3.11 Provisions, Contingent Liabilities and Contingent Assets

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

Contingent liabilities are recognised only when there is a possible obligation arising from past events,
due to occurrence or non-occurrence of one or more uncertain future events, not wholly within the
control of the Company, or where any present obligation cannot be measured in terms of future
outflow of resources, or where a reliable estimate of the obligation cannot be made. Obligations are
assessed on an ongoing basis and only those having a largely probable outflow of resources are
provided for.

Contingent assets are not disclosed in the financial statements unless an inflow of economic benefits
is probable.

3.12 Dividends on ordinary shares

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

3.13 Determination of Fair value

The Company measures financial instruments at fair value at each balance sheet date.

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:

• In the principal market for the asset or liability, or

• 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.

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

• Level 1 financial instruments - Those where the inputs used in the valuation are unadjusted quoted
prices from active markets for identical assets or liabilities that the Company has access to at the
measurement date. The Company considers markets as active only if there are sufficient trading
activities with regards to the volume and liquidity of the identical assets or liabilities and when there
are binding and exercisable price quotes available on the balance sheet date.

• Level 2 financial instruments - Those where the inputs that are used for valuation and are
significant, are derived from directly or indirectly observable market data available over the entire
period of the instrument's life. Such inputs include quoted prices for similar assets or liabilities in
active markets, quoted prices for identical instruments in inactive markets and observable inputs
other than quoted prices such as interest rates and yield curves, implied volatilities, and credit
spreads. In addition, adjustments may be required for the condition or location of the asset or the
extent to which it relates to items that are comparable to the valued instrument. However, if such
adjustments are based on unobservable inputs which are significant to the entire measurement, the
Company will classify the instruments as Level 3.

• Level 3 financial instruments - Those that include one or more unobservable input that is significant
to the measurement as whole.

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 period.

The company evaluates the levelling at each reporting period on an instrument-by-instrument basis
and reclassifies instruments when necessary based on the facts at the end of the reporting period.

3.14 Recognition of Income

Revenue (other than for those items to which Ind AS 109 Financial Instruments are applicable) is
measured at fair value of the consideration received or receivable.

3.14.1 Interest on Overdue Balances and Other Charges

Overdue interest in respect of loans is recognised upon realisation.

3.14.2 Fee Income & Sale of Service

a) Fee income from loans are recognised upon satisfaction of following:

i) Completion of service

ii) and realisation of the fee income.

b) Servicing and collections fees on assignment are recognised upon completion of service.

3.15 Dividend Income

Dividend income (including from FVOCI investments) is recognised when the Company's right to

receive the payment is established, it is probable that the economic benefits associated with the
dividend will flow to the entity and the amount of the dividend can be measured reliably. This is
generally when the shareholders approve the dividend.

3.16 Earnings Per Share

Basic Earnings Per Share is 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.
The weighted average number of equity shares outstanding during the period and for all periods
presented is adjusted for events, such as bonus shares, other than the conversion of potential equity
shares, that have changed the number of equity shares outstanding, without a corresponding change
in resources. For the purpose of 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 is adjusted for the effects of all dilutive potential equity shares.

3.17 Cash Flow Statement

Cash flows are reported using the indirect method, where by profit / (loss) before tax is adjusted for
the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash
receipts or payments

For the purpose of the Statement of Cash Flows, cash and cash equivalents as defined above, net of
outstanding bank overdrafts as they are considered an integral part of cash management of the
company.

3.18 Cash and Cash equivalents

Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term
deposits with an original maturity of three months or less, which are subject to an insignificant risk of
changes in value.

3.19 Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the
arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the
arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a
right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the
leased assets are classified as operating leases. Operating lease payments are recognised as an
expense in the Statement of Profit and Loss on a straight line basis over the lease term.

4. Significant accounting judgements, estimates and assumptions

The preparation of the Company's financial statements requires management to make judgements,
estimates and assumptions that affect the reported amount of revenues, expenses, assets and
liabilities, and the accompanying disclosures, as well as the disclosure of contingent liabilities.
Uncertainty about these assumptions and estimates could result in outcomes that require a material
adjustment to the carrying amount of assets or liabilities affected in future periods.

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

4.1 De-recognition of Financial instruments

The Company enters into securitisation transactions where financial assets are transferred to a
structured entity for a consideration. The financial assets transferred qualify for derecognition only
when substantial risk and rewards are transferred.

This assessment includes judgements reflecting all relevant evidence including the past performance
of the assets transferred and credit risk that the Company has been exposed to. Based on this
assessment, the Company believes that the credit enhancement provided pursuant to the transfer of
financial assets under securitisation are higher than the loss incurred on the similar portfolios of
the Company hence it has been concluded that securitisation transactions entered by the Company
does not qualify de-recognition since substantial risk and rewards of the ownership has not been
transferred. The transactions are treated as financing arrangements and the sale consideration
received is treated as borrowings.

