అకౌంట్స్ గమనికలుContinental Securities Ltd.

Mar 31, 2025

6. Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past
event, 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.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that
reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as a finance cost.

7. Dividends on ordinary shares

The Company recognises a liability to make cash distributions to equity shareholders of the Company when the
distribution is authorised and the distribution is no longer at the discretion of the Company. As per the
Companies Act, 2013, the final dividend is authorised when it is approved by the shareholders and interim
dividend is authorised when it is approved by the Board of Directors of the Company. A corresponding amount is
recognised directly in equity.

8. Contingent liabilities, Contingent assets and Commitments

The Company does not recognize a contingent liability but discloses its existence in the financial statements
Contingent liability is disclosed in the case of:

• A present obligation arising from past events, when it is not probable that an outflow of resources will
not be required to settle the obligation.

• A present obligation arising from past events, when no reliable estimate is possible.

• A possible obligation arising from past events, unless the probability of outflow of resources is remote.
Contingent liabilities are reviewed at each balance sheet date.

Contingent assets are not recognised. A contingent asset is disclosed, as required by Ind AS 37, where an inflow
of economic benefits is probable.

Commitments are future contractual liabilities, classified and disclosed as follows:

• The estimated amount of contracts remaining to be executed on capital account and not provided for;

• Undisbursed commitment relating to loans; and

• Other non-cancellable commitments, if any, to the extent they are considered material and relevant in
the opinion of management.

9. Retirement and other employee benefits

Provision for further liability of gratuity payable at a future date has not been made as no employee has become
entitled for the same as on date and shall be accounted for as and when paid.

10. Taxes

Tax expense comprises current and deferred tax.

Current income tax

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to
the taxation authorities in accordance with Income tax Act, 1961. The tax rates and tax laws used to compute
the amount are those that are enacted or substantively enacted, at the reporting date. Current income 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 items are recognised in correlation to the underlying
transaction either in OCI or directly in equity.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets
are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused
tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax
losses can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it
is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to
be utilised. Unrecognised deferred tax assets are re-assessed 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. Deferred tax relating to items recognised outside profit or loss is
recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are
recognised in correlation to the underlying transaction either in OCI or directly in equity. Deferred tax assets and
deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current
tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

11. Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity
shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose calculating Diluted Earnings per share, the net profit or loss 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.

12. Financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual
provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value.
Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair
value of the financial assets or financial liabilities, as appropriate, on initial recognition. Where the fair value of
financial assets and financial liabilities at initial recognition is different from its transaction price, the difference
between the fair value and transaction price is recognised in the statement of profit and loss. Transaction costs
directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized
immediately in Statement of profit and loss.

(a) Recognition and Measurement

(I.) Financial Assets

All financial assets are recognised initially at fair value when the Company becomes party to the
contractual provisions of the financial asset. In case of financial assets which are not recorded at fair value
through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the
financial assets, are adjusted to the fair value on initial recognition.

Financial assets carried at amortised cost: A financial asset is subsequently measured at amortised cost if
it is held within a business model whose objective is to hold the asset in order to collect contractual cash
flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding using the Effective Interest
Rate (EIR) method less impairment, if any and the amortisation of EIR and loss arising from impairment, if
any is recognised in the statement of profit and loss.

Financial assets at fair value through other comprehensive income: A financial asset is measured at fair
value through other comprehensive income if both of the following conditions are met: • If it is held
within a business model whose objective is to hold these assets in order to collect contractual cash flows
and to sell these financial assets, and • The contractual terms of the financial assets give rise on specified
dates to cash flows that are solely payments of principal and interest on the principal amount
outstanding. Fair value movements are recognised in the other comprehensive income. For equity
investments, the Company makes an election on an instrument-by instrument basis to designate equity
investments as measured at FVOCI. These elected investments are measured at fair value with gains and
losses arising from changes in fair value recognized in other comprehensive income and accumulated in

the reserves. The cumulative gain or loss is not reclassified to Statement of profit and loss on disposal of
the investments. These investments in equity are not held for trading. Instead, they are held for strategic
purpose. Dividend income received on such equity investments are recognized in Statement of profit and
loss.

Financial assets at fair value through profit or loss: A financial asset which is not classified as either
amortised cost or at fair value through other comprehensive income is carried at fair value through the
statement of profit and loss
(II.) Financial liabilities

All financial liabilities are recognized initially at fair value when the company become party to the
contractual provisions of the financial liability. In case of financial liability which are not recorded at fair
value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of
the financial liabilities, are adjusted to the fair value on initial recognition. The company''s financial
liabilities include trade and other payables, loans and borrowings including bank overdrafts.

