therein a sum not less than twenty per cent of its net profit annually as disclosed in the Statement of Profit and Loss account, before any dividend is declared

2) Securities premium

Sectaries premium reserve is used to record the premium on issue of shares The reserve can be ulAised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies AcL2013

3) Retained earnings

Retained earnings comprises of the Company''s undistntouted earnings after taxes.

4) Employee stock option reserve

This reserve relates to stock options granted by the Company to employees under various ESOP schemes This reserve is transferred to securities premium account on exercise of vested options.

5) Defined Benefit Plan • Other Comprehensive Income

This represents the cumulative gains and losses ansing on the remeasurement of defined benefit pians in accordance with Ind AS 19 that have been recognized in other comprehensive income

6) Amalgamation Adjustment Reserve

Upon amalgamation of Canopy Finance Ltd (transferor company) with Purple Finance Ltd (Transferee company), the statutory reserves (l.e. reserve under Section 45IC of the Reserve Bank of India Act 1934) of Rs 3,525.90 thousands of the transferor company as on 1 st October. 2022 (l.e. appointed date) were recorded in the books of the transferee company with a corresponding debit to Amalgamat>on Adjustment Account When the identity of the statutory reserves is no longer required to be maintained, both the statutory reserves and the aforesaid account will be reversed

Methods and assumptions used In prepanng sensitivity and their imitations: The liability Mas projected by changing certain assumptions and the total liability post the change in such assumptions have been captured in the table above This sensitivities are based on change r one single assumption, other assumptions being constant In practice, scenario may involve change in several assumptions where the stressed defined benefit obligation may be significantly impacted

The company does not have any leave encashment policy

Note - 37: Segment Information

The company is primarily engaged m the business of financing. All the activities of the company revche around the mam business Further, the company does not have any separate geographic segments other than India

Note - 43B: Fair value hierarchy for assets and liabilities

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions.

The Company categorizes assets and liabilities measured at fair value into one of three levels depending on the ability to observe inputs employed in their measurement which are described as follows:

i) Level 1

Quoted (unadjusted) prices in active markets for identical assets or liabilities. i) Level 2

Other techniques for which all inputs which have a significant effect on the recorded fair values are observable, either directly or indirectly. i) Level 3

Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

I. Risk management framework:

The Company''s overall objective is to manage its businesses, and the associated risks, in a manner that balances serving the interests of all its stakeholders and at the same time minimise potential adverse effects on its financial performance. The Company places emphasis on risk management practices to ensure an appropriate balance between risks and returns.

The Company is exposed to credit risk, market risk and liquidity risk. The Company''s board of directors have overall responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors have established the Risk Management Committee, which is responsible for developing and monitoring the Company''s risk management policies. The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities.

A Credit risk

Credit risk is the risk of loss resulting from the failure of a borrower or counter party to honour its financial or contractual obligations. Credit risk arises in the company''s direct lending operations, and in its funding and investment activities where counterparties have repayment or other obligations. The Company''s exposure to credit risk is influenced mainly by cash and cash equivalents, other bank balances, investments, loan assets, trade receivables and other financial assets.

The company lays down various monitoring process for Macro Economic factor analysis, industry analysis, portfolio analysis and account level analysis to control delinquencies. The company implements robust portfolio monitoring approach and various tools to have a close monitoring of the portfolio.

ECL Methodology

The Company records allowance for expected credit losses for all financial assets other than FVTPL, together with loan commitments. Equity instruments are not subject to impairment.

The ECL allowance is based on the credit losses expected to arise over the life of the asset (the lifetime expected credit loss), unless there has been no significant increase in credit risk since origination, in which case, the allowance is based on the 12 months'' expected credit loss.

The Company has established 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. Based on the above process, the Company categorises its loans into Stage 1, Stage 2 and Stage 3, as described below:

Stage 1

All exposures where there has not been a significant increase in credit risk since initial recognition or that has low credit risk at the reporting date and that are not credit impaired upon origination are classified under this stage. The company records allowance based on twelve months ECL.

Stage 2

All exposures where there has been a significant increase in credit risk since initial recognition but are not credit impaired are classified under this stage. The company records allowance for Lifetime ECL.

Stage 3

All exposures assessed as credit impaired when one or more events that have a detrimental impact on the estimated future cash flows of that asset have occurred are classified in this stage. The company records allowance for Lifetime ECL.

