(S) Provisions, contingent liabilities and contingent assets
The Company creates a provision when there is a present obligation as a result of past events and it is probable that
there will be outflow of resources and a reliable estimate of the obligation can be made of the amount of the obligation.
Contingent liabilities are not recognised but are disclosed in the notes to the Standalone Ind AS financial statements. A
disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but
probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of
which the likelihood of outflow of resources is remote, no provision or disclosure is made.
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer
probable that the outflow of resources would be required to settle the obligation, the provision is reversed.
Contingent assets are not recognised nor disclosed in the Standalone Ind AS financial statements.
(T) Foreign currency translation
The Company's financial statements are presented in Indian Rupee, which is also the Company's functional currency.
Initial recognition: Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the
time of the transaction.
Conversion: Monetary assets and liabilities denominated in foreign currencies at the year end are restated at year end
rates.
Exchange differences: All exchange differences are accounted in the Statement of Profit and Loss.
(U) Employee benefits
1) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12
months after the end of the period in which the employees render the related service are recognised in respect of
employees' services up to the end of the reporting period and are measured at the amounts expected to be paid when
the liabilities are settled.
2) Post-employment obligations
i) Defined benefit plans
Gratuity:
The Company's gratuity benefit scheme is a defined benefit plan. The Company's net obligation in respect of the
gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in
return for their service in the current and prior periods; that benefit is discounted to determine its present value, and
the fair value of any plan assets, if any, is deducted.
The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using
the Projected Accrued Benefit Method (same as Projected Unit Credit Method), which recognises each period of
service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build
up the final obligation.
The obligation is measured at the present value of the estimated future cash flows. The discount rates used for
determining the present value of the obligation under defined benefit plan, are based on the market yields on
Government securities as at the balance sheet date.
Remeasurement of the net defined benefit liability/ asset, which comprise actuarial gains and losses, the return on
plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized
immediately in the balance sheet with a corresponding debit or credit to OCI ( other Comprehensive Income) in the
period in which they occur. Net interest expense and other expenses related to defined benefit plans are recognized
in profit or loss. Remeasurements are not reclassified to profit or loss in subsequent periods.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to
past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognises
gains and losses on the settlement of a defined benefit plan when the settlement occurs.
ii) Defined contribution plans
Provident fund:
Company's contributions to the recognised provident fund, which is a defined contribution scheme, are charged to
the Statement of Profit and Loss.
(V) Earnings per share
1) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners of the Company by the weighted
average number of equity shares outstanding during the financial year, adjusted for bonus element in equity shares
issued during the year, if any.
2) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential equity
shares, and the weighted average number of additional equity shares that would have been outstanding assuming
the conversion of all dilutive potential equity shares.
(W) Rounding of Amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakh upto two decimal
points as per the requirements of Schedule III, unless otherwise stated.
(X) Critical estimates and judgments
The Company makes estimates and assumptions that affect the amounts recognised in the Standalone Ind AS financial
statements, and the carrying amounts of assets and liabilities within the next financial year. Estimates and judgments are
continually evaluated and are based on management's experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. Management also makes certain judgments, apart
from those involving estimations, in the process of applying the accounting policies. Judgments that have the most
significant effect on the amounts recognised in the Standalone Ind AS financial statements and estimates that can cause
a significant adjustment to the carrying amount of assets and liabilities within the next financial year include the following:
1) Estimation of fair value of unlisted investments
The fair value of financial instruments that are not traded in an active market is determined using valuation
techniques. The Company uses its judgment to select a variety of methods and make assumptions that are mainly
based on market conditions existing at the end of each reporting period. For details of the key assumptions used
and the impact of changes to these assumptions.
2) Current tax
Provision for current tax is made after taking into consideration benefits admissible under the provisions of the
Income Tax Act, 1961. For the purpose of preparing Income Tax working, the Company has opted for the new
taxation rates u/s 115BAA of the Income Tax Act, 1961.
3) Estimation of fair value of investments property
The Company has carried out the valuation activity to assess fair value of its Investment in land and property.
Accordingly, fair value estimates for investment in land and property is classified as level 3.
The Company has obtained a Valuation Report from valuer to assess fair value of its Investment of property.
(Y) New standards, interpretations, and amendments:
The Ministry of Corporate Affairs (MCA) notifies new standards or amendments to the existing standards under
Companies (Indian Accounting Standards) Rules as issued from time to time. The MCA notified the Companies
(Indian Accounting Standards) Amendment Rules, 2025 to amend the Companies (Indian Accounting Standards)
Rules, 2015, as below:
Ind AS 21, The Effects of Changes in Foreign Exchange Rates :This amendment is introduced to provide enhanced
guidance on assessing currency exchangeability and estimating exchange rates when currencies are non¬
exchangeable to align with international accounting standards. The effective date for adoption of this amendment is
annual periods beginning on or after April 1, 2025. The Company has evaluated the amendment and there is no
impact on its financial statements.
