MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion of our financial condition and results of operations together with our Restated Consolidated Financial Information which is included in this Draft Red Herring Prospectus. Our Restated Consolidated Financial Information differ in certain material respects from IFRS, U.S. GAAP and GAAP in other countries, and our assessment of the factors that may affect our prospects and performance in future periods. Accordingly, the degree to which our Restated Consolidated Financial Information will provide meaningful information to a prospective investor in countries other than India is entirely dependent on the readers level of familiarity with Ind AS. Our financial year ends on March 31 of each year. Accordingly, references to "Fiscal Year 2023 ", "Fiscal Year 2024 " and "Fiscal Year 2025 ", are to the 12-month period ended March 31 of the relevant year. This Draft Red Herring Prospectus includes the Restated Financial Information of the Company that has been prepared under Ind AS notified under Section 133 of the Companies Act, 2013, and in accordance with requirements of Section 26 of Part I of Chapter III of the Companies Act, Paragraph (A) of Clause 11 (I) of Part A of Schedule VI of the SEBIICDR Regulations and the Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the Institute of Chartered Accountants of India as amendedfrom time to time.
Some of the information in the following discussion, including information with respect to our plans and strategies, contain forward-looking statements that involve risks and uncertainties. You should read the section "Forward-Looking Statements" on page 16 for a discussion of the risks and uncertainties related to those statements. Our actual results may differ materially from those expressed in or implied by these forward-looking statements as a result ofvarious factors, including those described below and elsewhere in this Draft Red Herring Prospectus. Also read "Risk Factors" and "Managements Discussion and Analysis Of Financial Condition and Results Of Operations - Significant Factors Affecting our Results of Operations and Financial Condition" on pages 40 and 578, respectively, for a discussion of certain factors that may affect our business, financial condition or results of operations.
Unless stated or the context requires otherwise, the financial information in this Draft Red Herring Prospectus is derived from the Restated Consolidated Financial Information included in this Draft Red Herring Prospectus. The financial information included in this section should be read in conjunction with our Restated Consolidated Financial Information, the notes and annexures thereto and "Managements Discussion and Analysis of Financial Position and Results of Operations" on pages 503 and 578 respectively.
Unless stated otherwise, the industry and market data contained in this section is derived from the industry report titled "Broking Industry in India" dated September 2025, which is exclusively prepared for the purposes of the Issue and issued by CARE Analytics and Advisory Private Limited appointed by us pursuant to an engagement letter dated April 16, 2025 and is exclusively commissioned and paid for by our Company ("CARE Report"). We commissioned and paid for the CARE Report for the purposes of confirming our understanding of the industry specifically for the purposes of the Issue, as no report is publicly available which provides a comprehensive industry analysis, particularly for our Companys products, that may be similar to the CARE Report. The CARE Report is available on the website of our Company at https://www.sihl.in/. The data included herein includes excerpts from the CARE Report and may have been re-ordered by us for the purposes of presentation. CARE Analytics and Advisory Private Limited is not, and has not in the past, been engaged or interested in the formation, or promotion, or management, of our Company. Further, it is an independent agency and neither our Company, nor our Directors, Promoter, KMPs, SMPs, and Subsidiaries, nor the BRLM are a related party to CARE Analytics and Advisory Private Limited as per the definition of "related party" under the Companies Act, 2013. Prospective investors are advised not to unduly rely on the CARE Report. There are no parts, data or information (which may be relevant for the proposed issue), that have been left out or changed in any manner. There are no parts, data or information (which may be relevant for the proposed Issue), that has been left out or changed in any manner. Also see, "Certain Conventions, Use of Financial Information and Market Data and Currency of Presentation -Industry and Market Data " on page 13. Unless otherwise indicated, financial, operational, industry and other related information derived from the CARE Report and included herein with respect to any particular year refers to such information for the relevant calendar year.
Unless the context otherwise requires, in this section, references to "we", "us ", or "our " refers to Shah Investors Home Limited on a consolidated basis and references to "the Company" or "our Company" refers to Shah Investors Home Limited on a standalone basis.
Overview
For details in relation to our business overview, competitive strengths, business strategies and business operations, please see "Our Business " beginning on page 438.
Significant Factors Affecting Our Results of Operations and Financial Condition
We believe that the following factors have significantly affected our results of operations and financial condition during the periods under review, and may continue to affect our results of operations and financial condition in the future:
General economic and financial services industry conditions in India
Our business and results of operations are affected by general economic conditions and trends in the financial services industry in India.
Real GDP growth is projected at 6.5%, driven by strong rural demand, improving employment, and robust business activity. The agriculture sectors bright prospects, healthy reservoir levels, and robust crop production support this growth. Manufacturing is reviving, and services remain resilient, despite global uncertainties. Investment activity is gaining traction, supported by healthy balance sheets and easing financial conditions. However, risks from geopolitical tensions, global market volatility, and geo-economic fragmentation persist.
If general economic conditions in India deteriorate or are not in line with our expectations, or if there is an impact on our business different from our expectations, our financial condition and results of operations may be materially and adversely affected. In addition, if favourable trends in the financial services industry or digitalisation slowdown or are reversed, our financial condition and results of operations may be materially and adversely affected. Please see the section entitled "Risk Factors - Any downturn or disruption in the securities markets, which are affected by general economic and market conditions in India and globally, may have a material adverse effect on our business, financial condition, cash flows, results of operations and prospects" on page 79.
