1. CORPORATE INFORMATION
Ranjit Securities Limited (The Company) is a public Limited Company domiciled in India and its shares are listed on Stock
Exchange. But, trading is suspended. The Company is principally engaged in providing Loans and Advances and is registered as an
NBFC under Section 45 IA of RBI Act, 1934.
2. Basis of Preparation and significant accounting policies
(i) Statement of compliance:
These standalone financial statements have been prepared in accordance with the Indian Accounting Standards (Ind AS) as per the
Companies (Indian Accounting Standards) Rules, 2015 (as amended), notified under Section 133 of the Companies Act, 2013 (the
"Act") (as amended), other relevant provisions of the Act, guidelines issued by the Reserve Bank of India as applicable to an NBFCs
and other accounting principles generally accepted in India. Any application guidance / clarifications / directions issued by RBI or
other regulators are implemented as and when they are issued / applicable, the guidance notes/announcements issued by the Institute
of Chartered Accountants of India (ICAI) are also applied except where compliance with other statutory promulgations require a
different treatment. Accounting policies have been consistently applied.
The financial statements were authorised for issue by the Board of Directors (BOD) on May 30, 2024.
The accounting policies set out below have been applied consistently to the periods presented in these financial statements.
(ii) Presentation of financial statements:
Balance Sheet, Statement of Profit and Loss and Statement of Changes in Equity are prepared and presented in the format prescribed
in the Division III of Schedule III of the Companies Act, 2013 (the ‘Act’). The Statement of Cash Flows has been prepared and
presented as per the requirements of Ind AS.
A summary of the significant accounting policies and other explanatory information is in accordance with the Companies (Indian
Accounting Standards) Rules, 2015 (as amended) as specified under Section 133 of the Act and accounting principles generally
accepted in India.
Financial assets and financial liabilities are generally reported gross in the balance sheet. They are only offset and reported net when,
in addition to having an unconditional legally enforceable right to offset the recognised amounts without being contingent on a future
event, the parties also intend to settle on a net basis.
Amounts in the financial statements are presented in Indian Rupees (') in lakh, which is also the Company’s functional currency and
all amounts have been rounded off to the nearest lakhs unless otherwise indicated.
(iii) Basis of measurement
The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at
fair values at the end of each reporting period as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services at the time of
entering into the transaction.
(iv) Measurement of fair values:
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, regardless of whether that price is
directly observable or estimated using another valuation technique.
In estimating the fair value of an asset or a liability, the Company takes into account the characteristics
of the asset or liability if market participants would take those characteristics into account when pricing
the asset or liability at the measurement date.
A number of the Company’s accounting policies and disclosures require the measurement of fair
values, for both financial and non-financial assets and liabilities.
Fair value for measurement and/or disclosure purposes for certain items in these financial statements is determined considering the
following measurement methods:
Fair values are categorized into different levels (Level 1, Level 2 or Level 3) in a fair value hierarchy based on the inputs used in the
valuation techniques. When measuring the fair value of an asset or a liability, the Company uses observable market data as far as
possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then
the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is
significant to the entire measurement.
The levels are described as follows:
a. Level 1: inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that
the Company can access at the measurement date
b. Level 2: inputs are inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly
or indirectly; and
c. Level 3: inputs are unobservable inputs for the valuation of assets or liabilities that the Company can access at the measurement date.
Valuation model and framework used for fair value measurement and disclosure of financial instrument Refer notes 34A and 34B
The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change
has occurred
(v) Use of estimates and judgments
In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities (including contingent liabilities and assets) as on the date of the
financial statements and the reported income and expenses for the reporting period. Management believes that the estimates used in
the preparation of the financial statements are prudent and reasonable. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
prospectively.
(a) Judgments
Information about the judgments made in applying accounting policies that have the most significant effects on the amounts
recognised in the financial statements is included in the following notes:
Classification of financial assets : assessment of business model within which the assets are held and assessment of whether the
contractual terms of the financial asset are solely payments of principal and interest on the principal amount outstanding.
Impairment of financial assets : establishing the criteria for determining whether credit risk on the financial assets has increased
significantly since initial recognition, determining methodology for incorporating forward looking information into measurement of
expected credit loss (‘ECL’) and selection of models used to measure ECL.
Equity accounted investees : whether the Company has significant influence over an investee.
(b) Assumptions and estimation uncertainties
Measurement of defined benefit obligations: key actuarial assumptions
Recognition of deferred tax assets: availability of future taxable profit against which carry-forward tax losses can be used;
Determination of the estimated useful lives of tangible assets and the assessment as to which components of the cost may be
capitalised;
Estimates regarding the value in use of the cash generating unit (CGU) for non financial assets based on the future cash flows.; and
Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of
resources.