Further, for the year ended March 31, 2025, MCA has notified Ind AS - 117 Insurance Contracts and amendments
to Ind AS 116 - Leases, relating to sale and leaseback transactions, applicable to the Company w.e.f. April 1,2024.
The Company has reviewed the same and based on its evaluation has determined that it does not have any
significant impact on the Ind AS financial statements
*The Board of directors of the company at its meeting held on 11th November, 2024, recommended the sub-division/split of one fully paid-up equity
share having a face value of Rs. 10/- each into 5 fully paid-up equity shares having a face value of Rs. 2/- each by alteration of capital clause of the
memorandum of association (MOA) subject to the approval of the members of the company. The members of the company approved the sub-division /
split of one fully paid-up equity share of Rs. 10/- each into Five fully paid-up equity share of Rs. 2/- each at the EGM held on 24th December 2024.
Further the record date for split / sub-division of equity shares was 13th January, 2025. Consequent to this, the authorized share capital comprises of
50,00,00,000 equity shares having a face value of Rs. 2/- each aggregating to Rs. 10,000 Lakhs and the paid-up share capital comprises of
8,74,92,165 equity shares having a face value of Rs. 2/- each aggregating to Rs. 1,749.84 lakhs.
(C) Par value per share:
The par value of Equity Shares is Rs.2/-. (Previous year of Rs. 10/- Each)
(D) The rights, preferences and restrictions attached to each class of shares including to restrictions on the distribution of dividends and
repayment of capital:
Equity Shares- The Company has only one class of equity shares. Each holder of equity shares is entitled to one vote per share. The equity
shareholders are entitled to dividend only if dividend in a particular financial year is recommended by the Board of Directors and approved by the
members at the annual general meeting of that year. In case of winding up, if the assets available for distribution are less than the paid up share
capital, then the shortfall will be borne by the members proportionately. Where there is an excess, the same shall be distributed proportionately among
the members.
Nature and purpose of reserve:
a) Capital Reserve
Capital Reserves are mainly the reserves created during business combination for the gain on bargain purchase.
b) Securities Premium
Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of
bonus shares in accordance with the provisions of the Companies Act, 2013.
c) General Reserve
The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by
a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be
reclassified subsequently to profit or loss.
d) Statutory Reserve Fund (As per RBI Guidelines)
Statutory reserve fund is created pursuant to section 45-IC of the Reserve Bank of India Act, 1934 for NBFC Companies. Therefore twenty percent of
the profit after taxation has been transferred to statutory reserve
e) Other Comprehensive Income (OCI)
FVOCI equity investments: The Company has elected to recognise changes in the fair value of certain investments in equity securities in other
comprehensive income. These changes are accumulated within the FVOCI equity investments reserve within equity. The Company transfers amounts
from this reserve to retained earnings when the relevant equity securities are derecognised.
Other Comprehensive Income also represents actuarial gains / (losses) arising on recognition of defined benefit plans.
f) Retained Earnings
Retained earnings or accumulated surplus represents total of all profits retained since Company's inception. Retained earnings are credited with current
year profits, reduced by losses, if any, dividend payouts, transfers to General reserve or any such other appropriations to specific reserves.
Note 35 Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most
advantageous) market at the measurement date under current market conditions (i.e., an exit price), regardless of whether that price is directly
observable or estimated using a valuation technique.
In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques.
1) Fair value hierarchy:
The Company determines fair value of its financial instruments according to following hierarchy:
Level 1: Category includes financials assets and liabilities that are measured in whole or significant part by reference to published quotes in an
active market.
Level 2: Category includes financials assets and liabilities that are measured using a valuation technique based on assumptions that are
supported by prices from observable current market transactions.
Level 3: Category includes financials assets and liabilities that are measured using valuation techniques based on nonmarket observable
inputs. This means that fair value are determined in whole or in part using a valuation model based on assumptions that are neither
supported by prices from observable current market transactions in the same instrument nor are they based on available market data.
The main asset classes in this category are unlisted equity investments as well as unlisted funds. Company has used discounted cash
flow, comparable company analysis, net asset value method and valuation report of independent valuers where ever possible.
Note 36 Financial risk management
Shardul Securities Limited (‘the Company’) is registered as Non-Banking Financial Company (NBFC) as defined under Section 45-IA of the
Reserve Bank of India Act, 1934 (RBI). It’s a Systemically Important Non-Deposit taking NBFC Company (NBFC-ND-SI).
The Company is exposed to market risk, credit risk, liquidity & interest rate risk and capital management risk. The Company’s risk management
function is carried out by the Risk Management Committee by evaluating financial risks and the appropriate governance framework for the
Company. The Risk Management Committee provides assurance to the Board that the Company’s financial risk activities are governed by
appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies
and risk objectives. The major risks are summarised below:
Market Risk:
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market
prices. The Company has quoted investments and investment in bullions which are exposed to fluctuations in stock/Commodity prices.
