3.18 Provisions
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.
3.19 Operating Cycle
An asset or a liability is classified as current when it satisfies any of the following criteria:
1. It is expected to be realized / settled, or is intended for sale or consumption, in the Company's normal operating cycle; or
2. It is held primarily for the purpose of being traded; or
3. It is expected to be realized / due to be settled within twelve months after the reporting date; or
4. It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date; or
5. The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
All other assets and liabilities are classified as non-current.
3.20 Dividends on ordinary shares
The Company recognises a liability to make cash or non-cash distributions to equity holders of the parent when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
Non-cash distributions are measured at the fair value of the assets to be distributed with fair value re-measurement recognised directly in equity.
Upon distribution of non-cash assets, any difference between the carrying amount of the liability and the carrying amount of the assets distributed is recognised in the statement of profit and loss.
4 Taxes
4.1 Current tax
Current tax assets and liabilities for the current and prior years are measured at the amount expected to be recovered from, or paid to, the taxation authorities. The tax rates and tax laws used to compute amount are those that are enacted, or substantively enacted, by the reporting date in the countries where the Company operates and generates taxable income.
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. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.”
4.2 Deferred tax
Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
- Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
- In respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future 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, except:
- When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
- In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences 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.
Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognised subsequently if new information about facts and circumstances change.
Acquired deferred tax benefits recognised within the measurement period reduce goodwill related to that acquisition if they result from new information obtained about facts and circumstances existing at the acquisition date. If the carrying amount of goodwill is zero, any remaining deferred tax benefits are recognised in OCI/ capital reserve depending on the principle explained for bargain purchase gains. All other acquired tax benefits realised are recognised in profit or loss.
4.3 Minimum Alternate Tax (MAT)
Minimum alternate tax (MAT ) paid in a year is charged to the statement of profit and loss as current tax. The Group recognizes MAT credit available as an asset only to the extent that it is probable that the Group will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Group recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as “MAT Credit Entitlement.” The Group reviews the MAT Credit Entitlement asset at each reporting date and writes down the asset to the extent the Group does not have convincing evidence that it will pay normal tax during the specified period.
5 Significant accounting judgments, estimates and assumptions
The preparation of the Company's Standalone financial statements requires management to make judgments, 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.
Judgments
In the process of applying the company's accounting policies, management has made the following judgments, which have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
5.1 Business model assessment
Classification and measurement of financial assets depends on the results of the SPPI and the business model test. The company determines the business model at a level
that reflects how company of financial assets are managed together to achieve a particular business objective. This assessment includes judgment reflecting all relevant evidence including how the performance of the assets is evaluated and their performance measured, the risks that affect the performance of the assets and how these are managed and how the managers of the assets are compensated. The company monitors financial assets measured at amortised cost or fair value through other comprehensive income that are derecognised prior to their maturity to understand the reason for their disposal and whether the reasons are consistent with the objective of the business for which the asset was held. Monitoring is part of the company's continuous assessment of whether the business model for which the remaining financial assets are held continues to be appropriate and if it is not appropriate whether there has been a change in business model and so a prospective change to the classification of those assets.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The company based its assumptions and estimates on parameters available, the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the company. Such changes are reflected in the assumptions when they occur.
5.2 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. Judgments 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 Note 40.
5.3 Effective Interest Rate (EIR) method
The company's EIR methodology, recognises interest income / expense using a rate of return that represents the best estimate of a constant rate of return over the expected behavioural life of loans given / taken and recognises the effect of potentially different interest rates at various stages and other characteristics of the product life cycle (including prepayments and penalty interest and charges).
This estimation, by nature, requires an element of judgement regarding the expected behaviour and life-cycle of the instruments, as well expected changes to India's base rate and other fee income/expense that are integral parts of the instrument.
5.4 Impairment of financial asset
The measurement of impairment losses across all categories of financial assets requires judgment, 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 judgments and estimates include:
The company's internal credit grading model, which assigns PDs to the individual grades
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, dDevelopment of ECL models, including the various formulas and the choice of inputs, dDetermination of associations between macroeconomic scenarios and, economic inputs, such as unemployment levels and collateral values, and the effect on PDs, EADs and LGDs
Selection of forward-looking macroeconomic scenarios and their probability weightings, to derive the economic inputs into the ECL models
It has been the company's policy to regularly review its models in the context of actual loss experience and adjust when necessary.
5.5 Provisions and other contingent liabilities
The company operates in a regulatory and legal environment that, by nature, has a heightened element of litigation risk inherent to its operations. As a result, it is involved in various litigation, arbitration and regulatory investigations and proceedings in the ordinary course of the company's business.
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 judgment is required to conclude on these estimates.
(ii) Includes demands which are pending for adjudication with various income tax authorities i.e. ITAT, CIT (Appeal), Commissioner of Income Tax, etc.
(iii) Includes demands which are pending for adjudication with CESTAT, Joint Commissioner of GST.
35.1 Inclusive of Unpaid Capital call on equity shares of Religare Capital Markets Limited amounting to ' 4,077.50 Lakhs.