Classification as debt or equity: Financial liabilities and equity instruments issued by the Company are
classified according to the substance of the contractual arrangements entered into and the definitions of
a financial liability and an equity instrument.

Equity Instrument: An equity instrument is any contract that evidences a residual interest in the assets of
the Company after deducting all its liabilities. Equity instruments are recorded at the proceeds received,
net of direct issue costs.

Subsequent measurement

Financial Liability: Financial liabilities other than financial liabilities at fair value through profit and loss are
subsequently measured at amortized cost using the effective interest method.

(b) Derecognition:

The Company derecognizes a financial asset when the contractual rights to the cash flows from the
financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under
Ind AS 109. A financial liability (or a part of a financial liability) is derecognised from the Company''s
balance sheet when the obligation specified in the contract is discharged or cancelled or expires.

(c) Impairment of financial instruments:

In accordance with Ind AS 109, the Company uses ''Expected Credit Loss'' model (ECL), for the financial
assets which are not fair valued through profit or loss. For all financial assets, expected credit losses are
measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit
risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected
credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount
that is required to be recognised is recognised as an impairment gain or loss in statement of profit and
loss.

Overview of the ECL principles:

Expected Credit Loss, at each reporting date, is measured through a loss allowance for a financial asset: •
At an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has
increased significantly since initial recognition. • At an amount equal to 12-month expected credit losses,
if the credit risk on a financial instrument has not increased significantly since initial recognition. Lifetime
expected credit losses (LTECLs) means expected credit losses that result from all possible default events
over the expected life of a financial asset.

12-month expected credit losses ((12mECLs) means the portion of Lifetime ECL that represent the ECLs
that result from default events on financial assets that are possible within the 12 months after the
reporting date. The Company records allowance for expected credit losses for all loans, other debt
financial assets, together with loan commitments (in this section all referred to as ''financial instruments'').
The ECL allowance is based on the credit losses expected to arise over the life of the asset (the lifetime
expected credit loss or LTECL), unless there has been no significant increase in credit risk since origination,
in which case, the allowance is based on the 12 months'' expected credit loss (12mECL). Both LTECLs and
12mECLs are calculated on either an individual basis or a collective basis, depending on the nature of the
underlying portfolio of financial instruments. The Company performs an assessment, at the end of each
reporting period, of whether a financial assets credit risk has increased significantly since initial
recognition. When making the assessment, the change in the risk of a default occurring over the expected
life of the financial instrument is used instead of the change in the amount of expected credit losses.
Based on the above process, the Company has established an internal model to evaluate ECL based on
nature of Financial Assets. Based on the above process, the Company categorizes its loans into Stage 1,
Stage 2 and Stage 3, as described below:

Stage 1: Stage 1 is comprised of all non-impaired financial assets which have not experienced a significant
increase in credit risk since initial recognition. When loans are first recognized, the Company recognizes
an allowance based on 12mECLs. A 12mECLs provision is made for stage 1 financial assets. In assessing
whether credit risk has increased significantly, the Company compares the risk of a default occurring on
the financial asset as at the reporting date with the risk of a default occurring on the financial asset as at
the date of initial recognition. Stage 1 loans also include facilities where the credit risk has improved and
the loan has been reclassified from Stage 2. Stage 2: Stage 2 is comprised of all non-impaired financial
assets which have experienced a significant increase in credit risk since initial recognition. The Company
recognises lifetime ECL for stage 2 financial assets. In subsequent reporting periods, if the credit risk of the
financial instrument improves such that there is no longer a significant increase in credit risk since initial
recognition, then entities shall revert to recognizing 12mECLs provision. Stage 3: Financial assets are
classified as Stage 3 when there is objective evidence of impairment as a result of one or more loss events
that have occurred after initial recognition with a negative impact on the estimated future cash flows of a
loan or a portfolio of loans.