The company continuously monitors market exposure.The unquoted redeemable non-convertible Preference Shares and unquoted
investment in various funds are measured at fair value through profit or loss. The fair values of these investments are regularly
monitored.
Credit Risk:
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an
obligation. Credit risk arises mainly from loans and advances, and loan commitments arising from such lending activities, but can also
arise from credit enhancement provided, such as financial guarantees, letters of credit, endorsements and acceptances. The
Company has very insignificant exposure to loans given or taken hence exposure to such risk is very negligible. The Financial
Guarantees is given on behalf of wholly owned subsidiary company.
Liquidity and Interest Rate Risk:
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled
by delivering cash or another financial asset. While interest rate risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market interest rates. The Company manages its liquidity risk by ensuring, as far as
possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risk to the Company’s reputation
Currency Risk:
Exchange rate volatility imparts a new dimension to the risk profile of an NBFC’s balance sheets having foreign assets or liabilities.
The Company is not exposed to currency risk as it has no foreign assets or liabilities.
Capital Management Risk:
The Reserve Bank of India (RBI) sets and monitors capital adequacy requirements for the Company from time to time. As per
regulations prescribed by Reserve Bank of India, the Company's minimum prescribed regulatory capital is holding Net Owned Funds
of Rs. 200 Lakhs. The Companies policies in respect of capital management and allocation are reviewed regularly by the Board of
Directors and hence, increase in capital is planned well in advance to ensure adequate funding for its growth.
The Company’s objective is to maintain appropriate levels of capital to support its business strategy taking into account the regulatory,
economic and commercial environment. The Company aims to maintain a strong capital base to support the risks inherent to its
business and growth strategies. The Company endeavors to maintain a higher capital base than the mandated regulatory capital at all
times. No changes have been made to the objectives, policies and processes from the previous years. However, they are under
constant review by the Board.
Ind AS 109 outlines a ‘three-stage’ model for impairment based on changes in credit quality since initial recognition as summarised
below, The objective of the impairment requirements is to recognise lifetime expected credit losses for all financial instruments for
which there have been significant increases in credit risk since initial recognition - whether assessed on an individual or collective
basis - considering all reasonable and supportable information, including that which is forward-looking.
A financial instrument that is not credit-impaired on initial recognition is classified in ‘Stage 1’ and has its credit risk continuously
monitored by the Company.
If significant increases in credit risk (‘SICR’) since initial recognition is identified, the financial instrument is moved to ‘Stage 2’ but is
not yet deemed to be credit-impaired.
If the financial instrument is credit-impaired, the financial instrument is then moved to ‘Stage 3’. Financial instruments in Stage 1 have
their ECL measured at an amount equal to 12 month ECLs. Instruments in Stages 2 or 3 have their ECL measured based on expected
credit losses on a lifetime basis. Purchased or originated credit-impaired financial assets are those financial assets that are credit
impaired on initial recognition. Their ECL is always measured on a lifetime basis (Stage 3).
The measurement of ECL is calculated using three main components: (i) Probability of Default (PD) (ii) Loss Given Default (LGD) and
(iii) the Exposure At Default (EAD).
The 12 month ECL is calculated by multiplying the 12 month PD, LGD and the EAD. The 12 month and lifetime PDs represent the PD
occurring over the next 12 months and the remaining maturity of the instrument respectively. The EAD represents the expected
balance at default, taking into account the repayment of principal and interest from the balance sheet date to the default event together
with any expected drawdowns of committed facilities. The LGD represents expected losses on the EAD given the event of default,
taking into account, among other attributes, the mitigating effect of collateral value at the time it is expected to be realised and the time
value of money.
i) Probability of default (PD) represents the likelihood of a borrower defaulting on its financial obligation, either over the next 12 months
(12M PD), or over the remaining lifetime (Lifetime PD) of the obligation.
ii) Exposure At default (EAD) is the total amount of an asset the entity is exposed to at the time of default. EAD is defined based on
the characteristics of the asset. EAD is dependent on the outstanding exposure of an asset, sanctioned amount of a loan and credit
conversion factor for non-funded exposures.
iii) Loss given default (LGD) It is the part of an asset that is lost provided the asset default. The recovery rate is derived as a ratio of
discounted value of recovery cash flows (incorporating the recovery time) to total exposure amount at the time of default. Recovery
rate is calculated for each segment separately. Loss given default is computed as (1 - recovery rate) in percentage terms.
The Company assesses when a significant increase in credit risk has occurred based on quantitative and qualitative assessments.
