Notes to Accounts of Mas Financial Services Ltd.

Mar 31, 2025

3.17 Provisions, contingent liabilities and contingent assets

A. Provisions

Provisions are recognised when the Company
has a present obligation (legal or constructive)
as a result of past events, and it is probable that
an outflow of resources embodying economic
benefits will be required to settle the obligation,
and a reliable estimate can be made of the amount
of the obligation. When the effect of the time value
of money is material, the Company determines the
level of provision by discounting the expected cash
flows at a pre-tax rate reflecting the current rates
specific to the liability. The expense relating to any
provision is presented in the statement of profit
and loss net of any reimbursement.

B. Contingent liability

A possible obligation that arises from past events
and the existence of which will be confirmed only
by the occurrence or non-occurrence of one or
more uncertain future events not wholly within the
control of the Company or; present obligation that
arises from past events where it is not probable
that an outflow of resources embodying economic
benefits will be required to settle the obligation;
or the amount of the obligation cannot be
measured with sufficient reliability are disclosed
as contingent liability and not provided for.

C. Contingent asset

A contingent asset is a possible asset that
arises from past events and whose existence
will be confirmed only by the occurrence or non¬
occurrence of one or more uncertain future events
not wholly within the control of the Company.
Contingent assets are neither recognised not
disclosed in the financial statements.

3.18 Taxes

A. Current tax

Current tax comprises amount of tax payable in
respect of the taxable income or loss for the year
determined in accordance with Income Tax Act,
1961 and any adjustment to the tax payable or
receivable in respect of previous years. Current tax

is the amount of tax payable on the taxable income
for the period as determined in accordance with
the applicable tax rates and the provisions of the
Income Tax Act, 1961.

Current income tax relating to items recognised
outside profit or loss is recognised outside profit
or loss (either in OCI or in equity). Current tax items
are recognised in correlation to the underlying
transaction either in OCI or equity.

B. Deferred tax

Deferred tax is recognised on temporary
differences between the carrying amounts of
assets and liabilities in the standalone financial
statements and the corresponding tax bases used
in the computation of taxable profit.

Deferred tax liabilities and assets are measured
at the tax rates that are expected to apply in the
period in which the liability is settled or the asset
realised, based on tax rates (and tax laws) that
have been enacted or substantively enacted by the
end of the reporting period. The carrying amount of
deferred tax liabilities and assets are reviewed at
the end of each reporting period.

Deferred tax relating to items recognised outside
profit or loss is recognised outside profit or loss
(either in OCI or in equity). Deferred tax items
are recognised in correlation to the underlying
transaction either in OCI or equity.

Deferred tax assets and liabilities are offset if such
items relate to taxes on income levied by the same
governing tax laws and the Company has a legally
enforceable right for such set off.

C. Goods and services tax paid on acquisition of
assets or on incurring expenses

Expenses and assets are recognised net of the
goods and services tax paid, except when the
tax incurred on a purchase of assets or availing
of services is not recoverable from the taxation
authority, in which case, the tax paid is recognised
as part of the cost of acquisition of the asset or as
part of the expense item, as applicable.

The net amount of tax recoverable from, or payable
to, the taxation authority is included as part of
receivables or payables in the balance sheet.

3.19 Earnings per share

Basic earnings per share ("EPS") is computed by dividing
the profit after tax (i.e. profit attributable to ordinary
equity holders) by the weighted average number of
equity shares outstanding during the year.

Diluted EPS is computed by dividing the profit after tax

(i.e. profit attributable to ordinary equity holders) as
adjusted for after-tax amount of dividends and interest
recognised in the period in respect of the dilutive
potential ordinary shares and is adjusted for any other
changes in income or expense that would result from
the conversion of the dilutive potential ordinary shares,
by the weighted average number of equity shares
considered for deriving basic earnings per share as
increased by the weighted average number of additional
ordinary shares that would have been outstanding
assuming the conversion of all dilutive potential ordinary
shares.

Potential equity shares are deemed to be dilutive only
if their conversion to equity shares would decrease the
net profit per share from continuing ordinary operations.
Potential dilutive equity shares are deemed to be
converted as at the beginning of the period, unless they
have been issued at a later date. Dilutive potential equity
shares are determined independently for each period
presented. The number of equity shares and potentially
dilutive equity shares are adjusted for share splits /
reverse share splits, right issue and bonus shares, as
appropriate.

3.20 Dividends on ordinary shares

The Company recognises a liability to make cash or
non-cash distributions to equity holders of the Company
when the distribution is authorised and the distribution
is no longer at the discretion of the Company. As per
the Act, final dividend is authorised when it is approved
by the shareholders and interim dividend is authorised
when the it is approved by the Board of Directors of
the Company. A corresponding amount is recognised
directly in equity.

Non-cash distributions are measured at the fair value
of the assets to be distributed with fair value re¬
measurement recognised directly in equity.

Upon distribution of non-cash assets, any difference
between the carrying amount of the liability and the
carrying amount of the assets distributed is recognised
in the statement of profit and loss.

3.21 Repossessed asset

In the normal course of business whenever default
occurs, the Company may take possession of properties
or other assets in its retail portfolio and generally
disposes such assets through auction, to settle the
outstanding debt. These assets are recognised at fair
value at the time of possession.

3.22 (i) Foreign Currency Transactions

Transactions in foreign currencies are recorded
at the rate of exchange prevailing on the date of
transaction.

Monetary assets and liabilities denominated in
foreign currencies are translated at the functional
currency at rates of exchange on the reporting
date.

Exchange difference on restatement of all other
monetary items is recognised in the Statement of
Profit and Loss.

(ii) Derivatives

A derivative is a financial instrument or
other contract with all three of the following
characteristics:

i) Its value changes in response to the change in
a specified interest rate, financial instrument
price, commodity price, foreign exchange
rate, index of prices or rates, credit rating or
credit index, or other variable, provided that, in
the case of a non-financial variable, it is not
specific to a party to the contract (i.e., the
''underlying'').

ii) It requires no initial net investment or an initial
net investment that is smaller than would be
required for other types of contracts expected
to have a similar response to changes in
market factors.

iii) It is settled at a future date.

The Company enters into derivative transactions with
various counterparties to hedge its foreign currency
exchange rate risks. Derivative transaction consists
of hedging of foreign exchange transactions, which
includes forward contracts.

Derivatives are recorded at fair value and carried as
assets when their fair value is positive and as liabilities
when their fair value is negative. The notional amount
and fair value of such derivatives are disclosed
separately. Changes in the fair value of derivatives are
recognised in the Statement of Profit and Loss.

4 . standards issued but not yet effective

Ministry of Corporate Affairs ("MCA") notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules
as issued from time to time. For the year ended 31
March 2025, MCA has not notified any new standards or
amendments to the existing standards applicable to the
Company.

For Cash credit / Overdraft and short term loans

(a) Cash credit / short term loans from banks are secured by hypothecation of movable assets of the Company and goods
covered under hypothecation ("HP") agreements / Loan cum HP agreements and book debts, receivables, loans and
advances and entire portfolio outstanding (except specific portfolio generated from various term loans sanctioned by
various banks/financial institutions on an exclusive basis) and equitable mortgage/negative lien by deposit of title deeds
on some of the Company''s immovable properties, as collateral security. The loans are also guaranteed by Mr. Kamlesh
Chimanlal Gandhi, Mrs. Shweta Kamlesh Gandhi. Overdraft loans are secured against fixed deposits placed.

(b) Interest rate range

Interest rate ranges from 7.65 % p.a. to 9.10 % p.a. as at 31 March 2025.

Interest rate ranges from 8.75 % p.a. to 9.40 % p.a. as at 31 March 2024.

The Company has not defaulted in repayment of borrowings and interest.

The Company has availed borrowings from banks or financial institutions on the basis of security of current assets and the
quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement
with the books of accounts of the Company.

The carrying amount of financial assets which is hypothecated against all secured borrowing inclusive of margin requirement
ranging from 1.10 times to 1.25 times is amounting to '' 9,214.20 crores (31 March 2024: '' 7,512.28 crores).

Crores Only) divided into 6,40,00,000 (Six Crores and Forty Lakh) Equity Shares of ''10 (Rupees Ten Only) each, 400 (Four
Hundred) - 9.75% Compulsorily Convertible Cumulative Preference Shares of ''1,00,000 (Rupees One Lakh Only) each,
2,20,00,000 (Two Crore Twenty Lakh) 0.01% Compulsorily Convertible Cumulative Preference Shares of ''10 (Rupees Ten
Only) each and 2,20,00,000 (Two Crore Twenty Lakh) - 13.31% Compulsorily Convertible Cumulative Preference Shares
of ''10 (Rupees Ten Only) each was reclassified into '' 112,00,00,000/- (Rupees One Hundred and Twelve Crores Only)
divided into 11,20,00,000 (Eleven Crores and Twenty Lakh) Equity Shares of ''10 (Rupees Ten Only) each.

2. During the Previous year, pursuant to the approval of shareholders at the Extra Ordinary General Meeting held on
February 09, 2024, the Authorised share capital of the Company has been increased from '' 112,00,00,000/- (Rupees
One Hundred and Twelve Crores Only) divided into 11,20,00,000 (Eleven Crores and Twenty Lakh) Equity Shares of
'' 10 (Rupees Ten Only) each to '' 200,00,00,000/- (Rupees Two Hundred Crores Only) divided into 20,00,00,000 (Twenty
Crores) Equity Shares of ''10 (Rupees Ten Only) each.

3. The Company, during the year, has allotted 1,74,67,248 no. of equity shares of face value of '' 10 each, at the issue price of
'' 286.25 per Equity Share, i.e., at a premium of '' 276.25 per Equity Share (which includes a discount of '' 15.06 per Equity
Share (4.99% of the floor price, as determined in terms of the SEBI ICDR Regulations) to the floor price), aggregating to
approximately '' 500 Crores, pursuant to Qualified Institutions Placement as on 21 June 2024.

Note: Mr. Mukesh C. Gandhi has passed away on 19 January 2021.

20.3 Details of bonus shares issued during the five years immediately preceding the balance sheet date:

10,93,24,086 equity shares of '' 10 each fully paid-up were allotted as bonus shares by capitalisation of general reserve and
balance from the statement of profit and loss during the year ended 31 March 2024.

20.4 Terms / rights attached to equity shares

The Company has one class of equity shares having a par value of '' 10 per share. Each shareholder is eligible for one vote
per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing
Annual General Meeting, except in case of interim dividend. In the event of liquidation of the Company, the equity shareholders
will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to
their shareholding.

21.1 Nature and purpose of reserve

1 Reserve u/s. 45-IC of the Reserve Bank of India Act, 1934 (the "RBI Act, 1934")

Reserve u/s. 45-IC of RBI Act, 1934 is created in accordance with section 45 IC(1) of the RBI Act, 1934. As per Section 45
IC(2) of the RBI Act, 1934, no appropriation of any sum from this reserve fund shall be made by the NBFC except for the
purpose as may be specified by RBI.

2 Securities premium

Securities premium is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes
in accordance with the provisions of section 52 of the Act.

3 Retained earnings

Retained earnings is the accumulated available profit of the Company carried forward from earlier years. These reserve
are free reserves which can be utilised for any purpose as may be required.

The Company recognises change on account of remeasurement of the net defined benefit liability (asset) as part of
retained earnings with separate disclosure, which comprises of:

i) actuarial gains and losses;

ii) return on plan assets, excluding amounts included in net interest on the net defined benefit liability (asset); and

iii) any change in the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit
liability (asset).

4 Other comprehensive income
On equity investments

The Company has elected to recognise changes in the fair value of investments in equity securities (other than investment
in subsidiary) in other comprehensive income. These changes are accumulated within the FVOCI equity investments
reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity
securities are derecognised.

On loans

The Company has elected to recognise changes in the fair value of loans and advances in other comprehensive income.
These changes are accumulated within the FVOCI - loans and advances reserve within equity. The Company transfers
amounts from this reserve to the statement of profit and loss when the loans and advances are sold. Further, impairment
loss allowances on the loans are recognised in OCI.

(d) Nature of CSR activities: Promoting education, eradicating hunger, poverty & malnutrition, promoting health care and
such other activities. For more details, refer annexure of Director''s report on CSR.

34 SEGMENT REPORTiNG:

Operating segment are components of the Company whose operating results are regularly reviewed by the Chief Operating
Decision Maker ("CODM") to make decisions about resources to be allocated to the segment and assess its performance and
for which discrete financial information is available.

The Company is engaged primarily on the business of "Financing" only, taking into account the risks and returns, the
organization structure and the internal reporting systems. All the operations of the Company are in India. All non-current
assets of the Company are located in India. Accordingly, there are no separate reportable segments as per Ind AS 108 -
"Operating segments".

Financial guarantee commission income amounts to '' Nil during the year (31 March 2024: less than '' 50,000) on account of
fair valuation of corporate financial guarantee given to bank on behalf of subsidiary.

All transactions with these related parties are priced on an arm''s length basis. None of the balances are secured.

Key managerial personnel who are under the employment of the Company are entitled to post employment benefits and other
employee benefits recognised as per Ind AS 19 - Employee Benefits in the financial statements.

The remuneration of key management personnel are determined by the nomination and remuneration committee having
regard to the performance of individuals and market trends.

36 OFFSETTING

Following table represents the recognised financial assets that are offset, or subject to enforceable master netting arrangements
and other similar arrangements but not offset, as at 31 March 2025 and 31 March 2024. The column ''net amount'' shows the
impact of the Company''s balance sheet if all the set-off rights were exercised.

Note:

31 March 2025: Nil (31 March 2024:'' 12.57 crores) represents advances received against loan agreements.

37 EVENTS AFTER THE REPORTING PERIOD

Ind AS 10 ''Events after the Reporting Period'', requires an entity to evaluate information available after the balance sheet date to
determine if such information constitutes an adjusting event, which would require an adjustment to the financial statements,
or a non-adjusting event, which would only require disclosure. There have been no events after the reporting date that require
disclosure in these financial statements.

38 REVENUE FROM CONTRACTS WITH CUSTOMERS

Set out below is the disaggregation of the Company''s revenue from contracts with customers and reconciliation to the
statement of profit and loss:

40 EMPLOYEE BENEFIT PLAN

Disclosure in respect of employee benefits under Ind AS 19 - Employee Benefits are as under:

(a) Defined contribution plan

The Company''s contribution to provident fund and employee state insurance scheme are considered as defined
contribution plans. The Company''s contribution to provident fund aggregating '' 2.98 crores (31 March 2024: '' 2.17
crores) and employee state insurance scheme aggregating '' 0.10 crores (31 March 2024: '' 0.11 crores) has been
recognised in the statement of profit and loss under the head employee benefits expense.

(b) Defined benefit plan:

Gratuity

The Company operates a defined benefit plan (the "gratuity plan") covering eligible employees. The gratuity plan is
governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is
entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at
retirement age/ resignation date.

The defined benefit plans expose the Company to risks such as actuarial risk, investment risk, liquidity risk, market risk,
legislative risk. These are discussed as follows:

Actuarial risk: It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:

Adverse salary growth experience: Salary hikes that are higher than the assumed salary escalation will result into an
increase in obligation at a rate that is higher than expected.

variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the gratuity
benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration
of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and
discount rate.

variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption than the
gratuity benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as
at the resignation date.

investment risk: For funded plans that rely on insurers for managing the assets, the value of assets certified by the
insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is
independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there
are significant changes in the discount rate during the inter-valuation period.

Liquidity risk: Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level
of benefits. If some of such employees resign / retire from the Company, there can be strain on the cash flows.

Market risk: Market risk is a collective term for risks that are related to the changes and fluctuations of the financial
markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time
value of money. An increase in discount rate leads to decrease in defined benefit obligation of the plan benefits and vice
versa. This assumption depends on the yields on the government bonds and hence the valuation of liability is exposed to
fluctuations in the yields as at the valuation date.

Legislative risk: Legislative risk is the riskofincrease in the plan liabilities or reduction in the plan assets dueto change in
the legislation/regulation. The government may amend the Payment of Gratuity Act, 1972, thus requiring the companies
to pay higher benefits to the employees. This will directly affect the present value of the defined benefit obligation and
the same will have to be recognized immediately in the year when any such amendment is effective.

ix. Asset liability matching strategies

The Company contributes to the insurance fund based on estimated liability of next financial year end. The projected
liability statements is obtained from the actuarial valuer.

x. Effect of plan on the Company''s future cash flows

a) Funding arrangements and funding policy

The Company has purchased an insurance policy to provide for payment of gratuity to the employees. Every year, the
insurance company carries out a funding valuation based on the latest employee data provided by the Company. Any
deficit in the assets arising as a result of such valuation is funded by the Company.

b) Maturity profile of defined benefit obligation

The average outstanding term of the obligations (years) as at 31^st March 2025 is 4.02 years.(31^st March 2024 :
4.10 years)

The Company has not funded its compensated absences liability and the same continues to remain as unfunded as at March
31,2025.

The liability for compensated absences is '' 0.27 crores (31 March 2024: '' 0.27 crores).

Code on Social Security, 2020

The Indian Parliament has approved the Code on Social Security, 2020 which subsumes the provident fund Act and the gratuity
Act and rules there under. The Ministry of Labour and Employment has also released draft rules thereunder on 13 November
2020 and has invited suggestions from stakeholders which are under active consideration by the Ministry of Labour and
Employment. The Company will evaluate the rules, assess the impact, if any, and account for the same once the rules are
notified and become effective.

41 FiNANCiAL iNSTRUMENT AND FAiR VALUE MEASUREMENT

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal
(or most advantageous) market at the measurement date under current market conditions (i.e. an exit price), regardless of
whether that price is directly observable or estimated using a valuation technique.

In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation
techniques.

This note describes the fair value measurement of both financial and non-financial instruments.

A. Measurement of fair values

i) Financial instruments - fair value

The fair value of financial instruments as referred to in note (B) below have been classified into three categories depending
on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for
identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurement).

The categories used are as follows:

Level 1: Quoted prices (unadjusted) in active markets for financial instruments

Level 2: The fair value of financial instruments that are not traded in active market is determined using valuation technique
which maximizes the use of observable market data and rely as little as possible on entity specific estimates. If all
significant inputs required to fair value on instrument are observable, the instrument is included in level 2; and

Level 3: If one or more of significant input is not based on observable market data, the instrument is included in level 3.

ii) Transfers between levels 1 and 2

There has been no transfer in between level 1 and level 2.

iii) Valuation techniques
Loans

The Company has computed fair value of the loans and advances through OCI considering its business model. These
have been fair valued using the base of the interest rate of loan disbursed in the last month of the year end which is an
unobservable input and therefore these has been considered to be fair valued using level 3 inputs.

Investments measured at FVTPL

Fair values of market linked debentures and mutual funds have been determined under level 1 using quoted market
prices(unadjusted) of the underlying instruments. Fair value of investment in alternate investment funds have been
determined under level 2 using observable input. For fair value of investment in OCPS of subsidiary, the Company has
used incremental borrowing rate and applied discounted cash flow model and accordingly measured under level 3.