The key elements of the ECL are summarized below: Exposure at Default (EAD): The Exposure at Default is
an estimate of the exposure at a future default date (in case of Stage 1 and Stage 2), taking into account,
expected changes in the exposure after the reporting date, including repayments of principal and interest,
whether scheduled by contract or otherwise, expected draw downs on committed facilities, and accrued
interest from missed payments. In case of Stage 3 loans EAD represents exposure when the default
occurred. Probability of Default (PD): The Probability of Default is an estimate of the likelihood of default
over a given time horizon. A default may only happen at a certain time over the assessed period, if the
facility has not been previously derecognized and is still in the portfolio. Loss Given Default (LGD): The
Loss Given Default is an estimate of the loss arising in the case where a default occurs at a given time. It is
based on the difference between the contractual cash flows due and those that the lender would expect
to receive, including from the realization of any collateral. It is usually expressed as a percentage of the
EAD. Impairment losses and releases are accounted for and disclosed separately from modification losses
or gains that are accounted for as an adjustment of the financial asset''s gross carrying value.

(d) Write offs:

The gross carrying amount of a financial asset is written off when there is no realistic prospect of further
recovery. This is generally the case when the Company determines that the debtor/ borrower does not
have assets or sources of income that could generate sufficient cash flows to repay the amounts subject
to the write-off. However, financial assets that are written off could still be subject to enforcement
activities under the Company''s recovery procedures, considering legal advice where appropriate. Any
recoveries made are recognized in the Statement of profit and loss.

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Mar 31, 2024

8. Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, 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. The expense relating to any provision is presented in the statement of profit and loss net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

9. Contingent liabilities, Contingent assets and Commitments

The Company does not recognize a contingent liability but discloses its existence in the financial statements

Contingent liability is disclosed in the case of:

• A present obligation arising from past events, when it is not probable that an outflow of resources will not be required to settle the obligation.

• A present obligation arising from past events, when no reliable estimate is possible.

• A possible obligation arising from past events, unless the probability of outflow of resources is remote. Contingent liabilities are reviewed at each balance sheet date.

Contingent assets are not recognised. A contingent asset is disclosed, as required by Ind AS 37, where an inflow of economic benefits is probable.

Commitments are future contractual liabilities, classified and disclosed as follows:

• The estimated amount of contracts remaining to be executed on capital account and not provided for;

• Undisbursed commitment relating to loans; and

• Other non-cancellable commitments, if any, to the extent they are considered material and relevant in the opinion of management.

10. Retirement and other employee benefits

Provision for further liability of gratuity payable at a future date has not been made as no employee has become entitled for the same as on date and shall be accounted for as and when paid.

11. Taxes

Tax expense comprises current and deferred tax.

Current income tax

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities in accordance with Income tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income 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 items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed 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. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

12. Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

13. 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.

14.1.Financial Assets

14.1.1 Initial recognition and measurement

Financial assets, with the exception of loans and advances to customers, are initially recognised on the trade date, i.e., the date that the Company becomes a party to the contractual provisions of the instrument. Loans and advances to customers are recognised when funds are disbursed to the customers. The classification of financial instruments at initial recognition depends on their purpose and characteristics and the management''s intention when acquiring them. All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Trade Receivable is measured at their transaction price (as defined in Ind AS 115) on initial recognition.

14.1.2 Classification and Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

• Debt instruments at amortised cost

• Debt instruments at fair value through other comprehensive income (FVTOCI)

• Debt instruments and equity instruments at fair value through profit or loss(FVTPL)

• Equity instruments measured at fair value through other comprehensive income (FVTOCI)

14.1.3 Debt instruments at amortised costs

A ''debt instrument'' is measured at the amortised 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 amortised cost using the effective interest rate (EIR) method less impairment. Amortised 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 amortisation is included in interest income in the statement of profit or loss. The losses arising from impairment are recognised in the statement of profit and loss.

14.1.4 Debt instruments at FVTOCI

A ''debt instrument'' is classified as at the FVTOCI if both of the following criteria are met:

• The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and

• The asset''s contractual cash flows represent SPPI. Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the P&L. On derecognition of the asset.

cumulative gain or loss previously recognised in OCI is reclassified from the equity to P&L. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the ElR method.

14.1.5 Debt instruments at FVTPL

FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. In addition, the company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ''accounting mismatch''). Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.

14.1.6 Business Model Test

An assessment of business models for managing financial assets is fundamental to the classification of a financial asset. The Company determines the business models at a level that reflects how financial assets are managed together to achieve a particular business objective. The Company''s business model does not depend on management''s intentions for an individual instrument, therefore the business model assessment is performed at a higher level of aggregation rather than on an instrument-by-instrument basis. The Company considers all relevant information available when making the business model assessment. The Company takes into account all relevant evidence available such as:- How the performance of the business model and the financial assets held within that business model are evaluated and reported to the Company''s key management personnel; The risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way in which those risks are managed; and How managers of the business are compensated (e.g. whether the compensation is based on the fair value of the assets managed or on the contractual cash flows collected). At initial recognition of a financial asset, the Company determines whether newly recognized financial assets are part of an existing business model or whether they reflect a new business model.