Exposures are considered to have resulted in a significant increase in credit risk and are moved to Stage 2 when:
i. Quantitative test: Accounts that are 30 calendar days or more past due move to Stage 2 automatically. Accounts that are 90
calendar days or more past due move to Stage 3 automatically.
ii. Qualitative test: Accounts that meet the portfolio’s ‘high risk’ criteria and are subject to closer credit monitoring. High risk customers
may not be in arrears but either through an event or an observed behavior exhibit credit distress.
iii. Reversal in Stages: Exposures will move back to Stage 2 or Stage 1 respectively, once they no longer meet the quantitative criteria
set out above. For exposures classified using the qualitative test, when they no longer meet the criteria for a significant increase in
credit risk.
Collateral and other credit enhancements:
The Company employs a range of policies and practices to mitigate credit risk.
Write-off policy:
The Company writes off financial assets, in whole or in part, when it has exhausted all practical recovery efforts and has concluded
there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include (i) ceasing
enforcement activity and (ii) where the Company’s recovery method is foreclosing on collateral and the value of the collateral is such
that there is no reasonable expectation of recovering in full.
Notes:
All quoted investments measured at FVPL have been included in less than 1 month bucket considering its liquidity. All unquoted equity
shares / funds including investment in subsidiaries & all quoted investments measured at FVOCI have been included in 'Over 5 years'.
a The maturity pattern has been prepared in line with various regulations issued by RBI from time to time, best practices & based upon
best estimate of the management with regard to the timing of various cash flows.
The classification of Assets and Liabilities into current and non-current is carried out based on their residual maturity profile as per
requirement of Schedule III to the Companies Act, 2013. The above maturity pattern of assets and liabilities has been prepared by the
b Company after taking into consideration guidelines for Maturity Profile - Liquidity given under master directions issued by RBI, best
practices and best estimate of the Assets-Liability Committee /management with regard to the timing of various cash flows.
Note 45 Leases:
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control
the use of an identified asset for a period of time in exchange for consideration.
i) As a Lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value
assets. The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term
of 12 months or less from the commencement date and do not contain a purchase option). Lease payments on short-term leases are
recognized as and when due.
ii) As a Lessor
Leases for which the Company is a lessor is classified as finance lease or operating lease. Whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee, the lease contract is classified as finance lease. All other leases is
classified as operating lease. For Operating Lease, lease rentals are recognised on a straight line basis over the term of lease.
Note 46 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 been operated throughout the year for all relevant transactions recorded in the software. Further, during the year there
were no instances of the audit trail feature being tampered and the audit trail has been preserved by the Company as per the statutory
requirements for record retention.
Note 47 Additional Regulatory information as per amendments in Schedule III of Companies Act, 2013
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding
any Benami property.
(ii) There are no balances outstanding on account of any transaction with companies struck off under section 248 of the Companies Act, 2013
or section 560 of Companies Act, 1956.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company 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:
(a) 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;
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(vi) The Company 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 Company shall:
(a) 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;
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(vii) The Company does not have any transaction which is not recorded in the books of accounts 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).
(viii) The Company has borrowed from banks and financial institutions for specific purpose during the financial year. This Loan are not in the
nature of working capital loans which is generally issued against the security of current assets.
(ix) There is no immovable property whose title deeds are not held in the name of the Company.
(x) There are no loans or advances in the nature of loans that are granted to promoters, directors, key managerial personnel (KMPs) and the
related parties either severally or jointly with any other person, that are: a) Repayable on demand or b) Without specifying any terms or
period of repayment.
(xi) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies
(Restriction on number of Layers) Rules, 2017.
(xii) The Company is not declared wilful defaulter by any bank or financial Institution or other lender.
N t Since the Company is systemically important non-deposit taking NBFC (NBFC-ND-SI), the ratios prescribed under division III of schedule III
o e are not applicable.
Note 49 Previous year's figures have been regrouped, rearranged and / or reclassified wherever necessary.
Note 1. The Company does not have any customer interface and thus there are no complaints received by the company from customers and from the offices of
Ombudsman during the year ended 31 st March 2025 and 31 st March 2024.
As per our report of even date attached For and on behalf of the Board of Directors
For Akkad Mehta & Co. LLP
Chartered Accountants Devesh D Chaturvedi
ICAI Firm Registration No : 100259W/W100384 (Chairman) (DIN 00004793)
Yogendra Chaturvedi
(Executive Director) (DIN 00013613)
Nirav Mehta
Partner Daya Bhalia
Membership No. 152552 (Exec Director & Co Secretary) (DIN 07049483)
Lalit Shah
(Director) (DIN 08473788)
Devesh Vasavada
(Director) (DIN 00273128)
Seshagiri
(Director) (DIN 10774559)
Vishnu Dutt
(Director) (DIN 06702812)
Viraf Katrak
(CEO)
Place :- Mumbai Tarun Chaturvedi
Date :- May 28, 2025 (CFO)
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