2.2.12 Provisions

a) Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

b) The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

2.2.13 Investment income

a) Investment income consists of interest income on funds invested, dividend income and gains on the disposal of financial assets measured at FVTPL and amortised cost.

b) Interest income on bond is recognised as it accrues in the statement of Profit or Loss, using the effective interest method and interest income on deposits

with banks is recognised on a time proportion accrual basis taking into the account the amount outstanding and the rate applicable.

c) Dividend income is recognised in the Profit or Loss on the date that the Company's right to receive payment is established.

2.2.14 Income tax

Income tax comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent it relates to items directly recognised in equity or in other comprehensive income.

i. Current income tax

Current income tax for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the taxable income for the period. The tax rates and tax laws used to compute the current tax amount are those that are enacted at the reporting date and applicable for the period. The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognised amounts and where it intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

ii. Deferred tax

Deferred tax is recognised using the balance sheet approach. Deferred tax assets and liabilities are recognised for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount in standalone financial statements.

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. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets and liabilities are classified as non-current assets and liabilities.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period 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 (in other comprehensive income). Deferred tax items are recognised in correlation to the underlying transaction in OCI.

The Company recognises interest levied and penalties related to income tax assessments in income tax expenses.

2.2.15 Earnings per share

The Company reports basic and diluted earnings per share in accordance with Ind AS 33 on Earnings per share. Basic earnings per share is computed using the weighted average number of equity shares outstanding during the period. There are no instruments which have effect of dilution on the EPS.

2.2.16 Operating Cycle

Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

31. Financial Risk Management

The Company's principal financial liabilities comprise trade and other payables. The main purpose of these financial liabilities is to support its operations. The Company’s principal financial assets include trade and other receivables, and cash and short-term deposits that derive directly from its operations.

The Company's activities expose it to a variety of financial risks: credit risk, liquidity risk, market risk (including foreign currency and interest rate risk) and regulatory risk. The Company's primary focus is to foresee the unpredictability of financial markets and seek to minimise potential adverse effects on its financial performance. The Company's exposure to credit risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers.

a) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers and investment securities. Credit risk arises from cash held with banks and financial institutions, as well as credit exposure to clients, including outstanding accounts receivable. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.

i. Trade and other receivables

The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer.

The demographics of the customer, including the default risk of the industry in which the customer operates, also has an influence on credit risk assessment.

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on days past due of various types of customers (i.e. issuers, DP (Depository Participants), RTA (Registrar and Transfer agents), etc). The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company evaluates the concentration of risk with respect to trade receivables as low.

No customer has accounted for more than 10% of the receivables as at March 31, 2024 and revenue for the year ended March 31, 2024.

No customer has accounted for more than 10% of the receivables as at March 31, 2023 and revenue for the year ended March 31, 2023.

ii. Investments

The Company limits its exposure to credit risk by making investment as per the investment policy. Further investment committee of the Company reviews the investment portfolio on monthly basis and recommends or provides suggestions to the management. The Company does not expect any losses from non-performance by these counter-parties, and does not have any significant concentration of exposures to specific industry sectors.

b) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due.

The Company’s treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. The management monitors the Company's net liquidity position through forecasts on the basis of expected cash flows.

The details regarding the contractual maturities of financial liabilities as at March 31, 2024 and March 31, 2023 are as below:

c) Market risk

The Company's business, financial condition and results of operations are highly dependent upon the levels of activity in the capital markets and in particular upon the trading volume on stock exchanges, the number of listed securities, the number of new listings and subsequent issuances and introduction of new services which will ease in doing business in capital markets.

In addition to the above risk, market risk also include following:

i. Foreign Currency risk

The Company’s foreign currency risk arises in respect of foreign currency transactions. The Company's foreign currency expenses are insignificant, while a significant portion of its costs are in Indian rupees.

As a result, if the value of the Indian rupee appreciates relative to these foreign currencies, the Company's expenses measured in rupees may decrease. Due to lessor quantum of expenses from foreign currencies, the Company is not much exposed to foreign currency risk.

ii. 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 interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's long-term/short-term investment with floating interest rates.

