Company Overview

J.A. Finance Ltd. is a public limited company incorporated in India. Its shares are listed on Calcutta Stock Exchange Limited (CSE) and BSE Limited. The Company is primarily engaged in the business of financing and investing (share and derivative trading/transactions). The Company is registered with the Reserve Bank of India (RBI) and Ministry of Corporate Affairs (MCA). Registration details are as follows:

The registered office & principal place of business of the Company is 1^st Floor, 7B, Punwani Chambers, Kiran Shankar Roy Road, Kolkata - 700001 (West Bengal).

Note - 2Basis of Preparation(i) Statement of compliance with Indian Accounting Standards (Ind AS)

These financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules 2015 as amended and notified under Section 133 of the Companies Act, 2013 (“the Act”), in conformity with the accounting principles generally accepted in India and other relevant provisions of the Act. Any application guidance/ clarifications/ directions issued by RBI or other regulators are implemented as and when they are issued/ applicable.

The Company’s financial statements are prepared in accordance with the Indian Accounting Standards (Ind AS) under the historical cost convention as a going concern and on accrual basis, except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013, the Indian Accounting Standards (Ind AS) specified under section 133 of the Companies Act, 2013 (“the Act”) read with rule 7 of the Companies (Accounts) Rules 2014 (as amended), prudential norms for income recognition, assets classification and provisioning for non-performing assets as well as contingency provision for standard assets as prescribed by the Reserve Bank of India (RBI) for NBFCs and the guidelines issued by Securities and Exchange Board of India (SEBI) to the extent applicable and other relevant amendment rules issued thereafter.

The accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard necessitates a change in the previously used accounting policy.

The financial statements for the year ended March 31, 2026 were authorized and approved for issue by the Board of Directors on May 26, 2026.

(ii) Functional and presentation currency

These financial statements are presented in Indian Rupees (‘INR’ or ‘Rs.’) which is also the Company’s functional currency. All amounts are rounded-off to the nearest lakhs or decimals thereof, unless otherwise indicated.

Summary of material accounting policies

The financial statements have been prepared using the material accounting policies and measurement basis summarized below. These policies are applied consistently for all the periods presented in the financial statements, except where the Company has applied certain accounting policies and exemptions upon transition to Ind AS.

Material Accounting Policy Information

Pursuant to the Companies (Indian Accounting Standards) Amendment Rules, 2023 effective 01-04-2023, the company is required to disclose ‘material accounting policy Information’ in lieu of the earlier requirement of disclosing ‘significant accounting policies.

All accounting policies followed by the company are in accordance with the Indian Accounting Standards (Ind AS) notified u/s 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015 and conform to Schedule III to the Companies Act, 2013 as applicable.

Specific disclosure of material accounting policy information where Ind AS permits options is made hereunder:

The company has assessed the materiality of the accounting policy information, which involves exercising judgement and considering both quantitative and qualitative factors by taking into account not only the size and nature of the item or condition but also the characteristics of the transactions, events or conditions that could make the information more likely to impact the decisions of the users of the financial statements.

a) Current vs non-current classification

The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is classified as current when it is:

(a) Expected to be realized or intended to be sold or consumed in normal operating cycle;

(b) expected to be realized within twelve months after the reporting period; or

(c) cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

(a) expected to be settled in normal operating cycle;

(b) due to be settled within twelve months after the reporting period; or

(c) there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

All other liabilities are classified as non-current.

b) Property, plant and equipment

Recognition and initial measurement

Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted on arriving at the purchase price. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repair and maintenance costs are recognized in the statement of profit and loss.

Pursuant to the requirements under schedule II of the Company Act 2013, the company has identified the cost of each component of the assets on the basis of its technical expertise and no component had a cost which is significant to the total cost of the assets and has useful life materially different from that of the remaining asset.

Subsequent measurement (depreciation method, useful lives and residual value)

Property, plant and equipment are subsequently measured at cost less accumulated depreciation and impairment losses. Depreciation on property, plant and equipment is provided on the straight-line method over the useful life of the assets as prescribed under Part ‘C’ of Schedule II of the Companies Act, 2013.