35.2 The Income tax return filed for the AY 2016-17 was picked up for assessment proceedings u/s 143(3) and the Income tax Department vide its final assessment order on 31.03.2021 has made an aggregate disallowance amounting to ' 1,24,942 Lakhs (including the disallowance of capital loss of RCML pursuant to reduction of share capital aggregating to ' 84,427 Lakhs). Further, the tax department has raised a demand aggregating to ' 20,451 Lakhs (including interest u/s. 234B and 234C of ' 7,642 Lakhs) after setting- off advance tax and TDS for the subject year. Subsequently, the AO has passed a rectification order dated 14.02.2023 & 15.05.2023 u/s. 154 r.w.s. 143(3) of the Act and reduced the disallowance to ' 1,24,935 Lakhs and reduced the demand to ' 16,412 Lakhs. Further, against the disallowances made by the AO in the final assessment order, the Company has filed an appeal before the Income Tax Appellant Tribunal ('ITAT') on 19.04.2021. Consequent to the appeal filed by the company, the Hon'ble ITAT vide its order dated 21.09.2023 has adjudicated the matter. The order of ITAT has following impacts:
(i) Out of the aggregate disallowances of ' 1,24,935 Lakhs made in the rectified assessment order, on additions aggregating to ' 40,508 Lakhs, the ITAT has granted relief to the Company. Pursuant to the order of ITAT, the Company has also filed an appeal effect application before the Assessing officer on 13.10.2023 to give effect to the order passed by the ITAT. Basis the appeal effect application, the demand of '16,412 Lakhs shall reduce to approx. ' 1,259 Lakhs.
(ii) The ITAT has confirmed the disallowance of short term and long term losses aggregating ' 84,427 Lakhs, claimed in the subject AY on write off of investment made in preference shares of a subsidiary. Against this issue upheld by the ITAT, the Company has filed an appeal before Delhi High Court on 17.01.2024, which has been duly admitted by the Delhi High Court on 29.04.2024. Now the matter is pending for adjudication before Delhi High Court. Further, the tax department has also filed an appeal before Delhi High Court on the grounds which were allowed by the ITAT to the company and the said appeal is pending at admission stage.
35.3 The assessment proceeding was initiated u/s 143(3) for AY 2017-18 and the AO has passed a final assessment order on 24.01.2022 confirming all the disallowances/additions, aggregating to ' 94,746 Lakhs, proposed in the draft assessment order dated 31.03.2021 and raised a demand of ' 13,996 Lakhs (including interest u/s. 234B of ' 4,940 Lakhs) after setting- off advance tax and TDS for the subject year. Against the said order passed by the Income tax department, the Company has taken following action (i) The company has filed an appeal before the Income Tax Appellant Tribunal ('ITAT') against the disallowances made by the income tax department, which is currently pending for adjudication before ITAT and (ii) the company had filed stay application before ITAT for stay of demand and the Hon'ble ITAT considering the facts of the present matter has granted interim stay on the operation of recovery of demand.
35.4 In accordance with the approval for payment of Brand License Fees granted by the Audit Committee and the Board of Directors in their respective meetings held on December 8, 2016 and December 10, 2016 respectively, the Company during the year ended March 31, 2017, had entered into an agreement for payment of Brand License Fees to RHC Holding Private Limited (“RHC”) for a period of 6 years effective April 01,2016 for usage of the “Religare” trademark/brand. During the year ended March 31,2018, RHC has assigned the trade mark “Religare” and its logo to Elive Infotech Pvt Limited (assignee/Elive). Further, Elive has waived the right to receive the brand license fee from REL or its subsidiaries/affiliates till the time interest on loans availed by the group companies of Elive and RHC from Religare Finvest Limited is serviced. In the suit titled SCCPL & Another vs. LVB & Others having no. CS(COMM) 633/2018 pending before the Hon'ble Delhi High Court, SCCPL had claimed ownership of “Religare Brand” by way of an Assignment Deed allegedly executed in its favour by RHC and Elive. The Hon'ble Delhi High Court vide its order date 22.02.2018 passed an order to maintain status quo regarding the Religare Trademark. RHC and Elive have filed an application under Section 340 Cr.P.C against SCCPL for wilfully knowing, deliberately making false statements and submitting forged documents. Loancore Servicing Solutions Ltd. has filed substitution on behalf of SCCPL by way of assignment deed. Further, Daiichi has also obtained a status quo order on the brand “Religare” by suppressing the fact that the entire shareholding of RHC Holdings Pvt. Ltd. in M/s Elive Infotech Pvt. Ltd. had been pledged in favour of RFL as a security for various loans to group companies of RHC Holdings Pvt. Ltd. RFL had filed objection application in the said proceedings.
35.5 Income Tax Assessment proceedings of the Company for the assessment year 2021-22 was completed National e-Assessment Centre vide assessment order dated 16.12.2022 after making adjustments on account of (i) Addition on account of Interest income on which TDS has been deducted by UCO bank amounting to ' 2,57,030 under the head PGBP and (ii) denial of brought forward losses pertaining to AY 2013-14 & AY 2016-17 aggregating to ' 7,560 Lakhs set-off with the income of the subject AY. Consequent to the adjustments made in the assessment order a demand of ' 2,148 Lakhs has been raised.
Against such assessment order the company has taken following action: (i) filed an appeal before CIT-A on 13.01.2023, (ii) Rectification Application dated 13.01.2023, once the rectification is adjudicated, the demand of ' 2,148 Lakhs will be reduced to Nil and (iii) stay of demand application is filed on 16.01.2023. Aforesaid actions taken by the company against the assessment order are pending for adjudication.
Further, the modified return is also filed u/s 170A basis the order of NCLT dated 15.06.2023 and all the points raised by the AO in the assessment order as stated above has been duly incorporated in the modified return of income. Therefore, the points raised by the AO in the assessment order have now become infructuous. The AO is now required to pass the updated assessment order basis the modified return of income filed by the company.