B. Accounting classifications and fair values

The carrying amount and fair value of financial instruments including their levels in the fair value hierarchy presented
below:

42 CAPITAL

The Company maintains an actively managed capital base to cover risks inherent in the business and is meeting the capital
adequacy requirements of the regulator, RBI. The adequacy of the Company''s capital is monitored using, among other
measures, the regulations issued by RBI.

The Company has complied in full with all its externally imposed capital requirements over the reported period. Equity share
capital and other equity are considered for the purpose of Company''s capital management.

42.1 Capital management

The primary objectives of the Company''s capital management policy are to ensure that the Company complies with externally
imposed capital requirements and maintains strong credit ratings and healthy capital ratios in order to support its business
and to maximise shareholder value.

The Company manages its capital structure and makes adjustments to it according to changes in economic conditions and
the risk characteristics of its activities. In order to maintain or adjust the capital structure, the Company may adjust the amount
of dividend payment to shareholders, return capital to shareholders or issue capital securities. No changes have been made to
the objectives, policies and processes from the previous years. However, they are under constant review by the Board.

Tier 1 capital consists of shareholders'' equity and retained earnings excluding unrealised gain but including unrealised loss.
Tier 2 capital consists of ECL on stage 1 and subordinated debt (subject to prescribed discount rates and not exceeding 50%
of Tier 1).

43 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company''s principal financial liabilities comprise borrowings and trade payables. The main purpose of these financial
liabilities is to finance the Company''s operations and to support its operations. The Company''s financial assets mainly includes
loan and advances, cash and cash equivalents that derive directly from its operations.

The Company is exposed to credit risk, liquidity risk and market risk. The Company''s board of directors has an overall
responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors
has established the risk management committee, which is responsible for developing and monitoring the Company''s risk
management policies. The committee reports regularly to the board of directors on its activities.

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.

The Company''s risk management committee oversees how management monitors compliance with the Company''s risk
management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks
faced by the Company.

43.1 Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counter-party to financial instrument fails to meet its
contractual obligations and arises principally from the Company''s loans and investments.

The carrying amounts of financial assets represent the maximum credit risk exposure.

(a) Loans and advances

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However,
management also considers the factors that may influence the credit risk of its customer base, including the default risk
associated with the industry.

The Company has established a credit policy under which each new customer is analysed individually for creditworthiness
before sanctioning any loan. The Company''s review includes external ratings, if they are available, financial statements,
credit agency information, industry information, the loan-to-value ratio etc.

Analysis of risk concentration

The following table shows the risk concentration of the Company''s loans.

Narrative Description of Collateral

Collateral primarily include vehicles purchased by retail loan customers and machinery & property in case of SME
customers. The secured exposure are secured wholly or partly by hypothecation of assets and undertaking to create a
security.

An impairment analysis is performed at each reporting date based on the facts and circumstances existing on that date
to identify expected losses on account of time value of money and credit risk. For the purposes of this analysis, the loans
are categorised into groups based on days past due. Each group is then assessed for impairment using the ECL model
as per the provisions of Ind AS 109 - financial instruments.

(i) Staging:

As per the provision of Ind AS 109, all financial instruments are allocated to stage 1 on initial recognition. However,
if a significant increase in credit risk is identified at the reporting date compared with the initial recognition, then an
instrument is transferred to stage 2. If there is objective evidence of impairment, then the asset is credit impaired and
transferred to stage 3.

The Company considers a financial instrument defaulted and therefore Stage 3 (credit-impaired) for ECL calculations in
all cases when the borrower becomes due by more than 90 days on its contractual payments.

For financial assets in stage 1, the impairment calculated based on defaults that are possible in next twelve months,
whereas for financial instrument in stage 2 and stage 3 the ECL calculation considers default event for the lifespan of the
instrument.

As per Ind AS 109, the Company assesses whether there is a significant increase in credit risk at the reporting date from
the initial recognition. The Company has staged the assets based on the days past dues criteria and other market factors
which significantly impacts the loan portfolio.

(ii) Grouping:

As per Ind AS 109, Company is required to group the portfolio based on the shared risk characteristics. The Company has
assessed the risk and its impact on the various portfolios and has divided the portfolio into following groups:

a. Two wheeler loans

b. Micro enterprise loans

c. Salaried personal loans

d. Small and medium enterprise loans

e. Commercial vehicle loans

f. Retail asset channel loans

(iii) ECL:

ECL on financial assets is an unbiased probability weighted amount based out of possible outcomes after considering
risk of credit loss even if probability is low. ECL is calculated based on the following components:

a. Probability of default ("PD")

b. Loss given default ("LGD")

c. Exposure at default ("EAD")

d. Discount factor ("D")

For RAC loan portfolio, the Company has developed internal rating based approach for the purpose of ECL. The credit
rating framework of the Company consists of various parameters based on which RAC loan portfolio is evaluated and
credit rating is assigned accordingly. The credit rating matrix developed by the Company is validated in accordance with
its ECL policy.

The Company has developed its PD matrix based on the external benchmarking of external reports, external ratings and
Basel norms. This PD matrix is calibrated with its historical data and major events on regular time interval in accordance
with its ECL policy.

Probability of default:

PD is defined as the probability of whether borrowers will default on their obligations in the future. Historical PD is derived
from internal data of the Company calibrated with forward looking macroeconomic factors.

For computation of probability of default ("Pd"), Vasicek Single Factor Model was used to forecast the PD term structure
over lifetime of loans. As per Vasicek model, given long term PD and current macroeconomic conditions, conditional PD
corresponding to current macroeconomic condition is estimated. The Company has worked out PD based on the last five
years historical data.

The PDs derived from the Vasicek model, are the cumulative PDs, stating that the borrower can default in any of the given
years, however to compute the loss for any given year, these cumulative PDs are converted to marginal PDs. Marginal
PDs is probability that the obligor will default in a given year, conditional on it having survived till the end of the Current
year.

As per Ind AS 109, expected loss has to be calculated as an unbiased and probability-weighted amount for multiple
scenarios.

The probability of default was calculated for 3 scenarios: upside (11%), downside (21%) and base (68%). This weightage
has been decided on best practices and expert judgement. Marginal conditional probability was calculated for all
3 possible scenarios and one conditional PD was arrived as conditional weighted probability.

Loss given default:

LGD is an estimate of the loss from a transaction given that a default occurs. Under Ind AS 109, lifetime LGD''s are defined
as a collection of LGD''s estimates applicable to different future periods.

Various approaches are available to compute the LGD. The Company has considered workout LGD approach. The
following steps are performed to calculate the LGD:

1) Analysis of historical credit impaired accounts at cohort level.

2) The computation consists of four components, which are:

a) Outstanding balance (POS)

b) Recovery amount (discounted yearly) by effective interest rate.

c) Expected recovery amount (for incomplete recoveries), discounted to reporting date using effective interest
rate.

d) Collateral (security) amount.

The formula for the computation is as below:

% Recovery rate = (discounted recovery amount security amount discounted estimated recovery) / (total outstanding
balance) % LGD = 1 - recovery rate

For RAC loan portfolio, the LGD has been considered based on Basel-ll Framework for all the level of credit rating portfolio.
Exposure at default:

As per Ind AS 109, EAD is estimation of the extent to which the financial entity may be exposed to counterparty in the
event of default and at the time of counterparty''s default. The Company has modelled EAD based on the contractual and
behavioural cash flows till the lifetime of the loans considering the expected assignment of loans.

The Company has considered expected cash flows for all the loans at DPD bucket level for each of the segments, which
was used for computation of ECL. The exposure at default is calculated for each product and for various DPD status
after considering future expected assignment which is not at risk. Moreover, the EAD comprised of principal component,
accrued interest and also the future interest for the outstanding exposure of retail loans. Further, the EAD for stage 3 retail
loans are the outstanding exposures at the time loan is classified as Stage 3 for the first time.

Discounting:

As per Ind AS 109, ECL on retail loans is computed by estimating the timing of the expected credit shortfalls associated
with the defaults and discounting them using effective interest rate.

ECL computation:

Conditional ECL at DPD pool level was computed with the following method:

Conditional retail ECL for year (yt) = EAD (yt) * conditional PD (yt) * LGD (yt) * discount factor (yt)

Conditional RAC ECL for year (yt) = EAD (yt) * conditional PD (yt) * LGD (yt)

For RAC loan portfolio, the Company has calculated ECL based on borrower wise assessment of internal credit rating as
per the framework of the Company, while for retail loan portfolio, the same has been calculated on collective basis.

The calculation is based on provision matrix which considers actual historical data adjusted appropriately for the future
expectations and probabilities. Proportion of ECL provided for across the stages is summarised below:

The loss rates are based on actual credit loss experience over past 5 years. These loss rates are then adjusted
appropriately to reflect differences between current and historical economic conditions and the Company''s view of
economic conditions over the expected lives of the loan receivables.

(iv) Management overlay

The Company holds a management and macro-economic overlay of '' 17.60 crores as at 31 March 2025
(31 March 2024: '' 18.79 crores).

(v) Modification of financial assets

The Company has modified the terms of certain loans provided to customers in accordance with RBI notification on MSME
restructuring dated 6 August 2020 and 5 May 2021. Such restructuring benefits are provided to distressed customers
who are impacted by COVID-19 pandemic.

Such restructuring benefits include extended payment term arrangements, moratorium and changes in interest
rates. The risk of default of such assets after modification is assessed at the reporting date and compared with
the risk under the original terms at initial recognition, when the modification is not substantial and so does not
result in derecognition of the original asset (refer note 3.5). The Company monitors the subsequent performance
of modified assets. The gross carrying amount of such assets held as at 31 March 2025 is '' 0.47 crores
(31 March 2024: '' 0.47 crores). Overall provision for expected credit loss against restructured loan exposure amounts to
'' 1.40 crores as at 31 March 2025 (31 March 2024: '' 0.13 crores). The Company continues to monitor if there is a
subsequent significant increase in credit risk in relation to such assets.

(b) Cash and cash equivalent and bank deposits

Credit risk on cash and cash equivalent and bank deposits is limited as the Company generally invests in term deposits
with banks which are subject to an insignificant risk of change in value.

43.2 Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting its obligations associated with its financial liabilities.
The Company''s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due.

The Company is monitoring its liquidity risk by estimating the future inflows and outflows during the start of the year and
planned accordingly the funding requirement. The Company manages its liquidity by unutilised cash credit facility, term loans
and direct assignment of loans.

The composition of the Company''s liability mix ensures healthy asset liability maturity pattern and well diverse resource mix.

The total cash credit limit available to the Company is '' 1338.75 Crore spread across 13 banks. The utilization level is
maintained in such a way that ensures sufficient liquidity on hand.

RBI has mandated minimum liquidity coverage ratio (LCR) of 50% to be maintained by December 2021, which is to be gradually
increased to 100% by December 2024. The Company has LCR of 477.76 % as of 31 March 2025 as against the LCR of 50%
mandated by RBI.

The Management expects to continue to maintain around 20% to 25% of assets under management as off book through direct
assignment transactions. It is with door to door maturity and without recourse to the Company. This further strengthens the
liability management.

The table below summarises the maturity profile of the undiscounted cash flow of the Company''s financial liabilities:

---

Mar 31, 2024

3.17 Provisions, contingent liabilities and contingent assets

A. Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of past events, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. When the effect of the time value of money is material, the Company determines the level of provision by discounting the expected cash flows at a pre-tax rate reflecting the current rates specific to the liability. The expense relating to any provision is presented in the statement of profit and loss net of any reimbursement.

B. Contingent liability

A possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or; present obligation that arises from past events where it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured

with sufficient reliability are disclosed as contingent liability and not provided for.

C. Contingent asset

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. Contingent assets are neither recognised not disclosed in the financial statements.

3.18 Taxes

A. Current tax

Current tax comprises amount of tax payable in respect of the taxable income or loss for the year determined in accordance with Income Tax Act, 1961 and any adjustment to the tax payable or receivable in respect of previous years. Current tax is the amount of tax payable on the taxable income for the period as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961.

Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in OCI or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or equity.

B. Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the standalone financial statements and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of deferred tax liabilities and assets are reviewed at the end of each reporting period.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in OCI or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or equity.

Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same

governing tax laws and the Company has a legally enforceable right for such set off.

C. Goods and services tax paid on acquisition of assets or on incurring expenses Expenses and assets are recognised net of the goods and services tax paid, except when the tax incurred on a purchase of assets or availing of services is not recoverable from the taxation authority, in which case, the tax paid is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable.

The net amount of tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

3.19 Earnings per share

Basic earnings per share ("EPS") is computed by dividing the profit after tax (i.e. profit attributable to ordinary equity holders) by the weighted average number of equity shares outstanding during the year.

Diluted EPS is computed by dividing the profit after tax (i.e. profit attributable to ordinary equity holders) as adjusted for after-tax amount of dividends and interest recognised in the period in respect of the dilutive potential ordinary shares and is adjusted for any other changes in income or expense that would result from the conversion of the dilutive potential ordinary shares, by the weighted average number of equity shares considered for deriving basic earnings per share as increased by the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits, right issue and bonus shares, as appropriate.

3.20 Dividends on ordinary shares

The Company recognises a liability to make cash or non-cash distributions to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the Act, final dividend is authorised when it is approved

by the shareholders and interim dividend is authorised when the it is approved by the Board of Directors of the Company. A corresponding amount is recognised directly in equity.

Non-cash distributions are measured at the fair value of the assets to be distributed with fair value remeasurement recognised directly in equity.

Upon distribution of non-cash assets, any difference between the carrying amount of the liability and the carrying amount of the assets distributed is recognised in the statement of profit and loss.

3.21 Repossessed asset

In the normal course of business whenever default occurs, the Company may take possession of properties or other assets in its retail portfolio and generally disposes such assets through auction, to settle the outstanding debt.

3.22 (I) Foreign Currency Transactions

Transactions in foreign currencies are recorded at the rate of exchange prevailing on the date of transaction.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency at rates of exchange on the reporting date.

Exchange difference on restatement of all other monetary items is recognised in the Statement of Profit and Loss.

(II) Derivatives

A derivative is a financial instrument or other contract with all three of the following characteristics:

i) Its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided that, in the case of a non-financial variable, it is not specific to a party to the contract (i.e., the ''underlying'').

ii) It requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts expected to have a similar response to changes in market factors.

iii) It is settled at a future date.

The Company enters into derivative transactions with various counterparties to hedge its foreign currency exchange rate risks. Derivative transaction consists of hedging of foreign exchange transactions, which includes forward contracts.

Derivatives are recorded at fair value and carried as assets when their fair value is positive and as liabilities when their fair value is negative. The notional amount and fair value of such derivatives are disclosed separately. Changes in the fair value of derivatives are recognised in the Statement of Profit and Loss.

4 . standards issued but not yet effective

Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended 31 March 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.

Note :

1. During the current year, pursuant to the approval of shareholders at the Extra Ordinary General Meeting held on February 09, 2024, the Authorized Share Capital of the Company comprising of '' 112,00,00,000/- (Rupees One Hundred and Twelve Crores Only) divided into 6,40,00,000 (Six Crores and Forty Lakh) Equity Shares of ''10 (Rupees Ten Only) each, 400 (Four Hundred) - 9.75% Compulsorily Convertible Cumulative Preference Shares of ''1,00,000 (Rupees One Lakh Only) each, 2,20,00,000 (Two Crore Twenty Lakh) 0.01% Compulsorily Convertible Cumulative Preference Shares of ''10 (Rupees Ten Only) each and 2,20,00,000 (Two Crore Twenty Lakh) - 13.31% Compulsorily Convertible Cumulative Preference Shares of ''10 (Rupees Ten Only) each was reclassified into '' 112,00,00,000/- (Rupees One Hundred and Twelve Crores Only) divided into 11,20,00,000 (Eleven Crores and Twenty Lakh) Equity Shares of ''10 (Rupees Ten Only) each.

2. During the current year, pursuant to the approval of shareholders at the Extra Ordinary General Meeting held on February 09, 2024, the Authorised share capital of the Company has been increased from '' 112,00,00,000/- (Rupees One Hundred and Twelve Crores Only) divided into 11,20,00,000 (Eleven Crores and Twenty Lakh) Equity Shares of '' 10 (Rupees Ten Only) each to '' 200,00,00,000/- (Rupees Two Hundred Crores Only) divided into 20,00,00,000 (Twenty Crores) Equity Shares of ''10 (Rupees Ten Only) each.

Note: Mr. Mukesh C. Gandhi has passed away on 19 January 2021.

20.3 The Company has neither allotted any share pursuant to contracts without payment being received in cash nor has it bought back any shares during the preceding period of 5 financial years.

20.4 Terms / rights attached to equity shares

The Company has one class of equity shares having a par value of '' 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation of the Company, the equity shareholders will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

21.1 Nature and purpose of reserve

1 Reserve u/s. 45-IC of the Reserve Bank of India Act, 1934 (the "RBI Act, 1934")

Reserve u/s. 45-IC of RBI Act, 1934 is created in accordance with section 45 IC(1) of the RBI Act, 1934. As per Section 45 IC(2) of the RBI Act, 1934, no appropriation of any sum from this reserve fund shall be made by the NBFC except for the purpose as may be specified by RBI.

2 Securities premium

Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes in accordance with the provisions of section 52 of the Act.

3 Retained earnings

Retained earnings is the accumulated available profit of the Company carried forward from earlier years. These reserve are free reserves which can be utilised for any purpose as may be required.

"The Company recognises change on account of remeasurement of the net defined benefit liability (asset) as part of retained earnings with separate disclosure, which comprises of:

i) actuarial gains and losses;

ii) return on plan assets, excluding amounts included in net interest on the net defined benefit liability (asset); and

iii) any change in the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability (asset).

4 Other comprehensive income On equity investments

The Company has elected to recognise changes in the fair value of investments in equity securities (other than investment in subsidiary) in other comprehensive income. These changes are accumulated within the FVOCI equity investments reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

On loans

he Company has elected to recognise changes in the fair value of loans and advances in other comprehensive income. These changes are accumulated within the FVOCI - loans and advances reserve within equity. The Company transfers amounts from this reserve to the statement of profit and loss when the loans and advances are sold. Further, impairment loss allowances on the loans are recognised in OCI.

e) Nature of CSR activities: Promoting education, eradicating hunger, poverty & malnutrition, promoting health care and such other activities. For more details, refer annexure of Director''s report on CSR.

34 SEGMENT REPORTING:

Operating segment are components of the Company whose operating results are regularly reviewed by the Chief Operating Decision Maker ("CODM") to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available.

The Company is engaged primarily on the business of "Financing" only, taking into account the risks and returns, the organization structure and the internal reporting systems. All the operations of the Company are in India. All non-current assets of the Company are located in India. Accordingly, there are no separate reportable segments as per Ind AS 108 -"Operating segments".