Asset class Useful life

Building 60 years

Plant and machinery 15 years

Office equipment 5 years

Computer equipment 3 years

Furniture and fixtures 10 years

Vehicles 8-10 years

Depreciation is calculated on a pro-rata basis from the date on which the asset is ready for use or till the date the asset is sold or disposed. The residual values, useful lives and method of depreciation are reviewed at the end of each financial year.

De-recognition

An item of property, plant and equipment and any significant part initially recognized is de-recognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognized in the statement of profit and loss, when the asset is de-recognized.

Capital work-in-progress

Capital work-in-progress is carried out at cost, comprising direct cost and related incidental expenses acquire property, plant and equipment. Assets which are not ready to be intended use are also shown under capital work-in-progress.

c) Intangible assets

Recognition and initial measurement

Intangible assets are stated at their cost of acquisition. The cost comprises purchase price including any import duties and other taxes (other than those subsequently recoverable from taxation authorities), borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use.

Subsequent measurement (amortization method, useful lives and residual value)

Intangible assets are amortized over a period of 3 years from the date when the assets are available for use. The estimated useful life (amortization period) of the intangible assets is arrived basis the expected pattern of consumption of economic benefits and is reviewed at the end of each financial year and the amortization period is revised to reflect the changed pattern, if any.

d) Revenue recognition Interest income on loans

Interest income is recorded on an accrual basis using the effective interest rate (EIR) method. Additional interest/overdue interest/ penal charges, if any, are recognized only when it is reasonable certain that the ultimate collection will be made.

Fees and Commission income

Income from business correspondent services is recognized as and when the services are rendered as per agreed terms and conditions of the contract.

Dividend income

Dividend income is recognized at the time when the right to receive is established by the reporting date. Miscellaneous income

All other income is recognized on an accrual basis when there is certainty in the ultimate realization /collection.

e) Finance costs

Finance costs include interest expense computed by applying the effective interest rate on respective financial instruments measured at amortized cost. Finance costs are charged to the Statement of profit and loss.

f) Borrowing costs

Borrowing costs that are directly attributable to the acquisition and/or construction of a qualifying asset, till the time such qualifying assets become ready for its intended use, are capitalized. Borrowing cost consists of interest and other costs that the Company incurred in connection with the borrowing of funds. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to the Statement of Profit and Loss as incurred basis the effective interest rate method.

g) Taxation

Tax expense recognized in Statement of Profit and Loss comprises the sum of deferred tax and current tax except to the extent it recognized in other comprehensive income or directly in equity.

Current tax comprises the tax payable or receivable on taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. Current tax is computed in accordance with relevant tax regulations. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received after considering uncertainty related to income taxes, if any. Current tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity).

Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognized amounts, and it is intended to realize the asset and settle the liability on a net basis or simultaneously.

Deferred tax is recognized in respect of temporary differences between carrying amount of assets and liabilities for financial reporting purposes and corresponding amount used for taxation purposes. Deferred tax assets are recognized on unused tax loss, unused tax credits and deductible temporary differences to the extent it is probable that the future taxable profits will be available against which they can be used. This is assessed based on the Company’s forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognized amounts, and it is intended to realize the asset and settle the liability on a net basis or simultaneously. Deferred tax relating to items recognized outside statement of profit and loss is recognized outside statement of profit or loss (either in other comprehensive income or in equity).

h) Employee benefits Short-term employee benefits

Short-term employee benefits including salaries, short term compensated absences (such as a paid annual leave) where the absences are expected to occur within twelve months after the end of the period in which the employees render the related service, profit sharing and bonuses payable within twelve months after the end of the period in which the employees render the related services and non-monetary benefits for current employees are estimated and measured on an undiscounted basis. None of the Employees are eligible for gratuity hence no provision has been made in the books of accounts.

i) Impairment of non-financial assets

At each reporting date, the Company assesses whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. A recoverable amount is higher of an asset’s net selling price and its value in use. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of Profit and Loss. If at the reporting date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed, and the asset is reflected at the recoverable amount.

Compensation for impairment

Compensation from third parties for items of property, plant and equipment that were impaired, lost or given up are recognized in the statement of profit and loss when the compensation becomes receivable.

j) Impairment of financial assets Loan assets.