Indian equity capital markets
Indias capital markets, including stock, bond, derivative markets, and mutual funds, have significantly influenced the nations financial system and economic development. We operate in the financial services industry in India where we conduct our business and generate substantially all of our revenues. We primarily offer secondary market brokering services to retail customers that comprise of both, residents and nonresident Indians. Our Company is also actively engaged in the business of providing services such as mutual funds distributorship, margin funding, stock lending and borrowing. The Indian financial market has experienced notable fluctuations in turnover across various exchanges in recent years. From FY20 to FY25, the combined turnover for all exchanges has shown impressive growth, with a CAGR of approximately 44.5% and Q-o-Q growth of 75.9% from Rs 116 trillion in Q1FY25 to Rs 203 trillion in Q1FY26. This growth trend highlights the performance of key exchanges, including the BSE, NSE, Multi Commodity Exchange (MCX), and National Commodity and Derivatives Exchange. In Jun25, the MTF book grew significantly, reaching Rs. 879 billion, a 23.7% increase over Mar25, the MTF book grew at a CAGR of 87% from last trading day of Mar20 to last trading day of Jun25. This growth is driven by rising investor awareness of MTFs benefits in boosting buying power and potential returns, along with a bullish stock market. Interest income from MTF ranges between 15% to 35% of total revenue for leading players. (Source: Care Report).
The Indian equity markets are affected by a variety of factors including growth in Indias GDP, taxation, monetary and other policies of the Government of India, laws and regulations that affect trading, political measures and regulatory developments, and general political stability, inflation, interest rate levels, change in consumer spending and saving patterns such as a shift from one category of investment to another, currency exchange rates and foreign investment including perceived unattractiveness of the Indian markets. Accordingly, a downturn in the Indian securities markets, persistent or short term, could adversely impact trading and investment patterns, result in decline in trading volumes and size, and, consequently, adversely impact our business, prospectus, results of operation and financial condition.
Maintaining our customer relationships specifically in the state of Gujarat
We have over the years established long-term relationships with our customers leading to recurrent business engagements with them. In our brokerage and commission business and our advisory business (particularly equity broking, wealth management, investment banking), revenues are largely influenced by the number of our retail, institutional and corporate clients. Our ability to grow our share of clients business is determined by us providing advisory services, customised business solutions, quality research and efficient execution. We believe successfully developing new customer relationships along with retaining existing customer relationships are critical for growing our businesses and consequently for our results of operations. We believe our ability to offer customized services to fit the needs of our customers across various business verticals allows us to deepen our relationships with our customers and enables us to target a greater share of their requirements thereby leading to recurring business.
The contribution of our western Indian operations in brokerage income as a percentage of total brokerage income from operations of our Company for Fiscals 2025, 2024 and 2023, expressed in both absolute terms and as a percentage of our total brokerage income.
Particulars |
Fiscal 2025 |
Fiscal 2024 |
Fiscal 2023 |
|||
| Amount (in Rs. lakhs) | As % of total brokerage Income | Amount (in Rs. lakhs) | As % of total brokerage Income | Amount (in Rs. lakhs) | As % of total brokerage Income | |
Gujarat |
6,056.24 | 93.30 | 5,210.13 | 93.53 | 3,477.31 | 93.91 |
Maharashtra |
283.44 | 4.37 | 234.30 | 4.21 | 164.75 | 4.45 |
Others |
151.45 | 2.33 | 125.77 | 2.26 | 60.73 | 1.64 |
Total |
6,491.13 | 100.00 | 5,570.20 | 100.00 | 3,702.79 | 100.00 |
Any decrease in revenues from western India, including due to increased competition or supply, or reduction in demand, in markets in which we operate, may have an adverse effect on our business, cash flows, results of operation and financial condition.
Competition
The Indian financial services industry is highly competitive. We face significant competition in all aspects of our business. In particular, we compete with other Indian and foreign brokerage houses and asset managers, among others, which operate in the markets in which we conduct our business. Over the last few quarters, brokers offering digital platforms are able to garner a significant proportion of the market share both in terms of incremental clients as well as trading volumes.
Our competitors may have various competitive advantages over us such as greater financial resources, wider brand recognition, broader knowledge resources, far-reaching partnerships, parentage and access to existing client base. It is also possible for our competitors to quickly adopt our business practices, scale up the services offered and set lower prices to compete with us. Mergers and acquisitions involving our competitors may create entities with even greater competitive advantages.
Significant Accounting Policies
1A. Corporate Information
Shah Investors Home Limited ("SIHL" or ‘the Holding Company) is a public limited company and incorporated under the provisions of Companies Act. The Company domiciled in India and its registered office 810, X-Change Plaza, DSCCSL (53E), Road 5E, Block 53, Zone 5, Gift City, Gandhinagar, Gujarat-382355 and correspondence office at SIHL House, Opp. Ambawadi Jain Temple, Nehrunagar Cross Road, Ahmedabad, Gujarat - 380015.
Shah Investors Home Limited, its subsidiaries are engaged in broking of equity, derivatives and mutual fund, wealth management services, distribution of financial products, proprietary investments and other activities in financial services.
These restated consolidated financial statements contain financial information of the Group and were authorized for issue by the Board of Directors on September 5, 2025.
Information on the Groups structure provided in note 52.
2A. Business Combination under Common Control
A common control business combination, involving entities or businesses in which all of the combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combination and where the control is not transitory, is accounted for in accordance with Appendix C to Ind AS 103 Business Combinations.