4.2 Fair value of Financial Instruments

The fair value of financial instruments is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction in the principal (or most advantageous) market at the
measurement date under current market conditions (i.e., an exit price) regardless of whether that
price is directly observable or estimated using another valuation technique. When the fair values of
financial assets and financial liabilities recorded in the balance sheet cannot be derived from active
markets, they are determined using a variety of valuation techniques that include the use of valuation
models. The inputs to these models are taken from observable markets where possible, but where
this is not feasible, estimation is required in establishing fair values. Judgements and estimates
include considerations of liquidity and model inputs related to items such as credit risk (both own and
counterparty), funding value adjustments, correlation and volatility. For further details about
determination of fair value please see Fair value note in Accounting policy.

4.3 Impairment of Financial Asset

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

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

• The Company's criteria for assessing if there has been a significant increase in credit risk and so
allowances for financial assets should be measured on a LTECL basis and the qualitative assessment

• The segmentation of financial assets when their ECL is assessed on a collective basis

• Development of ECL models, including the various formulas and the choice of inputs

• Determination of temporary adjustments as qualitative adjustment or overlays based on broad
range of forward looking information as economic inputs

It has been the Company's policy to regularly review its models in the context of actual loss
experience and adjust when necessary.

4.4 Provisions and other contingent liabilities

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

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

4.5 Recent Pronouncements :

Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing
standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the
year ended 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 new pronouncements and based on its evaluation has
determined that it does not have any impact in its financial statement.

a) Statutory reserve represents the reserve created as per Section 45IC of the RBI Act, 1934, pursuant to which a Non-Banking
Financial Company shall create a reserve fund and transfer therein a sum not less than twenty per cent of its net profit every year as
disclosed in the Statement of Profit and Loss account, before any dividend is declared.

b) The general reserve is a free reserve, retained from Group's profits and can be utilized upon fulfilling certain conditions in
accordance with statute of the relevant Act.

c) Equity Component of Compound Financial Instrument represents the amount of equity part of the Convertible Preference Shares
which had been converted into Equity Shares during the Financial Year 2019-20.

d) Retained Earnings are the profits and losses that the company has earned / incurred till date, less any transfers to the Statutory
Reserves and General Reserves.

34 CAPITAL MANAGEMENT

The company maintains an actively managed capital base to cover risks inherent in the business,
meeting the capital adequacy requirements of Reserve Bank of India (RBI), maintain strong credit
rating and healthy capital ratios in order to support business and maximise shareholder value. The
adequacy of the Company's capital is monitored by the Board using, among other measures, the
regulations issued by RBI.

The company manages its capital structure and makes adjustments to it according to changes in
economic conditions and the risk characteristics of its activities. In order to maintain or adjust the
capital structure, the Company may adjust the amount of dividend payment to shareholders, return
capital to shareholders or issue capital securities.

The company has complied in full with the capital requirements prescribed by RBI over the
reported period.

a) Risk Management

The company has put in place a robust risk management framework to promote a proactive
approach in reporting, evaluating and resolving risks associated with the business. Given the nature
of the business, the company is engaged in, the risk framework recognizes that there is uncertainty
in creating and sustaining value as well as in identifying opportunities. Risk management is
therefore made an integral part of the company's effective management practice.

Risk Management Framework: The company's risk management framework is based on (a) clear
understanding and identification of various risks (b) disciplined risk assessment by evaluating the
probability and impact of each risk (c) Measurement and monitoring of risks by establishing Key
Risk Indicators with thresholds for all critical risks and (d) adequate review mechanism to monitor
and control risks.

The company has a well-established risk reporting and monitoring framework. The in-house
developed risk monitoring tool, Composite Risk Index, highlights the movement of top critical risks.
This provides the level and direction of the risks, which are arrived at based on the two level risk
thresholds for the identified Key Risk Indicators and are aligned to the overall company's risk
appetite framework approved by the board. The company also developed such risk reporting and
monitoring mechanism for the risks at business / vertical level. The company identifies and
monitors risks periodically. This process enables the company to reassess the top critical risks in a
changing environment that need to be focused on.

Risk Governance structure: The Company's risk governance structure operates with a clearly laid
down charter and senior management direction and oversight. The board oversees the risk
management process and monitors the risk profile of the company directly as well as through a
board constituted risk management committee.

The risk management division has established a comprehensive risk management framework across
the business and provides appropriate reports on risk exposures and analysis in its pursuit of
creating awareness across the company about risk management. The key risks faced by the
company are credit risk, liquidity risk, interest rate risk, operational risk, reputational and
regulatory risk, which are broadly classified as credit risk, market risk, operational risk, and liquidity
risk.

b) Credit Risk

Credit risk arises when a borrower is unable to meet financial obligations to the lender. This could
be either because of wrong assessment of the borrower's payment capabilities or due to
uncertainties in future. The effective management of credit risk requires the establishment of
appropriate credit risk policies and processes.

The company has comprehensive and well-defined credit policies which encompass credit approval
process for all businesses along with guidelines for mitigating the risks associated with them. The
appraisal process includes detailed risk assessment of the borrowers, physical verifications and field
visits. The company has a robust post sanction monitoring process to identify credit portfolio trends
and early warning signals. This enables it to implement necessary changes to the credit policy,
whenever the need arises.

c) Market Risk

Market Risk is the possibility of loss arising from changes in the value of a financial instrument as a
result of changes in market variables such as interest rates, exchange rates and other asset prices.
The company's exposure to market risk is a function of asset liability management activities. The
company is exposed to interest rate risk and liquidity risk.