The Company follows a ‘three-stage’ model for impairment based on changes in credit quality since initial recognition as summarized below:

• Stage 1 (1-30 days) includes loan assets that have not had a significant increase in credit risk since initial recognition or that have low credit risk at the reporting date.

• Stage 2 (31-60 days) includes loan assets that have had a significant increase in credit risk since initial recognition but that do not have objective evidence of impairment.

• Stage 3 (more than 90 days) includes loan assets that have objective evidence of impairment at the reporting date.

The Expected Credit Loss (ECL) is measured at 12-month ECL for Stage 1 loan assets and at lifetime ECL for Stage 2 and Stage 3 loan assets. ECL is the product of the Probability of Default, Exposure at Default and Loss Given Default, defined as follows:

Probability of Default (PD)

The PD represents the likelihood of a borrower defaulting on its financial obligation, either over the next 12 months (12 months PD), or over the remaining lifetime (Lifetime PD) of the obligation.

Loss Given Default (LGD)

LGD represents the Company’s expectation of the extent of loss on a defaulted exposure. LGD varies by type of counterparty, type and preference of claim and availability of collateral or other credit support.

Exposure at Default (EAD)

EAD is based on the amounts the Company expects to be owed at the time of default.

Forward-looking economic information (including management overlay) is included in determining the 12-month and lifetime PD, EAD and LGD. The assumptions underlying the expected credit loss are monitored and reviewed on an ongoing basis.

T rade receivables

In respect of trade receivables, the Company applies the simplified approach of Ind AS 109, which requires measurement of loss allowance at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of trade receivables.

Other financial assets

In respect of its other financial assets, the Company assesses if the credit risk on those financial assets has increased significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the Company measures the loss allowance at an amount equal to 12-month expected credit losses, else at an amount equal to the lifetime expected credit losses.

When making this assessment, the Company uses the change in the risk of a default occurring over the expected life of the financial asset. To make that assessment, the Company compares the risk of a default occurring on the financial asset as at the balance sheet date with the risk of a default occurring on the financial asset as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition. The Company assumes that the credit risk on a financial asset has not increased significantly since initial recognition if the financial asset is determined to have low credit risk at the balance sheet date.

Write-offs

Financial assets are written off either partially or in their entirety to the extent that there is no realistic prospect of recovery. Any subsequent recoveries are credited to impairment on financial instrument on statement of profit and loss.

k) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand (including impress), demand deposits and short-term highly liquid investments (certificate of deposits and commercial paper) that are readily convertible into known amount of cash and which are subject to an insignificant risk of changes in value. The Company has netted off the balance of bank overdraft with cash and cash equivalents for cash flow statement.

l) Provisions, contingent assets and contingent liabilities

Provisions are recognized only when there is a present obligation, as a result of past events, and when a reliable estimate of the amount of obligation can be made at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. Provisions are discounted to their present values, where the time value of money is material.

Contingent liability is disclosed for:

• Possible obligations which will be confirmed only by future events not wholly within the control of the Company or

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

Contingent assets are neither recognized nor disclosed except when realization of income is virtually certain, a related asset is disclosed.

m) Financial instruments

A Financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Initial recognition and measurement

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs. Subsequent measurement of financial assets and financial liabilities is described below.

Non-derivative financial assets Subsequent measurement

i. Financial assets carried at amortized cost -

A financial asset is measured at the amortized cost if both the following conditions are met:

• The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and

• Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in interest income in the Statement of Profit and Loss.

ii. Investments in equity instruments -

Investments in equity instruments which are held for trading are classified as at fair value through profit or loss (FVTPL). For all other equity instruments, the Company makes an irrevocable choice upon initial recognition, on an instrument-by-instrument basis, to classify the same either as at fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL). Amounts presented in other comprehensive income are not subsequently transferred to profit or loss. However, the Company transfers the cumulative gain or loss within equity. Dividends on such investments are recognized in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.

iii. Investments in mutual funds -

Investments in mutual funds, if any, are measured at fair value through profit and loss (FVTPL).

iv. Financial guarantee contracts:

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.

Financial guarantee contracts issued by a Company are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:

-the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109 -Financial Instruments; and

- the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Ind AS 18 - Revenue.