35.6 The income tax proceedings for the Assessment Year 2013-14 was completed vide assessment order dated 28.03.2016, wherein the disallowance u/s. 14A of Act of ' 194 Lakhs and disallowance u/s. 37(1) on account of fines and penalties of ' 35.18 Lakhs has been made.
Aggrieved by the said order, Company filed an appeal to the CIT-A, the CIT-A vide its order dated 28.07.2017 has granted partial relief by deleting the disallowance u/s. 14A of the Act and confirming disallowance of fines and penalties u/s. 37(1) of Act. Subsequently, the appeal was filed to the Hon'ble Income tax Appellate Tribunal ('ITAT') and the Hon'ble ITAT vide its order dated 25.02.2021 and MA order dated 01.04.2022 has given following directions (i) to restrict the disallowance u/s. 14A of the Act only to the extent of the exempt income earned by company for the subject AY and (ii) remanded back the matter to the AO for verification of facts and documents respecting the claim of company for fines and penalties.
Pursuant to the order of ITAT, the jurisdictional Assessing officer has passed an order giving effect to the appeal order dated 04.02.2023 wherein it has restricted the disallowance u/s. 14A of the Act to the extent of dividend income and determined a refund of ' 34.95 Lakhs.
However, in the subject matter the National Faceless Appeal Centre (“”NFAC””), without any jurisdiction passed an assessment order dated 29.03.2023 under section 143(3) read with section (r.w.s) 254 r.w.s 144B of the Act. In the aforesaid order the NFAC has made the identical disallowance which was made by the jurisdictional AO in original assessment order passed u/s. 143(3) of the Act dated 28.03.2016 and raised a demand of ' 8,434 Lakhs. The order passed by NFAC has several legal and factual errors. The NFAC has passed this order without any jurisdiction and also overruled orders of ITAT and CIT- A. The said order has several computation errors as well and the NFAC has also not given the company an opportunity of being heard through video conferencing despite of a specific request made by the company.
I n view of such errors in the assessment order passed causing undue hardship on the company, the company has filed a writ petition before the Hon'ble Delhi High Court seeking relief by quashing this impugned order and determining refund as per the appeal effect order passed by the jurisdictional AO. The Hon'ble Delhi High Court has duly admitted the writ petition of the company and has stayed the operation of the impugned order dated 29.03.2023 till the conclusion of matter. The matter is currently pending for adjudication.
39 Segment Reporting:
1 Basis of Segmentation
The segment reporting of the Company has been prepared in accordance with Ind AS 108 “Operating Segment”. For management purpose the Company is organised into business units based on services and has two reportable segments (a) Investment and Financing Activities, and, (b) Support Services.
The Segments have been identified as reportable segments by the Company's Chief Operating Decision Maker (“CODM”). Segment profit amounts are evaluated regularly by the Board, which has been identified as CODM, in deciding how to allocate resources and in assessing performance.
Segments Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments and amount allocated on a reasonable basis. Unallocated expenditure consists of common expenditure incurred for all segments. The asset and liabilities that cannot be allocated between segments are shown as unallocated between the segments and shown as unallocated corporate assets and liabilities respectively.
2 Information about Reportable Segments:
Primary Segment
(a) The business segment has been considered as the primary segment for disclosure. The Company's primary business comprises of ‘Investment and Financing Activities' and ‘Support Services'. The business segments have been identified considering the nature of services, the differing risks and returns, the organization structure and the internal financial reporting system.
(b) Segment revenue, results, assets and liabilities have been accounted for on the basis of their relationship to the operating activities of the segment and amounts allocated on a reasonable basis.
(c) Revenue and expenses directly attributable to segments are reported under each reportable segment. Expenses incurred on behalf of other segments and not directly identifiable to each reportable segment have been allocated to each segment on the basis of associated revenues of each segment. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses.
(d) Assets (including Property Plant & Equipment's) and liabilities that are directly attributable to segments are disclosed under each reportable segment. Common assets have been allocated to each segment on the basis of associated revenues of each segment. Liabilities have been allocated to each segment on the basis of total segment expense. All other assets and liabilities are disclosed as unallocable.
If the segment result of a segment includes interest or dividend income, its segment assets include the related receivables, loans, investments, or other interest or dividend generating assets.
If the segment result of a segment includes interest expense, its segment liabilities include the related interest-bearing liabilities.
40.1 Valuation Principles
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.
I n order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques.
40.2 Fair value hierarchy
Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels:
Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities.
Level 2: Inputs other than quoted price included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
The fair value of financial instruments that are not traded in an active market is determined using market approach and valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.
Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
If one or more of the significant inputs is not based on observable market data, the fair value is determined using generally accepted pricing models based on a analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparty.
The fair value of trade receivables, trade payables and other current financial assets and liabilities is considered to be equal to the carrying amounts of these items due to their short-term nature. Where such items are Non-current in nature, the same has been classified as Level 3 and fair value determined using basis. Similarly, unquoted equity instruments where most recent information to measure fair value is insufficient, or if there is a wide range of possible fair value measurements, cost has been considered as the best estimate of fair value.
There has been no change in the valuation methodology for Level 3 inputs during the year. The Company has not classified any material financial instruments under Level 3 of the fair value hierarchy. There were no transfers between Level 1 and Level 2 during the year.
41 Financial Risk Management, Objectives and Policies
41.1 Introduction and risk profile
Company has operations in India. Whilst risk is inherent in the Company's activities, it is managed through an integrated risk management framework, including on-going identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Company's continuing profitability and each individual within the Company is accountable for the risk exposures relating to his or her responsibilities. The Company is exposed to credit risk, liquidity risk and market risk. It is also subject to various operating and business risks.