The Company continuously monitors these risks and manages them through appropriate risk limits.

d) Concentration of Risk/Exposure

Concentration of credit risk arise when a number of counterparties or exposures have comparable
economic characteristics, or such counterparties are engaged in similar activities or operate in same
geographical area or industry sector so that collective ability to meet contractual obligations is
uniformly affected by changes in economic, political or other conditions.

The Concentration of risk is managed by company for each product by its region and its
subsegments.

e) Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people or
systems, or from external events.

The operational risks of the company are managed through comprehensive internal control
systems and procedures and key back up processes. In order to further strengthen the control
framework and effectiveness, the company has established risk control self- assessment to identify
process lapses by way of exception reporting. This enables the management to evaluate key areas
of operational risks and the process to adequately mitigate them on an ongoing basis.

f) Liquidity Risk

Liquidity risk is defined as the risk that the company will encounter difficulty in meeting obligations
associated with financial liabilities that are settled by delivering cash or another financial asset.
Liquidity risk arises because of the possibility that the company might be unable to meet its
payment obligations when they fall due as a result of mismatches in the timing of the cash flows
under both normal and stress circumstances. Such scenarios could occur when funding needed for
illiquid asset positions is not available to the company on acceptable terms. To limit this risk,
management has arranged for diversified funding sources and adopted a policy of availing funding
in line with the tenor and repayment pattern of its receivables and monitors future cash flows and
liquidity. The company has developed internal control processes and contingency plans for
managing liquidity risk.

The Management assessed that cash and cash equivalents, bank balance other than Cash and cash equivalents,
Loans, Other financial assets, payables, Borrowings and other financial liabilities approximates their carrying
amount largely due to short term maturities of these instruments.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be
exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The
following methods and assumptions were used to estimate the fair values of financial assets or liabilities
disclosed under level 2 category.

i) The fair value of loans have estimated by discounting expected future cash flows using discount rate equal to
the rate near to the reporting date of the comparable product.

ii) The fair value of borrowings other than debt securities and subordinated liabilities have estimated by
discounting expected future cash flows discounting rate near to report date based on comparable rate / market
observable data.

(i) The Company does not have any immovable property (other than properties where the company is the lessee and the lease
arrangements are duly executed in favour of the lessee) as at balance sheet date. Accordingly, disclosures as required under
this para is not applicable.

(ii) The Company does not have any investment property as at balance sheet date. Accordingly, disclosures as required under
this para is not applicable.

(iii) The Company has not revalued its Property, Plant and Equipment during the year. Accordingly, disclosures as required under
this para is not applicable.

(iv) The Company does not have any intangible assets as at balance sheet date. Accordingly, disclosures as required under this
para is not applicable.

(v) The Company has not granted any loans or advances in the nature of loan to promoters, directors, KMP and the related
parties (as defined under Companies Act, 2013), either severally or jointly with any other person, which are repayable on
demand or without specifying any terms or period of repayment during the curent and the previous year. Accordingly,
disclosures as required under this para is not applicable.

(vi) The Company does not have any capital work-in-progress as at balance sheet date. Accordingly, disclosures as required
under this para is not applicable.

(vii) The Company does not have any intagible asset under development as at balance sheet date. Accordingly, disclosures as
required under this para is not applicable.

(viii) There has been no proceeding initiated or pending against the Company for holding any benami property under the
Prohibition of Benami Property Transactions Act, 1988 and the rules made thereunder. Accordingly, disclosures as required
under this para is not applicable.

(ix) The Company has not taken any borrowings from banks or financial institutions on the basis of security of assets.
Accordingly, disclosures as required under this para is not applicable.

(x) The Company has not been declared as wilful defaulter by any bank or financial institution or other lender. Accordingly,
disclosures as required under this para is not applicable.

(xi) The Company has not entered into any transaction with companies struck off under section 248 of the Companies Act, 2013
or section 560 of Companies Act, 1956 during the current and previous year. Accordingly, disclosures as required under this
para is not applicable.

(xii) There are no charges or satisfaction pending for registration with the Registrar of Companies beyond the statutory period by
the Company. Accordingly, disclosures as required under this para is not applicable.

(xiii) The Company does not have any subsidiary/associate/joint venture and accordingly compliance with number of layers
prescribed under clause (87) of section 2 of the Companies Act, 2013 read with Companies (Restriction on Number of Layers)
Rules, 2017 is not applicable.

As per our report of even date attached.

For A.C. Bhuteria & Co. For and on behalf of the Board of Directors of Frontier Capital Limited

Chartered Accountants
ICAI Firm Regn No. 303105E

Mohit Bhuteria Hemendranath Rajendranath Choudhary Mayur Doshi

Partner Whole Time Director Director

Membership No: 056832 DIN: 06641774 DIN: 08351413

Date: 12.05.2025 Date: 12.05.2025

Place: Kolkata Place: Mumbai