40 EMPLOYEE BENEFIT PLAN

Disclosure in respect of employee benefits under Ind AS 19 - Employee Benefits are as under:

(a) Defined contribution plan

The Company''s contribution to provident fund and employee state insurance scheme are considered as defined contribution plans. The Company''s contribution to provident fund aggregating '' 2.17 crores (31 March 2023: '' 1.61 crores) and employee state insurance scheme aggregating '' 0.11 crores (31 March 2023: '' 0.12 crores) has been recognised in the statement of profit and loss under the head employee benefits expense.

(b) Defined benefit plan:

Gratuity

Financial assets not measured at fair value

The Company operates a defined benefit plan (the "gratuity plan") covering eligible employees. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age/ resignation date.

The defined benefit plans expose the Company to risks such as actuarial risk, investment risk, liquidity risk, market risk, legislative risk. These are discussed as follows:

Actuarial risk: It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:

Adverse salary growth experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in obligation at a rate that is higher than expected.

variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the gratuity benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate

variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption than the gratuity benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.

Investment risk: For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.

Liquidity risk: Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign / retire from the Company, there can be strain on the cash flows.

Market risk: Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in defined benefit obligation of the plan benefits and vice versa. This assumption depends on the yields on the government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.

Legislative risk: Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/regulation. The government may amend the Payment of Gratuity Act, 1972, thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the defined benefit obligation and the same will have to be recognized immediately in the year when any such amendment is effective.

ix. Asset liability matching strategies

The Company contributes to the insurance fund based on estimated liability of next financial year end. The projected liability statements is obtained from the actuarial valuer.

x. Effect of plan on the Company''s future cash flows

a) Funding arrangements and funding policy

The Company has purchased an insurance policy to provide for payment of gratuity to the employees. Every year, the insurance company carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company.

b) Maturity profile of defined benefit obligation

The average outstanding term of the obligations (years) as at 31^st March 2024 is 4.10 years.(31^st March 2023 : 5.11 years)

The Company has not funded its compensated absences liability and the same continues to remain as unfunded as at March 31,2023.

The liability for compensated absences is '' 0.27 crores (31 March 2023: '' 0.16 crores).

Code on Social Security, 2020

The Indian Parliament has approved the Code on Social Security, 2020 which subsumes the provident fund Act and the gratuity Act and rules there under. The Ministry of Labour and Employment has also released draft rules thereunder on 13 November 2020 and has invited suggestions from stakeholders which are under active consideration by the Ministry of Labour and Employment. The Company will evaluate the rules, assess the impact, if any, and account for the same once the rules are notified and become effective.

41. FINANCIAL INSTRUMENT AND FAIR VALUE MEASUREMENT

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price), regardless of whether that price is directly observable or estimated using a valuation technique.

In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques.

This note describes the fair value measurement of both financial and non-financial instruments.

A. Measurement of fair values

i) Financial instruments - fair value

The fair value of financial instruments as referred to in note (B) below have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurement).

The categories used are as follows:

Level 1: Quoted prices (unadjusted) in active markets for financial instruments

Level 2: The fair value of financial instruments that are not traded in active market is determined using valuation technique which maximizes the use of observable market data and rely as little as possible on entity specific estimates. If all significant inputs required to fair value on instrument are observable, the instrument is included in level 2; and

Level 3: If one or more of significant input is not based on observable market data, the instrument is included in level 3.

ii) Transfers between levels 1 and 2

There has been no transfer in between level 1 and level 2.

iii) Valuation techniques Loans

The Company has computed fair value of the loans and advances through OCI considering its business model. These have been fair valued using the base of the interest rate of loan disbursed in the last month of the year end which is an unobservable input and therefore these has been considered to be fair valued using level 3 inputs.

Investments measured at FVTPL

Fair values of market linked debentures and mutual funds have been determined under level 1 using quoted market prices(unadjusted) of the underlying instruments. Fair value of investment in alternate investment funds have been determined under level 2 using observable input. For fair value of investment in OCPS of subsidiary, the Company has used incremental borrowing rate and applied discounted cash flow model and accordingly measured under level 3.

42. CAPITAL

The Company maintains an actively managed capital base to cover risks inherent in the business and is meeting the capital adequacy requirements of the regulator, RBI. The adequacy of the Company''s capital is monitored using, among other measures, the regulations issued by RBI.

The Company has complied in full with all its externally imposed capital requirements over the reported period. Equity share capital and other equity are considered for the purpose of Company''s capital management.

42.1 Capital management

The primary objectives of the Company''s capital management policy are to ensure that the Company complies with externally imposed capital requirements and maintains strong credit ratings and healthy capital ratios in order to support its business and to maximise shareholder value.

The Company manages its capital structure and makes adjustments to it according to changes in economic conditions and the risk characteristics of its activities. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend payment to shareholders, return capital to shareholders or issue capital securities. No changes have been made to the objectives, policies and processes from the previous years. However, they are under constant review by the Board.

43. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company''s principal financial liabilities comprise borrowings and trade payables. The main purpose of these financial liabilities is to finance the Company''s operations and to support its operations. The Company''s financial assets mainly includes loan and advances, cash and cash equivalents that derive directly from its operations.

The Company is exposed to credit risk, liquidity risk and market risk. The Company''s board of directors has an overall responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors has established the risk management committee, which is responsible for developing and monitoring the Company''s risk management policies. The committee reports regularly to the board of directors on its activities.

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.

The Company''s risk management committee oversees how management monitors compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

43.1 Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counter-party to financial instrument fails to meet its contractual obligations and arises principally from the Company''s loans and investments.

The carrying amounts of financial assets represent the maximum credit risk exposure.

(a) Loans and advances

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry.

The Company has established a credit policy under which each new customer is analysed individually for creditworthiness before sanctioning any loan. The Company''s review includes external ratings, if they are available, financial statements, credit agency information, industry information, the loan-to-value ratio etc.

Narrative Description of Collateral

Collateral primarily include vehicles purchased by retail loan customers and machinery & property in case of SME customers. The secured exposure are secured wholly or partly by hypothecation of assets and undertaking to create a security.

An impairment analysis is performed at each reporting date based on the facts and circumstances existing on that date to identify expected losses on account of time value of money and credit risk. For the purposes of this analysis, the loans are categorised into groups based on days past due. Each group is then assessed for impairment using the ECL model as per the provisions of Ind AS 109 - financial instruments.

(i) Staging:

As per the provision of Ind AS 109, all financial instruments are allocated to stage 1 on initial recognition. However, if a significant increase in credit risk is identified at the reporting date compared with the initial recognition, then an instrument is transferred to stage 2. If there is objective evidence of impairment, then the asset is credit impaired and transferred to stage 3.

The Company considers a financial instrument defaulted and therefore Stage 3 (credit-impaired) for ECL calculations in all cases when the borrower becomes due by more than 90 days on its contractual payments.

For financial assets in stage 1, the impairment calculated based on defaults that are possible in next twelve months, whereas for financial instrument in stage 2 and stage 3 the ECL calculation considers default event for the lifespan of the instrument.

As per Ind AS 109, the Company assesses whether there is a significant increase in credit risk at the reporting date from the initial recognition. The Company has staged the assets based on the days past dues criteria and other market factors which significantly impacts the loan portfolio.

Company''s internal grades and staging criteria for loans are as follows:

(iv) Management overlay

The Company holds a management and macro-economic overlay of '' 18.79 crores as at 31 March 2024 (31 March 2023: '' 20.03 crores).

(v) Modification of financial assets

The Company has modified the terms of certain loans provided to customers in accordance with RBI notification on MSME restructuring dated 6 August 2020 and 5 May 2021. Such restructuring benefits are provided to distressed customers who are impacted by COVID-19 pandemic.

Such restructuring benefits include extended payment term arrangements, moratorium and changes in interest rates. The risk of default of such assets after modification is assessed at the reporting date and compared with the risk under the original terms at initial recognition, when the modification is not substantial and so does not result in derecognition of the original asset (refer note 3.5). The Company monitors the subsequent performance of modified assets. The gross carrying amount of such assets held as at 31 March 2024 is '' 0.47 crores (31 March 2023: '' 2.73 crores). Overall provision for expected credit loss against restructured loan exposure amounts to '' 0.13 crores as at 31 March 2024 (31 March 2023: '' 1.06 crores). The Company continues to monitor if there is a subsequent significant increase in credit risk in relation to such assets.

(b) Cash and cash equivalent and bank deposits

"Credit risk on cash and cash equivalent and bank deposits is limited as the Company generally invests in term deposits with banks which are subject to an insignificant risk of change in value.

43.2 Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting its obligations associated with its financial liabilities. The Company''s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due.

The Company is monitoring its liquidity risk by estimating the future inflows and outflows during the start of the year and planned accordingly the funding requirement. The Company manages its liquidity by unutilised cash credit facility, term loans and direct assignment of loans.

The composition of the Company''s liability mix ensures healthy asset liability maturity pattern and well diverse resource mix.

The total cash credit limit available to the Company is '' 1690 Crore spread across 14 banks. The utilization level is maintained in such a way that ensures sufficient liquidity on hand.

RBI has mandated minimum liquidity coverage ratio (LCR) of 50% to be maintained by December 2021, which is to be gradually increased to 100% by December 2024. The Company has LCR of 547.22 % as of 31 March 2024 as against the LCR of 50% mandated by RBI.

B. Foreign currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Foreign currency risk for the Company arises majorly on account of foreign currency borrowings. The Company''s foreign currency exposures are managed in accordance with its Foreign Exchange Risk Management Policy which has been approved by its Board of Directors. The Company has hedged its foreign currency risk on its foreign currency borrowings as on March 31, 2024 by entering into forward contracts with the intention of covering the entire term of foreign currency exposure. The counterparties for such hedge transactions are banks.

46.2 The Company is not a declared wilful defaulter by any bank or financial Institution or other lender, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India, during the year ended 31 March 2024 and 31 March 2023.

46.3 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 during the year ended 31 March 2024 and 31 March 2023.

46.4 All the charges or satisfaction, as applicable are registered with ROC within the statutory period.

46.5 The Company has taken borrowings from banks and financial institutions and utilised them for the specific purpose for which they were taken as at the Balance sheet date. Unutilised funds are held by the Company in the form of deposits or in current accounts till the time the utilisation is made subsequently.

46.6 There have been no transactions which have not been recorded in the books of accounts, that have been surrendered or disclosed as income during the year ended 31 March 2024 and 31 March 2023, in the tax assessments under the Income Tax Act, 1961. There have been no previously unrecorded income and related assets which were to be properly recorded in the books of account during the year ended 31 March 2024 and 31 March 2023.

46.7 As a part of normal lending business, the Company grants loans and advances after exercising proper due diligence. Other than the transactions described above,

(a) No funds have been advanced or loaned or invested by the Company to or in any other person(s) or entity(ies) including foreign entities ("Intermediaries") with the understanding that the Intermediary shall lend or invest in a party identified by or on behalf of the Company (Ultimate Beneficiaries);

(b) No funds have been received by the Company from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly, lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

46.8 The Company has not traded or invested in Crypto currency or Virtual Currency during the year ended 31 March 2024 and 31 March 2023.

46.9 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 31 March 2024 and 31 March 2023.

46.10 The Company has not entered into any scheme of arrangement.

46.11 The company has used accounting software for maintaining its books of account for the financial year ended 31 March 2024 which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all the relevant transactions recorded in the software except that, audit trail feature was not enabled at database level for accounting software to log any direct data changes. Further, there has been no instance of the audit trail feature being tempered with in respect of such accounting software where such feature is enabled.

actual repayment of this loan will be made as per the original repayment terms as per the original Indian Rupee Long term Borrowing. Accordingly, the maturity pattern in this table is considered as per the applicable tenure of the original INR Borrowing. The amount of such Foreign currency loan outstanding as at 31 March 2024 is '' 577.04 Crore.

47.5 Exposure to Real Estate Sector: Refer note 51 (A) (1) for details

47.6 Exposure to Capital Market: Refer note 51 (A) (2) for details

47.7 Details of financing of parent company products

Not applicable

47.8 details of Single Borrower Limit ("SGL") / Group Borrower Limit ("GBL") exceeded by the NBFc

i) Loans and advances, excluding advance funding but including off-balance sheet exposures to any single party in excess of 15 per cent of owned fund of the NBFC:

Nil

ii) Loans and advances to (excluding advance funding but including debentures/bonds and off-balance sheet exposures) and investment in the shares of single party in excess of 25 per cent of the owned fund of the NBFC:

Nil

47.9 Unsecured advances

a) Refer note 8(B)(ii) to the standalone financial statements.

b) The Company has not granted any advances against intangible securities (31 March 2023: Nil).

47.10 Registration obtained from other financial sector regulators

The Company is registered with RBI and has all its operations in India, it has not obtained registration from any other financial sector regulators during the year.

47.11 Disclosure of penalties imposed by RBI and other regulators

During the year ended 31 March 2024, no penalties have been imposed by RBI and other regulators (31 March 2023: Nil).

47.12 Related party transactions

Refer note 35 to the standalone financial statements.

The impairment allowances under Ind AS 109 made by the Company exceeds the total provision required under IRACP (including standard assets provisioning), as at 31 March 2024 and 31 March 2023 and accordingly, no amount is required to be transferred to impairment reserve.

The disclosure requirement of the policy for sales out of amortised cost business model portfolios of the Company is not applicable to the Company.

54. THE DISCLOSURES AS REQUIRED BY THE MASTER DIRECTION - MONITORING OF FRAUDS IN NBFCS ISSUED By RBI Dated 29 SEpTEMBER 2016

There was 10 instance of fraud by customer amounting to '' 0.87 crores reported during the year ended 31 March 2024. (Previous year 31 March 2023 17 instances : '' 1.89).

55. The Company has complied with the RBI circular dated 12 November 2021 - "Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances - Clarifications''. On 15 February 2022, RBI allowed deferment till 30 September 2022 of Para 10 of this circular pertaining to upgrade of Non performing accounts. However, the Company has not opted for this deferment.

57. Figures of previous year has been regrouped / reclassified, wherever necessary, to correspond with the figures of the current year.

In terms of our report of even date attached For and on behalf of the Board of Directors of

For Mukesh M Shah & Oo. MAS Financial Services Limited

Chartered Accountants Firm''s Registration No: 106625W

Chandresh S. Shah Darshana S. Pandya Kamlesh O. Gandhi

Partner (Director & Chief Executive Officer) (Chairman & Managing Director)

Membership No: 042132 (dIN - 07610402) (DIN - 00044852)

Riddhi B. Bhayani Ankit Jain

(Company Secretary & Compliance Officer) (Chief Financial Officer)

(Membership No: A41206)

Ahmedabad Ahmedabad

24 April 2024 24 April 2024

---

Mar 31, 2023

# The above classification also includes balance of spread receivable on assigned portfolio. (Refer note 10)

* Represents amount less than '' 50,000

** New assets originated are those assets which have either remained in stage 1 or have become stage 2 or 3 at the year end.

In accordance with the board approved moratorium policy read with RBI guidelines dated 27 March 2020, 17 April 2020 and 23 May 2020 relating to ''COVID-19 - Regulatory Package'', the Company had granted moratorium up to six months on the payment of installments which became due between 1 March 2020 and 31 August 2020 to all eligible borrowers.

The Honourable Supreme Court of India in a public interest litigation (Gajendra Sharma vs. Union of India & Anr), vide an interim order dated 3 September 2020 (''interim order''), has directed that no additional borrower accounts shall be classified as impaired (''non-performing assets'' or ''NPA'') which were not declared NPA till 31 August 2020, till further orders. Based on the said interim order, the Company had not classified any standard account as of 31 August 2020 as NPA after 31 August 2020. The Company has classified those accounts as stage 3 and provisioned accordingly for financial reporting purposes.

The interim order granted to not declare accounts as NPA stood vacated on 23 March 2021 vide the judgement of the Hon''ble SC in the matter of Small Scale Industrial Manufacturers Association vs. UOI & Ors, and other connected matters, in accordance with the instructions in paragraph 5 of the RBI circular no. RB1/2021-22/17DOR. STR.REC.4/21.04.048/2021-22 dated 7 April 2021 issued in this connection, the Company had continued with the asset classification of borrower accounts as per the extant RBI instructions / IRAC norms and as per ECL model under Ind AS financial statements for the year ended 31 March 2021 and 31 March 2022.

The contractual amount outstanding on loans that have been written off during the year, but were still subject to enforcement activity is '' 42.65 crores at 31 March 2023 (31 March 2022: '' 30.11 crores).

The increase in ECL was driven by an increase in the gross amount of the portfolio, movements between stages as a result of increase in credit risk, change in probability of default, macro economic factors and management overlays due to estimated macro-economic factors. The extent to which macro-economic factors will impact current estimates of ECL is uncertain at this point of time. The Company has conducted a qualitative assessment and has considered forecasted macro economic factors and a higher probability of default to factor on impairment allowances. For further details, refer note 44.

8.3 Credit quality of loan assets

The table below shows the gross carrying amount of loans based on the Company''s internal grades and year-end stage classification of loans. The amounts presented are gross of impairment allowances. Details of the Company''s internal grades are explained in note 44.1.

(c) Capital work in progress

Capital work in progress includes borrowing costs related to development of building amounted to '' 1.24 crores (31 March 2022: '' 1.46 crores and 1 April 2021: '' 1.81 crores). Finance costs are capitalised using rates based on specific borrowing rate i.e. 8.91% for the year ended 31 March 2023.

For Cash credit / Overdraft and short term loans

(a) Cash credit / short term loans from banks are secured by hypothecation of movable assets of the Company and goods covered under hypothecation ("HP") agreements / Loan cum HP agreements and book debts, receivables, loans and advances and entire portfolio outstanding (except specific portfolio generated from various term loans sanctioned by various banks/financial institutions on an exclusive basis) and equitable mortgage/negative lien by deposit of title deeds on some of the Company''s immovable properties, as collateral security. The loans are also guaranteed by Mr. Kamlesh Chimanlal Gandhi, Mrs. Shweta Kamlesh Gandhi and Legal heirs of Late Mr. Mukesh Chimanlal Gandhi. Overdraft loans are secured against fixed deposits placed.

(b) Interest rate range

Interest rate ranges from 7.45 % p.a. to 11.55 % p.a. as at 31 March 2023.

Interest rate ranges from 2.90% p.a. to 11.00% p.a. as at 31 March 2022.

Interest rate ranges from 7.65% p.a. to 12.00% p.a. as at 1 April 2021.

The Company has not defaulted in repayment of borrowings and interest.

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

The carrying amount of financial assets which is hypothecated against all secured borrowing inclusive of margin requirement ranging from 1.10 times to 1.25 times is amounting to '' 6291.38 crores (31 March 2022: '' 4,562.37 crores, 1 April 2021: '' 3,825.80 crores).

20.3 The Company has neither allotted any share pursuant to contracts without payment being received in cash nor has it bought back any shares during the preceding period of 5 financial years.

20.4 Terms / rights attached to equity shares

The Company has one class of equity shares having a par value of '' 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation of the Company, the equity shareholders will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

21.1 Nature and purpose of reserve

1. Reserve u/s. 45-IC of the Reserve Bank of India Act, 1934 (the "RBI Act, 1934")

Reserve u/s. 45-IC of RBI Act, 1934 is created in accordance with section 45 IC(1) of the RBI Act, 1934. As per Section 45 IC(2) of the RBI Act, 1934, no appropriation of any sum from this reserve fund shall be made by the NBFC except for the purpose as may be specified by RBI.