41.1.1 Risk Management Structure
The Board of Directors are responsible for the overall risk management approach and for approving the risk management strategies and principles.
The Board has constituted the Risk Management Committee which is responsible for monitoring the overall risk process within the Company. The Risk Management Committee (RMC) has the overall responsibility for the development of the risk strategy and implementing principles, frameworks, policies and limits. The RMC is responsible for managing risk decisions and monitoring risk levels.
The Head of respective department/function shall be responsible for implementation of the risk management system as may be applicable to their respective areas of functioning who will maintain record of each risk identified along with mitigation plan in Risk & Control Matrix (RCM) and will update it periodically.
The Company's policy is that risk management processes throughout the Company are audited at regular interval by the Internal Audit function, which examines both the adequacy of the procedures and the Company's compliance with the procedures. Internal Audit discusses the results of all assessments with management, and reports its findings and recommendations to the Supervisory Board and Audit Committee.
41.2 Financial Risk Management:
The Company's principal financial liabilities, other than derivatives, comprise of borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company's operations. The Company's principal financial assets, other than derivatives, include trade and other receivables, investments and cash and cash equivalents that arise directly from its operations.
The Company is exposed to credit risk, liquidity risk and market risk. It is also subject to various operating and business risks.
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments, including investments and deposits, receivables, payables and borrowings.
The Company's overall risk management focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the Company.
41.2.1 Credit Risk
The Company continuously monitors all assets subject to ECLs. In order to determine whether an instrument or a portfolio of instruments is subject to 12m ECL or LTECL, the Company assesses whether there has been a significant increase in credit risk since initial recognition. The Company considers an exposure to have significantly increased in credit risk underlying assets and accordingly changes the ECL.
When estimating ECLs on a collective basis for a Company of similar assets, the Company applies the same principles for assessing whether there has been a significant increase in credit risk since initial recognition.
For other Financial asset an Investments the company ha an investment policy which allow the Company to investment with counter parties having credit rating and with limits as predefined in Investment policy.
41.2.2 Interest Rate Risk
I nterest rate risk is the fair value of future cash flows of a financial instrument which fluctuates because of changes in the market Interest rates. The company's position with regards to interest income treasury team manages the interest rate by diversifying its portfolio across tenures.
41.2.3 Reputational Risk
Reputational Risk As per the above standard, REL is also exposed to reputation risk arising from failures in governance, business strategy and process, regulatory-compliance and legal risk. These risks are generally covered under Operational risks. Reputational risk is the risk of potential damage to the Company due to deterioration of its reputation. The reputation of the Company may suffer as a result of its failure to comply with laws, regulations, rules, reporting requirements, standards and codes of conduct applicable to its activities, rather than compliance with the internal limits or procedures. Proactive measures to minimize the risk of losing reputation could be a sound risk management framework, good corporate governance high level ethics and integrity, rigorous anti money laundering procedures, good business practices and reporting of all breaches which lead to reputational risk to the attention of senior management and the board.
Management of subsidiaries and support functions of REL should take into consideration above basic risk categorization and devise their own risk cum control matrix for each of the product line, segment, business and operations.”
41.2.6 Operational risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This risk shall also incorporate possible causes of loss resulting from regulatory non-compliances. The main sources of operational risk are Process design, Employees, Equipment, Information technology, Physical risk, regulatory non-compliance, Fiduciary etc.
42 Capital
The Company maintains an actively managed capital base to cover risks inherent in the business and is meeting the capital adequacy requirements of the local banking supervisor, Reserve Bank of India (RBI) of India. The adequacy of the Company's capital is monitored using, among other measures, the regulations issued by RBI. Company has complied in full with all its externally imposed capital requirements over the reported period.
42.1 Capital Management
The primary objectives of the Company's capital management policy are to ensure that the Company complies with externally imposed capital requirements and maintains strong credit ratings and healthy capital ratios in order to support its business and to maximize shareholder value.
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. No changes have been made to the objectives, policies and processes from the previous years. However, they are under constant review by the Board.
43 Retirement benefit Plan
43.1 Defined Contribution Plan
Contribution toward provident fund plan for all employees is made to regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution Scheme as the Company does not carry any legal or constructive obligations to pay further contributions apart from the contributions made on monthly basis which are charged to the Statement of Profit and Loss account as incurred. The amount charged to the Statement of Profit and Loss is ' 74.31 Lakhs during the year (2022-23: ' 60.48 Lakhs).
43.2 Defined Benefits plan
The Company has a defined benefit gratuity plan in India (funded). The Company's defined benefit gratuity plan is a final salary plan for its employees, which requires contributions to be made to a separately administered fund. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member's length of service and salary at retirement age. The fund has the form of a trust and it is governed by the Board of Trustees, which consists of an equal number of employer and employee representatives. The Board of Trustees is responsible for the administration of the plan assets and for the definition of the investment strategy.
Each year, the Board of Trustees reviews the level of funding in the India gratuity plan. Such a review includes the asset-liability matching strategy and investment risk management policy. This includes employing the use of annuities and longevity swaps to manage the risks. The Board of Trustees decides its contribution based on the results of this annual review. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.
43.3 Others benefits
The employees of the Company are entitled to leave benefits as per the policy of the Company. The liability for compensated absences is accrued based on the actuarial valuation as at the balance sheet date conducted by an independent actuary. The net present value of the Group companies' obligations are determined based on the Projected Unit Credit Method at the end of each year.