14.1.7 Equity Instruments

All equity instruments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Company makes such election on an instrument-by- instrument basis. The classification is made on initial recognition and is irrevocable. If the company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the company may transfer the cumulative gain or loss within equity. Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.

14.2 Financial liabilities

14.2.1 Initial recognition and measurement

Financial liabilities are classified and measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for trading or it is designated as on initial recognition. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and derivative financial instruments.

14.2.2 Classification and Subsequent measurement - Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the profit or loss. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not subsequently transferred to P&L. Flowever, the company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit and loss.

14.2.3 Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised 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 amortisation is included as finance costs in the statement of profit and loss. This category generally applies to borrowings.

14.4 Reclassification of financial assets and liabilities

The company doesn''t reclassify its financial assets subsequent to their initial recognition, apart from the exceptional circumstances in which the company acquires, disposes of, or terminates a business line. Financial liabilities are never reclassified.

14.5 De-recognition of financial assets and financial liabilities

14.5.1 Financial Assets

A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is de-recognised when the rights to receive cash flows from the financial asset have expired. The Company also de-recognised the financial asset if it has transferred the

financial asset and the transfer qualifies for de recognition. The Company has transferred the financial asset if, and only if, either:

• It has transferred its contractual rights to receive cash flows from the financial asset or

• It retains the rights to the cash flows, but has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement.

Pass-through arrangements are transactions whereby the Company retains the contractual rights to receive the cash flows of a financial asset (the ''original asset''), but assumes a contractual obligation to pay those cash flows to one or more entities (the ''eventual recipients''), when all of the following three conditions are met:

• The Company has no obligation to pay amounts to the eventual recipients unless it has collected equivalent amounts from the original asset, excluding short-term advances with the right to full recovery of the amount lent plus accrued interest at market rates.

• The Company cannot sell or pledge the original asset other than as security to the eventual recipients.

• The Company has to remit any cash flows it collects on behalf of the eventual recipients without material delay. In addition, the Company is not entitled to reinvest such cash flows, except for investments in cash or cash equivalents including interest earned, during the year between the collection date and the date of required remittance to the eventual recipients.

A transfer only qualifies for derecognition if either:

• The Company has transferred substantially all the risks and rewards of the asset or

• The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. The Company considers control to be transferred if and only if, the transferee has the practical ability to sell the asset in its entirety to an unrelated third party and is able to exercise that ability unilaterally and without imposing additional restrictions on the transfer. When the Company has neither transferred nor retained substantially all the risks and rewards and has retained control of the asset, the asset continues to be recognised only to the extent of the Company''s continuing involvement, in which case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration the Company could be required to pay. If continuing involvement takes the form of a written or purchased option (or both) on the transferred asset, the continuing involvement is measured at the value the Company would be required to pay upon repurchase. In the case of a written put option on an asset that is measured at fair value, the extent of the entity''s continuing

involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.

14.5.2 Financial Liabilities

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. Where 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 a derecognition of the original liability and the recognition of a new liability. The difference between the carrying value of the original financial liability and the consideration paid is recognised in profit or loss.

14. Impairment of financial assets

14.1 Overview of the ECL principles

The Company is recording the allowance for expected credit losses for all loans and other debt financial assets not held at FVTPL, together with loan commitments and Excess Interest Spread (EIS) receivable, (in this section all referred to as ''financial instruments''). Equity instruments are not subject to impairment under Ind AS 109. The ECL allowance is based on the credit losses expected to arise over the life of the asset (the lifetime expected credit loss or LTECL), unless there has been no significant increase in credit risk since origination, in which case, the allowance is based on the 12 months'' expected credit loss (12m ECL). The 12m ECL is the portion of LTECL that represent the ECL that result from default events on a financial instrument that are possible within the 12 months after the reporting date. Both LTECL and 12m ECL are calculated on collective basis, depending on the nature of the underlying portfolio of financial instruments.

14.2 Write-offs

Financial assets are written off either partially or in their entirety only when the Company has stopped pursuing the recovery. If the amount to be written off is greater than the accumulated loss allowance, the difference is first treated as an addition to the allowance that is then applied against the gross carrying amount. Any subsequent recoveries are credited to Statement of profit and loss account.

15. Fair value measurement

The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date using valuation techniques. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

i. In the principal market for the asset or liability, or

ii. In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their

economic best interest. A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting year.