ECL Calculations

The Company calculates ECLs based on a probability-weighted scenarios and historical data to measure the expected cash shortfalls. A cash shortfall is the difference between the cash flows that are due to an entity in accordance with the contract and the cash flows that the entity expects to receive. ECL consists of three key components:

Probability of default (PD) :

The probability of default (''PD'') is the likelihood that an obligor will default on its obligations in the future. A default may only happen at a certain time over the assessed period, if the facility has not been previously derecognised and is still in the portfolio

Exposure At Default ("EAD”):

The amount which the obligor will owe to the Company at the time of default is defined as the exposure at default (EAD). Exposure at default (EAD) is the sum of outstanding principal and the interest amount accrued but not received on each loan as at reporting date.

Loss Given Default ("LGD”):

Loss given default estimates the normalised loss which company incurs post customer default. It is computed through recovery observed in delinquent accounts over a period of time. It is based on the difference between contractual cash flows that are due and expected to be received including from the collateral if any.

Given the company''s historically limited and relatively small loan portfolio, along with the absence of adequate and qualitative internal data necessary for reliable computation of Probability of Default (PD) across different stages and Loss Given Default (LGD), the company determines its provisioning requirements by computing provisions under both the RBI''s IRAC norms and its internal ECL policy. The company adopts the higher of the two provisions to ensure a prudent and compliant approach.

Reconciliation of loss allowance provision - For loans

Refer note 4 for detailled reconciliation of loan movements and loss allowance provision

In addition to the ECL for loans as prescribed above, the Company also holds other financial assets such as balances with Bank, trade receivables and other financial assets. The Company recognizes ECL on such assets based on the historical loss experience measures (e.g. write off rates / provision g rates) adjusted for expected losses in the future keeping in mind the nature of industry and credit ratings of such counter-parties. The amount is currently not expected to have a significant impact and the company will periodically assess the same.

III. Liquidity risk:

Liquidity risk involves the inability of an entity to fund growth in assets, manage unplanned changes in funding sources and to meet obligations when required. Liquidity risk also arises due to the maturity mismatch associated with assets and liabilities. Cost of such liquidity risk would be in terms of either raising fresh liabilities at higher cost or liquidating its assets at a higher discount rate.

The Company manages its liquidity requirement by analysing the maturity pattern of the Company''s cash flow of financial assets and financial liabilities. The Company''s policy on liquidity risk is to ensure availability of adequate liquid resources with a view to keep maturity mismatches in the Balance Sheet of the Entity within desired levels. The Company also has lines of credit that it can access to meet liquidity needs.

IV. Market risk:

Market risk is the risk of loss from changes in market prices and rates (including interest rates, credit spreads, equity prices, foreign exchange rates, and property rate risk), the correlations among them, and their levels of volatility. The company is predominantly exposed to only interest rate risk & property rate risk and have almost no impact of foreign exchange and commodity prices directly. The company continuously monitors these risks and manages them through appropriate risk limits.

Interest rate risk:

Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows of financial instruments. The Company''s exposure to changes in interest rates relates to the Company''s outstanding floating rate liabilities and assets.

The Company has formulated Purple Finance Employee Stock Option Schemes, 2022 (ESOP Scheme-2022) as approved by the board of directors at its meeting held on 17th September, 2022. The options allotted under the ESOP Scheme 2022 are vested over a period of four years in the ratio of 25%, 25%, 25% and 25% respectively from the end of 12 months from the date of grant. The stock options are granted at an exercise price of Rs. 33 per share ESOP Scheme 2022. The fair value of the share options was estimated at the grant date using Black Scholes pricing model and, taking into account the terms and conditions upon which the share options were granted.

49.2 Title deeds of immovable properties not held in name of the Company

The Company does not own any immovable properties

49.3 Valuation of Property. Plant and Equipment

The company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year

49.4 Details of Benami property

No proceedings have been initiated or are pending against the Company for holding any 8enami property under the Benami Transactions (Prohibition) Act 1988 (45 of 1988) and the rules made thereunder.