The following tables summaries the components of net benefit expense recognised in the statement of profit or loss and the funded status and amounts recognised in the balance sheet for the respective plans:
46 Disclosure on Employees Stock Options Scheme
46.1 ESOP Policy
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based payments transactions are set out in notes to accounts.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in Statement of Profit and Loss such that the cumulative expenses reflects the revised estimate, with a corresponding adjustment to the Share Option Outstanding Account.
ESOPs (equity - settled share - based payments) have also been granted to the employees of:
Subsidiary (including step down subsidiary) whereby:
i) The Company has debited these shares as ‘Investment in Subsidiary' and credited its equity;
ii) The subsidiary has debited its expenses (employee related cost) and credited the capital contribution from the parent;
The employees of the Company are recipient of equity - settled share based payments either from the Company and / or its subsidiary (including step down subsidiary.
i) Where the transaction is with the subsidiary, credit to ‘Dividend Income' and debit to expenses (employee related cost)
ii) The Subsidiary has debited Investment and credited to capital contribution.”
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.
46.2 ESOP DISCLOSURES
Details of the Scheme:
The Board of Directors at its meeting held on February 12, 2019, approved the Religare Enterprises Limited Employee Stock Option Plan 2019 (“REL ESOP 2019 / Scheme”) to issue and allot stock options up to a maximum of 10% of expanded share capital of the Company (after taking into account any other equity Shares including through convertible instruments) for the permanent employees and directors whether a whole-time director or not (other than Promoters of the Company, Independent Directors and Directors holding directly or indirectly more than 10% of the outstanding Equity Shares of the Company) of the Company and its present and future holding company and subsidiary company(ies) in terms of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014. The shareholders of the Company approved the Scheme vide their special resolution passed through postal ballot on March 29, 2019.
The Nomination and Remuneration Committee of the Company has approved the following grants to select senior level executives of the Company in accordance with the Stock Option Scheme.
46.3 The details of grants approved for employees of the Company and employees of its subsidiaries (including step down subsidiaries) in accordance with the Employees Stock Option Scheme:
Note: For the year ended March 31, 2024, the Company has accounted expense of ' 18.83 Lakhs as Employee Benefit Expenses on the aforesaid employee stock option plan , including subsidiaries and step down subsidiaries scheme (Previous year: reversal of ' 5.00 Lakhs). The balance in share option outstanding account is ' 129.85 Lakhs as of March 31, 2024 (' 110.99 Lakhs of March 31,2023).
46.5 TRANSACTIONS DURING THE YEAR
During the year, the Company has:
Credited ESOP reserve on:
i) Debiting to employee related cost by ' 18.55 Lakhs (previous year: '6.09 Lakhs) being ESOP expenses on its own employees;
ii) Debiting investment in subsidiaries by ' 0.11 Lakhs (previous year: ' 1.19 Lakhs) being ESOP expenses on its subsidiaries employees;
Credited to ESOP Reserve' & debited employee related cost by ' 0.28 Lakhs (previous year: ' 1.09 Lakhs) being ESOPs granted to the employees of the Company by its subsidiary;
The part of ESOP granted to employees of the its subsidiaries stand cancelled during the year. On Cancellation of ESOP's the amount of '0.08 Lakhs (previous year: ' 1.19 Lakhs) was transferred from ESOP reserve A/c to Retained earning.
47 Earnings per share
Basic earnings per share (EPS) is calculated by dividing the net profit for the year attributable to equity holders of Company by the weighted average number of equity shares outstanding during the year.
Diluted EPS is calculated by dividing the net profit attributable to equity holders of Company (after adjusting for interest on the convertible preference shares and interest on the convertible bond, in each case, net of tax) by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on the exercise of all the outstanding share options as per ESOP scheme.
(vi) Institutional set-up for liquidity risk management
The Company has borrowing from group companies but does not have bank borrowings or deposits. The Company manages its liquidity risk based on the asset liability management policy which includes liquidity risk management and incorporates the principles laid down by RBI in the liquidity risk management framework of NBFC.
51 Other Notes
a) Classification of Loans and Advances and provision for Non-Performing Assets and provision towards diminution in the value of Investments other than long term have been made in accordance with the NBFC Regulations / Directions after considering subsequent recoveries and realizable value of investments respectively. Provision for Investment is made in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time. The classification of loans into standard, sub-standard and loss assets and investments have been disclosed at gross value and the corresponding provision against non-performing assets / investments has been included under provisions in accordance with NBFC Directions. The notified Indian Accounting Standards (Ind AS) are followed by the Company in so far as they are not inconsistent with the NBFC Directions / Regulations.
b) As during the current year there is no taxable income no provision for income tax has been considered necessary. Further, as the Company had opted for new tax regime under section 115BAA of the Income Tax Act, 1961, the provisions of MAT under Section 115JB are not applicable to the Company.
c) (i) REL has not redeemed 15 Lakhs preference shares issued to Oscar Investments Limited, which had become due for
redemption on October 31, 2018 having the redemption value of ' 4,190.28 Lakhs, as it has disputed the said transaction to be an illegal one and has filed a police complaint with Economic Offence Wing (EOW). In the matter of Daiichi Sankyo Company Limited (the 'Daiichi') vs. Malvinder Mohan Singh and Others, REL has been made a garnishee with regards to these preference shares. REL has filed an interim application disputing its liability as a garnishee. The preference shares stand transferred in the account of the Court receiver. The Decree Holder i.e. Daiichi has filed an application by suppressing the fact that the entire shareholding of RHC Holdings Pvt Ltd in Elive InfoTech Pvt Ltd. has been pledged in favour of Religare Finvest Limited (RFL) a wholly owned subsidiary of REL, as a security for various loans to group companies of RHC Holdings Pvt Ltd and obtained a status quo order on the brand “Religare”. RFL has filed an objection application in the said proceedings. RFL has also filed an objection application against the release of properties to Daiichi. Elive Infotech Pvt. Ltd. has further filed an application seeking sale of the Religare Trademark along with payment of approx. ' 323 Crores from REL for unauthorized usage of the Religare and allied Trademarks in light of the Brand License Agreement executed with RHC Holding Pvt. Ltd. The matter is sub-judice.