Business combinations involving entities or businesses under common control are accounted for using the pooling of interest method as follows :
> The assets and liabilities of the combining entities are reflected at their carrying amounts.
> No adjustments are made to reflect fair values, or recognize new assets or liabilities. Adjustments are made only to harmonize significant accounting policies.
> The financial information in the financial statements in respect of prior periods are restated as if the business combination had occurred from the beginning of the preceding period in the financial statements.
> The identity of the reserves are preserved and appear in the financial statements of the transferee in the same form in which they appeared in the financial statements of the transferor.
The difference, if any, between the amounts recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount of share capital of the transferor is transferred to capital reserve and is presented separately from other capital reserves with disclosure of its nature and purpose in the notes.
3A. Business Combination under Acquisition method
The Group applies the acquisition method in accounting for business combinations for the businesses which are not under common control. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquirees identifiable net assets. Acquisition related costs are expensed as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their acquisition date fair values. For this purpose, the liabilities assumed include contingent liabilities representing present obligation and they are measured at their acquisition fair values irrespective of the fact that outflow of resources embodying economic benefits is not probable. However, the following assets and liabilities acquired in a business combination are measured at the basis indicated below:
A) Deferred tax assets or liabilities and the assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with Ind AS 12 ‘Income Tax and Ind AS 19 ‘Employee Benefits respectively.
B) Potential tax effects of temporary differences and carry forwards of an acquiree that exist at the acquisition date or arise as a result of the acquisition are accounted in accordance with Ind AS 12.
C) Reacquired rights are measured at a value determined on the basis of the remaining contractual term of the related contract. Such valuation does not consider potential renewal of the reacquired right.
Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of Ind AS 109 ‘Financial Instruments, is measured at fair value with changes in fair value recognised in profit or loss. If the contingent consideration is not within the scope of Ind AS 109, it is measured in accordance with the appropriate Ind AS.
Contingent consideration that is classified as equity is not re-measured at subsequent reporting dates and its subsequent settlement is accounted for within equity.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.
If the business combination is achieved in stages, any previously held equity interest is re-measured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss or OCI, as appropriate.
4A. Material accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to the existing accounting standard requires a change in the accounting policy hitherto in use.
4.1 Basis of preparation
(i) Compliance with Ind AS
The restated consolidated financial statements of the Group comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 ("the Act") read with Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the Act.
The restated consolidated financial statements up to and including the year ended 31 March 2024 were prepared in accordance with the accounting standards notified under companies (Accounting Standard) Rules, 2006 (as amended) under the Act read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended), and other generally accepted accounting principles in India (collectively referred to as "Indian GAAP" or "Previous GAAP")
These restated consolidated financial statements are the first financial statements of the Group under Ind AS. Refer 55 for an explanation of how the transition from previous GAAP to Ind AS has affected Groups financial position, financial performance and cash flows.
The transition to Ind AS has been carried out in accordance with Ind AS 101 First Time Adoption of Indian Accounting Standards. Accordingly, the impact of transition has been recorded in the opening reserves as at 1 April 2022.
Accounting policies have been applied consistently over all the periods presented in these restated consolidated financial statements, except where the Group has applied certain accounting policies and exemptions upon transition to Ind AS.
(ii) Historical cost convention
The restated consolidated financial statements have been prepared on a historical cost basis, except for the following:
> Financial instruments are measured at fair value through Profit and Loss or Other Comprehensive Income,
> Defined benefit plans - plan assets measured at fair value; and
(iii) Preparation of restated consolidated financial statements
The Holding Company is covered in the definition of Non-Banking Financial Group as defined in Companies (Indian Accounting Standards) (Amendment) Rules, 2016. As per the format prescribed under Division III of Schedule III to the Companies Act, 2013 on 11 October 2018 (as amended), the Holding Company presents the restated Balance Sheet, the restated Statement of Profit and Loss and the restated Statement of Changes in Equity in the order of liquidity. A maturity analysis of recovery or settlement of assets and liabilities within 12 months after the reporting date and more than 12 months after the reporting date is presented in note 46.
(iv) Use of estimates and judgments
The preparation of restated consolidated financial statements in conformity with Ind AS requires management to make estimates, judgments, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities (including contingent liabilities) and disclosures as of the date of restated consolidated financial statements and the reported amounts of revenue and expenses for the reporting period. Actual results could differ from these estimates. Accounting estimates and underlying assumptions are reviewed on an ongoing basis and could change from period to period. Appropriate changes in estimates are recognized in the period in which the Company becomes aware of the changes in circumstances surrounding the estimates. Any revisions to accounting estimates are recognized prospectively in the period in which the estimate is revised and future periods.
(v) Determining whether an arrangement contains a lease
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Company uses significant judgment in assessing the lease term (including anticipated renewals) and the applicable discount rate. The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option.
4.2 Principles of consolidation and equity accounting
(i) Subsidiaries
The restated consolidated financial statement has comprised restated financial statements of the Company and its subsidiaries. Subsidiaries are all the entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group.
The Group combines the financial statements of the Holding Company and its subsidiaries line by line adding together like items of assets, liabilities, equity, income and expenses. Intercompany transactions, balances and unrealized gains on transactions within the Group are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss, consolidated statement of changes in equity and balance sheet respectively. Statement of Profit and Loss including Other Comprehensive Income (OCI) is attributable to the equity holders of the Holding Company and to the non-controlling interest basis the respective ownership interest and such balance is attributed even if this results in controlling interest is having a deficit balance.
