(d) Terms and rights attached to equity shares:
The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share.
In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
As per records of the Company, including its register of members/ shareholders, and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.
The Company has not allotted any share pursuant to contracts without payment being received in cash nor it has issued any bonus shares or bought back any shares, during the period of five years immediately preceding the reporting date.
Retained Earnings
Retained earnings represents the surplus in profit and loss account and net amount of appropriations made to/from retained earnings Statutory reserve fund
Statutory Reserve fund is created as per the terms of section 45 IC(1) of the Reserve Bank of India Act, 1934 as a statutory reserve.
Securities premium
Securities premium is used to record the premium on issue of shares. It can be utilised only for limited purposes in accordance with the provisions of the Companies Act, 2013
33 Provision for retirement benefits under the Payment of Gratuity Act and Provident Fund Act have not been made as the said act are not applicable to the company on account of the company having less than the required number of employees.
34 Contingent Liability - Rs. NIL (Previous Year Rs. Nil).
35 The company has filed legal suits against 5 customers for recovery of Loan and advances amounting to Rs. 11.47 crores (Previous year Rs. 11.47 crores).
Since the above loans and advances are fully secured, the company does not foresee any liability against it. The required provision on the aforesaid loans and advances has been made in the books of account as on 31 st March' 2024 as per RBI guidelines.
36 Estimated amount of contracts remaining to be executed on capital account Rs. Nil (Previous Year Rs. Nil).
37 SEGMENT REPORTING
Ind AS - 108 on 'Segment Reporting’ became applicable during the current year. The Company is engaged in financing by way of loans and sale of property. The Company does not have any reportable geographic segment. The Revenues profit and assets from the reportable business segment in terms of Ind AS -108 on 'Segment Reporting’ as notified by the Companies (Accounting Standards) Rules 2006 are as given below:
40 As per Section 135 of the Companies Act 2013 the Company is required to spend in every financial year at least two per cent of the average net profits of the company made during the three immediately preceding financial years on corporate social responsibility (CSR) activities. During the current year, the company has not contributed towards CSR initiatives due to losses in three immediate preceding financial years.
42 Sundry debtors and Loans and Advances have value on realization in the ordinary course of business at least equal to the amount at which they are stated in the financial statement.
43 Debit and Credit Balances outstanding in the accounts of some of the parties are subject to confirmation/reconciliation.
44 Previous year figures
Figures of the previous year have been regrouped /reclassified wherever considered necessary to confirm to current year classification.
45 Fair value measurements
A Financial assets and liabilities
The carrying amounts of financial instruments by category are as follows:
B Fair value hierarchy
Financial assets and financial liabilities are measured at fair value in the financial statements are grouped into three Levels of a fair value hierarchy. The three Levels are defined based on the observability of significant inputs to the measurement, as follows:
The category used are as follows:
Level 1: Quoted prices (unadjusted) in for identical instruments in active markets;
Level 2: Directly (i.e. as prices) or indirectly (i.e. derived from prices) observable market inputs, other than Level 1 inputs; and Level 3: Inputs which are not based on observable market data (unobservable inputs).
The management assessed that fair values of cash and cash equivalents, other bank balances, other financial assets, trade payables and other financial liabilities approximate their respective carrying amounts, largely due to the short-term maturities of these instruments. The following methods and assumptions were used to estimate the fair values for other assets and liabilities:
(i) The fair values of the Company’s fixed interest bearing loan and investment in debt securities are determined by applying discounted cash flows (‘DCF’) method, using discount rate that reflects the issuer’s borrowing rate as at the end of the reporting period.
(ii) The fair values of the Company fixed rate interest-bearing debt securities and borrowings are determined by applying discounted cash flows (‘DCF’) method, using discount rate that reflects the issuer’s borrowing rate as at the end of the reporting period. For variable rate interest-bearing debt securities and borrowings carrying value represent best estimate of their fair value as these are subject to changes in underlying interest rate indices as and when the changes happen.
46 Financial Risk Management
The Company's principal financial assets include investments, loans, trade receivables, other receivables, cash and cash equivalents and other bank balances that derive directly from its operations. The Company's principal financial liabilities, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company's operations.
a) Market risk:
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risk such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, other financial instruments.
b) Interest Rate Risk
The Company has exposure to interest rate risk, primarily from its lending business and related borrowings. The following table demonstrates the sensitivity to a reasonably possible change in interest rates (all other variables being constant) of the Company's statement of profit and loss.
The Company's policy is to monitor positions of borrowings and loans on a regular basis for managing interest rate risk and for determining the interest rate to be charged on the loan given and having a balanced portfolio of fixed and variable rate loans and borrowings.
c) Foreign currency risk:
The Company does not have any foreign currency risk. Hence no sensitivity analysis is required
d) Credit Risk:
Credit risk is the risk that the Company will incur a loss because its Loans and receivables fail to discharge their contractual obligations and arises principally from the Company's Loans and advances, receivables, cash and cash equivalents, deposits with banks and investments. The Company has a framework for monitoring credit quality of its Loans and receivables based on days past due monitoring at period-end. Repayment by individual Loans and receivables are tracked regularly and required steps for recovery are taken through follow ups and legal recourse.
The Company measures the expected credit loss of Loans and receivables based on historical trend, industry practices and the business environment in which the entity operates. Expected Credit Loss is based on actual credit loss experienced and past trends based on the historical data.