(vi) Revenue Recognition
The Company follows the accrual basis of accounting except, in the following case where the same are recorded on cash basis on
ascertainment of risk and obligation.
• Interest and other dues are recognized on accrual basis except in the case of Income of Non-Performing Assets (NPA) which is
recognized as & when received as per the Prudential Norms prescribed by the RBI.
• Dividend declared by the respective companies’ upto the close of the accounting period are accounted for as income once the right
to receive is established.
(vi) Statement of Cash Flows
Statement of Cash Flows is prepared segregating the cash flows into operating, investing and financing activities. Cash flow from
operating activities is reported using indirect method adjusting the net profit for the effects of:
i. changes during the period in operating receivables and payables transactions of a non-cash nature
ii. non-cash items such as depreciation, Impairment, deferred taxes, unrealized foreign currency gains and losses, and undistributed
profits of associates and joint ventures; and
iii. all other items for which the cash effects are investing or financing cash flows.
Cash and cash equivalents (including bank balances) shown in the Statement of Cash Flows exclude items which are not available for
general use as on the date of Balance Sheet.
(vii) Financial assets at Fair Value through Other Comprehensive Income (‘FVTOCI’)
A financial asset is measured at FVTOCI only if both of the following conditions are met :
It is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.
The contractual terms of the financial asset represent contractual cash flows that are solely payments of principal and interest.
Subsequently, these are measured at fair value and changes therein, are recognized in other comprehensive income. Impairment losses on
said financial assets are recognized in other comprehensive income and do not reduce the carrying amount of the financial asset in the
balance sheet.
(viii) Financial assets at Fair Value through Profit and Loss (FVTPL)
Any financial instrument, which does not meet the criteria for categorisation as at amortized cost or as FVOCI, is classified as at FVTPL.
Subsequently, these are measured at fair value and changes therein, are recognized in profit and loss account.
(ix) Investment in equity instruments
All equity investments in scope of Ind AS 109 (i.e. other than equity investments in subsidiaries / associates / joint ventures) are
measured at FVTPL.
Subsequently, these are measured at fair value and changes therein, are recognized in profit and loss account. However on initial
recognition of an equity instrument that is not held for trading, the Company may irrevocably elect to present subsequent changes in fair
value in OCI. This election is made on an investment by investment basis.
(x) De-recognition/Modification of financial assets and financial liabilities
Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily de-recognised
(i.e. removed from the Company’s balance sheet) when:
a. The rights to receive cash flows from the asset have expired, or fully recovered or
b. The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash
flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either:
c. (i) the Company has transferred substantially all the risks and rewards of the asset, or
(ii) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of
the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it
evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained
substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the
transferred asset to the extent of the Company’s continuing involvement. The Company also recognize a liability for the consideration
received attributable to the Company’s continuing involvement on the asset transferred. The transferred asset and the associated liability
are measured on a basis that reflects the rights and obligations that the Company has retained.
On de-recognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the
portion of the asset de-recognized) and the sum of (i) the consideration received (including any new asset obtained less any new liability
assumed) and (ii) any cumulative gain or loss that had been recognized in OCI is recognized in profit or loss.
Financial liabilities
The Company de-recognizes a financial liability when its contractual obligations are discharged or cancelled, or expired.
(xi) Modifications of financial assets and financial liabilities
Financial assets
If the terms of a financial asset are modified, the Company evaluates whether the cash flows of the modified asset are substantially
different. If the cash flows are substantially different, then the modification results in de recognisation of the original financial asset
and new financial asset is recognized at fair value.
If the cash flows of the modified asset are not substantially different, then the modification does not result in de-recognition of the
financial asset. In this case, the Company recalculates the gross carrying amount of the financial asset and recognizes the amount
arising from adjusting the gross carrying amount as a modification gain or loss in profit or loss. Any costs or fees incurred adjust the
carrying amount of the modified financial asset and are amortised over the remaining term of the modified financial asset by
recomputing the EIR rate on the instrument.
If such a modification is carried out because of financial difficulties of the borrower, then the gain or loss is presented together with
impairment losses. In other cases, it is presented as interest income.
Financial liabilities
The Company de-recognizes a financial liability when its terms are modified and the cash flows of the modified liability are
substantially different. In this case, a new financial liability based on the modified terms is recognized at fair value. The difference
between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognized
in profit or loss.
If the modification is not accounted as derecognition, then the amortised cost of the liability is recalculated by discounting the
modified cash flows at the original EIR and the resulting gain or loss is recognised in profit or loss. Any costs or fees incurred adjust
the carrying amount of the modified financial liability and are amortised over the remaining term of the modified financial liability by
recomputing the EIR rate on the instrument.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet when the Company has a legally
enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the
liability simultaneously.