(ii) Equity method
Under the equity method of accounting, the investments are initially recognized at cost and adjusted thereafter to recognize the Groups share of the post-acquisition profits or losses of the investee in profit or loss, and the Groups share of other comprehensive income of the investee in other comprehensive income.
When the Groups share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the other entity.
Unrealized gains on transactions between the Group companies are eliminated to the extent of the Groups interest in these entities. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment
of the asset transferred. Accounting policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group.
(iii) Changes in ownership interests
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognized within equity.
When the Group ceases to consolidate or equity account for an investment because of a loss of control or joint control, any retained interest in the entity is re-measured to its fair value with the change in carrying amount recognized in profit or loss. This fair value becomes the initial carrying -amount for the purposes of subsequently accounting for the retained interest as an associate or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously expected credit recognized in other comprehensive income are reclassified to profit or loss.
If the ownership interest in an associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income are reclassified to profit or loss where appropriate.
4.3 Revenue Recognition
The Group recognizes revenue from contracts with customers based on a five step model as set out in Ind AS 115, Revenue from Contracts with Customers, to determine when to recognize revenue and at what amount. Revenue is measured based on the consideration specified in the contract with a customer. Revenue from contracts with customers is recognised when services are provided and it is highly probable that a significant reversal of revenue is not expected to occur.
Revenue is measured at fair value of the consideration received or receivable. Revenue is recognised when (or as) the Group satisfies a performance obligation by transferring a promised service (i.e. an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset.
When (or as) a performance obligation is satisfied, the Group recognizes as revenue the amount of the transaction price (excluding estimates of variable consideration) that is allocated to that performance obligation.
The Group applies the five-step approach for recognition of revenue:
> Identification of contract(s) with customers; A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations and sets out the criteria for every contract that must be met.
> Identification of the separate performance obligations in the contract; A performance obligation is a promise in a contract with a customer to transfer a good or service to the customer.
> Determination of transaction price; The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.
> Allocation of transaction price to the separate performance obligations: For a contract that has more than one performance obligation, the Company allocates the transaction price to each performance obligation in an amount that depicts the amount of consideration to which the Company expects to be entitled in exchange for satisfying each performance obligation.; and
> Recognition of revenue when (or as) each performance obligation is satisfied.
(i) Brokerage fee income
It is recognised on trade date basis in accordance with the terms of contract and is exclusive of goods and service tax and securities transaction tax (STT) wherever applicable.
(ii) Interest income
Interest income is recognized on accrual basis in restated statement of profit and loss for all financial instruments measured at amortized cost.
(iii) Dividend income
Dividend income is recognized in the restated statement of profit and loss on the date that the Groups right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the entity and the amount of dividend can be reliably measured. This is generally when the shareholders approve the dividend.
(iv) Net gain on fair value changes
The Company designates certain financial assets for subsequent measurement at fair value through profit or loss (FVTPL) or fair value through other comprehensive income (FVOCI). The Company recognizes gains on fair value change of financial assets measured at FVTPL and realized gains on de-recognition of financial asset measured at FVTPL and FVOCI on net basis in profit or loss.
(v) Depository services income
Revenue from depository services on account of annual maintenance charges have been accounted over the period of the performance obligation.
Revenue from depository services on account of transaction charges is recognized point in time when the performance obligation is satisfied.
(vi) Delayed payment charges
Interest is earned on delayed payments from customers and is recognised on a time proportion basis taking into account the amount outstanding from customers and the rates applicable.
4.4 Income Tax
The income tax expense or credit for the period is the tax payable on the current periods taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Current and deferred tax is recognized in restated statement of profit and loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively
Current Tax
Current tax is measured at the amount of tax expected to be payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961. Current tax assets and current tax liabilities are off set when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis.
Deferred Tax
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred tax is also not accounted for, if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.
Deferred tax liabilities are not recognized for temporary differences between the carrying amount and tax bases of investments in subsidiaries and associates where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority.
4.5 Leases
For any new contracts entered into on or after 1 April 2022, the Company considers whether a contract is, or contains a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. The Company assess whether it has the right to direct ‘how and for what purpose the asset is used throughout the period of use.
Measurement and recognition of leases as a lessee
The Company has adopted Ind AS 116 "Leases" using the cumulative catch-up approach. Company has recognised Right of Use assets as at 1 April 2022 for leases previously classified as operating leases and measured at an amount equal to lease liability (adjusted for related prepayments/ accruals). The Company has discounted lease payments using the incremental borrowing rate for measuring the lease liability.
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities.
The Company depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Company also assesses the right-of-use asset for impairment when such indicators exist.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is re-measured to reflect any reassessment or modification, or if there are changes in in substance fixed payments.
When the lease liability is re-measured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.
The Company has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.
When the Company revises its estimate of the term of any lease, it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted using a revised discount rate. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised, except the discount rate remains unchanged. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term. If the carrying amount of the right-of-use asset is adjusted to zero, any further reduction is recognised in statement of profit and loss.
For contracts that both convey a right to the Company to use an identified asset and require services to be provided to the Company by the lessor, the Company has elected to account for the entire contract as a lease, i.e. it does not allocate any amount of the contractual payments to, and account separately for, any services provided by the supplier as part of the contract.
4.6 Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Outstanding bank overdrafts are not considered integral part of the Companys cash management.