49.5 Borrowing from banks

The Company has borrowed funds from banks and financial institutions on the basis of security of current assets It has filed quarterly returns or statements of current assets with banks and financial institutions and the said returns/statements are in agreement with books of accounts

49.6 Willful defaulter

The Company is not declared as willful defaulter by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof or other lender in accordance with the guidelines on willful defaulters issued by the Reserve Bank of India

49.7 Relationship with struck off companies

The company does not have any transaction with companies struck off under section 748 of the Companies Act 2013 or section 560 of Companies Act. 1956, during the previous year.

49.8 Registration of charges or satisfaction with Registrar of Companies

The Company has taken the working capital loan and created the charge on loan portfokos (as ''hypothecated assets'') which needs to be registered with Registrar of Companies

49.9 Compliance with number of layers of companies

The Company has not created any layer of Investments as prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules. 2017.

49.10 (MfefiiSCi B''SJKSKXsS) feESte MB?) sfcEB® ssarafetE

The Group, as part of its normal business, grants loans and advances, makes investment These transactions are part of Group''s normal notvbanklng finance business, which is conducted ensuring adherence to all regulatory requirements Other than the transactions described above, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of lunds) by the Group to or in any other persons or entities, including foreign entities (''Intermediaries'') with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Group (Ultimate 8ene Claries). The Group has also not received any fund from any parties (Funding Party) with the understanding that the Group shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Funding Party ("Ultimate 8eneficiaries'') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

49.11 Undisclosed income

There is no income surrendered or disclosed as income during the current or previous year m the tax assessments under the Income Tax Act. 1961. that has not been recorded in the books of account

49.12 Corporate Social Responsibility (CSR)

The company is not covered under section 135 of the Companies Act 2013

49.13 Details of crypto currency or virtual currency

The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

In the opinion of the board, current assets, loans & advances have value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the accounts.

Note - 53: Figures of the previous year have been regrouped, reclassified and recast, wherever necessary to conform to current year''s classification

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Mar 31, 2024

Earnings per share calculations are done in accordance with Ind AS 33 "Earnings per Share".

During the year on account of merger of Canopy Finance Ltd with the company, new equity shares of face value of Rs. 10 -each fully paid-up have been issued and allotted to the eligible shareholders of CFL on 17th March, 2024 as per the share exchange ratio contained in the Scheme being 1:1. These shares have been considered for calculation ofEPSw.e.f 1st October, 2022 (being the appointed date of the merger) as per Ind AS 33.

Methods and assumptions used in preparing sensitivity and llicir limitations: The liability was projected by changing certain assumptions and the total liability post the change in such assumptions have been captured in the table above. This sensitivities arc based on change in one single assumption, other assumptions being constant. In practice, scenario may involve change in several assumptions where the stressed defined benefit obligation maybe significantly impacted.

The company does not have any leave encashment policy.

No If - W: Sr»nr lit liilm m.ition

The company is primarily engaged in the business of financing. All the activities of the company revolve around the main business. Further, the company does not have any se pi rate geographic segments other than India.

Note - 44B: Fair value hierarchy for assets and liabilities

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions.

The Company categorizes assets and liabilities measured at fair value into one of three levels depending on the ability to observe inputs employed m their measurement which are described as follows:

i) Level 1

Quoted (unadjusted) prices m active markets for identical assets or liabilities, i) Level 2

Other techniques for which all inputs which have a significant effect on the recorded fair values are observable, either directly or indirectly, i) Level 3

Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

Note - 45: Risk man.igf mt ul: 0 ill 1100)

I. Risik mnitigr mrnl i''niniru''ork:

The Company’s overall objective is to manage its businesses, and the associated risks, in a manner that balances serving the interests of all its stakeholders and at the mine time minimise potential adverse effects on its financial performance. The Company places emphasis on risk management practices to ensure an appropriate balance between risks and returns.

The Company is exposed to credit risk, market risk and liquidity risk. The Company''s board of directors have overall responsibility for the establishment and overnight of the Company''s risk management framework. The board of directors have established the Risk Management Committee, which is responsible for developing and monitoring the Company''s risk management policies. The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to rat appropriate risk limits and controls and to monitor nsks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities.

A Credit risik

Credit risk is the risk of loss resulting from the failure of a borrower or counter party to honour its financial or contractual obligations. Credit risk arises in the company''s direct lending operations, and in its funding and investment activities where counterparties have repayment or other obligations. The Company’s exposure to credit risk is influenced mainly by cash and cash equivalents, other bank balances, investments, loan assets, trade receivables and other financial assets.