2. Securities premium

Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes in accordance with the provisions of section 52 of the Act.

3. Retained earnings

Retained earnings is the accumulated available profit of the Company carried forward from earlier years. These reserve are free reserves which can be utilised for any purpose as may be required.

The Company recognises change on account of remeasurement of the net defined benefit liability (asset) as part of retained earnings with separate disclosure, which comprises of:

i) actuarial gains and losses;

ii) return on plan assets, excluding amounts included in net interest on the net defined benefit liability (asset); and

iii) any change in the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability (asset).

4. Other comprehensive income On equity investments

The Company has elected to recognise changes in the fair value of investments in equity securities (other than investment in subsidiary) in other comprehensive income. These changes are accumulated within the FVOCI equity investments reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

On loans

The Company has elected to recognise changes in the fair value of loans and advances in other comprehensive income. These changes are accumulated within the FVOCI - loans and advances reserve within equity. The Company transfers amounts from this reserve to the statement of profit and loss when the loans and advances are sold. Further, impairment loss allowances on the loans are recognised in OCI.

32. CHANGES IN ACCOUNTING POLICIES

The accounting policies and practices followed in the preparation of the standalone financial statements for the year ended 31 March 2023 are the same as those followed in the preparation of the standalone financial statements for the year ended 31 March 2022, except for the change in accounting policy as explained in below paras.

Till 31^st December 2022, gain on assignment of financial asset was recognised as ''unearned income on assigned loans'' under the head ''other non-financial liabilities'' and was amortised in the statement of profit and loss over the period of the underlying residual tenure of the assigned loan portfolio. Such policy was adopted by the management for more prudent and fair presentation of financial statements by exercising their judgement under para 19 of Ind AS 1 "Presentation of financial statements". During the quarter ended 31 March 2023, the Company has received a directive from the Reserve Bank of India to book such gain upfront in the statement of profit and loss in accordance with Ind AS 109 instead of amortising it over the period of the underlying residual tenure of the assigned loan portfolio.

The new accounting policy has been implemented retrospectively and being presented from the beginning of the earliest period i.e. 1 April 2021. On account of new policy, in case of derecognition of loans upon assignment prior to 1 April 2021, where underlying residual terms of the assigned portfolio was falling on or after 1 April 2021, the Company has increased other equity by '' 32.40 crores, decreased the deferred tax assets by '' 10.91 crores and decreased unearned income on assigned loans under the head other non-financial liabilities of '' 43.31 crores.

Had the Company not revised its policy, the other equity would have decreased by '' 30.95 crores, deferred tax assets would have increased by '' 10.42 crores, liability on unearned income would have increased by '' 41.37 crores as at 31 March 2023 and the gain on assignment (on amortised basis) would have been '' 69.60 Crore for the year ended 31 March 2023. As per the new policy, the Company has recognized gain on assignment of '' 68.04 crores for the year ended 31 March 2023. Accordingly, gain on assignment would have increased by '' 1.56 crores and deferred tax expense would have increased by '' 0.39 crores for the year ended 31 March 2023.

As per the requirement of Ind AS 8, the Company has restated the financial information of previous financial year 2021-22 to reflect the change in accounting policy as explained above. The following table summarises the reconciliation of figures restated with previously reported figures. The tables show the adjustments recognised for each individual line item.

33. CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR) ('' In Crores)
	As at 31 March 2023	As at As at 31 March 2022 1 April 2021
(A) Contingent liabilities
I) In respect of disputed income-tax matters : (Refer note i)	0.12	- -
II) Guarantees given on behalf of subsidiary company: (Refer note ii)
a) To banks
Amount of guarantees '' Nil (31 March 2022: Nil and 1 April 2021: '' 10 crores)
Amount of loans outstanding	-	- 1.07
b) To National Housing Bank ("NHB")
Amount of guarantees '' 5 crores (31 March 2022: '' 5 crores and 1 April 2021: '' 5 crores)
Amount of loan outstanding	0.79	1.11 1.44
(B) Commitments
I) Estimated amount of contracts remaining to be executed on capital account and not provided for:
Property, plant & equipment and Capital work in progress	1.39	1.38 -
II) Loan commitments for sanctioned but not disbursed amount	-	45.00 1.35

Notes:

i) After adjusting the amount of refund claimed by the company amounting '' 0.33 Crore.

ii) Guarantees have been given by the Company to various banks and NHB on behalf of the subsidiary company for the loan taken and accordingly, the same has been shown as contingent liability.

34. CORPORATE SOCIAL RESPONSIBILITY ("CSR") EXPENSES:

The average profit before tax of the Company for the last three financial years was '' 213.01 crores, basis which the Company was required to spend '' 4.26 crores towards CSR activities for the current financial year (31 March 2021: '' 4.41 crores).

Note: Unspent CSR amount of '' 3.84 crores and '' 3.99 crores for FY 2020-21 and FY 2021-22 respectively was deposited in unspent CSR bank account on 28 April 2021 and 25 April 2022 respectively. Unspent amount of '' 3.98 crores available with the Company is transferred to an unspent CSR account on 27 April 2023

d) Reason for shortfall: The Company has on-going projects and it is spending the said amount as per pre-approved on-going projects. For more details, refer annexure of Director''s report on CSR.

e) Nature of CSR activities: Promoting education, eradicating hunger, poverty & malnutrition, promoting health care and such other activities. For more details, refer annexure of Director''s report on CSR.

35. SEGMENT REPORTING:

Operating segment are components of the Company whose operating results are regularly reviewed by the Chief Operating Decision Maker ("CODM") to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available.

The Company is engaged primarily on the business of "Financing" only, taking into account the risks and returns, the organization structure and the internal reporting systems. All the operations of the Company are in India. All non-current assets of the Company are located in India. Accordingly, there are no separate reportable segments as per Ind AS 108 - "Operating segments".

Financial guarantee commission income amounts to '' 0.01 crores (31 March 2022: '' 0.01 crores) on account of fair valuation of corporate financial guarantee given to bank on behalf of subsidiary.

All transactions with these related parties are priced on an arm''s length basis. None of the balances is secured.

Key managerial personnel who are under the employment of the Company are entitled to post employment benefits and other employee benefits recognised as per Ind AS 19 - Employee Benefits in the financial statements.

38. EVENTS AFTER THE REPORTING PERIOD

Ind AS 10 ''Events after the Reporting Period'', requires an entity to evaluate information available after the balance sheet date to determine if such information constitutes an adjusting event, which would require an adjustment to the financial statements, or a non-adjusting event, which would only require disclosure. There have been no events after the reporting date that require disclosure in these financial statements.

41. EMPLOYEE BENEFIT PLAN

Disclosure in respect of employee benefits under Ind AS 19 - Employee Benefits are as under:

(a) Defined contribution plan

The Company''s contribution to provident fund and employee state insurance scheme are considered as defined contribution plans. The Company''s contribution to provident fund aggregating '' 1.61 crores (31 March 2022: '' 1.29 crores) and employee state insurance scheme aggregating '' 0.12 crores (31 March 2022: '' 0.13 crores) has been recognised in the statement of profit and loss under the head employee benefits expense.

(b) Defined benefit plan:

Gratuity

Financial assets not measured at fair value

The Company operates a defined benefit plan (the "gratuity plan") covering eligible employees. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age/ resignation date.

The defined benefit plans expose the Company to risks such as actuarial risk, investment risk, liquidity risk, market risk, legislative risk. These are discussed as follows:

Actuarial risk: It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:

Adverse salary growth experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in obligation at a rate that is higher than expected.

Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the gratuity benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.

Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption than the gratuity benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.

Investment risk: For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.

Liquidity risk: Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign / retire from the Company, there can be strain on the cash flows.

Market risk: Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in defined benefit obligation of the plan benefits and vice versa. This assumption depends on the yields on the government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.

Legislative risk: Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/regulation. The government may amend the Payment of Gratuity Act, 1972, thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the defined benefit obligation and the same will have to be recognized immediately in the year when any such amendment is effective.

The discount rate is based on the prevailing market yields of Government of India''s bond as at the balance sheet date for the estimated term of the obligations.

viii. Sensitivity analysis

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and withdrawal rates. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis is given below:

ix. Asset liability matching strategies

The Company contributes to the insurance fund based on estimated liability of next financial year end. The projected liability statements is obtained from the actuarial valuer.

x. Effect of plan on the Company''s future cash flows

a) Funding arrangements and funding policy

The Company has purchased an insurance policy to provide for payment of gratuity to the employees. Every year, the insurance company carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company.

(c) Other long term employee benefits

The liability for compensated absences is '' 0.16 crores (31 March 2022: '' 0.17 crores and 1 April 2021: '' 0.07 crores). Code on Social Security, 2020

The Indian Parliament has approved the Code on Social Security, 2020 which subsumes the provident fund Act and the gratuity Act and rules there under. The Ministry of Labour and Employment has also released draft rules thereunder on 13 November 2020 and has invited suggestions from stakeholders which are under active consideration by the Ministry of Labour and Employment. The Company will evaluate the rules, assess the impact, if any, and account for the same once the rules are notified and become effective.

42. FINANCIAL INSTRUMENT AND FAIR VALUE MEASUREMENT

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price), regardless of whether that price is directly observable or estimated using a valuation technique.

In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques.

This note describes the fair value measurement of both financial and non-financial instruments.

A. Measurement of fair values

i) Financial instruments - fair value

The fair value of financial instruments as referred to in note (B) below have been classified into three categories depending

on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurement).

The categories used are as follows:

Level 1: Quoted prices (unadjusted) in active markets for financial instruments

Level 2: The fair value of financial instruments that are not traded in active market is determined using valuation technique which maximizes the use of observable market data and rely as little as possible on entity specific estimates. If all significant inputs required to fair value on instrument are observable, the instrument is included in level 2; and

Level 3: If one or more of significant input is not based on observable market data, the instrument is included in level 3.

ii) Transfers between levels 1 and 2

There has been no transfer in between level 1 and level 2.

iii) Valuation techniques Loans

The Company has computed fair value of the loans and advances through OCI considering its business model. These have been fair valued using the base of the interest rate of loan disbursed in the last month of the year end which is an unobservable input and therefore these has been considered to be fair valued using level 3 inputs.

Investments measured at FVTPL

Fair values of market linked debentures and mutual funds have been determined under level 1 using quoted market prices(unadjusted) of the underlying instruments. Fair value of investment in alternate investment funds have been determined under level 2 using observable input. For fair value of investment in OCPS of subsidiary, the Company has used incremental borrowing rate and applied discounted cash flow model and accordingly measured under level 3.

43. CAPITAL

The Company maintains an actively managed capital base to cover risks inherent in the business and is meeting the capital adequacy requirements of the regulator, RBI. The adequacy of the Company''s capital is monitored using, among other measures, the regulations issued by RBI.

The Company has complied in full with all its externally imposed capital requirements over the reported period. Equity share capital and other equity are considered for the purpose of Company''s capital management.

43.1 Capital management

The primary objectives of the Company''s capital management policy are to ensure that the Company complies with externally imposed capital requirements and maintains strong credit ratings and healthy capital ratios in order to support its business and to maximise shareholder value.

The Company manages its capital structure and makes adjustments to it according to changes in economic conditions and the risk characteristics of its activities. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend payment to shareholders, return capital to shareholders or issue capital securities. No changes have been made to the objectives, policies and processes from the previous years. However, they are under constant review by the Board.

44. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company''s principal financial liabilities comprise borrowings and trade payables. The main purpose of these financial liabilities is to finance the Company''s operations and to support its operations. The Company''s financial assets mainly includes loan and advances, cash and cash equivalents that derive directly from its operations.

The Company is exposed to credit risk, liquidity risk and market risk. The Company''s board of directors has an overall responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors has established the risk management committee, which is responsible for developing and monitoring the Company''s risk management policies. The committee reports regularly to the board of directors on its activities.

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.

The Company''s risk management committee oversees how management monitors compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

44.1 Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counter-party to financial instrument fails to meet its contractual obligations and arises principally from the Company''s loans and investments.

The carrying amounts of financial assets represent the maximum credit risk exposure.

(a) Loans and advances

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry.

The Company has established a credit policy under which each new customer is analysed individually for creditworthiness before sanctioning any loan. The Company''s review includes external ratings, if they are available, financial statements, credit agency information, industry information, the loan-to-value ratio etc.

Narrative Description of Collateral

Collateral primarily include vehicles purchased by retail loan customers and machinery & property in case of SME customers. The secured exposure are secured wholly or partly by hypothecation of assets and undertaking to create a security.

An impairment analysis is performed at each reporting date based on the facts and circumstances existing on that date

to identify expected losses on account of time value of money and credit risk. For the purposes of this analysis, the loans are categorised into groups based on days past due. Each group is then assessed for impairment using the ECL model as per the provisions of Ind AS 109 - financial instruments.

(i) Staging:

As per the provision of Ind AS 109, all financial instruments are allocated to stage 1 on initial recognition. However, if a significant increase in credit risk is identified at the reporting date compared with the initial recognition, then an instrument is transferred to stage 2. If there is objective evidence of impairment, then the asset is credit impaired and transferred to stage 3.

The Company considers a financial instrument defaulted and therefore Stage 3 (credit-impaired) for ECL calculations in all cases when the borrower becomes due by more than 90 days on its contractual payments.

For financial assets in stage 1, the impairment calculated based on defaults that are possible in next twelve months, whereas for financial instrument in stage 2 and stage 3 the ECL calculation considers default event for the lifespan of the instrument.

As per Ind AS 109, the Company assesses whether there is a significant increase in credit risk at the reporting date from the initial recognition. The Company has staged the assets based on the days past dues criteria and other market factors which significantly impacts the loan portfolio.

(ii) Grouping:

As per Ind AS 109, Company is required to group the portfolio based on the shared risk characteristics. The Company has assessed the risk and its impact on the various portfolios and has divided the portfolio into following groups:

a. Two wheeler loans

b. Micro enterprise loans

c. Salaried personal loans

d. Small and medium enterprise loans

e. Commercial vehicle loans

f. Retail asset channel loans

(iii) ECL:

ECL on financial assets is an unbiased probability weighted amount based out of possible outcomes after considering risk of credit loss even if probability is low. ECL is calculated based on the following components:

a. Probability of default (""PD")

b. Loss given default ("LGD")

c. Exposure at default ("EAD")

d. Discount factor ("D")

For RAC loan portfolio, the Company has developed internal rating based approach for the purpose of ECL. The credit rating framework of the Company consists of various parameters based on which RAC loan portfolio is evaluated and credit rating is assigned accordingly. The credit rating matrix developed by the Company is validated in accordance with its ECL policy.

The Company has developed its PD matrix based on the external benchmarking of external reports, external ratings and Basel norms. This PD matrix is calibrated with its historical data and major events on regular time interval in accordance with its ECL policy.

Probability of default:

PD is defined as the probability of whether borrowers will default on their obligations in the future. Historical PD is derived from internal data of the Company calibrated with forward looking macroeconomic factors.

For computation of probability of default ("PD"), Vasicek Single Factor Model was used to forecast the PD term structure over lifetime of loans. As per Vasicek model, given long term PD and current macroeconomic conditions, conditional PD corresponding to current macroeconomic condition is estimated. The Company has worked out PD based on the last five years historical data.

The PDs derived from the Vasicek model, are the cumulative PDs, stating that the borrower can default in any of the given years, however to compute the loss for any given year, these cumulative PDs are converted to marginal PDs. Marginal PDs is probability that the obligor will default in a given year, conditional on it having survived till the end of the Current year.

As per Ind AS 109, expected loss has to be calculated as an unbiased and probability-weighted amount for multiple scenarios.

The probability of default was calculated for 3 scenarios: upside (11%), downside (21%) and base (68%). This weightage has been decided on best practices and expert judgement. Marginal conditional probability was calculated for all 3 possible scenarios and one conditional PD was arrived as conditional weighted probability.

Loss given default:

LGD is an estimate of the loss from a transaction given that a default occurs. Under Ind AS 109, lifetime LGD''s are defined as a collection of LGD''s estimates applicable to different future periods.

Various approaches are available to compute the LGD. The Company has considered workout LGD approach. The following steps are performed to calculate the LGD:

1) Analysis of historical credit impaired accounts at cohort level.

2) The computation consists of four components, which are:

a) Outstanding balance (POS)

b) Recovery amount (discounted yearly) by effective interest rate.

c) Expected recovery amount (for incomplete recoveries), discounted to reporting date using effective interest rate.

d) Collateral (security) amount.

The formula for the computation is as below:

% Recoveryrate=(discountedrecoveryamount securityamount discounted estimated recovery)/(total outstandingbalance) % LGD = 1 - recovery rate

For RAC loan portfolio, the LGD has been considered based on Basel-II Framework for all the level of credit rating portfolio. Exposure at default:

As per Ind AS 109, EAD is estimation of the extent to which the financial entity may be exposed to counterparty in the event of default and at the time of counterparty''s default. The Company has modelled EAD based on the contractual and behavioural cash flows till the lifetime of the loans considering the expected assignment of loans.

The Company has considered expected cash flows for all the loans at DPD bucket level for each of the segments, which was used for computation of ECL. The exposure at default is calculated for each product and for various DPD status after considering future expected assignment which is not at risk. Moreover, the EAD comprised of principal component, accrued interest and also the future interest for the outstanding exposure of retail loans. Further, the EAD for stage 3 retail loans are the outstanding exposures at the time loan is classified as Stage 3 for the first time.

Discounting:

As per Ind AS 109, ECL on retail loans is computed by estimating the timing of the expected credit shortfalls associated with the defaults and discounting them using effective interest rate.

ECL computation:

Conditional ECL at DPD pool level was computed with the following method:

Conditional retail ECL for year (yt) = EAD (yt) * conditional PD (yt) * LGD (yt) * discount factor (yt)

Conditional RAC ECL for year (yt) = EAD (yt) * conditional PD (yt) * LGD (yt)

For RAC loan portfolio, the Company has calculated ECL based on borrower wise assessment of internal credit rating as per the framework of the Company, while for retail loan portfolio, the same has been calculated on collective basis.

The loss rates are based on actual credit loss experience over past 5 years. These loss rates are then adjusted appropriately to reflect differences between current and historical economic conditions and the Company''s view of economic conditions over the expected lives of the loan receivables.

(iv) Management overlay

The Company holds a management and macro-economic overlay of '' 20.03 crores as at 31 March 2023 (31 March 2022: '' 37.84 crores and 1 April 2021 : '' 56.23 crores).

(v) Modification of financial assets

The Company has modified the terms of certain loans provided to customers in accordance with RBI notification on MSME restructuring dated 6 August 2020 and 5 May 2021. Such restructuring benefits are provided to distressed customers who are impacted by COVID-19 pandemic.