4.7 Financial instruments
Initial recognition and measurement:
Financial assets and financial liabilities are recognized when the entity becomes a party to the contractual provisions of the instrument. Regular way purchases and sales of financial assets are recognized on trade date, the date on which the Company commits to purchase or sell the asset.
At initial recognition, the Group except for trade receivables, measures the financial asset or financial liability at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability, transaction costs that are incremental and directly attributable to the acquisition or issue of the financial asset or financial liability, such as fees and commissions. Transaction costs of financial assets and financial liabilities carried at fair value through profit or loss are expensed in Statement of profit and loss. Immediately after initial recognition, an expected credit loss allowance (ECL) is recognized for financial assets measured at amortized cost.
When the fair value of financial assets and liabilities differs from the transaction price on initial recognition, the entity recognizes the difference as follows:
a) When the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e. a Level 1 input) or based on a valuation technique that uses only data from observable markets, the difference is recognized as a gain or loss.
b) In all other cases, the difference is deferred and the timing of recognition of deferred day one profit or loss is determined individually. It is either amortized over the life of the instrument, deferred until the instruments fair value can be determined using market observable inputs, or realized through settlement.
When the Group revises the estimates of future cash flows, the carrying amount of the respective financial assets or financial liability is adjusted to reflect the new estimate discounted using the original effective interest rate. Any changes are recognized in Statement of profit and loss.
Fair value of financial instruments:
the Groups assets and liabilities are measured at fair value for financial reporting purpose. 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 regardless of whether that price is directly observable or estimated using another valuation technique.
Fair value measurements under Ind AS are categorized into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurement are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
> Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at measurement date
> Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and
> Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs) that the Company can access at measurement date.
Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in note 43.
Financial assets
(i) Classification and subsequent measurement:
The Company has applied Ind AS 109 and classifies its financial assets in the following measurement categories:
> Fair value through profit or loss (FVTPL)
> Fair value through other comprehensive income (FVOCI); or
> Amortised cost.
Classification and subsequent measurement of financial assets depends on:
> The Companys business model for managing the asset; and
> The cash flow characteristics of the asset.
Financial assets carried at:
(A) Amortised cost
Financial assets at amortized cost are subsequently measured at amortized cost using effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain and loss on de-recognition are recognized in profit or loss.
(B) Fair value through other comprehensive income
A financial asset not classified as either amortised cost or FVOCI, is classified as FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognised as ‘other income in the Statement of Profit and Loss.
(C) Fair value through profit or loss
A financial asset not classified as either amortised cost or FVOCI, is classified as FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognised as ‘other income in the Statement of Profit and Loss.
1. Equity instruments
Equity instruments are instruments that meet the definition of equity from the issuers perspective; that is, instruments that do not contain a contractual obligation to pay and that evidence a residual interest in the issuers net assets.
All investments in equity instruments classified under financial assets are initially measured at fair value, the Group may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL.
The Group makes such election on an instrument-by-instrument basis. Fair value changes on an equity instrument is recognised as revenue from operations in the Statement of Profit and Loss unless the Group has elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity instrument measured at FVOCI are recognized in OCI. Amounts recognised in OCI are not subsequently reclassified to the Statement of Profit and Loss. Dividend income on the investments in equity instruments are recognised as ‘Revenue from operations in the statement of Profit and Loss.
2. Investments in mutual funds
Investments in mutual funds are measured at fair value through profit and loss (FVTPL).
3. Debt Instrument
Subsequent measurement of debt instruments depends on the Groups business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Group has classified its debt instruments:
- Amortised cost: Assets that are held for collection of contractual cash flows and where the contractual terms give rise on specified dates to cash flows that represent solely payments of principal and interest, are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost is recognised in profit or loss when the asset is derecognized or impaired.
- Fair value through other comprehensive income (FVTOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets cash flow represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVTOCI). Movements in the carrying amount are taken through OCI, except for recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit & loss in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI.
- Fair value through profit or loss (FVTPL): Assets that do not meet the criteria for amortised cost, are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss is recognised in profit or loss and presented net in the statement of profit and loss within other income in the period in which it arises. Interest income from these financial assets is included in other income.
(ii) Impairment
The Group recognizes impairment allowances using Expected Credit Losses ("ECL") method on all the financial assets that are not measured at Fair value through profit or loss (FVTPL):
ECL are probability-weighted estimate of credit losses. They are measured as follows:
> Financials assets that are not credit impaired - as the present value of all cash shortfalls that are possible within 12 months after the reporting date.
> Financials assets with significant increase in credit risk - as the present value of all cash shortfalls that result from all possible default events over the expected life of the financial assets.
> Financials assets that are credit impaired - as the difference between the gross carrying amount and the present value of estimated cash flows.
Financial assets are written off/fully provided for when there is no reasonable of recovering financial assets in its entirety or a portion thereof.
However, financial assets that are written off could still be subject to enforcement activities under the Groups recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in the restated statement of Profit and Loss.