The company lays down various monitoring process for Micro Economic factor analysis, industry analysis, portfolio analysis and account level analysis to control delinquencies. The company implements robust portfolio monitoring approach and various tools to have a close monitoring of the portfolio.

ECL Mr iIkmIoIo^y

The Company records allowance for expected credit losses for all financial assets other than FVTPL, together with loan commitments. Equity instruments are not subject to impairment.

The ECL allowance is based on the credit losses expected to arise over the life of the asset (the lifetime expected credit loss), unless there lias been no significant increase in credit risk since origination, in which case, the allowance is based on the 12 months'' expected credit loss.

The Company lias established a policy to perform an assessment, at the end of each reporting period, of whether a financial instrument''s credit risk lias increased significantly since initial recognition. Based on the above process, the Company categorises its loans into Stage I, Stage 2 and Stage 3, as described below:

Stagf I

All exposures where there has not been a significant increase in credit risk since initial recognition or that has low credit risk at the reporting date and that are not credit impaired upon origination are classified underthis stage. The company records allowance based on twelve months ECL.

Stage 2

All exposures where there has been a significant increase in credit risk since initial recognition but arc not credit impaired are classified under this stage. The comjxuiy records allowance for Lifetime ECL.

Stage 3

All exposures assessed ascredit impaired when one or more events that have a detrimental impact on the estimated future cash flows of that asset have occurred are classified in this stage. The company records allowance for Lifetime ECL.

N»lf - 45: Risk management: ( in 1100)

KCL Cakukitfens

The Company calculates ECLs based on a probability-weighted scenarios and historical data to measure the expected cash shortfalls. A cash shortfall is the difference between

the casli flows that arc due to an entity in accordance with the contract and the cash flows that the entity expects to receive. KCL consists of three key components:

Probability of default (PI)):

The probability of default (‘PD’) is the likelihood that an obligor will default on its obligations in the future. A default may only happen at a certain time over the assessed period, if the facility has not been previously derecognised and is still in the portfoho.

Exposure At Default C‘EAI)"):

The amount which the obligor will owe to the Company at the time of default Is defined as the exposure at default (KAO). Exposure at default (EAD) is the sum of outstanding principal and the interest amount accrued but not received on each loan as at reporting date.

Loss Given Default (''"L(>l)''''):

Loss given default estimates the normalised loss which company incurs post customer default. It is computed through recovery observed in delinquent accounts over a period oftimc.lt is based on the difference between contractual cash flows that arc due and expected to be received including from the collateral if any.

Since the company''s loan prtfolio in tic post was limited and small, at present the company does not have sufficient intcriul data for computation of PD fordifferent stages a ixl IXjD. I lence, the company has relied on data used by certain other NBFC’s and industry data as reference for the calculations. Based on the above data, RBI norms and requirements and internal assessment, the company has at present determined blanket ECL provisioning at 0.275% across a II different stages of loans.

R re oik''ilia I fen of loss a flow a lice provision - for loans

Refer note 4 fordc tallied reconciliation of loan movementsand lossallowancc provision

In addition to the ECL for loam as prescribed above, the Company also holds oilier financial assets such as balances with Bank, trade receivables and other financial assets.The Company recognizes ECL on such assets based on tic historical loss experience measures (c.g. wiite off rates i provision rates) adjusted for expected losses in the future keeping in mind the nature of industry and credit ratings of such counter-parties. The amount is currently not expected to have a significant impact and the compmy will periodically assess the same

Note - 46: Business combination

The Board of Directors of the Company in its meeting held on 15th November, 2022 had approved a Scheme of Merger by Absorption ("Scheme"), inter alia, involving amalgamation of Canopy Finance Ltd (CFL) with the Company (PFL) under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013. The Scheme of Merger by Absorption of CFL by PFL , under Section 230 to 232 of the Companies Act 2013 was duly sanctioned by Honourable National Company Law Tribunal (“NCLT”). Mumbai Bench vide their Order dated 15th February, 2024, effective from the last of the dates on which the certified copies of the Order(s) of the Adjudicating Body, are filed with the Registrar of Companies being 29th February 2024 and appomted date of the Scheme being 1st October 2022. The company had obtamed approvals no objection to the Scheme from various statutory authorities, as applicable. Pursuant to the Scheme, new equity shares of face value of Rs. 10 -each fully paid-up have been issued and allotted to the eligible shareholders of CFL on 17th March, 2024 as per the share exchange ratio contained in the Scheme being 1:1. As per Ind AS 103, the amalgamation has been accounted under the ‘''acquisition method”. The difference between the purchase consideration and fair value has been accounted as

goodwill capital reserve on amalgamation, as applicable.