Such restructuring benefits include extended payment term arrangements, moratorium and changes in interest rates. The risk of default of such assets after modification is assessed at the reporting date and compared with the risk under the original terms at initial recognition, when the modification is not substantial and so does not result in derecognition of the original asset (refer note 3.5). The Company monitors the subsequent performance of modified assets. The gross carrying amount of such assets held as at 31 March 2023 is '' 2.73 crores (31 March 2022: '' 16.16 crores and 1 April 2021: '' 4.46 crores). Overall provision for expected credit loss against restructured loan exposure amounts to '' 1.06 crores as at 31 March 2023 (31 March 2022: '' 1.78 crores and 1 April 2021: '' 1.12 crores). The Company continues to monitor if there is a subsequent significant increase in credit risk in relation to such assets.

(b) Cash and cash equivalent and bank deposits

Credit risk on cash and cash equivalent and bank deposits is limited as the Company generally invests in term deposits with banks which are subject to an insignificant risk of change in value.

44.2 Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting its obligations associated with its financial liabilities. The Company''s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due.

The Company is monitoring its liquidity risk by estimating the future inflows and outflows during the start of the year and planned accordingly the funding requirement. The Company manages its liquidity by unutilised cash credit facility, term loans and direct assignment of loans.

The composition of the Company''s liability mix ensures healthy asset liability maturity pattern and well diverse resource mix.

The total cash credit limit available to the Company is '' 1690 Crore spread across 14 banks. The utilization level is maintained in such a way that ensures sufficient liquidity on hand.

RBI has mandated minimum liquidity coverage ratio (LCR) of 50% to be maintained by December 2021, which is to be gradually increased to 100% by December 2024. The Company has LCR of 508.67% as of 31 March 2023 as against the LCR of 50% mandated by RBI.

The Management expects to continue to maintain around 20% to 25% of assets under management as off book through direct assignment transactions. It is with door to door maturity and without recourse to the Company. This further strengthens the liability management.

44.3 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 includes interest rate risk and foreign currency risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

A. Interest rate risk

I nterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s investment and variable interest rate borrowings and lending.

The sensitivity analysis have been carried out based on the exposure to interest rates for lending and borrowings carried at variable rate and investments made by the Company.

B. Foreign currency risk

The Company does not have any instrument denominated or traded in foreign currency. Hence, such risk does not affect the Company.

45. LEASE DISCLOSURE Where the Company is the lessee

The Company has entered into agreements for taking its office premises under leave and license arrangements. These agreements are for tenures between 11 months and 5 years and majority of the agreements are renewable by mutual consent on mutually agreeable terms, lease rentals have an escalation ranging between 5% to 15%. Leases for which the lease term is less than 12 months have been accounted as short term leases.

Title deeds of all immovable properties of the Company are held in name of the Company. Further all the lease agreements are duly executed in favour of the Company for properties where the Company is the lessee.

46. TRANSFER OF FINANCIAL ASSETS

46.1 Transferred financial assets that are not derecognised in their entirety

The following table provides a summary of financial assets that have been transferred in such a way that part or all of the transferred financial assets do not qualify for derecognition, together with the associated liabilities:

46.2 Transferred financial assets that are derecognised in their entirety

The Company has assigned loans by way of direct assignment. As per the terms of these deals, since substantial risk and rewards related to these assets were transferred to the extent of exposure net of MRR to the buyer, the assets have been derecognised from the Company''s Balance Sheet. The table below summarises the carrying amount of the derecognised financial assets :

46.3 Transferred financial assets that are derecognised in their entirety but where the Company has continuing involvement

The Company has not transferred any assets that are derecognised in their entirety where the Company continues to have continuing involvement.

47. ADDITIONAL DISCLOSURES:

47.1 No proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder, as at 31 March 2023, 31 March 2022 and 1 April 2021.

47.2 The Company is not a declared wilful defaulter by any bank or financial Institution or other lender, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India, during the year ended 31 March 2023 and 31 March 2022.

47.3 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 during the year ended 31 March 2023 and 31 March 2022.

47.4 All the charges or satisfaction, as applicable are registered with ROC within the statutory period.

47.5 The Company has taken borrowings from banks and financial institutions and utilised them for the specific purpose for which they were taken as at the Balance sheet date. Unutilised funds are held by the Company in the form of deposits or in current accounts till the time the utilisation is made subsequently.

47.6 There have been no transactions which have not been recorded in the books of accounts, that have been surrendered or disclosed as income during the year ended 31 March 2023 and 31 March 2022, in the tax assessments under the Income Tax Act, 1961. There have been no previously unrecorded income and related assets which were to be properly recorded in the books of account during the year ended 31 March 2023 and 31 March 2022.

47.7 As a part of normal lending business, the Company grants loans and advances after exercising proper due diligence. Other than the transactions described above,

(a) No funds have been advanced or loaned or invested by the Company to or in any other person(s) or entity(ies) including foreign entities ("Intermediaries") with the understanding that the Intermediary shall lend or invest in a party identified by or on behalf of the Company (Ultimate Beneficiaries);

(b) No funds have been received by the Company from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly, lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

47.8 The Company has not traded or invested in Crypto currency or Virtual Currency during the year ended 31 March 2023 and 31 March 2022.

47.9 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 31 March 2023 and 31 March 2022.

47.10 The Company has not entered into any scheme of arrangement.

48.5 Exposure to Real Estate Sector: Refer note 52 (A) (1) for details

48.6 Exposure to Capital Market: Refer note 52 (A) (2) for details

48.7 Details of financing of parent company products

Not applicable

48.8 Details of Single Borrower Limit ("SGL'') / Group Borrower Limit ("GBL'') exceeded by the NBFC

i) Loans and advances, excluding advance funding but including off-balance sheet exposures to any single party in excess of 15 per cent of owned fund of the NBFC:

Nil

ii) Loans and advances to (excluding advance funding but including debentures/bonds and off-balance sheet exposures) and investment in the shares of single party in excess of 25 per cent of the owned fund of the NBFC:

Nil

48.9 Unsecured advances

a) Refer note 8(B)(ii) to the standalone financial statements.

b) The Company has not granted any advances against intangible securities (31 March 2022: Nil).

48.10 Registration obtained from other financial sector regulators

The Company is registered with RBI and has all its operations in India, it has not obtained registration from any other financial sector regulators during the year.

48.11 Disclosure of penalties imposed by RBI and other regulators

During the year ended 31 March 2023, no penalties have been imposed by RBI and other regulators (31 March 2022: Nil).

48.12 Related party transactions

Refer note 36 to the standalone financial statements.

48.13 Ratings assigned by credit rating agencies and migration of ratings during the year

48.14 Remuneration of directors

Refer note 36 to the standalone financial statements.

48.15 Management Discussion and Analysis

The annual report has a detailed chapter on Management Discussion and Analysis.

48.16 Net profit or loss for the period, prior period items and change in accounting policies

The Company does not have any prior period items during the current year other than those disclosed in financials. Refer note 32 for change in accounting policy.

48.17 Revenue recognition

Refer note 3.1 to the standalone financial statements.

48.18 Ind AS 110 - consolidated financial statements (CFS)

The Company has prepared Consolidated Financial Statements in accordance with the requirements of Ind AS 110 -Consolidated Financial Statements.

The LCR is one of the key parameters closely monitored by RBI to enable a more resilient financial sector. The objective of the LCR is to promote an environment wherein balance sheet carry a strong liquidity for short term cash flow requirements. To ensure strong liquidity NBFCs are required to maintain adequate pool of unencumbered High-Quality Liquid Assets (HQLA) which can be easily converted into cash to meet their stressed liquidity needs for 30 calendar days. The LCR is expected to improve the ability of financial sector to absorb the shocks arising from financial and/or economic stress, thus reducing the risk of spill over from financial sector to real economy.

The Liquidity Risk Management of the Company is managed by the Asset Liability Committee (ALCO) under the governance of Board approved Liquidity Risk Framework and Asset Liability Management policy. The LCR levels for the balance sheet date is derived by arriving the stressed expected cash inflow and outflow for the next calendar month. To compute stressed cash outflow, all expected and contracted cash outflows are considered by applying a stress of 15%. Similarly, inflows for the Company is arrived at by considering all expected and contracted inflows by applying a haircut of 25%.

HQLA primarily includes cash on hand, bank balances in current accounts and free fixed deposit against which overdraft facility has been availed off net of availed overdraft.

The LCR is computed by dividing the stock of HQLA by its total net cash outflows over one-month stress period. LCR guidelines requires NBFCs to maintain minimum LCR of 60% and 50% as on 31 March 2023 and 31 March 2022 respectively which is gradually required to be increased to 100% by 1 December 2024.

The disclosure requirement of the policy for sales out of amortised cost business model portfolios of the Company is not applicable to the Company.

55. THE DISCLOSURES AS REQUIRED BY THE MASTER DIRECTION - MONITORING OF FRAUDS IN NBFCS ISSUED BY RBI DATED 29 SEPTEMBER 2016

There was 17 instance of fraud by customer amounting to '' 1.89 crores reported during the year ended 31 March 2023. (Previous year: Nil).

56. The Company has complied with the RBI circular dated 12 November 2021 - "Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances - Clarifications''. On 15 February 2022, RBI allowed deferment till 30 September 2022 of Para 10 of this circular pertaining to upgrade of Non performing accounts. However, the Company has not opted for this deferment.

58. Figures of previous year has been regrouped / reclassified, wherever necessary, to correspond with the figures of the current year.

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Mar 31, 2019

1. CORPORATE INFORMATION

MAS Financial Services Limited (the "Company") is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. It is registered as a non deposit taking non-banking finance Company ("NBFC") with Reserve Bank of India ("RBI"). The Company is engaged in the business of providing Micro Enterprise loans ("MEL"), Small and Medium Enterprise loans ("SME"), Two Wheeler loans ("TW"), Commercial Vehicle loans ("CV") and loans to NBFCs - to create the underlying assets of MEL, SME, TW and CV. Its shares are listed on two recognised stock exchanges in India i.e. BSE Limited ("BSE") and the National Stock Exchange of India Limited ("NSE").

The Company''s registered office is at 6, Ground Floor, Narayan Chambers, Behind Patang Hotel, Ashram Road, Ahmedabad-380009, Gujarat, India.

2. BASIS OF PREPARATION

2.1 Statement of compliance

The standalone financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (the "Ind AS") prescribed under section 133 of the Companies Act, 2013 (the "Act").

For all periods up to and including the year ended 31 March 2018, the Company had prepared its standalone financial statements in accordance with accounting standards notified under section 133 of the Act, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP or previous GAAP). These standalone financial statements for the year ended 31 March 2019 are the Company''s first financial statements prepared in accordance with Ind AS.

2.2 Basis of measurement

The standalone financial statements have been prepared on historical cost basis except for following assets and liabilities which have been measured at fair value amount:

i) Loans and investment in equity instruments at fair value through other comprehensive income ("FVOCI") and

ii) Defined benefit plans - plan assets

2.3 Functional and presentation currency

The standalone financial statements are presented in Indian Rupees (?) which is the currency of the primary economic environment in which the Company operates (the "functional currency"). The values are rounded to the nearest lakhs, except when otherwise indicated.

2.4 Use of estimates, judgements and assumptions

The preparation of the standalone financial statements in conformity with Ind AS requires management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Judgements

In the process of applying the Company''s accounting policies, management has made judgements, which have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year.

i) Business model assessment

Classification and measurement of financial assets depends on the results of business model and the solely payments of principal and interest ("SPPI") test. The Company determines the business model at a level that reflects how groups of financial assets are managed together to achieve a particular business objective. This assessment includes judgement reflecting all relevant evidence including how the performance of the assets is evaluated and their performance measured, the risks that affect the performance of the assets and how these are managed and how the managers of the assets are compensated. The Company monitors financial assets measured at amortised cost or fair value through other comprehensive income that are derecognised prior to their maturity to understand the reason for their disposal and whether the reasons are consistent with the objective of the business for which the asset was held. Monitoring is part of the Company''s continuous assessment of whether the business model for which the remaining financial assets are held continues to be appropriate and if it is not appropriate whether there has been a change in business model and so a prospective change to the classification of those assets.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the standalone financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

i) Fair value of financial instruments

The fair value of financial instruments is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price) regardless of whether that price is directly observable or estimated using another valuation technique. When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of valuation models. The inputs to these models are taken from observable markets where possible, but where this is not feasible, estimation is required in establishing fair values. For further details about determination of fair value refer note 3.9 and note 43.

ii) Effective interest rate ("EIR") method

The Company''s EIR methodology, as explained in Note 3.1(A), recognises interest income / expense using a rate of return that represents the best estimate of a constant rate of return over the expected behavioral life of loans given / taken and recognises the effect of potentially different interest rates at various stages and other characteristics of the product life cycle (including prepayments and penalty interest and charges).

This estimation, by nature, requires an element of judgement regarding the expected behavior and lifecycle of the instruments, as well as expected changes to interest rates and other fee income/ expense that are integral parts of the instrument.

iii) Impairment of financial asset

The measurement of impairment losses across all categories of financial assets requires judgement, in particular, the estimation of the amount and timing of future cash flows and collateral values when determining impairment losses and the assessment of a significant increase in credit risk. These estimates are driven by a number of factors, changes in which can result in different levels of allowances.

The Company''s expected credit loss ("ECL") calculations are outputs of complex models with a number of underlying assumptions regarding the choice of variable inputs and their interdependencies. Elements of the ECL models that are considered accounting judgements and estimates include:

a) The Company''s criteria for assessing if there has been a significant increase in credit risk and so allowances for financial assets should be measured on a life time expected credit loss ("LTECL") basis.

b) Development of ECL models, including the various formulas and the choice of inputs.

c) Determination of associations between macroeconomic scenarios and economic inputs, such as gross domestic products, lending interest rates and collateral values, and the effect on probability of default ("PD"), exposure at default ("EAD") and loss given default ("LGD").

d) Selection of forward-looking macroeconomic scenarios and their probability weightings, to derive the economic inputs into ECL models.

iv) Provisions and other contingent liabilities

The Company operates in a regulatory and legal environment that, by nature, has a heightened element of litigation risk inherent to its operations. As a result, it is involved in various litigation, arbitration and regulatory investigations and proceedings in the ordinary course of the Company''s business.

When the Company can reliably measure the outflow of economic benefits in relation to a specific case and considers such outflows to be probable, the Company records a provision against the case. Where the outflow is considered to be probable, but a reliable estimate cannot be made, a contingent liability is disclosed.

Given the subjectivity and uncertainty of determining the probability and amount of losses, the Company takes into account a number of factors including legal advice, the stage of the matter and historical evidence from similar incidents. Significant judgement is required to conclude on these estimates.

For further details on provisions and other contingencies refer note 3.17.

These estimates and judgements are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances. Management believes that the estimates used in preparation of the standalone financial statements are prudent and reasonable.

2.5 Presentation of the standalone financial statements

The Company presents its balance sheet in order of liquidity. An analysis regarding recovery or settlement within 12 months after the reporting date (current) and more than 12 months after the reporting date (non-current) is presented in Note 41.

Financial assets and financial liability 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 in all of the following circumstances:

i) The normal course of business

ii) The event of default

Note: Cash credit / short term loans from banks are secured by hypothecation of movable assets of the Company and goods covered under hypothecation ("HP") agreements / Loan cum HP agreements and relative book debts, receivables, loans and advances and entire portfolio outstanding (except specific portfolio generated from various term loans sanctioned by various banks/financial institutions on an exclusive basis) and equitable mortgage/negative lien by deposit of title deeds on some of the Company''s immovable properties, as collateral security. The loans are also guaranteed by Mr. Kamlesh Chimanlal Gandhi, Mr. Mukesh Chimanlal Gandhi and Mrs. Shweta Kamlesh Gandhi.

The Company has not defaulted in repayment of borrowings and interest.

NOTE 3.1 TERMS / RIGHTS ATTACHED TO PREFERENCE SHARES

Compulsorily Convertible Cumulative Preference Shares (CCCPS)

(a) 2,17,35,545 CCCPS of the face value of Rs. 10 each carry a right from 17 February 2014 to be paid a fixed cumulative preferential dividend at the rate of 0.01% per annum. These CCCPS were automatically and fully convertible into equity shares, at a conversion price to be determined as per the terms of the agreement, upon the expiry of a period of 13 years from the date of final issuance of these CCCPs i.e. from 13 October 2008. Subsequent to execution of the agreement, on 23 March 2017, the Company had revised conversion terms of the original agreement through "Amendment and Termination Agreement to the Shareholders'' Agreement dated 29 January 2014" pursuant to which these CCCPS were converted into equity shares at a price determined as per the agreement.

(b) 2,17,35,545 CCCPS of the face value of Rs. 10 each carry a right from 17 February 2014 to be paid a fixed cumulative preferential dividend at the rate of 13.31% per annum. These CCCPS were automatically and fully convertible into equity shares, at a conversion price to be determined as per the terms of the agreement, upon the expiry of a period of 7 years from the effective date i.e. from 17 February 2014. Subsequent to execution of agreement, on 23 March 2017, the Company had revised conversion terms of the original agreement through "Amendment and Termination Agreement to the Shareholders'' Agreement dated 29 January 2014" pursuant to which these CCCPS were converted into equity shares at a price determined as per the agreement.

(c) 400 CCCPS of the face value of Rs. 100,000 each carry a right from 13 May 2016 to be paid fixed cumulative preferential dividend at the rate of 9.75% per annum. These CCCPS were automatically and fully convertible into equity shares, at a conversion price of Rs. 1,685 (Rupees one thousand six hundred and eighty five only) per equity share at the end of 10 years, provided however that, the price of these equity shares were subject to the terms and conditions of their issue and the valuation of the Company at the time of conversion of such CCCPS. Under the terms and conditions of issue the Company had right to convert the CCCPS into equity shares during in their tenure from the 5^th till the 10^th year from the issue date. As per the terms and conditions of the issue, the investors had a Put option to convert the CCCPS into equity shares. These shares were converted into equity shares as per above terms.

NOTE 3.2 ISSUE OF SHARE CAPITAL

(a) Pursuant to the private placement offer letter (the "Offer Document") dated 30 March 2017, the Company had allotted 10,34,553 number of equity shares on 19 April 2017 having face value of Rs. 10 per share at a premium of Rs. 328.31 per share under the second tranche of the Offer Document. The Company had raised total of Rs. 13,500.00 lakhs towards private placement offer letter.

(b) Pursuant to the Initial Public Offering (the "IPO"), the Company had allotted 50,92,829 equity shares of Rs. 10 each as fresh issue of equity shares. Out of which, 169,082 equity shares were allotted to eligible employees at premium of Rs. 404.00 per share and balance 49,23,747 equity shares were allotted to public at premium of Rs. 449.00 per share.

(c) Pursuant to the conversion of various compulsorily convertible instruments as mentioned in Note 18.3 below, the Company had issued and allotted 55,78,479 equity shares to the convertible instrument holders. Out of converted equity shares, 49,46,448 equity shares were offered for sale by the convertible instrument holders during the IPO.