(iii) Derecognition
A financial asset is derecognised only when:
The Group has transferred the rights to receive cash flows from the financial asset or retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the Group has transferred an asset, the Group evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the Group has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Group has not retained control of the financial asset. Where the Group retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
Transfer of loans through assignment transaction can be made only after continuing involvement in loans i.e retaining a minimum specific percentage of loan but without retaining any substantial risk and reward in the loan assigned. The assigned portion of loans is derecognized and gains/losses are accounted for, only if the Company transfers substantially all risks and rewards specified in the underlying assigned loan contracts. Gain/loss arising on such assignment transactions is recorded upfront in the Statement of Profit and Loss and the corresponding loan is derecognized from the Balance Sheet immediately. Further, if the transfer of loan qualifies for derecognition, entire interest spread at its present value (discounted over the life of the asset) is recognized on the date of derecognition itself as interest strip receivable (interest strip on assignment) and correspondingly presented as gain/loss on derecognition of financial asset.
Financial liabilities
(i) Initial recognition and measurement
All financial liabilities are recognised when the Company becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs.
(ii) Subsequent measurement
Financial liabilities are subsequently measured at amortised cost using the EIR method. Financial liabilities carried at fair value through profit or loss is measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss.
(iii) Derecognition
A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expires
4.8 Property, plant and equipment
Property, plant and equipment are stated at cost of acquisition less accumulated depreciation except in the case of land which is stated at cost. Cost includes expenditure that is directly attributable to the acquisition and installation of the assets.
Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to Statement of profit and loss during the reporting period in which they are incurred.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-financial assets and the cost of assets not put to use before such date are disclosed under ‘Capital work-in progress.
Transition to IndAS
On transition to IndAS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognized as at April 01, 2022 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
Depreciation methods, estimated useful lives and residual value
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if any.
The Company depreciates property, plant and equipment over their estimated useful lives on written down value method. The estimated useful lives of assets are as follows:
Assets Category |
Useful Life |
(a) Property, plants & equipment: |
|
(i) Building |
60 Years |
(ii)Furniture and Fixture |
10 Years |
(iii)Vehicles (Two Wheelers) |
10 Years |
(iv)Vehicles (Four Wheelers) |
8 Years |
(v)Office Equipment |
5 Years |
(vi)Electrical Installations |
10 Years |
(b)Leasehold Property |
Amortized over the lease period based on straight line method |
The useful lives for these assets is in compliance with the useful lives as indicated under Part C of Schedule II of the Companies Act, 2013.
The useful lives, residual values of each part of tangible and the depreciation method are reviewed at the end of each financial year. If any of these expectations differ from previous estimates, such change is accounted for as a change in an accounting estimate.
Derecognition:
The carrying amount of an item of property, plant and equipment is derecognized on disposal or when no future economic benefits are expected from its use or disposal. Gains and losses on disposals are determined by comparing proceeds with carrying amount and are recognized in the restated statement of profit and loss when the asset is derecognized.
4.9 Intangible assets
Measurement at recognition:
Intangible assets are recognized where it is probable that the future economic benefit attributable to the assets will flow to the Company and its cost can be reliably measured. Intangible assets are stated at cost of acquisition less accumulated amortization and impairment, if any.
Transition to Ind AS:
On transition to Ind AS, the Company has elected to continue with the carrying value of all of intangible assets (including Goodwill) recognized as at April 01, 2022 measured as per the previous GAAP and use that carrying value as the deemed cost of intangible assets. Goodwill has not been amortized after transition to Ind AS since it has an indefinite useful life but tested for impairment at the year end.
Expenditure incurred on acquisition/development of intangible assets which are not put/ready to use at the reporting date is disclosed under intangible assets under development. The Company amortizes intangible assets on a straight-line basis over the four years commencing from the month in which the asset is first put to use. The Company provides pro-rata amortization from the day the asset is put to use.
Assets |
Useful life |
Computer Software |
4 Years |
The amortization period and the amortization method for an intangible asset with infinite useful life is reviewed at the end of each financial year. If any of these expectations differ from previous estimates, such change is accounted for as a change in an accounting estimate.
Derecognition:
The carrying amount of an intangible asset is derecognized on disposal or when no future economic benefits are expected from its use or disposal. Gains and losses on disposals are determined by comparing proceeds with carrying amount and are recognized in the statement of profit and loss when the asset is derecognized.
4.10 Impairment of non-financial assets
At each reporting date, the Group assesses whether there is any indication based on internal/external factors, that an asset may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset. The recoverable amount of asset is the higher of its fair value or value in use. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects the current market assessment of time value of money and the risks specific to it. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognised in the statement of profit and loss. All assets (except goodwill) are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An Impairment loss is reversed if there has been a change in estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the assets carrying amount would have been determined, net of depreciation or amortization, had no impairment loss been recognised.
4.11 Expected credit loss (ECL) model:
The Company applies the ECL model in accordance with Ind AS 109 for recognising impairment loss on financial assets. The ECL allowance is based on the credit losses expected to arise from all possible default events over the expected life of the financial asset (lifetime ECL), unless there has been no significant increase in credit risk since origination, in which case, the allowance is based on the 12-month ECL. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL is calculated on a collective basis, considering the retail nature of the underlying portfolio of financial assets.
The impairment methodology applied depends on whether there has been a significant increase in credit risk. When determining whether the risk of default on a financial asset has increased significantly since initial recognition, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on a provision matrix which takes into account the Companys historical credit loss experience, current economic conditions, forward looking information and scenario analysis.