The figures for the current reporting pencd as well as previous reporting period includes the effect of merger of transferor Company CFL as discussed above and are therefore not comparable with figures of the respective previous year penod.

b) Calculation of goodwill acquired

The difference between the purchase consideration and the amount attributable to identified assets and liabilities as identified above represents the residual goodwill in the business. As a result of the merger, the Company receives manuals, data, catalogues, quotations, sales and advertising materials, lists of present and former customers and suppliers, customer credit information, customer pricing information, and other records of existing customers of CFL and vice versa. This will lead to s\uergic benefits, efficiency of operations and management, rapid growth of the entity, optimum utilization of its resources and optimization of the administrative and operative costs, in value creation for the shareholders and stakeholders of the

combined amalgamated company as it will have improved efficiency, market share, financial structure, larger cash flows and stronger consolidated revenue and profitability.

50.2 Title deeds of immovable properties not held in name of the Company

The Company does not own any immovable properties.

50.3 Valuation of Property, Plant and Equipment

The company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.

50.4 Details of Benami property

No proceedings have been initiated or are pending against the Company for holding an}'' Benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 19SS) and the rules made thereunder.

50.5 Borrowing from banks

The Company has borrowed funds from banks and financial institutions on the basis of security of current assets. It has filed quarterly returns or statements of current assets with banks and financial institutions and the said returns statements are in agreement with books of accounts.

50.6 Willful defaulter

The Company is not declared as willful defaulter by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof or other lender in accordance with the guidelines on willful defaulters issued by the Reserve Bank of India.

50.7 Relationship with struck off companies

The company does not have any transaction with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956, during the previous year.

50.8 Registration of charges or satisfaction with Registrar of C''ompanies

The Company has taken the workmg capital loan and created the charge on loan portfolios (as "hyporthecated assets") which needs to be registered with Registrar of Companies.

50.9 Compliance with number of layers of companies

The Company has not created any layer of investments as prescribed under clause (S'') of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.

50.10 Compliance with approved scherae(s) of arrangements

The Board of Directors of the Company in its meeting held on 15th November, 2022 had approved a Scheme of Merger by Absorption (" Scheme" ),inter alia, invoking amalgamation of Canopy Finance Ltd (CFL)with the Company under Sections 230to 232 and other applicable provisions of the Companies Act, 2013. The Hofrble National Company Law Tribunal, Mumbai Bench ("XCLT”) has approved the Scheme of Merger by Absorption (“Scheme”). The effect of such Scheme of Arrangements has been accounted for m the books of account of the Company in accordance with the Scheme and in accordance with accounting standards.

50.11 Utilisation of borrowed funds and share premium

The Group, as pan of its normal business, grants loans and advances, maizes investment, provides guarantees to and accept deposits and borrowings from its customers, other entities and persons. These transactions are pan of Group''s normal nonbanking finance business, which is conducted ensuring adherence to all regulator}’ requirements. Other than the transactions described above, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or an}’ other sources or kind of funds) by the Group to or in an}’ other persons or entities, including foreign entities ("Intermediaries''’) with the understanding, whether recorded m writing or otherwise, that the Intermediary shall lend or invest in part}’ identified by or on behalf of the Group (Ultimate Bene-cianes). The Group has also not received an}’ fund from any parties (Funding Part}’) with the understanding that the Group shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Funding Part}’ ("Ultimate Beneficiaries”) or provide an}’ guarantee, security or the like on behalf of the Ultimate Beneficiaries.

50.12 Undisclosed income

There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

50.13 Corporate Social Responsibility (CSR)

The company is not covered under section 135 of the Companies Act, 2013

50.14 Details of crypto currency or virtual currency

The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

Note - 52: First Time Adoption of Ind AS ('' in ’000)

Transition to Ind AS

The Company has adopted Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs with effect from .April 1. 2023 with comparatives being restated. These financial statements for the year ended 31 March. 2024 are the first Ind-.AS financial statements that the Company has prepared in accordance with Ind-AS. For periods up to and including the year ended 31st March, 2023 the Company prepared its financial statements m accordance with accounting standards notified under section 133 of the Companies .Act 2013, read together with paragraph 7 of the Companies (.Accounts) Rules, 2014 (Indian GAAP). During the year, The company had issued interim financial statement for the period ended 31st December, 2023 under previous G.AAP, since the company was in process of implementing IND .AS transition.