All investments in Debentures and Bonds are at fixed rate of Interest and does not have material interest rate risks. The Company's investments in floating rate are primarily in Fixed Maturity Plans (FMPs) of mutual funds, which do not expose it to significant interest rate risk. The Company's exposure to assets having price risk is as under:-

iii. Regulatory Risk

The Company requires various regulatory approvals, registrations and permissions to operate its business, including at a corporate level as well as at the level of each of its components. Some of these approvals are required to be renewed from time to time. The Company's operations are subject to continued review by regulator and these regulations may change from time to time in fast changing capital market environment. The Company's compliance team constantly monitors the compliance with these rules and regulations.

32. Capital Management

The Company's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Company monitors the return on capital as well as the level of dividends on its equity shares. The Company's objective when managing capital is to maintain an optimal structure so as to maximise shareholder value.

The Company is equity financed which is evident from the capital structure. Further, the Company has always been a net cash Company with cash and bank balances along with investments which are predominantly investments in mutual funds being far in excess of financial liabilities.

i. Legal Claim:

a) Writ petition has been filed by Swojas Energy Foods Limited & Ors. against SEBI, CDSL & Ors. pursuant to Demat accounts of the petitioners being frozen on receipt of instructions received from BSE based on a circular issued by BSE in discussion with SEBI. Petitioners have sought monetary compensation exceeding ^ 333 Lakh for alleged illegal freezing of demat accounts as the petitioners' allege that SEBI did not delegate any such power to BSE. There have been two hearings, however, there is no further development in the matter.

b) The Hon’ble Arbitration Tribunal has passed an award by granting a claim of ^ 86.03 Lakh to the Claimant and directed CDSL to pay. CDSL has challenged the said award before the Hon’ble Bombay High Court and the same is currently pending.

c) Arbitration and Civil Cases pending in the court/ with the authorities amounting to ' 842 Lakh, The management believes that the crystallisation of liability on CDSL is remote in these cases.

ii. Bank Guarantees

As per business requirements, bank guarantees are issued by banks on behalf of the Company, against 100% margin

(earmarked) on fixed deposit receipts. (Refer note 44)

37. Employee benefits

37.1 Defined benefits plan - Gratuity

Gratuity is administered through Gratuity Scheme with Life Insurance Corporation of India (LIC). The LIC raises demand for annual contribution for gratuity amount based on its own computation without providing entire details as required by the Ind AS 19 "Employee Benefits". Hence the Company obtains separate actuarial valuation report as required under Ind AS 19 "Employee Benefits" from an independent Actuary. The expected return on plan assets is based on market expectation at the beginning of the year, for the returns over the entire life of the related obligations.

37.2 Compensated Absences

The employees of the Company are entitled to compensated absences. The employees can carry forward a portion of the unutilised accumulated compensated absences and utilise it in future periods or receive cash at retirement or termination of employment. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the end of the reporting period. The Company recognises accumulated compensated absences based on actuarial valuation. Non-accumulating compensated absences are recognised in the period in which the absences occur. The Company recognises remeasurement gains or losses immediately in the statement of profit and loss.

During the year ended March 31, 2024 an amount recognised as an expense in respect of compensated leave absences is ^ 316.31 Lakh, (Previous year ended March 31, 2023 is ^ 217.43 Lakh).

38 . As per the rule the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2018 (the "Amended Regulations") the Company has determined the IPF contribution at 5% of profit from depository operation after making such contribution according to the Amended Regulations. The profit from depository operations has been determined by reducing the other income for the year from the Net profit before exceptional items and tax for the year after making such contribution. The movement of IPF provision is given below:

39. SEBI vide its circular no. CIR/MRD/DP/18/2015 dated December 09, 2015 had come up with a concept of Basic Services Demat Accounts (BSDA) with an objective of promoting financial inclusion and expanding the reach of depository services to tier II and tier III towns, recommended that the revenue source of the depositories may be augmented and Depository Participants (DPs) may be incentivised by having a revenue sharing mechanism between depositories and DPs. SEBI circular also prescribes that the annual issuer charges may be increased, and the incremental revenue received by the Depositories be shared suitably with their Depository Participants for promoting the BSDA and opening new accounts in tier II and tier III towns. Further in order to compensate the DPs towards the cost of opening and maintaining Basic Services Demat Accounts, the depositories shall pay an incentive of ^ 100/- for every new BSDA opened by their participants in other than the top 15 cities specified by SEBI. The incentive shall be provided at the end of the financial year only with respect to the new BSDA opened during the financial year and which displayed at least one credit in the account during the Financial Year.