The expected credit loss is a product of exposure at default (EAD), probability of default (PD) and loss given default (LGD). The Company has devised an internal model to evaluate the PD and LGD based on the parameters set out in Ind AS 109. Accordingly, the financial assets have been segmented into three stages based on the risk profiles. The three stages reflect the general pattern of credit deterioration of a financial asset. The company categorises financial assets at the reporting date into stages based on the days past due (DPD) status as under:
- Stage 1: Trade receivable for which credit risk has not increased significantly and that are also not credit impaired
- Stage 2: Trade receivable for which credit risk has increased significantly but not credit impaired
- Stage 3: Trade receivable for which credit risk has increased significantly and are credit impaired
LGD is an estimate of loss from a transaction given that a default occurs. PD is defined as the probability of whether the borrowers will default on their obligations in the future. For assets which are in Stage 1, a 12-month PD is required. For Stage 2 assets a lifetime PD is required while Stage 3 assets are considered to have a 100% PD. EAD represents the expected exposure in the event of a default and is the gross carrying amount in case of the financial assets held by the Company.
The Company incorporates forward looking information into both assessments of whether the credit risk of an instrument has increased significantly since its initial recognition and its measurement of ECL. Based on the consideration of external actual and forecast information, the Company forms a ‘base case view of the future direction of relevant economic variables. This process involves developing two or more additional economic scenarios and considering the relative probabilities of each outcome. The base case represents a most likely outcome while the other scenarios represent more optimistic and more pessimistic outcomes.
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 Companys ECL calculations are outputs of complex models with a number of underlying assumptions regarding the choice of variable inputs and their interdependencies. The inputs and models used for calculating ECLs may not always capture all characteristics of the market at the date of the financial statements. The Company regularly reviews its models in the context of actual loss experience and makes adjustments when such differences are significantly material.
The amount of ECL (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised as an impairment gain or loss in profit or loss.
4.12 Provisions and contingencies:
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the reporting date.
Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost. Expected future operating losses are not provided for.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made. Contingent assets are not recognised in financial statements since this may result in the recognition of income that may never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate. Where an inflow of economic benefits is probable, the group discloses a brief description of the nature of the contingent assets at the end of the reporting period, and, where practicable, an estimate of their financial effect, measured using the principles set out for provisions in Ind AS 37.
4.13 Employee benefits
(i) Short-term obligations
Short-term employee benefits are recognized as an expense at the undiscounted amount in the restated Statement of Profit and Loss for the year in which the related services are rendered. The Group recognises the costs of bonus payments when it has a present obligation to make such payments as a result of past events and a reliable estimate of the obligation can be made.
(ii) Post-employment obligations
Defined contribution plan:
Contribution paid/payable to the recognised provident fund and Employee State Insurance Corporation, which is a defined contribution scheme, is charged to the Statement of Profit and Loss in the period in which they occur.
Defined benefits plan:
Gratuity is post-employment benefit and is in the nature of defined benefit plan. The liability recognised in the Balance Sheet in respect of gratuity is the present value of defined benefit obligation at the Balance Sheet date together with the adjustments for unrecognised actuarial gain or losses and the past service costs. The defined benefit obligation is calculated at or near the Balance Sheet date by an independent actuary using the projected unit credit method. Actuarial gains and losses comprise experience adjustment and the effects of changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income in the period in which they occur and are not reclassified to the Statement of Profit and Loss.
The Group has funded its Gratuity liability under group scheme with an Insurer. The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligations reduced by the fair value of the scheme assets. Any asset resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the scheme.
4.14 Foreign currency translation
(i) Functional and presentation currency
Items included in restated consolidated financial statements of the Group are measured using the currency of the primary economic environment in which the Group operates (‘the functional currency). The restated consolidated financial statements are presented in Indian rupee (INR) in lakhs rounded off to two decimal places except when otherwise stated as permitted by Schedule III to the Companies Act, 2013, which is Groups functional and presentation currency.
(ii) Translation and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognized in profit or loss.
(iii) Translation of subsidiaries
All income and expense items are converted at the average rate of exchange applicable for the period. All assets and liabilities are translated at the closing rate as on the balance sheet date.
4.15 Dividend Distribution:
Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
4.16 Earnings per share
a) Basic earnings per share
Basic earnings per share is calculated by dividing the net profit for the period (excluding other comprehensive income) attributable to equity share holders of the Group by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus element in equity shares issued during the year.
b) Diluted earnings per share
Diluted earnings per share is computed by dividing the net profit for the period (excluding other comprehensive income) attributable to equity shareholders by the weighted average number of shares outstanding during the period as adjusted for the effects of all diluted potential equity shares except where the results are anti-dilutive. Further, when a subsidiary issue the potential ordinary shares that are convertible into the ordinary shares of the subsidiary, to parties other than the parent and if these potential ordinary shares of the subsidiary have a dilutive effect on the basic earnings per share of the reporting entity, they are included in the calculation of diluted earnings per share.
4.17 Borrowing Costs
Expenses related to borrowing cost are accounted using effective interest rate. Borrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.
4.18 Segment Reporting
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the companys Chief Operating Decision Maker ("CODM") to make decisions for which discrete financial information is available. Based on the management approach as defined in Ind AS 108, the CODM evaluates the Companys performance and allocates resources based on an analysis of various performance indicators by business segments and geographic segments.
4.19 Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirements.
4.20 Events after reporting date
Where events occurring after the balance sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Otherwise, events after the balance sheet date of material size or nature are only disclosed.
5A. Key accounting estimates and judgements
The preparation of restated consolidated financial statements requires management to make judgments, estimates and assumptions in the application of accounting policies that affect the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on ongoing basis. Any changes to accounting estimates are recognized prospectively.