(ii) REL has not redeemed 250 Lakhs preference shares issued to RHC Finance Pvt. Limited, which had become due for redemption on August 30, 2021 having the redemption value of ' 4,212.75 Lakhs. REL has also filed a petition with Hon'ble NCLT, Delhi under Section 55 and 59 of the Companies Act, 2013 seeking rectification of Register of Members of the
Company, alleging the transaction to be a fraudulent one and has sought cancellation of preference shares along with stay on voting rights in the interim. On September 29, 2021, the Hon'ble NCLT directed ordering the status quo on the respondents to restrain them from exercising their voting power with the resolution, until the further orders. Further, vide order dated December 16, 2021, it was affirmed by Hon'ble NCLT that interim orders will continue. The matter is sub-judice.
iii) The Company had created the provision of contingency towards the potential interest liability, if any, which may arise from the final outcome of above matters on prudent / conservative basis. The Company's management based on its re-assessment of the facts of the matter and as advised by the legal experts in the earlier year, at March 31, 2023, was of the view that there will be no contractual or legal obligation on the Company to pay any compensation/interest in lieu of the unredeemed preference shares or on its redemption value irrespective of what may be the final outcome of the matters regarding the payment of redemption value of ' 8,403.03 Lakhs which are presently sub-judice as detailed above. Accordingly, the provision towards contingency of ' 2,941.67 Lakhs held on this account (' 868.25 created during the year ended March 31, 2023 and ' 2,073.42 Lakhs created upto March 31,2022) had been reversed during the earlier year ended March 31,2023, however, the provision towards the redemption value of ' 8,403.03 Lakhs has been continued on prudent / conservative basis under Note 19 - Other Financial Liabilities.
d) In FY 2018, an Inter Corporate Loan of ' 285.00 Lakhs was given to Religare Capital Markets Limited (RCML) by one of the merged Company i.e. Religare Advisors Limited (RAL) (now merged with REL - refer note 51.r) for working capital requirement out of which ' 35 Lakhs were adjusted / received subsequently. Considering the cash flow issues and no business operations in RCML, REL had given Letter of Comfort (LoC) dated 30th May 2018 to RAL mentioning that REL agrees to meet and provide payment upto ' 250 Lakhs to RAL, which will be reimbursed by REL as and when business demands cash funds and support for revival of business. Due to its weak financial position and no business operation, RCML couldn't repay the said Inter Corporate Loan till the balance sheet date and accordingly RAL had recognized impairement loss allowance of ' 250 Lakhs in the statement of Profit and Loss in FY 2022-23.
e) The Company has neither traded nor invested in Crypto Currency or Virtual Currency during the year ended March 31, 2024 / March 31, 2023.
f) Though the Company has investment in entire equity shares of ‘Religare Capital Markets Limited (“RCML”)', however, the right to exercise control through voting rights may not be available with the Company. Besides this, in terms of the tripartite agreement between the Company, RCML and ‘RHC Holding Private Limited', severe long term restrictions and significant restrictive covenants have been imposed on major decision making at RCML, by the holders of preference shares in RCML. Considering the same, the financial results of RCML and its subsidiaries have not been considered in the consolidated financial statements of the Company, in accordance with the applicable Indian Accounting Standards. The Company has fully impaired the value of its investment in RCML. The net worth of the RCML as per the last audited financial statements as at March 31,2017 was negative by ' 61,971.95 Lakhs, and thereafter, the financial statements/results of RCML are not available with the Company. There is a contingent liability of ' 4,077.50 Lakhs towards uncalled equity shares capital of RCML.
g) The Company has received the Public Announcement dated September 25, 2023 in relation to an Open Offer to the Public Shareholders of the Company on behalf of the Burman Group of Companies [i.e. M.B. Finmart Private Limited (“Acquirer 1”), Puran Associates Private Limited (“Acquirer 2”), VIC Enterprises Private Limited (“Acquirer 3”), and Milky Investment & Trading Company (“Acquirer 4”) (hereinafter the “Acquirers”)], for acquisition of upto 90,042,541 fully paid-up equity shares of face value of ' 10 each from the public shareholders of the Company representing 26.00% of the Expanded Voting Share Capital of the Company. The Open Offer has been made pursuant to and in compliance with Regulations 3(1) and 4 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and subsequent amendments thereto. The Detailed Public Statement dated October 03, 2023 has been published by the Acquirers on October 04, 2023, and the Draft Letter of Offer has been submitted by the Acquirers with SEBI on October 11,2023. The Acquirers have received the approval of the Competition Commission of India (“CCI”) as mentioned in the Press Release dated January 23, 2024 followed by detailed order of the same date uploaded on on the CCI website on March 15, 2024, the same has been appealed against and pending adjudication before Hon'ble National Company Law Appellate Tribunal (NCLAT). Further, the Company received an endorsement email from the RBI addressed to the Acquirer on their Application for prior approval for change in management and control stating that request cannot
be acceded to, as application for prior permission for acquiring control and / or change in management has to be submitted by the NBFC in which, change in management and control is taking place. Presently there is no impact of the same on the Company, however, the Company is monitoring and evaluating the above development closely.