De-recognition of financial assets

Financial assets (or where applicable, a part of financial asset or part of a group of similar financial assets) are derecognized (i.e. removed from the Company’s balance sheet) when the contractual rights to receive the cash flows from the financial asset have expired, or when the financial asset and substantially all the risks and

rewards are transferred. Further, if the Company has not retained control, it shall also de-recognise the financial assets and recognize separately as assets or liabilities any rights and obligations created or retained in the transfer.

Non-derivative financial liabilities Subsequent measurement

Subsequent to initial recognition, all non-derivative financial liabilities are measured at amortized cost using the effective interest method.

De-recognition of financial liabilities

A financial liability is de-recognized when the obligation under the liability is discharged or cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the DE recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the Statement of Profit and Loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset, and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.

n) Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue.

For the purpose of calculating diluted earnings per share, the net profit or loss (interest and other finance cost associated) for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

o) Segment reporting

The Company identifies the segment basis of the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are regularly reviewed by the management and in assessing performance. The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship with the operating activities of the segment.

p) Dividend/ Distribution

Dividend distribution to the company shareholders is recognized as a liability in the financial statements in the period in which the dividend is approved by the company shareholders.

q) Significant management judgement in applying accounting policies and estimation uncertainty

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the related disclosures. Actual results may differ from these estimates.

Significant management judgements Recognition of deferred tax assets

The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilized.

Evaluation of indicators for impairment of assets

The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.

Expected credit loss (‘ECL’)

The measurement of expected credit loss allowance for financial assets measured at amortized cost requires use of complex models and significant assumptions about future economic conditions and credit behavior (e.g. likelihood of customers defaulting and resulting losses). The Company makes significant judgements with regard to the following while assessing expected credit loss:

• Determining criteria for significant increase in credit risk;

• Establishing the number and relative weightings of forward-looking scenarios for each type of product/market and the associated ECL; and

• Establishing groups of similar financial assets for the purposes of measuring ECL.

Provisions

At each balance sheet date basis, the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding contingent liabilities. However, the actual future outcome may be different from this judgement.

Significant estimates

Useful lives of depreciable/amortizable assets

Management reviews its estimate of the useful lives of depreciable/amortizable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of assets.

Fair value measurements

Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available). This involves developing estimates and assumptions consistent with how market participants would price the instrument.

Material Accounting Policy Information

Pursuant to the Companies (Indian Accounting Standards) Amendment Rules, 2023 effective 01-04-2023, the
company is required to disclose ‘material accounting policy Information’ in lieu of the earlier requirement of
disclosing ‘significant accounting policies.

All accounting policies followed by the company are in accordance with the Indian Accounting Standards
(Ind AS) notified u/s 133 of the Companies Act, 2013 read with the Companies (Indian Accounting
Standards) Rules, 2015 and conform to Schedule III to the Companies Act, 2013 as applicable.

Specific disclosure of material accounting policy information where Ind AS permits options is made
hereunder:

The company has assessed the materiality of the accounting policy information, which involves exercising
judgement and considering both quantitative and qualitative factors by taking into account not only the size
and nature of the item or condition but also the characteristics of the transactions, events or conditions that
could make the information more likely to impact the decisions of the users of the financial statements.

a) Current vs non-current classification

The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is classified as current when it is:

(a) Expected to be realized or intended to be sold or consumed in normal operating cycle;

(b) expected to be realized within twelve months after the reporting period; or

(c) cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

(a) expected to be settled in normal operating cycle;

(b) due to be settled within twelve months after the reporting period; or

(c) there is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period.

All other liabilities are classified as non-current.

b) Property, plant and equipment

Recognition and initial measurement

Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price,
borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its
working condition for the intended use. Any trade discount and rebates are deducted on arriving at the
purchase price. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Company and the cost of the item can be measured reliably. All other repair and maintenance costs are
recognised in the statement of profit and loss.

Pursuant to the requirements under schedule II of the Company Act 2013, the company has identified the cost
of each component of the assets on the basis of its technical expertise and no component had a cost which is
significant to the total cost of the assets and has useful life materially different from that of the remaining
asset.