NOTE 3.3 CONVERSION OF COMPULSORILY CONVERTIBLE INSTRUMENTS

All the compulsorily convertible instruments were converted into equity shares as per agreements, amended from time to time, in the following manner:

(a) 0.01% Compulsorily Convertible Cumulative Preference Shares were converted into 17,39,865 equity shares having face value of Rs. 10 each at a premium of Rs. 114.93 per equity share on 12 September 2017;

(b) 13.31% Compulsorily Convertible Cumulative Preference Shares were converted into 12,80,723 equity shares having face value of Rs. 10 each at a premium of Rs. 159.71 per equity share on 12 September 2017;

(c) 9.75% Compulsorily Convertible Cumulative Preference Shares were converted into 87,716 equity shares having face value of Rs. 10 each at a premium of Rs. 446 per equity share on 12 September 2017; and

(d) 13% Compulsorily Convertible Debentures were converted into 24,70,175 equity shares having face value of Rs. 10 each at a premium of Rs. 192.33 per equity share on 21 September 2017.

NOTE 3.4 DETAILS OF BONUS SHARES ISSUED DURING THE FIVE YEARS IMMEDIATELY PRECEDING THE BALANCE SHEET DATE:

(a) 60,00,000 equity shares of Rs. 10 each fully paid-up were allotted as bonus shares by capitalisation of Capital Redemption Reserve during the year ended 31 March 2014.

(b) 2,40,00,188 equity shares of Rs. 10 each fully paid-up were allotted as bonus shares by capitalisation of general reserve and balance from the statement of profit and loss during the year ended 31 March 2017.

NOTE 3.5 TERMS / RIGHTS ATTACHED TO EQUITY SHARES

The Company has one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation of the Company, the equity shareholders will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

NOTE 4.1 NATURE AND PURPOSE OF RESERVE

1 Reserve u/s. 45-IA of the Reserve Bank of India Act, 1934 (the "RBI Act, 1934")

Reserve u/s. 45-IA of RBI Act, 1934 is created in accordance with section 45 IC(1) of the RBI Act, 1934. As per Section 45 IC(2) of the RBI Act, 1934, no appropriation of any sum from this reserve fund shall be made by the NBFC except for the purpose as may be specified by RBI.

2 Securities premium

Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes in accordance with the provisions of section 52 of the Act.

3 Surplus in the statement of profit and loss

Surplus in the statement of profit and loss is the accumulated available profit of the Company carried forward from earlier years. These reserve are free reserves which can be utilised for any purpose as may be required.

4 FVOCI equity investments

The Company has elected to recognise changes in the fair value of investments in equity securities (other than investment in subsidiary) in other comprehensive income. These changes are accumulated within the FVOCI equity investments reserve within equity.

5 FVOCI - loans and advances

The Company has elected to recognise changes in the fair value of loans and advances in other comprehensive income. These changes are accumulated within the FVOCI - loans and advances reserve within equity.

6 Remeasurement of the defined benefit liabilities

Remeasurement of the net defined benefit liabilities comprise actuarial gain or loss, return on plan assets excluding interest and the effect of asset ceiling, if any.

Notes:

i) Guarantees are given by the Company to various banks and NHB on behalf of the subsidiary company for the loan taken and accordingly, the same has been shown as contingent liability.

ii) During the previous year, the Company has given bank guarantee to NSE amounting to Rs. 160.04 lakhs as a security deposits in connection with its IPO and accordingly, the same has been shown as contingent liability.

iii) There are numerous interpretative issues relating to the Supreme Court ("SC") judgement dated 28 February 2019, relating to components / allowances paid that need to be taken into account while computing an employer''s contribution of provident fund ("PF") under the Employees'' Provident Funds and Miscellaneous Provisions Act,1952. The Company is in process of evaluating the method of computation of its PF contribution prospectively and would record any further effect in its financial statements, on receiving additional clarity on the subject.

NOTE 5. The Company has incurred expenditure of Rs. 2,399.91 lakhs during the year ended 31 March 2018 and Rs. 2,766.99 lakhs (net of recovery from selling shareholders Rs. 832.50 lakhs) as at 31 March 2018 respectively towards private placement of equity shares, IPO and offer for sale ("OFS"). The Company has adjusted the expenses incurred to the securities premium account.

NOTE 6 LEASING ARRANGEMENTS

(a) Operating lease commitments - as lessee

The Company has entered into leave and license agreements for taking office premises along with furniture and fixtures as applicable and godown premises on rental basis ranging from 11 to 60 months. It has recognised lease payments amounting to Rs. 177.35 lakhs and Rs. 166.75 lakhs for the year ended 31 March 2019 and 2018 respectively in the statement of profit and loss. The Company has given refundable, interest free security deposits under certain agreements. Certain agreements contain provision for renewal and further there are no sub-leases. The future minimum lease payments under non-cancellable operating leases are as follows:

(b) Operating lease commitments - as lessor

The Company has let out portions of office premises along with furniture and fixtures and other amenities on operating lease to its subsidiary MAS Rural Housing & Mortgage Finance Limited. It has recognised lease rental income amounting to Rs. 13.35 Lakhs and Rs. 12.00 Lakhs for the year ended 31 March 2019 and 2018 respectively in the statement of profit and loss.

NOTE 7 SEGMENT REPORTING:

Operating segment are components of the Company whose operating results are regularly reviewed by the Chief Operating Decision Maker ("CODM") to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available.

The Company is engaged primarily on the business of "Financing" only, taking into account the risks and returns, the organization structure and the internal reporting systems. All the operations of the Company are in India. All non-current assets of the Company are located in India. Accordingly, there are no separate reportable segments as per Ind AS 108 - "Operating segments".

NOTE 8 Under the Micro, Small and Medium Enterprises Development Act, 2006 ("MSMED Act") which came into force from October 2, 2006, certain disclosures are required to be made relating to micro, small and medium enterprises. There have been no reported cases of delays in payments to micro and small enterprises or of interest payments due to delays in such payments. The disclosure as required by section 22 of MSMED Act has been given below:

NOTE 9. During the previous year, pursuant to initial public offering ("IPO") and offer for sale, the Company had issued 1,00,39,277 equity shares out of which:

(i) 50,92,829 equity shares of Rs. 10 each were allotted as fresh issue of equity shares. Out of which, 1,69,082 equity shares were allotted to eligible employees of the Company and its subsidiary at premium of Rs. 404.00 per share and balance 49,23,747 equity shares were allotted to public at premium of Rs. 449.00 per share.

(ii) 49,46,448 equity shares of Rs. 10 each were offered for sale by the existing shareholders at premium of Rs. 449.00 per share.

NOTE 10.1 DERIVATIVES

The Company has not entered into any derivative transactions and hence the disclosure required has not been made.

NOTE 10.2 DETAILS OF FINANCIAL ASSETS SOLD TO SECURITISATION / RECONSTRUCTION COMPANY FOR ASSET RECONSTRUCTION

The Company has not sold financial assets to securitisation / reconstruction Company for asset reconstruction during the year (previous year Nil)

NOTE 10.3 DETAILS OF NON-PERFORMING FINANCIAL ASSETS PURCHASED / SOLD.

The Company has not purchased or sold non-performing financial assets during the year (previous year Nil).

NOTE 10.4 DETAILS OF FINANCING OF PARENT COMPANY PRODUCTS

Not applicable

NOTE 10.5 DETAILS OF SINGLE BORROWER LIMIT ("SGL") / GROUP BORROWER LIMIT ("GBL") EXCEEDED BY THE NBFC

i) Loans and advances, excluding advance funding but including off-balance sheet exposures to any single party in excess of 15 per cent of owned fund of the NBFC:

Nil

ii) Loans and advances to (excluding advance funding but including debentures/bonds and off-balance sheet exposures) and investment in the shares of single party in excess of 25 per cent of the owned fund of the NBFC:

Nil

NOTE 10.6 UNSECURED ADVANCES

a) Refer Note no. 7(B)(ii) to the financial statements.

b) The Company has not granted any advances against intangible securities (31 March 2018: Nil).

NOTE 10.7 REGISTRATION NUMBER OBTAINED FROM RBI:

B. 01. 00241

NOTE 10.8 DISCLOSURE OF PENALTIES IMPOSED BY RBI AND OTHER REGULATORS

During the financial year ended 31 March 2019, no penalties have been imposed by RBI and other regulators (31 March 2018: Nil).

NOTE 10.9 REMUNERATION OF DIRECTORS

Refer Note no. 34 to the financial statements.

NOTE 10.10 MANAGEMENT

The annual report has a detailed chapter on Management Discussion and Analysis.

NOTE 10.11 NET PROFIT OF LOSS FOR THE PERIOD, PRIOR PERIOD ITEMS AND CHANGE IN ACCOUNTING POLICIES

There are no such material items which require disclosures in the notes to account in terms of the relevant Ind AS.

NOTE 10.12 REVENUE RECOGNITION

Refer note no. 3.1 to the financial statements.

NOTE 10.13 IND AS 110 - CONSOLIDATED FINANCIAL STATEMENTS (CFS)

All the subsidiaries of the Company have been consolidated as per Ind AS 110. Refer consolidated financial statements (CFS).

NOTE 10.14 CONCENTRATION OF DEPOSITS (FOR DEPOSIT TAKING NBFCS)

Not Applicable

NOTE 10.15 OVERSEAS ASSETS (FOR THOSE WITH JOINT VENTURES AND SUBSIDIARIES ABROAD)

Nil

NOTE 10.16 OFF-BALANCE SHEET SPVs SPONSORED (WHICH ARE REQUIRED TO BE CONSOLIDATED AS PER ACCOUNTING NORMS)

Nil

NOTE 11. Q2QEB3 Information as required in terms of Paragraph 13 of the RBI Master Direction DNBR. PD. 008/03.10.119/2016-17 dated September 01, 2016 "Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 are mentioned as below:

Notes:

1. As defined in point xix of paragraph 3 of Chapter - 2 of these Directions.

2. Provisioning norms are applicable as prescribed in the Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2016.

3. All Ind AS issued by MCA 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 (5) above.

NOTE 12 The Board of Directors recommended dividend of Rs. 3.60 per equity share of face value of Rs. 10 each, which is subject to approval by shareholders of the Company.

NOTE 13. OFFSETTING

Following table represents the recognised financial assets that are offset, or subject to enforceable master netting arrangements and other similar arrangements but not offset, as at 31 March 2019, 31 March 2018 and 1 April 2017. The column ''net amount'' shows the impact of the Company''s balance sheet if all the set-off rights were exercised.

Note:

1. Rs. 1,668.26 lakhs (31 March 2018: Rs. 1,496.32 lakhs, 1 April 2017: Rs. 815.84 lakhs) represents advances received against loan agreements.

2. Rs. 50,878.81 lakhs (31 March 2018: Rs. 43,849.76 lakhs, 1 April 2017: Rs. 36,108.96 lakhs) represents security deposits received from borrowers.

3. Rs. 197.55 lakhs (31 March 2018: Rs. 289.54 lakhs, 1 April 2017: Rs. 312.45 lakhs) represents deposits given as security against borrowings.

NOTE 14. EMPLOYEE BENEFIT PLAN

Disclosure in respect of employee benefits under Ind AS 19 - Employee Benefit are as under:

(a) Defined contribution plan

The Company''s contribution to provident fund and employee state insurance scheme are considered as defined contribution plans. The Company''s contribution to provident fund aggregating Rs. 86.69 lakhs (31 March 2018: '' 78.06 lakhs) has been recognised in the statement of profit and loss under the head employee benefits expense.

(b) Defined benefit plan:

Gratuity

Financial assets not measured at fair value

The Company operates a defined benefit plan (the "gratuity plan'''') covering eligible employees. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age/ resignation date.

The defined benefit plans expose the Company to risks such as actuarial risk, investment risk, liquidity risk, market risk, legislative risk. These are discussed as follows:

Actuarial risk: It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:

Adverse salary growth experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in obligation at a rate that is higher than expected.

Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the gratuity benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.

Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption than the gratuity benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.

Investment risk: For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.

Liquidity risk: Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign / retire from the Company, there can be strain on the cash flows.

Market risk: Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in defined benefit obligation of the plan benefits and vice versa. This assumption depends on the yields on the government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.

Legislative risk: Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/ regulation. The government may amend the Payment of Gratuity Act, 1972, thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the defined benefit obligation and the same will have to be recognized immediately in the year when any such amendment is effective.

viii. Sensitivity analysis

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and withdrawal rates. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis is given below:

ix. Asset liability matching strategies

The Company contributes to the insurance fund based on estimated liability of next financial year end. The projected liability statements is obtained from the actuarial valuer.

x. Effect of plan on the Company''s future cash flows

a) Funding arrangements and funding policy

The Company has purchased an insurance policy to provide for payment of gratuity to the employees. Every year, the insurance company carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company.

The future accrual is not considered in arriving at the above cash-flows.

The expected contribution for the next year is Rs. 41.52 lakhs.

(C) Other long term employee benefits

The liability for compensated absences as at the year ended 31 March 2019 is Rs. 15.84 lakhs and as at year ended 31 March 2018 is '' 75.57 lakhs.

B. Measurement of fair values

i) Valuation techniques and significant unobservable inputs

The carrying amounts of financial assets and liabilities which are at amortised cost are considered to be the same as their fair values as there is no material differences in the carrying values presented.

ii) Financial instruments - fair value

The fair value of financial instruments as referred to in note (A) above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurement).

The categories used are as follows:

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices;

Level 2: The fair value of financial instruments that are not traded in active market is determined using valuation technique which maximizes the use of observable market data and rely as little as possible on entity specific estimates. If all significant inputs required to fair value on instrument are observable, the instrument is included in level 2; and

Level 3: If one or more of significant input is not based on observable market data, the instrument is included in level 3.

iii) Transfers between levels I and II

There has been no transfer in between level I and level II.

iv) Valuation techniques Loans

The Company has computed fair value of the loans and advances through OCI considering its business model. These have been fair valued using the base of the interest rate of loan disbursed in the last seven days of the year end which is an unobservable input and therefore these has been considered to be fair valued using level 3 inputs.

Investment in equity instruments

The majority equity instruments held by the Company are actively traded on stock exchanges with readily available active prices on a regular basis. Such instruments are classified as level 1. Equity investments in unquoted instruments are fair valued using the price earnings ratio approach and accordingly classified as fair valued using level 2.

Security deposits

The Company has fair valued the security deposit using normal market rate of interest as on relevant date using cash flow method approach.

C. Capital

The Company maintains an actively managed capital base to cover risks inherent in the business and is meeting the capital adequacy requirements of the local banking supervisor, RBI. The adequacy of the Company''s capital is monitored using, among other measures, the regulations issued by RBI.

The Company has complied in full with all its externally imposed capital requirements over the reported period. Equity share capital and other equity are considered for the purpose of Company''s capital management.

C.1 Capital management

The primary objectives of the Company''s capital management policy are to ensure that the Company complies with externally imposed capital requirements and maintains strong credit ratings and healthy capital ratios in order to support its business and to maximise shareholder value.

The Company manages its capital structure and makes adjustments to it according to changes in economic conditions and the risk characteristics of its activities. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend payment to shareholders, return capital to shareholders or issue capital securities. No changes have been made to the objectives, policies and processes from the previous years. However, they are under constant review by the Board.

NOTE 15 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company''s principal financial liabilities comprise borrowings and trade payables. The main purpose of these financial liabilities is to finance the Company''s operations and to support its operations. The Company''s financial assets include loan and advances, cash and cash equivalents that derive directly from its operations.

The Company is exposed to credit risk, liquidity risk and market risk. The Company''s board of directors has an overall responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors has established the risk management committee, which is responsible for developing and monitoring the Company''s risk management policies. The committee reports regularly to the board of directors on its activities.

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.

The Company''s risk management committee oversees how management monitors compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

1) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counter-party to financial instrument fails to meet its contractual obligations and arises principally from the Company''s receivables from customers and loans.

The carrying amounts of financial assets represent the maximum credit risk exposure.

Loans and advances

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry.

The risk management committee has established a credit policy under which each new customer is analysed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes external ratings, if they are available, financial statements, credit agency information, industry information etc.

An impairment analysis is performed at each reporting date based on the facts and circumstances existing on that date to identify expected losses on account of time value of money and credit risk. For the purposes of this analysis, the loan receivables are categorised into groups based on days past due. Each group is then assessed for impairment using the ECL model as per the provisions of Ind AS 109 - financial instruments.

Staging:

As per the provision of Ind AS 109 general approach all financial instruments are allocated to stage 1 on initial recognition. However, if a significant increase in credit risk is identified at the reporting date compared with the initial recognition, then an instrument is transferred to stage 2. If there is objective evidence of impairment, then the asset is credit impaired and transferred to stage 3.

The Company considers a financial instrument defaulted and therefore Stage 3 (credit-impaired) for ECL calculations in all cases when the borrower becomes 90 days past due on its contractual payments.

For financial assets in stage 1, the impairment calculated based on defaults that are possible in next twelve months, whereas for financial instrument in stage 2 and stage 3 the ECL calculation considers default event for the lifespan of the instrument.

As per Ind AS 109, Company assesses whether there is a significant increase in credit risk at the reporting date from the initial recognition. Company has staged the assets based on the Day past dues criteria and other market factors which significantly impacts the portfolio.

Grouping:

As per Ind AS 109, Company is required to group the portfolio based on the shared risk characteristics. Company has assessed the risk and its impact on the various portfolios and has divided the portfolio into following groups:

a. TW loan

b. SME loans

c. SRTO loan

d. MSME loan

e. Retail asset channel loans

ECL:

ECL on financial assets is an unbiased probability weighted amount based out of possible outcomes after considering risk of credit loss even if probability is low. ECL is calculated based on the following components:

a. Marginal probability of default ("MPD")

b. Loss given default ("LGD")

c. Exposure at default ("EAD")

d. Discount factor ("D")

Marginal probability of default:

PD is defined as the probability of whether borrowers will default on their obligations in the future. Historical PD is derived from NBFC internal data calibrated with forward looking macroeconomic factors.

For computation of probability of default ("PD"), Vasicek Single Factor Model was used to forecast the PD term structure over lifetime of loans. As per Vasicek model, given long term PD and current macroeconomic conditions, conditional PD corresponding to current macroeconomic condition is estimated. Company has worked out on PD based on the last five years historical data.

Marginal probability:

The PDs derived from the Vasicek model, are the cumulative PDs, stating that the borrower can default in any of the given years, however to compute the loss for any given year, these cumulative PDs have to be converted to marginal PDs. Marginal PDs is probability that the obligor will default in a given year, conditional on it having survived till the end of the previous year.

Conditional marginal probability:

As per Ind AS 109, expected loss has to be calculated as an unbiased and probability-weighted amount for multiple scenarios.

The probability of default was calculated for 3 scenarios: upside (11%), downside (21%) and base (68%). This weightage has been decided on best practices and expert judgement. Marginal conditional probability was calculated for all 3 possible scenarios and one conditional PD was arrived as conditional weighted probability.

LGD:

LGD is an estimate of the loss from a transaction given that a default occurs. Under Ind AS 109, lifetime LGD''s are defined as a collection of LGD''s estimates applicable to different future periods.