(xii) Impairment of Financial Assets
The Company recognizes impairment allowances for ECL on all the financial assets that are not measured at FVTPL:
a. Financial assets that are debt instruments.
b. Lease receivables.
c. Financial guarantee contracts issued.
d. Loan commitment issued.
e. Financial assets that are not credit impaired - as the present value of all cash shortfalls that are possible within 12 months after
the reporting date.
f. Financial assets with significant increase in credit risk but not credit impaired - as the present value of all cash shortfalls that
result from all possible default events over the expected life of the financial asset.
g. Financial assets that are credit impaired - as the difference between the gross carrying amount and the present value of estimated
cash flows.
h. Undrawn loan commitments - as the present value of the difference between the contractual cash flows that are due to the
Company if the commitment is drawn down and the cash flows that the Company expects to receive.
i. No impairment loss is recognized on equity investments.
j. ECL are probability weighted estimate of credit losses. They are measured as follows:
(i) With respect to trade receivables and other financial assets, the Company measures the loss allowance at an amount
equal to lifetime expected credit losses.
(ii) Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the
assets. For financial assets at FVTOCI, the loss allowance is recognised in OCI.
Based on the above process, the Company categorizes its loans into Stage 1, Stage 2 and Stage 3, as described below:
Stage 1: When loans are first recognized, the Company recognizes an allowance based on 12 month ECLs. This also includes facilities
where the credit risk has improved and the loan has been reclassified from Stage 2.
Stage 2: When a loan has shown a significant increase in credit risk since origination, the Company records an allowance for the LTECLs.
Stage 2 loans also include facilities, where the credit risk has improved and the loan has been reclassified from Stage 3.
Stage 3: Loans considered credit-impaired. A default on a financial asset is when the counterparty fails to make the contractual payments
within 90 days of when they fall due. Accordingly, the financial assets shall be classified as Stage 3, if on the reporting date, it has been
more than 90 days past due. Further if the customer has requested forbearance in repayment terms, such restructured, rescheduled or
renegotiated accounts are also classified as Stage 3. Non-payment on another obligation of the same customer is also considered as a stage
3. Defaulted accounts include customers reported as fraud in the Fraud Risk Management Committee. Once an account defaults as a result
of the Days past due condition, it will be considered to be cured only when entire arrears of interest and principal are paid by the borrower.
The Company records an allowance for the LTECLs.
Write-off
Financial assets are written off (either partially or in full) when there is no reasonable expectation of recovering a financial asset in its
entirety or a portion thereof. This is generally the case when the Company determines that the borrower does not have assets or sources of
income that could generate sufficient cash flows to repay the amounts subject to the write-off. This assessment is carried out at the
individual asset level and is charged to statement of profit or loss.
However, financial assets that are written off could still be subject to enforcement activities under the Company’s recovery procedures,
taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss as an adjustment to impairment
on financial assets.
(xiii) Property, plant and equipment and Investment property
^- Recognition and measurement
Property, plant and equipment held for use or for administrative purposes, are stated in the balance sheet at cost less accumulated
depreciation and accumulated impairment losses. The cost includes non-refundable taxes, duties, freight and other incidental expenses
related to the acquisition and installation of the respective assets.
Investment Property consists of building let out to earn rentals. The Company follows cost model for measurement of investment property.
Depreciation
Depreciation is provided using the straight line method over the useful life as prescribed under Schedule II to the Companies Act, 2013.
Depreciation is calculated on pro-rata basis, including the month of addition and excluding the month of sale/disposal. Leasehold
improvements are amortized over the underlying lease term on a straight line basis. Residual value in respect of Buildings and Vehicles is
considered as 5% of the cost and in case of other assets ‘Nil’.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of
any changes in estimate accounted for on a prospective basis.
De-recognition
An item of property, plant and equipment or investment property is de-recognized upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant
and equipment or investment property is determined as the difference between the sales proceeds and the carrying amount of the asset
and is recognized in profit or loss.
(xiv) Intangible assets
Recognition and measurement
Intangible assets are recognized at cost of acquisition which includes all expenditure that can be directly attributed or allocated on a
reasonable and consistent basis, to create, produce or making the asset ready for its intended use.
Amortisation
Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method
are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
De-recognition
An intangible asset is de-recognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses
arising from de-recognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount
of the asset is recognised in profit or loss when the asset is de-recognized.
(xiv) Impairment of non-financial assets
At each reporting date, the Company reviews the carrying amount of its non-financial assets (other than assets held for sale and deferred
tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount
is estimated.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that
is largely independent of the cash inflows of other assets or CGUs.
The ‘recoverable amount’ of an asset or CGU is the greater of its value in use and its fair value less costs to sell. ‘Value in use’ is based
on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset or CGU.
Impairment losses are recognised in profit and loss. An impairment loss is reversed only to the extent that the asset’s carrying amount
does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had
been recognised.
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