Subsequent measurement (depreciation method, useful lives and residual value)

Property, plant and equipment are subsequently measured at cost less accumulated depreciation and
impairment losses. Depreciation on property, plant and equipment is provided on the straight-line method
over the useful life of the assets as prescribed under Part ‘C’ of Schedule II of the Companies Act, 2013.

Asset class Useful life

Building 60 years

Plant and machinery 15 years

Office equipment 5 years

Computer equipment 3 years

Furniture and fixtures 10 years

Vehicles 8-10 years

Depreciation is calculated on a pro-rata basis from the date on which the asset is ready for use or till the date
the asset is sold or disposed. The residual values, useful lives and method of depreciation are reviewed at the
end of each financial year.

De-recognition

An item of property, plant and equipment and any significant part initially recognised is de-recognised upon
disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising
on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying
amount of the asset) is recognised in the statement of profit and loss, when the asset is de-recognised.

Capital work-in-progress

Capital work-in-progress is carried out at cost, comprising direct cost and related incidental expenses acquire
property, plant and equipment. Assets which are not ready to be intended use are also shown under capital
work-in-progress.

c) Intangible assets

Recognition and initial measurement

Intangible assets are stated at their cost of acquisition. The cost comprises purchase price including any import
duties and other taxes (other than those subsequently recoverable from taxation authorities), borrowing cost if
capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for
the intended use.

Subsequent measurement (amortisation method, useful lives and residual value)

Intangible assets are amortised over a period of 3 years from the date when the assets are available for use.
The estimated useful life (amortisation period) of the intangible assets is arrived basis the expected pattern of
consumption of economic benefits and is reviewed at the end of each financial year and the amortisation
period is revised to reflect the changed pattern, if any.

d) Revenue recognition
Interest income on loans

Interest income is recorded on an accrual basis using the effective interest rate (EIR) method. Additional
interest/overdue interest/ penal charges, if any, are recognised only when it is reasonable certain that the
ultimate collection will be made.

Fees and Commission income

Income from business correspondent services is recognised as and when the services are rendered as per
agreed terms and conditions of the contract.

Dividend income

Dividend income is recognised at the time when the right to receive is established by the reporting date.
Miscellaneous income

All other income is recognised on an accrual basis when there is certainty in the ultimate realization
/collection.

e) Finance costs

Finance costs include interest expense computed by applying the effective interest rate on respective financial
instruments measured at amortised cost. Finance costs are charged to the Statement of profit and loss.

f) Borrowing costs

Borrowing costs that are directly attributable to the acquisition and/or construction of a qualifying asset, till
the time such qualifying assets become ready for its intended use, are capitalised. Borrowing cost consists of
interest and other costs that the Company incurred in connection with the borrowing of funds. A qualifying
asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other
borrowing costs are charged to the Statement of Profit and Loss as incurred basis the effective interest rate
method.

g) Taxation

Tax expense recognised in Statement of Profit and Loss comprises the sum of deferred tax and current tax
except to the extent it recognised in other comprehensive income or directly in equity.

Current tax comprises the tax payable or receivable on taxable income or loss for the year and any adjustment
to the tax payable or receivable in respect of previous years. Current tax is computed in accordance with
relevant tax regulations. The amount of current tax payable or receivable is the best estimate of the tax amount

expected to be paid or received after considering uncertainty related to income taxes, if any. Current tax
relating to items recognised outside profit or loss is recognised outside profit or loss (either in other
comprehensive income or in equity).

Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognised
amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.

Deferred tax is recognised in respect of temporary differences between carrying amount of assets and
liabilities for financial reporting purposes and corresponding amount used for taxation purposes. Deferred tax
assets are recognised on unused tax loss, unused tax credits and deductible temporary differences to the extent
it is probable that the future taxable profits will be available against which they can be used. This is assessed
based on the Company’s forecast of future operating results, adjusted for significant non-taxable income and
expenses and specific limits on the use of any unused tax loss. Unrecognised deferred tax assets are reassessed
at each reporting date and are recognised to the extent that it has become probable that future taxable profits
will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the
asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date. The measurement of deferred tax reflects the tax consequences
that would follow from the manner in which the Company expects, at the reporting date, to recover or settle
the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset only if there is a
legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the
liability on a net basis or simultaneously. Deferred tax relating to items recognised outside statement of profit
and loss is recognised outside statement of profit or loss (either in other comprehensive income or in equity).