The adoption of Ind AS has been earned out in accordance with Ind AS 101, First-tune Adoption of Indian Accounting Standards. The Company has prepared financial statements which comply with Ind-.AS applicable for periods ended on 31 March, 2024 together with the comparative period data as at and for the year ended March 31, 2023, a3 desenbed in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at 1 .April, 2022 the Company''s date of transition to Ind-.AS. This note explains the principal adjustments made by the Company in restating its Indian G.AAP financial statements, including the balance sheet as at 1 April, 2022 and the financial statements as at and for the year ended March 31,2023.

Optional Exemptions

Further, Ind AS 101- First-time adoption of Indian Accounting Standards, allows first-tune adopters, exemptions from the retrospective application and exemption from application of certain requirements of other Ind .AS. The Company has availed the following exemptions as per Ind AS 101

1. The Company has elected to consider the cany mg value of all its items of property, plant and equipment and intangible assets recogmsed in the financial statements prepared under Previous G.AAP and use the same as deemed cost m the opening Ind .AS Balance Sheet.

2. The company has elected to apply transitional provisions with respect to Lease. Accordingly, the company has

- Identified whether a contract contains lease or not on the basis of facts and circumstances existing on the transition date

- The company has measured a lease liability on the date of transition at the present value of remaining lease payments, discounted using incremental borrowing rate as on transition date. The company ha3 elected to measure right of use asset at an amount equal to lease liability as on date of transition.

- The company has elected to apply a smgle discount rate to portfolio of leases with similar characteristic.

- The company has elected to account for leases for which the lease term ends within 12 months of the date of transition and leases for low value asset as if they were short term lease accounted for in accordance with paragraph 6 of IND AS 116.

- The company has elected to exclude initial direct cost from the measurement of right of use asset at the date of transition

3. The Company has classified the financial assets m accordance with Ind AS 109 on the basis of facts and circumstances that exist at the date of transition to Ind AS.

1) Lease Accounting

Under the previous accounting GAAP, lease rent was debited to statement of Profit and Loss on a straight line basis. Under IND AS Right of use assets and lease liabilities are recognized for all leases except short term lease and Depreciation and Finance charges are recorded on such assets and liabilities respectively. Under exemption available under IND AS 101 Right of Use Assets are recognized at amount equal to Lease liabilities on the date of transitional Financial Assets at Fair value

Under the previous accounting GAAP, interest tree lease securin'' deposits (that are refundable in cash on completion of lease term) are recorded at transaction cost. Under Ind AS such financial assets are required to be recognized at fair value. Accordingly, the Company has measured such security deposit at fair value and the difference between the fair value and transaction value of the securin'' deposit has been recognized as prepaid rent (Right of use Assets). Impact of such changes on date of transition is recognized in opening reserves and changes thereafter are recorded in statement of Profit and Loss accounts.

3) Investments at fair value

Under the previous accounting GAAP, the investments were earned at cost whereas under Ind AS, investments are measured at fan value through profit and loss or fair value through Other Comprehensive Income and the changes are recorded in the statement of profit or loss or Other Comprehensive income respectively.

4) Effective interest rate

Under previous accounting GAAP, transaction costs charged to customers was recognised upfront while under Ind AS, such costs are included in the initial recognition amount of financial asset and recognised as interest income using the effective interest method.

5) Expected credit loss

The company has defined policy for expected credit loss required under IND AS 109 which was not there under the previous accounting GAAP and accordingly, the company has restated the provisions for expected credit loss as on the transition date and in subsequent accounting penods which were earlier done based on RBI guidelines.

6) Deferred Tax

Deferred tax under Ind AS has been recognised for temporary differences between tax base and the book base of the relevant assets and liabilities. Under the Previous GAAP, the deferred tax was accounted based on timing differences impactmg the Statement of Profit and Loss for the period.

Note - 55: Figures of the previous year have beer, regrouped, reclassified and recast, wherever necessary to conform to current year''s classification