Pursuant to the Circular, the Company has set aside ^ 1,361.23 Lakh during the year ended March 31, 2024 ( Previous year ended March 31, 2023 is ^ 967.24 Lakh) being 20% of the incremental revenue received from issuers during the respective years, towards the DP incentive scheme.

40. Chief Operating Decision Maker (CODM) as defined under Indian Accounting Standard 108 Operating Segments:

The Managing Director and Chief Executive Officer of the Company, has been identified as the CODM as defined by Indian Accounting Standard 108 "Operating Segments". The CODM evaluates the Company's performance, allocates resources based on analysis of the various performance indicators of the Company as a single unit.

The principal business of the Company is of "Depository Services". All other activities of the Company revolve around its principal business. Therefore, directors have concluded that there is only one operating reportable segment as per Indian Accounting Standard 108 "Operating Segments".

The entity’s revenues are entirely attributable to customers in India. All the non-current assets of the Company are located in India.

41. Option permitted under Section 115BAA of the Income-tax Act, 1961:

From the financial year 2019-20, the Company had elected to exercise the option permitted under Section 115BAA of the Income-tax Act, 1961 as introduced by the Taxation Laws (Amendment) Act, 2019.

46. Events after the reporting period

There are no events that have occurred between the end of the reporting period and the date when the standalone financial statements are approved that provide evidence of conditions that existed at the end of the reporting period.

47. To maintain the consistency with the current year presentation, fixed deposits of ' 1,081 Lakh as on March 31, 2023 having original maturity of more than 12 months with remaining maturity of less than 12 months has been reclassified in current assets from bank balances other than Cash & Cash equivalents to Other financial assets. This reclassification does not have any impact on the profit for the year and the management believes that it does not have any material impact on information presented in the balance sheet.

48. Other Statutory Information

a) The Company, for the current year as well as previous year, does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

b) The Company, for the current year as well as previous year, does not have any charges or satisfaction to be registered with ROC.

c) The Company, for the current year as well as previous year, has not traded or invested in Crypto currency or Virtual Currency during the financial year.

d) The Company, for the current year as well as previous year, does not have any such transaction which is not recorded in the books of account that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961

e) The Company, for the current year as well as previous year, has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

f) The Company, for the current year as well as previous year, has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Group shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

g) The Company has not been declared as willful defaulter by any bank or financial Institution or other lender, since the Company has not undertaken any borrowing during the current year and previous year.

h) The Company, during the current year and previous year, has not made any investment in downstream companies which are not in compliance with clause (87) of Section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.

i) The Company has not entered into any scheme of arrangement in terms of Sections 230 to 237 of the Companies Act, 2013 during the current year and previous year.

j) The Company has not revalued its Property, Plant and Equipment or intangible assets or both during the current year and previous year.

k) The Company has not granted/given any loans or advances during the current year and previous year to the promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013), either severally or jointly with any other person, that are repayable on demand or without specifying any terms or period of repayment.

49. The Company has used accounting software for maintaining its books of account which has a feature of recording audit

trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the

software. Further, there are no instance of audit trail feature being tampered with.

50. Standards notified but not yet effective

There are no standards that are notified and not yet effective as on the date.

Signatures to Notes 1 to 50 forming part of standalone Financial Statements

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

Central Depository Services (India) Limited

For S. R. Batliboi & Co. LLP Balkrishna V Chaubal Nehal Vora

Chartered Accountants Chairman Managing Director & CEO

ICAI Firm registration No. 301003E/E300005 DIN: 06497832 DIN: 02769054

Per Jayesh Gandhi Nilay Shah Girish Amesara

Partner Company Secretary Chief Financial Officer

Membership No. 037924 Membership No. A20586

Place: Mumbai Place: Mumbai

Date: May 04, 2024 Date: May 04, 2024