h) Employee benefits
Short-term employee benefits

Short-term employee benefits including salaries, short term compensated absences (such as a paid annual
leave) where the absences are expected to occur within twelve months after the end of the period in which the
employees render the related service, profit sharing and bonuses payable within twelve months after the end
of the period in which the employees render the related services and non-monetary benefits for current
employees are estimated and measured on an undiscounted basis.

i) Impairment of non-financial assets

At each reporting date, the Company assesses whether there is any indication that an asset may be impaired. If
any such indication exists, the Company estimates the recoverable amount of the asset. A recoverable amount
is higher of an asset’s net selling price and its value in use. If such recoverable amount of the asset or the
recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the
carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is
recognised in the Statement of Profit and Loss. If at the reporting date there is an indication that if a
previously assessed impairment loss no longer exists, the recoverable amount is reassessed, and the asset is
reflected at the recoverable amount.

Compensation for impairment

Compensation from third parties for items of property, plant and equipment that were impaired, lost or given
up are recognised in the statement of profit and loss when the compensation becomes receivable.

j) Impairment of financial assets
Loan assets.

The Company follows a ‘three-stage’ model for impairment based on changes in credit quality since initial
recognition as summarised below:

• Stage 1 (1-30 days) includes loan assets that have not had a significant increase in credit risk since
initial recognition or that have low credit risk at the reporting date.

• Stage 2 (31-60 days) includes loan assets that have had a significant increase in credit risk since initial
recognition but that do not have objective evidence of impairment.

• Stage 3 (more than 90 days) includes loan assets that have objective evidence of impairment at the
reporting date.

The Expected Credit Loss (ECL) is measured at 12-month ECL for Stage 1 loan assets and at lifetime ECL for
Stage 2 and Stage 3 loan assets. ECL is the product of the Probability of Default, Exposure at Default and
Loss Given Default, defined as follows:

Probability of Default (PD)

The PD represents the likelihood of a borrower defaulting on its financial obligation, either over the next 12
months (12 months PD), or over the remaining lifetime (Lifetime PD) of the obligation.

Loss Given Default (LGD)

LGD represents the Company’s expectation of the extent of loss on a defaulted exposure. LGD varies by type
of counterparty, type and preference of claim and availability of collateral or other credit support.

Exposure at Default (EAD)

EAD is based on the amounts the Company expects to be owed at the time of default.

Forward-looking economic information (including management overlay) is included in determining the 12-
month and lifetime PD, EAD and LGD. The assumptions underlying the expected credit loss are monitored
and reviewed on an ongoing basis.

Trade receivables

In respect of trade receivables, the Company applies the simplified approach of Ind AS 109, which requires
measurement of loss allowance at an amount equal to lifetime expected credit losses. Lifetime expected credit
losses are the expected credit losses that result from all possible default events over the expected life of trade
receivables.

Other financial assets

In respect of its other financial assets, the Company assesses if the credit risk on those financial assets has
increased significantly since initial recognition. If the credit risk has not increased significantly since initial

recognition, the Company measures the loss allowance at an amount equal to 12-month expected credit losses,
else at an amount equal to the lifetime expected credit losses.

When making this assessment, the Company uses the change in the risk of a default occurring over the
expected life of the financial asset. To make that assessment, the Company compares the risk of a default
occurring on the financial asset as at the balance sheet date with the risk of a default occurring on the financial
asset as at the date of initial recognition and considers reasonable and supportable information, that is
available without undue cost or effort, that is indicative of significant increases in credit risk since initial
recognition. The Company assumes that the credit risk on a financial asset has not increased significantly
since initial recognition if the financial asset is determined to have low credit risk at the balance sheet date.

Write-offs

Financial assets are written off either partially or in their entirety to the extent that there is no realistic
prospect of recovery. Any subsequent recoveries are credited to impairment on financial instrument on
statement of profit and loss.

k) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand (including imprest), demand deposits and short-term highly
liquid investments (certificate of deposits and commercial paper) that are readily convertible into known
amount of cash and which are subject to an insignificant risk of changes in value. The Company has netted off
the balance of bank overdraft with cash and cash equivalents for cash flow statement.