Various approaches are available to compute the LGD. Company has considered workout LGD approach. The following steps are performed to calculate the LGD:

1) Analysis of historical credit impaired accounts at cohort level.

2) The computation consists of five components, which are:

a) Outstanding balance (POS)

b) Recovery amount (discounted yearly) by initial contractual rate.

c) Expected recovery amount (for incomplete recoveries), discounted to reporting date using initial contractual rate.

d) Collateral (security) amount

The formula for the computation is as below:

% Recovery rate = (discounted recovery amount security amount discounted estimated recovery) / (total POS)

% LGD = 1 - recovery rate

EAD:

As per Ind AS 109, EAD is estimation of the extent to which the financial entity may be exposed to counterparty in the event of default and at the time of counterparty''s default. Company has modelled EAD based on the contractual and behavioral cash flows till the lifetime of the loans considering the expected prepayments.

Company has considered expected cash flows for all the loans at DPD bucket level for each of the segments, which was used for computation of ECL. Moreover, the EAD comprised of principal component, accrued interest and also the future interest for the outstanding exposure. So discounting was done for computation of expected credit loss.

Discounting:

As per Ind AS 109, ECL is computed by estimating the timing of the expected credit shortfalls associated with the defaults and discounting them using effective interest rate.

ECL computation:

Conditional ECL at DPD pool level was computed with the following method:

Conditional ECL for year (yt) = EAD (yt) * conditional PD (yt) * LGD (yt) * discount factor (yt)

The loss rates are based on actual credit loss experience over past years. These loss rates are then adjusted appropriately to reflect differences between current and historical economic conditions and the Company''s view of economic conditions over the expected lives of the loan receivables. Movement in provision of expected credit loss has been provided in below note.

Cash and cash equivalent and Bank deposits

Credit risk on cash and cash equivalent and bank deposits is limited as the Company generally invests in term deposits with banks which are rated AA- to AA , based on CRISIL ratings.

2) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting its obligations associated with its financial liabilities. The Company''s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due.

The Company is monitoring its liquidity risk by estimating the future inflows and outflows during the start of the year and planned accordingly the funding requirement. The Company manages its liquidity by unutilised cash credit facility, term loans and direct assignment.

The composition of the Company''s liability mix ensures healthy asset liability maturity pattern and well diverse resource mix.

Capital adequacy ratio of the Company, as on 31 March 2019 is 29.13% against regulatory norms of 15%. Tier I capital is 27.40% as against requirement of 10%. Tier II capital is 1.73% which may increase from time to time depending on the requirement and also as a source of structural liquidity to strengthen asset liability maturity pattern.

The total cash credit limit available to the Company is Rs. 183,500.00 lakhs spread across 20 banks. The utilization level is maintained in such a way that ensures sufficient liquidity on hand.

Majority of the Company''s portfolio is MSME loans which qualifies as Priority Sector Lending. Over the years, the Company has maintained around 35% to 40% of assets under management as off book through direct assignment transactions. It is with door to door maturity and without recourse to the Company. This further strengthens the liability management.

3) 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 includes interest rate risk and foreign currency risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

3.1) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s investment in bank deposits and variable interest rate borrowings and lending. Whenever there is a change in borrowing interest rate for the Company, necessary change is reflected in the lending interest rates over the timeline in order to mitigate the risk of change in interest rates of borrowings.

3.2) Foreign currency risk

The Company does not have any instrument denominated or traded in foreign currency. Hence, such risk does not affect the Company.

NOTE 16. There have been no events after the reporting date that require disclosure in these financial statements.

NOTE 17. EXPLANATION TO TRANSITION TO IND AS

As stated in Note 2, these are the Company''s first financial statements prepared in accordance with Ind AS. For the year ended 31 March 2018, the Company had prepared its financial statements in accordance with Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act ("Previous GAAP").

The accounting policies set out in Note 3 have been applied in preparing these financial statements for the year ended 31 March 2019 including the comparative information for the year ended 31 March 2018 and the opening Ind AS balance sheet on the date of transition i.e. 1 April 2017.

In preparing the Ind AS balance sheet as at 1 April 2017 and in presenting the comparative information for the year ended 31 March 2018, the Company has adjusted amounts reported previously in the financial statements prepared in accordance with Previous GAAP. This note explains the principal adjustments made by the Company in restating its financial statements prepared in accordance with Previous GAAP and how the transition from Previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows.

Optional exemptions availed and mandatory exceptions

In preparing these financial statements, the Company has applied the below mentioned optional exemptions and mandatory exceptions.

A. Optional exemptions availed

1. Property plant and equipment and intangible assets

As per Ind AS 101 an entity may elect to:

(i) measure an item of property, plant and equipment at the date of transition at its fair value and use that fair value as its deemed cost at that date

(ii) use a Previous GAAP revaluation of an item of property, plant and equipment at or before the date of transition as deemed cost at the date of the revaluation, provided the revaluation was, at the date of the revaluation, broadly comparable to:

- fair value;

- or cost or depreciated cost under Ind AS adjusted to reflect, for example, changes in a general or specific price index.

The elections under (i) and (ii) above are also available for intangible assets that meets the recognition criteria in Ind AS 38, Intangible Assets, (including reliable measurement of original cost); and criteria in Ind AS 38 for revaluation (including the existence of an active market).

(iii) use carrying values of property, plant and equipment, intangible assets and investment properties as on the date of transition to Ind AS (which are measured in accordance with Previous GAAP) if there has been no change in its functional currency on the date of transition.

As permitted by Ind AS 101, the Company has elected to continue with the carrying values under Previous GAAP for all the items of property, plant and equipment. The same election has been made in respect of intangible assets also.

2. Investments in subsidiaries

Ind-AS 101 allows a first-time adopter to use a deemed cost when measuring an investment in a subsidiary in the separate opening statement of financial position. This deemed cost can be determined using either fair value at the date of transition to Ind-AS or a Previous GAAP carrying amount at that date. A first-time adopter is able to choose whether to use the deemed cost exemption on an investment-by-investment basis for its subsidiary.

Accordingly, the Company has elected to avail the exemption and use the Previous GAAP carrying value as deemed cost.

3. Designation of previously recognised financial instruments

Ind AS 101 permits an entity to designate particular equity investments (other than equity investments in subsidiaries, associates and joint arrangements) as at FVOCI based on facts and circumstances at the date of transition to Ind AS (rather than at initial recognition).

The Company has opted to avail this exemption to designate equity investments (other than investment in subsidiary) as FVOCI on the date of transition.

B. Mandatory exceptions

1. Accounting estimates

As per Ind AS 101, an entity''s estimates in accordance with Ind AS at the date of transition to Ind AS at the end of the comparative period presented in the entity''s first Ind AS financial statements, as the case may be, should be consistent with estimates made for the same date in accordance with the Previous GAAP unless there is objective evidence that those estimates were in error. However, the estimates should be adjusted to reflect any differences in accounting policies.

As per Ind AS 101, where application of Ind AS requires an entity to make certain estimates that were not required under Previous GAAP those estimates should be made to reflect conditions that existed at the date of transition (for preparing opening Ind AS balance sheet) or at the end of the comparative period (for presenting comparative information as per Ind AS).

The Company''s estimates under Ind AS are consistent with the above requirement. Key estimates considered in preparation of the financial statements that were not required under the Previous GAAP are listed below:

- Fair valuation of financial instruments carried at FVOCI.

- Impairment of financial assets based on the expected credit loss model.

- Determination of the discounted value for financial instruments carried at amortised cost.

- EIR on borrowings.

- Expected life of portfolio.

- Classification of equity and liability.

2. Derecognition of financial assets and liabilities

As per Ind AS 101, an entity should apply the derecognition requirements in Ind AS 109 - Financial Instruments, prospectively for transactions occurring on or after the date of transition to Ind AS. However, an entity may apply the derecognition requirements retrospectively from a date chosen by it if the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.

The Company has elected to apply the de-recognition criteria for financial assets/liabilities prospectively. Hence, it has not recognised any financial assets/financial liabilities previously derecognised.

3. Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable.

Accordingly, the company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition.

4. Impairment of financial assets

The Company being NBFC company is required to assess the impairment of financial assets based upon the new model i.e. ECL instead of rule based guidance (RBI Prudential Norms) as prevailed under Previous GAAP

Accordingly, the Company has applied the impairment requirement of Ind-AS 109 on all financial assets recognised as per Ind-AS 109 retrospectively except:

1. The Company has sought to approximate the credit risk on initial recognition by considering all reasonable and supportable information that is available without undue cost or effort.

2. The Company has determined whether the financial asset is having low credit risk, as specified in Ind-AS 109, and whether there is a significant increase in credit risk since initial recognition of financial assets by applying rebuttable presumption of 30 days past due.

3. If the Company is unable to determine whether there is a significant increase in credit risk since initial recognition of a financial asset, without involving undue cost or effort, the Company shall recognise a loss amount equal to life time expected losses at each reporting date till the financial asset is derecognised.

Accordingly, the Company has developed ECL model for testing of impairment of loans and advances.

* Ind AS 101 requires reconciliations of its equity reported in accordance with previous GAAP to its equity in accordance with Ind AS and a reconciliation to its total comprehensive income in accordance with Ind AS for the latest period in the entity''s most recent annual financial statements. The Company has chosen to provide reconciliation of amount reported in accordance with previous GAAP to amount reported under Ind AS for each line item of balance sheet and statement of profit and loss as an additional disclosure.

# The previous GAAP figures have been reclassified to conform to Ind AS presentation requirements for the purpose of this note.

Notes to the reconciliations

1) FVOCI of financial assets

a) Investments

Under Previous GAAP the Company accounted for long term investments in unquoted and quoted equity shares as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, financial assets representing investment in equity shares of entities other than subsidiaries have to be fair valued. At the date of transition to Ind AS, difference between the instruments fair value and Previous GAAP carrying amount has been recognised as a separate component of equity, in the FVOCI reserve, net of related deferred taxes. Accordingly, an amount of '' 0.77 lakh has been recognised in OCI for the year ended 31 March 2018. Further an amount of Rs. 8.02 lakhs has been recognised as increase in investments as on 1 April 2017.

b) Loans and advances

The Company has business model of sale the loan portfolio through assignment or hold the loan portfolio and therefore, the Company recognizes its loan portfolio through FVOCI as per IND AS 109. While under Previous GAAP, loans and advances were carried at their carrying amount. Accordingly, at the date of transition to Ind AS, difference between the fair value of loan and Previous GAAP carrying amount has been recognised as a separate component of loans and advances, in the FVOCI reserve, net of related deferred taxes. An amount of Rs. 1,651.09 lakhs has been adjusted in retained earning as on 1 April 2017. Further, Rs. 2,471.74 lakhs has been recognised in FVOCI during the year ended 31 March 2018.

2) Actuarial gain and loss

Under Ind AS, all actuarial gains and losses are recognised in other comprehensive income. Under Previous GAAP, the Company recognised actuarial gains and losses in the statement of profit or loss. However, this has no major impact on the total comprehensive income and total equity as on 1 April 2017 or as on 31 March 2018.

3) Loss allowance

Under Previous GAAP the Company has created provision for impairment of loans to customer as per the guidelines specified by RBI. Under Ind AS, the Company has recognised impairment loss on loans based on the expected credit loss model as required by Ind AS 109. Consequently, the Company impaired its loans and advances by Rs. 365.47 lakhs on 1 April 2017 which has been eliminated against retained earnings. Further, a reversal of Rs. 182.60 lakhs has been recognised in the statement of profit and loss for the year ended on 31 March 2018.

4) EIR

a) Under Previous GAAP, transaction cost charged to customers were recognised upfront while under Ind AS, such costs are included in the initial recognition amount of financial asset and recognised as interest income using effective interest method. Consequently, loan to customer on the date of transition as on 1 April 2017 have decreased by Rs. 994.07 Lakhs which has been eliminated against retained earnings. The impact of Rs. 115.85 Lakhs for the year ended on 31 March 2018 has been recognised in the statement of profit and loss.

b) Under Previous GAAP transaction cost incurred on borrowings were amortized over the tenure of the loan on straight-line basis while under Ind AS, such cost are included in the initial recognition amount of financial assets and recognised as interest income using effective interest method. Consequently, borrowings on the date of transition date have increased by Rs. 21.96 Lakhs and interest expenses for the year ended 31 March 2018 has decreased by Rs. 18.36 Lakhs.

5) Corporate financial guarantees

The Company has given various corporate guarantees to banks on behalf of its subsidiary. Under Previous GAAP, guarantees were disclosed in the financial statements as part of notes to accounts. Under Ind AS, these guarantees are initially measured at fair value and recognised as investment in subsidiary and corresponding financial liability. It has resulted into increase of income by Rs. 189.32 Lakhs on the date of transition which has been recognised in the retained earnings and an amount of Rs. 26.19 Lakhs for the year ended 31 March 2018 has been recognised in the statement of profit and loss.

6) Interest reversal on stage 3 financial assets

Under Previous GAAP, the Company did not accrue interest on stage 3 assets. Under Ind AS, the Company has recognized interest on stage 3 assets resulting into an income of Rs. 275.92 Lakhs on the date of transition which has been recognised in retained earnings. The impact of '' 6.36 Lakhs for the year ended 31 March 2018 has been adjusted in the statement of profit and loss.

7) Security deposits initially recognised at amortised cost

Under Previous GAAP, the Company accounted for refundable security deposits liability taken from customers at carrying cost. Under Ind AS, these deposits have been accounted at amortised cost determined using the appropriate market rate.

8) Assignment of loan portfolio

The Company derecognizes the loan portfolio assigned to assignees. Under Previous GAAP, interest income spread on the loan portfolio assigned (net of minimum retention ratio) was recognized as and when it was accrued, i.e., over the life of the loan given. Under Ind AS, such interest income is recognized upfront i.e., at the time of assignment transaction.

This has resulted in increase in equity as on 1 April 2017 by Rs. 3,819.85 Lakhs and as on 31 March 2018 by Rs. 1,889.94 Lakhs.

9) Compulsorily convertible preference shares

Under Previous GAAP, compulsorily convertible preference shares ("CCPS") were disclosed at their carrying amount and classified as equity. Under Ind AS, these instruments are classified as financial liability and measured at amortised cost as per Ind AS 32. Accordingly, on the date of transition, a total impact of Rs. 13,091.50 Lakhs on account of CCPS has been adjusted against retained earnings. For the year ended 31 March 2018, an impact of Rs. 1,194.92 Lakhs and a positive impact of Rs. 14,286.42 Lakhs has been recognised in the

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Mar 31, 2018

1 . CORPORATE INFORMATION

MAS Financial Services Limited is a public company domiciled in India and incorporated under the provisions of Companies Act, 1956. It is registered as a Non-Banking Finance Company (NBFC) with Reserve Bank of India. The Company is engaged in the business of providing Micro Enterprise Loans, SME Loans, Two Wheeler Loans, Commercial Vehicle Loans, Agri Based Loans and loans to Micro Financial Institutions (MFI) and NBFCs. During the year, the equity shares of the Company were listed on BSE Limited and National Stock Exchange Limited pursuant to the Initial Public Offering (“IPO”) and Offer of Sales(“OFS”).

2.1 Issue of Share capital

(a) Pursuant to the Private Placement offer letter (“Offer Document”) dated 30^th March 2017, the Company has allotted 10,34,553 number of equity shares on 19^th April 2017 having face value of Rs.10/- per share at a premium of Rs.328.31/per share under the second tranche of the Offer Document. The Company has raised total of Rs.13,500 lakhs towards private placement offer letter as of date.

(b) Pursuant to the Initial Public Offering (“IPO”), the Company has allotted 50,92,829 equity shares of Rs.10/- each as fresh issue of equity shares. Out of which, 1,69,082 equity shares were allotted to eligible employees at premium of Rs.404 per share and 49,23,747 were allotted to public at premium of Rs.449 per share.

(c) Pursuant to the conversion of various compulsorily convertible instruments as mentioned in Note 3.3 below, the Company has issued and alloted 55,78,479 equity shares to the convertible instrument holders. Out of converted equity shares, 49,46,448 equity shares were offered for sale by the convertible instrument holders.

2.2 Conversion of Compulsorily Convertible instruments

All the compulsorily convertible instruments were converted into Equity Shares as per agreements, amended from time to time, in the following manner:

(a) 0.01% Compulsorily Convertible Cumulative Preference Shares were converted into 17,39,865 Equity Shares having face value of Rs.10/- each at a premium of Rs.114.93/share;

(b) 13.31% Compulsorily Convertible Cumulative Preference Shares were converted into 12,80,723 Equity Shares having face value of Rs.10/- each at a premium of Rs.159.71/share;

(c) 9.75% Compulsorily Convertible Cumulative Preference Shares were converted into 87,716 Equity Shares having face value of Rs.10/- each at a premium of Rs.446/share; and

(d) 13% Compulsorily Convertible Debentures were converted into 24,70,175 Equity Shares having face value of Rs.10/at a premium of Rs.192.33/share.

2.3 Details of bonus shares issued during the five years immediately preceding the Balance Sheet date:

(a) 60,00,000 Equity Shares of Rs.10 each fully paid-up were allotted as bonus shares by capitalisation of Capital Redemption Reserve during 2013-14

(b) 2,40,00,188 Equity Share of Rs.10 each fully paid-up were allotted as bonus shares by capitalisation of free reserves during 2016-17

Note: Cash Credits/Overdrafts/Short Term Loans from Banks are secured by hypothecation of movable assets of the Company and goods covered under HP Agreements/ Loan cum Hypothecation Agreements and relative book debts, receivables, loans and advances and entire portfolio outstanding (except specific portfolio generated from various term loans sanctioned by various banks/FIs on an exclusive basis) and equitable mortgage/negative lien by deposit of title deeds on some of the Company’s immovable properties, as collateral security. The loans are also guaranteed by Mr. Kamlesh Chimanlal Gandhi, Mr. Mukesh Chimanlal Gandhi and Mrs. Shweta Kamlesh Gandhi.

Note

1. Earnings per share calculations are done in accordance with Accounting Standard 20 “Earnings Per Share”. As per the requirements of AS 20 “Earnings Per Share”, the weighted average number of equity shares considered for calculation of Basic and Diluted Earnings per Share.

3. The Company has incurred various expenditure of Rs.2,399.91 lakhs during the year and Rs.2,766.99 lakhs (net of recovery from selling shareholders Rs.832.50 lakhs) as at 31^st March 2018 respectively towards private placement of equity shares, IPO and OFS. The Company has adjusted the expenses incurred to the Security Premium account.

4. Corporate Social Responsibility (OSR) Expenses:

The Gross amount required to be spent by the Company during the year towards Corporate Social Responsibility is Rs.161.92 lakhs (Previous year: Rs.124.90 lakhs) as per section 135 of Companies Act, 2013. Details of amount spent towards CSR as below: .