Credit risk management
Company considers probability of default upon initial recognition of asset and whether there has been any significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk Company compares the risk of default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forward-looking information.
Definition of Default
A default on a financial asset is when the counterparty fails to make contractual payments within 90 days of when they fall due. This definition of default is determined by considering the business environment in which NBFC operates and other macro-economic factors.
For Trade receivables, definition of default has been considered at 360 days past due after looking at the historical trend of receiving the payments.
Company provides for expected credit loss based on following:
The Company classifies its financial assets in three stages having the following characteristics :
Stage 1 :- Unimpaired and without significant increase in credit risk since initial recognition on which a twelve months allowance for ECL is recognised;
Stage 2 :- a significant increase in credit risk since initial recognition on which a lifetime ECL is recognised; and
Stage 3 :-Objective evidence of impairment, and are therefore considered to be in default or otherwise credit impaired on which lifetime ECL is recognised.
Unless identified at an earlier stage, all financial assets are deemed to have suffered a significant increase in credit risk when they are thirty days past due ( DPD ) on the reporting date and are accordingly transferred from stage 1 to stage 2 .For Stage 1 an ECL allowance is calculated on a twelve months point in time probability weighted probability of default . For stage 2 and 3 assets a life time ECL is calculated on a lifetime probability of default (Refer note 56)
Credit risk on cash and cash equivalents is limited as the Company generally invest in deposits with banks with high credit ratings assigned by credit rating agencies.
e) Liquidity Risk
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The Company's approach to managing liquidity is to ensure, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
The Company's principal sources of liquidity are cash and cash equivalents, liquid asset portfolio like Mutual funds and the cash flow that is generated from operation.
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include interest accrued till the reporting date.
47 Capital Management
For the purpose of Company's capital management, capital includes issued capital and other equity reserves. The primary objective of the Company's Capital Management is to maximize shareholder value. The Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants. The Company monitors capital on the basis of the following gearing ratio.
In terms of the requirement as per RBI notification no. RBI/2019-20/170 DOR (NBFC).CC.PD.No.109/22.10.106/2019-20 dated March 13, 2020 on implementation of Indian Accounting Standards, Non-Banking Financial Companies (NBFCs) are required to create an impairment reserve for any shortfall in impairment allowances under Ind AS 109 and Income Recognition, Asset Classification and Provisioning (IRACP) norms (including provision on standard assets). The impairment provision required under IRACP (including standard asset provisioning) exceeds the provision made under Ind AS 109, as at March 31, 2023 and accordingly, no amount is required to be transferred to impairment reserve.
57 The Company had invoked resolution plans to relieve COVID-19 pandemic related stress to eligible borrowers. The resolution plans were based on the parameters laid down in the resolution policy approved by the Board of Directors of the Company and in accordance with the guidelines issued by the RBI on August 6, 2020. Since no resolution plan had been invoked by customers, no disclosure is required as per the format prescribed as per the notification no. RBI/2020-21/16 DOR.NO.BP.BC/3/21.04.048/2020-21 for the year ended March 31, 2024.
58 Title deeds of Immovable Properties not held in name of the Company
The Company does not possess any immovable property (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) whose title deeds are not held in the name of the Company during the financial year ended March 31, 2024 and March 31,2023.
59 Details of Crypto Currency or Virtual Currency
The Company has not traded or invested in Crypto currency or Virtual currency during the financial years ended March 31,2024 and March 31, 2023.
60 Details of Benami Property Held
No proceedings 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 in the financial years ended March 31, 2024 and March 31,2023.
61 Wilful Defaulter
The Company has not been declared as a wilful defaulter by any bank or financial institution or other lender in the financial years ended March 31,2024 and March 31,2023.
62 Relationship with Struck off Companies
The Company has no transactions with companies whose names have been struck off under section 248 of Companies Act, 2013 or section 560 of Companies Act, 1956 in the financial years ended March 31, 2024 and March 31, 2023.
63 The Reserve Bank of India, under Scale Based Regulations (SBR) has categorised the Company in Base Layer (NBFC-BL) vide its circular dated September 30, 2022. So, the company is not required to disclose their CRAR, tier I CRAR, tier II CRAR and liquidity ratio as a part of their balance sheet.
64 Registration of charges or satisfaction with Registrar of Companies (ROC)
The Company has no borrowings from Banks and Financial institutions during the financial year. So, charges or satisfaction to be registered with ROC within the statutory period for the financial years ended March 31, 2024 and March 31,2023 are not applicable.
65 Compliance with number of layers of companies
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 for the financial years ended March 31, 2024 and March 31,2023.
66 Utilisation of Borrowed funds and share premium
The Company, as part of its normal business, grants loans and advances, makes investment and borrowings from its customers, other entities and persons. These transactions are part of Company’s normal nonbanking 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 funds) by the Company to or in any other persons or entities, including foreign entities (“Intermediaries”) with the understanding, whether recorded in writing or otherwise, thatthe Intermediary shall lend or invest in party identified by or on behalf ofthe Company (Ultimate Beneficiaries). The Company has also not received any fund from any parties (Funding Party) with the understanding thatthe Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalfof the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
67 Undisclosed income
There are no transactions not recorded in the books of accounts.
68 Events after reporting date
There have been no events after the reporting date.
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