h) The Company has not advanced or loaned or invested funds to any other person(s) or entity, 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.
i) The Company is not declared wilful defaulter by any bank or financial institution or any other lenders.
j) Serious Fraud Investigation Office (“SFIO”)
The Company has received a letter dated February 28, 2018 from Serious Fraud Investigation Office (“SFIO”), Ministry of Corporate Affairs (“MCA”), Government of India, intimating the Company that the MCA has ordered an investigation into the affairs of the Company by the SFIO. The investigation is going on as on date and information sought by SFIO for Company and its subsidiaries through various communications is being provided.
k) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
l) The Board of Directors had appointed Mr. Subramanian Lakshminarayanan and Mr. Francis Daniel Lee as Executive Chairman
and Executive Director on November 14, 2017 and November 17, 2017 respectively subject to approval of shareholders.
They ceased to be Executive Chairman and Executive Director of the Company w.e.f. January 22, 2018 and January 24, 2018 respectively. The shareholders of the Company at the Annual General Meeting held on September 20, 2018 did not accord approval for payment of remuneration to them for their tenure as Executive Chairman / Executive Directors. Accordingly, U/s 197(9) of the Companies Act, 2013, the Company has sent notices for refund of the remuneration of ' 82.61 Lakhs and ' 4.36 Lakhs respectively paid to them. They have not refunded the amount till date. The Company has submitted an Complaint/Application with the ROC, Delhi for Adjudication of Penalty under Section 454 of the Companies Act, 2013 in September, 2019 to recover the amount. However, no reply has been received from the ROC in the matter till date. The letters seeking status of said applications were submitted to the ROC in December, 2022. The recovery will be accounted on realisation.
m) (i) Religare Finvest Limited (RFL) a wholly owned subsidary, had faced significant asset liability mismatches and suffered losses
as a result of shiphoning and misappropriation of its funds under the control of the erstwhile promoters. RFL had made defaults in repayment of its obligation towards the borrowings and interest thereon. During the year ended March 31,2021, RFL had proposed its Debt Restructuring Plan (DRP) to the lenders, and as the same could not be approved, RFL proposed One Time Settlement ('OTS') with its lenders, which was finally agreed by all the lenders (except few unsecured lenders) and executed on December 30, 2022. OTS interalia stipulated the payment of total upfront consideration of ' 217,800 lacs i.e. ' 215,000 lacs to the secured lenders and ' 2,800 lacs to the unsecured lenders. The said OTS had been implemented by RFL by payment of entire upfront consideration of ' 217,800 lacs (' 177,800 lacs on December 31, 2022, and ' 40,000 lacs on March 8, 2023). RFL has also received No Due Certificates from all the lenders under OTS. As part of the OTS, RFL has also entered into an Upside Sharing Agreement on December 30, 2022 with the OTS lenders in terms of which RFL shall share with the lenders, 70% of the principal and 50% of the interest of the FDR with LVB (net of expenses), subject to a minimum of ' 50,000 Lakhs and 60% of the Corporate Loan Book ('CLB') (net of expenses), both currently being pursued as part of litigations instituted by RFL, as and when recovered by RFL.
(ii) Apart from OTS as detailed in para - 51m(i) above, 1,000 Unsecured Rated Listed Redeemable Non-Convertible Subordinated Debentures of ' 1,000,000/- each amounting ' 11,860 Lakhs (including accrued interest) issued by RFL had also been settled for an amount of ' 2,000 Lakhs by REL with one of its Lenders in the earlier year on April 22, 2022 as per the
Settlement Agreement entered with the said lender, and the impact thereof had been taken in the accounts of the previous period / year accordingly.
(iii) During the current year, RFL has settled the unsecured loan taken from ICICI Bank Ltd., which was not part of OTS, and has paid the final settlement amount of ' 18,750.00 Lakhs as per the terms of the settlement against the outstanding dues of ' 41,784.62 Lakhs.
(iv) Debenture holders of NCD series 30, 32, 35 and 36 (having the overdue outstanding of ' 9,539.46 Lakhs) who were not part of OTS, have accepted the settlement offer of RFL during the current year. As per the terms of the settlement, the settlement amounts aggregating to ' 9,533.60 Lakhs (net of TDS of ' 5.86 Lakhs) have been paid in full.
(v) As RFL in the past had faced significant asset liability mismatches, suffered losses and made defaults in repayment of its obligation towards the borrowings and interest thereon, it had been put under Corrective Action Plan (CAP) by RBI, which inter-alia prohibits it from expansion of credit / investment portfolios other than investment in Government Securities. As detailed in para 51.m(i) to 51.m(iv) above, RFL in its revival journey has repaid / settled the debts of all its lenders, and now it is debt free company with no subsisting default, and there is improvements in its financial ratios and liquidity position and strengthening of the corporate governance standards and it is ready to resume lending business based on its core competencies, and RFL has submitted the request letter to RBI for the removal of CAP and restrictions thereto, and is taking the necessary corrective measures and has submitted the information / details as required and advised by RBI in this regard.