5. The company sells loans through securitization and direct assignment transactions.

The information of securitization /direct assignment by the company as originator as required by RBI Circular DNBS. PD. No. 301/3.10.01/2012-13 dated 21^st August 2012 is as under:

6. Disclosures for operating leases under Accounting Standard 19 - “Accounting for Leases”.

(a) The Company has entered into leave and license agreements for taking office premises along with furniture and fixtures as applicable and godown premises on rental basis ranging from 11 to 60 months. The specified disclosure in respect of these agreements is given below:

(b) The company has let out portions of office premises along with furnitures & fixtures and other amenities on operating lease to its subsidiary MAS Rural Housing & Mortgage Finance Limited. Lease rental income recognised in the Statement of Profit and Loss is as follows:

7. Employee Benefits

Disclosures as required as per Accounting Standard AS-15 (revised) - “Employee Benefits”, in respect of Gratuity are as under:

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India in the form of a qualifying insurance policy.

8. Segment Reporting

The Company is engaged primarily in the business of Financing and all its operations are in India only. Accordingly, there are no separate reportable segments as per Accounting Standard 17 - “Segment Reporting”.

9. The Company has not received any intimation from vendors regarding their status under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 for the year. Hence information relating to amounts due to micro enterprises and small enterprises as required by the Act has not been given.

10. During the year, pursuant to initial public offering (IPO) and Offer For Sale, the Company has offered 1,00,39,277 equity shares out of which:

(i) 50,92,829 equity shares of Rs.10/- each were allotted as fresh issue of equity shares. Out of which, 1,69,082 equity shares were allotted to eligible employees at premium of Rs.404 per share and 49,23,747 equity shares were allotted to public at premium of Rs.449 per share.

(ii) 49,46,448 equity shares of Rs.10/- each were offered for sale by the existing shareholders at premium of Rs.449 per share.

11. The disclosures required in terms of Annexure XII of the RBI Master Direction DNBR. PD. 008/03.10.119/2016-17 dated September 01, 2016 “Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 are given in Annexure A forming part of these Financial Statements.

12. The disclosures required in terms of Paragraph 13 of the Master Direction - Non-Banking Financial Company -Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 are given in Annexure B forming part of these Financial Statements.

13. The Board of directors recommended dividend of Rs.2.16/- per equity share of face value of Rs.10 each, which is subject to approval by shareholders of the Company.

14. Previous year figures have been regrouped / reclassified to conform to current year’s classification.

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Mar 31, 2015

1. Segment Reporting

The Company is engaged primarily in the business of Financing and all its operations are in India only. Accordingly, there are no separate reportable segments as per Accounting Standard 17 - "Segment Reporting".

2. Related Party Disclosures

(a) Related party disclosures as required by Accounting Standard 18, "Related Party Disclosures".

List of related parties and relationships:

Sr. No. Nature of Relationship

1 Subsidiary MAS Rural Housing & Mortgage Finance Limited

2 Key Management Personnel Mr. Kamlesh C. Gandhi (Chairman & Managing Director)

Mr. Mukesh C. Gandhi (Whole Time Director & Chief Finance Officer)

Mrs. Darshana S. Pandya (Director & Chief Operating Officer)

3 Entities under common control Swalamb Mass Financial Services Limited

Anamaya Capital LLP Kamlesh C. Gandhi (HUF)

Prarthna Marketing Private Limited

4 Relatives of Key Management Personnel Mrs. Shweta K. Gandhi

Mrs. Urmilaben C. Gandhi Mr. Dhvanil K. Gandhi Mr. Saumil D. Pandya

*The Director interested in Jain Sons Finlease Limited and Shubham Housing Development Finance Company Private Limited ceased to be a director in MAS Financial Services Limited with effect from 27^th February 2017. Hence, the disclosures made are of amount outstanding as on 27^th February 2017 and maximum balance outstanding upto that date.

5. The Company has not received any intimation from vendors regarding their status under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 for the year. Hence information relating to amounts due to micro enterprises and small enterprises as required by the Act has not been given.

6. During the year, pursuant to initial public offering (IPO) and Offer For Sale, the Company has offered 1,00,39,277 equity shares out of which:

(i) 50,92,829 equity shares of Rs, 10/- each were allotted as fresh issue of equity shares. Out of which, 1,69,082 equity shares were allotted to eligible employees at premium of Rs, 404 per share and 49,23,747 equity shares were allotted to public at premium of Rs, 449 per share.

(ii) 49,46,448 equity shares of Rs, 10/- each were offered for sale by the existing shareholders at premium of Rs, 449 per share.

7. The disclosures required in terms of Annexure XII of the RBI Master Direction DNBR. PD. 008/03.10.119/2016-17 dated September 01, 2016 "Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 are given in Annexure A forming part of these Financial Statements.

8. The disclosures required in terms of Paragraph 13 of the Master Direction - Non-Banking Financial Company -Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 are given in Annexure B forming part of these Financial Statements.

9. The Board of directors recommended dividend of Rs, 2.16/- per equity share of face value of Rs, 10 each, which is subject to approval by shareholders of the Company.

10. Previous year figures have been regrouped / reclassified to conform to current year''s classification.

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Mar 31, 2011

1. Contingent Liabilities:

As at 31st March 2011 As at 31st March 2010 Rs. Rs.

Guarantee given to a bank in respect of loan granted by the bank to the Company''s subsidiary Amount of guarantee Rs. 100,000,000 Amount of loan outstanding 10,000,000 - Other amounts for which the Company is contingently 1,500,000 - liable

2. Capital Commitments:

Estimated amounts of contracts remaining to be executed on capital account (net of advances) and not provided for - Rs. Nil (Previous year Rs. 625,000)

3. The Company has issued 40,000,000 8% Cumulative Redeemable Preference Shares (CRPS) of the face value of Rs.10 each to India Advantage Fund -VII (Mezzanine Fund I) ("the investor*) as stated in Note No. 6(a) below. As per the terms of the agreement, upon occurrence or non-occurrence of certain events, the investor has a right to convert, at its option, the CRPS into fully paid-up equity shares of the Company at a rate to be determined based on fair value of the equity shares to be calculated in the manner stated in the agreement. Further, on issue of equity shares (i) to Bellwether Microfinance Trust as per note 5 below or (ii) to Nederland''s Financierings- Maatschappij Voor Ontwikkelingslanden N. V.(FMO) as stated in Note No.7(b) below or (iii) on the Company''s initial public offer, depending upon the rate at which the equity shares are issued, the amount of securities premium shall be decided, against which, the Company shall charge the above stated premium on redemption of the CRPS as per the provisions of Section 78(2)(d) of the Companies Act, 1956. Under the circumstances, due to the variables currently indeterminate, the proportionate redemption premium for the period covered under these financial statements, amounting to Rs. 198.19 lacs (Previous year Rs. 207.50 lacs) (cumulatively Rs. 568.30 lacs upto 31st March, 2011) has not been provided for in the profit and loss account for the year.

4. The Company has entered into a Share Subscription and Shareholders Agreement ("the Agreement") with Caspian Advisors Private Ltd., Trustee, Bellwether Microfinance Trust ("Bellwether"), pursuant to which in the event of capital expansion by the Company by way of issue of equity shares, Bellwether has a right but not the obligation to subscribe to equity shares at price to be determined as per the terms of the Agreement.

5. (a) The Company has entered Into an Investment and Shareholders Agreement ("the Agreement) with India

Advantage Fund - VII (Mezzanine Fund I) ("the Investor") pursuant to which the Investor has subscribed to and has been allotted 40,000,000 8% Cumulative Redeemable Preference Shares of the face value of Rs. 10 each for cash at par. These shares are redeemable in one installment at the end of four years ''-i,'' \ from the "Second Closing Date", as defined in the Agreement, i.e. on 15th June, 2012 at face value plus a redemption premium which is to be calculated based on the IRR to be provided to the Investor on its investment as per the terms of the Agreement.

(b) The aforesaid Agreement inter alia provides that in the event the Company fails to redeem the preference shares on the redemption date, the Investor shall have the right to convert, at its option, whole or part of the preference shares into fully paid up equity shares of the Company under the circumstances and at a price to be determined as per the terms of the Agreement.

(c) The Company has entered into Warrant Subscription Agreement ("the Agreement") with India Advantage Fund - VII (Mezzanine Fund I) ("the Investor*) pursuant to which the Investor has subscribed to and has been allotted 2,000,000 warrants of the Company without any payment being made in cash by the Investor. Each warrant confers on the warrant holder, an option to subscribe to one equity share of the Company on one or more occasions, at any time during the currency of the Agreement and the Investment and Shareholders Agreement referred to in 6(a) above, as per the terms and conditions and at a price as specified in the Agreement. During the year under these financial statements, the investor has not exercised the option.

6. (a) The Company has entered into Share Subscription and Shareholders Agreement ("the Agreement") with Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N. V.(FMO) ("the Investor") pursuant to which, the investor has subscribed to and has been allotted 43,471,090 Cumulative Compulsorily Convertible Preference Shares (CCCPS) of the face value of Rs. 10 each at par.

(b) The CCCPS carry a right to be paid a fixed cumulative preferential dividend at the rate of 7% per annum free of income tax till the Financial Year ending on 31st March, 2014. After this date, under the circumstances specified in the Agreement, the rate of dividend is to be increased as provided for in the Agreement. The CCCPS are compulsorily convertible into equity shares at a conversion price to be determined based on the time of conversion and IRR to be provided to the Investor on its investment as per the terms of the Agreement.

7. During the year the Company has assigned, with recourse, loan receivables of 46,945 (Previous Year 25,156) contracts amounting to Rs. 1,744,895,538 (including future interest receivable) (Previous year Rs. 1,030,646,843) fora consideration of Rs. 1,575,665,831 (Previous year Rs. 923,765,939) and de- recognized the assets from the books. The income booked during the year in respect of assignment of receivables is Rs. 138,661,557 (Previous year Rs. 95,950,179) net of Rs. 29,374,957 (Previous year Rs. 25,984,789) provided for towards future servicing of the assigned pool.

During the year provision in respect of securitisation of Rs. 19,541,779 (Previous year Rs. 10,898,234) considered no longer necessary has been written back.

Outstanding balances of assigned loans as at 31st March, 2011 is Rs. 1,746,266,675 (As at 31st March, 2010 Rs. 1,142,736,505).

Notes:

i. Statement showing computation of net profits in accordance with section 349 of the Companies Act, 1956 is not furnished as no commission is payable to the directors.

ii. The above figures do not include contribution to Gratuity Fund as provision for gratuity benefit is based on actuarial valuation done on an overall company basis.

8. Segment Reporting

The Company is engaged primarily in the business of Financing and accordingly there are no separate reportable segments as per Accounting Standard 17 - "Segment Reporting" prescribed by Companies (Accounting Standards) Rules, 2006

Note:

Since the price at which the share warrants and the compulsorily convertible cumulative preference shares will be converted to equity shares is not ascertainable at present their effects are ignored in calculating diluted earnings per share.

9. Suppliers covered under the Micro, Small and Medium Enterprises Development Act, 2006 have not furnished the information regarding filing of necessary memorandum with appointed authority. In view of this, information required under Schedule VI of the Companies Act, 1956 to that extent is not given.

19. Exceptional item represents Contingent Provision against Standard Assets at 0.25% of standard assets made as per RBI Circular No. DNBS.PD.CC.No.207/03.02.002/2010-11 dated 17 January, 2011.

10. Balances of debtors, creditors and loans and advances are subject to confirmation. Adjustments, if any required, will be made on settlement of the account of the parties.

11. The disclosures required in terms of Paragraph 13 of the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 are given in Annexure A forming part of these Financial Statements.

12. Previous year''s figures have been regrouped / reclassified wherever necessary to conform to current year''s classification.

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Mar 31, 2010

1. Cash and cash equivalents include amount not available for immediate use :

Fixed Deposit/Cash Collateral in line with Banks Rs. 193.029,870 (Previous year Rs. 178.639,879)

2. The above Cash Flow Statement has been prepared under the "Indirect Method" as set out in the Accounting Standard - 3 on Cash Flow Statement issued by the Institute of Chartered Accountants of India.

3. Previous year''s figures have been regrouped and reclassified wherever necessary.

* Note :

Gross Block of building includes Rs.1,418,582 /- (Previous Year: Rs. 1,418,582 /-) pertaining to premises not in the name of the Company and for which conveyance deeds are yet to be executed.

2. Capital Commitments:

Estimated amounts of contracts remaining to be executed on capital account (net of advances) and not provided for - Rs. 625,000 (Previous year Rs.NIL)

3. The Company has issued 40,000,000 8% Cumulative Redeemable Preference Shares (CRPS) of the face value of Rs.10 each to India Advantage Fund - VII (Mezzanine Fund I) ("the investor") as stated in Note No. 7(a) below. As per the terms of the agreement, upon occurrence or non-occurrence of certain events, the investor has a right to convert, at its option, the CRPS into fully paid-up equity shares of the Company at a rate to be determined based on fair value of the equity shares to be calculated in the manner stated in the agreement. Further, on issue of equity shares (i) to Bellwether Microfinance Trust as per note 6(b) below or

N. V.(FMO) as stated in Note No.8(b) below or (iii) on the Company''s initial public offer, depending upon the rate at which the equity shares are issued, the amount of securities premium shatl be decided, against which, the Company shall charge the above stated premium on redemption of the CRPS as per the provisions of Section 78(2)(d) of the Companies Act, 1956. Under the circumstances, due to the variables currently indeterminate, the proportionate redemption premium for the period covered under these financial statements, amounting to Rs. 207.50 lacs (Previous year Rs. 162.61 lacs) (cumulatively Rs. 370.11 lacs upto 31s1 March, 2010) has not been provided for in the profit and loss account for the year.

4. The Company has made adequate provision for non-performing assets identified, in accordance with the Guidelines issued by the Reserve Bank of India.

5. (a) The Company has entered into a Share Subscription and Shareholders Agreement ("the Agreement")

with Caspian Advisors Private Ltd., Trustee, Bellwether Microfinance Trust ("Bellwether"), pursuant to which, Bellwether has subscribed to and has'' been allotted 650,000 Cumulative Redeemable Non Convertible Preference Shares of the face value of Rs. 100 each, at par These shares bear a coupon rate of 8.5% per annum during the first year and subsequently the rate of dividend is to be calculated on a floating basis as S-BAR minus 225 basis points, subject to a maximum of 10.5% per annum and minimum of 6.5% per annum. All the shares are redeemable at par on August 15, 2010.

(b) Under the Agreement, in the event of capital expansion by the Company by way of issue of equity shares, Bellwether has a right but not the obligation to subscribe to equity shares at a price to be determined as per the terms of the Agreement.

6. (a) The Company has entered into an Investment and Shareholders Agreement ("the Agreement") with India Advantage Fund - VII (Mezzanine Fund I) ("the Investor") pursuant to which the Investor has subscribed to and has been allotted 40,000,000 8% Cumulative Redeemable Preference Shares of the face value of Rs. 10 each for cash at par. These shares are redeemable in one installment at the end of four years from the "Second Closing Date", as defined in the Agreement, i.e. on 15th June, 2012 at face value plus a redemption premium which is to be calculated based on the IRR to be provided to the Investor on its investment as per the terms of the Agreement.

(b) The aforesaid Agreement inter alia provides that in the event the Company fails to redeem the preference shares on the redemption date, the Investor shall have the right to convert, at its'' option, whole or part of the preference shares into fully paid up equity shares of the Company under the circumstances and at a price to be determined as per the terms of the Agreement.

(c) The Company has entered into Warrant Subscription Agreement ("the Agreement") with India ''Advantage Fund - VII (Mezzanine Fund I) ("the Investor") pursuant to which the Investor has subscribed to and has been allotted 2,000,000 warrants of the Company without any payment being made in cash by the Investor. Each warrant confers on the warrant holder, an option to subscribe to one equity share of the Company on one or more occasions, at any time during the currency of the Agreement and the Investment and Shareholders Agreement referred to in 6 (a) above, as per the terms and conditions and at a price as specified in the Agreement. During the year under these financial statements, the investor has not exercised the option.

7. (a) The Company has entered into Share Subscription and Shareholders Agreement ("the Agreement") with Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N. V.(FMO) ("the Investor") pursuant to which, the investor has subscribed to and has been allotted 43,471,090 Cumulative Compulsorily Convertible Preference Shares (CCCPS) of the face value of Rs. 10 each at par.

(b) The CCCPS carry a right to be paid a fixed cumulative preferential dividend at the rate of 7% per annum free of income tax till the Financial Year ending on 31st March, 2014. After this date, under the circumstances specified in the Agreement, the rate of dividend is to be increased as provided for in the Agreement. The CCCPS are compulsorily convertible into equity shares at a conversion price to be determined based on the time of conversion and IRR to be provided to the Investor on its investment as per the terms of the Agreement.

8. During the year the Company has assigned, with recourse, loan receivables of 25,156 (Previous Year 11,433) contracts amounting to Rs. 1,030,646,843 (including future interest receivable) (Previous year Rs. 420,710,800) for a consideration of Rs. 923,765,939 (Previous year Rs. 364,637,648) and de-recognized the assets from the books. Outstanding balances of such assigned loans as at 31st March, 2010 is Rs. 1,142,736,505 (As at 31st March, 2009 Rs. 550,299,894).

Notes:

i. Statement showing computation of net profits in accordance with section 349 of the Companies Act, 1956 is not furnished as no commission is payable to the directors:

ii. The above figures do not include contribution to Gratuity Fund as provision for gratuity benefit is based on actuarial valuation done on an overall company basis.

9 Disclosures for operating leases under Accounting Standard 19 - "Accounting for Leases" prescribed by Companies (Accounting Standards) Rules, 2006

10. Segment Reporting

The Company is engaged primarily in the business of Financing and accordingly there are no separate reportable segments as per Accounting Standard 17 - "Segment Reporting" prescribed by Companies (Accounting Standards) Rules, 2006

11. Related Party Disclosures

Related party disclosures as required by Accounting Standard 18, Related Party Disclosures", prescribed by Companies (Accounting Standards) Rules, 2006

List of related parties and relationships:

Subsidiary : Mas Rural Housing & Mortgage Finance Ltd.

Key Management Personnel : Mr. Kamlesh C. Gandhi (Managing Director)

Mr. Mukesh C. Gandhi (Whole-time Director)

Note:

Since the share warrants and the compulsorily convertible cumulative preference shares are considered anti- dilutive their effects are ignored in calculating diluted earnings per share.

12. Suppliers covered under the Micro, Small and Medium Enterprises Development Act, 2006 have not furnished the information regarding filing of necessary memorandum with appointed authority. In view of this, information required under Schedule VI of the Companies Act, 1956 to that extent is not given.

13. Balances of debtors, creditors and loans and advances are subject to confirmation. Adjustments, if any required, will be made on settlement of the account of the parties.

14. The disclosures required in terms of Paragraph 13 of the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 are given in Annexure A forming part of these Financial Statements. .

15. Previous year''s figures have been regrouped / reclassified wherever necessary to conform to current year''s classification.

* Includes vehicle loans that are secured but amount of which is not separately ascertained

(6) Investor group-wise classification of all investments (current and long term) in shares and securities (both quoted and unquoted ):

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 are applicable as prescribed in the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) 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 (4) above.

* Repossessed assets have been included in "over 6 months to 1 year" bucket, being the expected period of realization as per management estimate.