(vi) After settlement with lenders, there is significant improvement in RFL's financial performance, ratios and position, which has a positive impact on the value of the investment of the Company in RFL, however, considering that RFL is still Under CAP, the Company considering the principle of prudency has not reversed the impairment on its investment in RFL.
n) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
o) In terms of the Share Purchase Agreement dated April 05, 2023 with IGEAR Holdings Private Limited (IHPL), The Indian Express Private Limited (TIEPL) and MIC Insurance Web Aggregator Private Limited (MIC) for acquisition of 100% stake in MIC, an IRDAI registered insurance web aggregator, the acquisition of MIC has been completed by the Company on December 08, 2023. Accordingly, it has become a wholly-owned subsidiary of the Company on December 08, 2023.
p) REL had entered into a Share Purchase Agreement on April 05, 2023 with Religare Finvest Limited (RFL), a wholly owned subsidiary of REL and Religare Housing Development Finance Corporation Limited (RHDFCL), subsidiary company of RFL, for acquisition of entire equity stake of RHDFCL held by RFL. RFL currently holds 87.5% of total share capital of RHDFCL. Post-acquisition, RHDFCL shall become a direct subsidiary of REL. The application seeking approval of RBI in the matter submitted by RHDFCL on April 18, 2023 has been returned by RBI with an advice to submit a fresh application with complete information, for which RHDFCL is taking the necessary steps.
q) (i). The Company continues to be barred from declaring dividends as per RBI letter issued in December, 2019.
(ii). The Company does not fall under the classification of Large Corporate Borrower as mentioned under the SEBI Circular No. SEBI/HO/DDHS/CIR/P/2018/144 dated November 26, 2018.
(r) Business Combination / Merger
(a) To ensure the simplification of group structure, thereby resulting in reduction in multiplicity of legal and regulatory compliances
and reduction of costs and pooling of common resources, the Board of Directors of ‘Religare Enterprises Limited' (‘REL / Transferee Company') at its meeting held on December 18, 2019 had considered and approved a merger of four of its direct / indirect subsidiaries ‘Religare Comtrade Limited' (RCTL), ‘Religare Insurance Limited' (RIL), ‘Religare Advisors Limited' (RAL), and ‘Religare Business Solutions Limited' (RBSL), (collectively referred to as the ‘Transferor Companies') by way of a Scheme of Amalgamation (the ‘Scheme'), at Nil Consideration. The Delhi Bench of the Hon'ble National Company Law Tribunal (NCLT)
through its order dated June 15, 2023 had approved the Scheme with the appointed date of the merger being April 01, 2019, and thereafter the Scheme had been filed with the Registrar of Companies on June 23, 2023.
(b) As all the Transferor Companies are the direct / indirect subsidiaries of the Transferee Company, and the entire paid up capital of the Transferor Companies is directly or indirectly beneficially held by the Transferee Company, no consideration is involved in the Scheme, and accordingly no new shares of the Transferee Company are issued in respect of shares held by the Transferee Company or its other subsidiaries in the Transferor Companies, and their entire share capital (including the preference share capital) is cancelled and extinguished.
(c) The merger has been accounted for based on the audited financial statements of the Transferee and Transferor Companies, using the pooling of interest method, as per guidance on Business Combination of entities under common control as contained in Ind AS 103 'Business Combination'. The difference between the amount of investment in the shares of the Transferor Companies as appearing in the books of accounts of the Transferee Company and the amount of paid capital of the Transferor Companies as at the appointed date has been transferred to the Capital Reserve as detailed below:
s) he Company has not received any fund from any person or entity, including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company 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.
t) The Ministry of Corporate Affairs (MCA) has issued a notification Companies (Accounts) Amendment Rules, 2021, which is effective from 1st April, 2023, states that every Company which uses accounting software for maintaining its books of account shall use only the accounting software where there is a feature of recording audit trail of each and every transaction, and further creating an edit log of each change made to books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled. The Company has used accounting software for maintaining its books of account which has feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software, except certain components of audit trail were not operating due to system limitations. Further, it was not tampered at any time during the year.
u) The Company has no such 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.
v) The title deed of immovable properties of the Company are held in the name of the Company.
53. Corporate Social Responsibility
Pursuant to the provisions of Section 135 of the Companies Act, 2013 and the Rules made thereunder and pursuant to the recommendation of the Committee, the Board has approved a Corporate Social Responsibility ('CSR') policy and the same has been uploaded on the website of the Company www.religare.com. CSR Policy contains the CSR activities which can be carried out by the Company, governance structure, implementation process, etc. As the Company has not made average net profits during the three immediately preceding financial years, no amount was required to be spent on CSR activities during the current financial year.
55. Previous Year Figures
The previous year figures have been regrouped and reclassified wherever considered necessary. Further, as the financial figures for the previous year include the impact of the merger as detailed in paras 51(r) above, accordingly the same may not be comparable.
Signature to Note No 1 to 55 forming part of Financial Statements
These are the Notes referred to in our report of even date
For S. P. Chopra & Co. For and on behalf of the Board of Directors
Firm Registration No.: 000346N Chartered Accountants
Sd/- Sd/- Sd/-
Pawan K. Gupta Dr. Rashmi Saluja Praveen Kumar Tripathi
Partner Executive Chairperson Director
Membership No.: 092529 DIN- 01715298 DIN- 02167497
Sd/- Sd/-
Nitin Aggarwal Reena Jayara
Group - CFO Company Secretary
Membership No.: A19122
Place: New Delhi Place: New Delhi
Date: May 21, 2024 Date: May 21, 2024
|