Information about critical judgments in applying accounting policies, as well as estimates and assumptions that have the most significant effect on the amounts recognised in the restated financial statements are included in the following notes:
(a) Provision and contingent liability:
On an ongoing basis, Group reviews pending cases, claims by third parties and other contingencies. For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial statements. Loss Contingencies that are considered possible are not provided for but disclosed as Contingent liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the financial statements. Gain contingencies are not recognized until the contingency has been resolved and amounts are received or receivable.
(b) Allowance for impairment of financial asset:
Judgements are required in assessing the recoverability of overdue and determining whether a provision against those is required. Factors considered include the ageing of past dues, value of collateral and any possible actions that can be taken to mitigate the risk of non-payment.
(c) Recognition of deferred tax assets:
Deferred tax assets are recognised for unused tax-loss carry forwards and unused tax credits to the extent that realisation of the related tax benefit is probable. The assessment of the probability with regard to the realisation of the tax benefit involves assumptions based on the history of the entity and budgeted data for the future.
(d) Defined benefit plans:
The cost of defined benefit plans and the present value of the defined benefit obligations are based on actuarial valuation using the projected unit credit method. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long - term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
(e) Property, plant and equipment and Intangible Assets:
Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation to be recorded during any reporting period. The useful lives and residual values as per schedule II of the Companies Act, 2013 or are based on the Groups historical experience with similar assets and taking into account anticipated technological changes, whichever is more appropriate.
(f) Business Model assessment:
Classification and measurement of financial assets depends on the results of the business model test. The Company determines the business model at a level that reflects how groups of financial assets are managed together to achieve a particular business objective. This assessment includes judgement 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 considers the frequency, volume and timing of sales in prior years, the reason for such sales, and its expectations about future sales activity. However, information about sales activity is not considered in isolation, but as part of a holistic assessment of how companys stated objective for managing the financial assets is achieved and how cash flows are realized. Therefore, the Company considers information about past sales in the context of the reasons for those sales, and the conditions that existed at that time as compared to current conditions.
Monitoring is part of the Companys 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.
(i) De-recognition of financial instruments - In case of transfer of loans through securitisation and direct assignment transactions, the transferred loans are de-recognised and gains/losses are accounted for, only if the Company transfers substantially all risks and rewards specified in the underlying assigned loan contract. In accordance with the Ind AS 109, on de-recognition of a financial asset under assigned transactions, the difference between the carrying amount and the consideration received are recognised in the restated statement of Profit and Loss.
4. Recent Accounting developments
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 not notified any new standards or amendments to the existing standards applicable to the Company.
Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income. Fair value movements are recognized in the other comprehensive income (OCI). Interest income measured using the EIR method and impairment losses, if any are recognised in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognised in OCI is reclassified from the equity to ‘other income in the Statement of Profit and Loss.
Non-GAAP Measures
Certain non-GAAP measures such as Net Asset Value per share, EBITDA, Net Debt to Equity and, Net Fixed Assets Turnover Ratio among others ("Non-GAAP Measures") presented in this Draft Red Herring Prospectus, are a supplemental measure of our performance and liquidity that are not required by, or presented in accordance with, Ind AS, Indian GAAP, or IFRS. Further, these Non-GAAP Measures are not a measurement of our financial performance or liquidity under Ind AS, Indian GAAP, or IFRS and should not be considered in isolation or construed as an alternative to cash flows, profit / (loss) for the year / period or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities derived in accordance with Ind AS, Indian GAAP, or IFRS. In addition, these Non-GAAP Measures are not a standardised term and, therefore, a direct comparison of similarly titled Non- GAAP Measures between companies may not be possible. Other companies may calculate the Non-GAAP Measures differently from us, limiting their usefulness as a comparative measure. Although the Non-GAAP Measures are not a measure of performance calculated in accordance with applicable accounting standards, our Companys management believes that they are useful to an investor in evaluating us because these are widely used measures to evaluate a companys operating performance.
Also see "Risk Factors- Certain non-GAAP financial measures and certain other statistical information relating to our operations and financial performance such as EBITDA, EBITDA margin, interest coverage ratio, net debt to EBITDA ratio, return on capital employed and return on equity have been included in this Draft Red Herring Prospectus. These non-GAAP financial measures are not measures of operating performance or liquidity defined by Ind AS and may not be comparable " on page 78.
Reconciliation of Net Asset Value per Equity Share
The table below reconciles the net asset value per Equity Share with respect to our Company derived from the Restated Consolidated Financial Information.
(in lakhs, unless stated otherwise) |
|||
Particulars |
Year ended March 31, |
||
| 2025 | 2024 | 2023 | |
Net Worth of the Company (I) |
16,808.98 | 15,054.13 | 11,745.98 |
Weighted average number of equity shares at the end of the year (II) |
157.54 | 157.54 | 157.54 |
Net asset value per equity share (III = I/II) ( Rs. per equity share) |
106.70 | 95.56 | 74.56 |
Reconciliation of EBITDA
The table below reconciles profit for the year to EBITDA with respect to our Company derived from the Restated Consolidated Financial Information.
in lakhs, unless stated otherwise) |
|||
Particulars |
Year ended March 31, |
||
| 2025 | 2024 | 2023 | |
Restated Profit Before Tax for the year (I) |
3,140.22 | 2,400.68 | 1,016.00 |
Adjustments: |
|||
Less: Other income (II) |
(19.12) | (122.93) | (64.66) |
Add: Exceptional Items (III) |
- | - | - |
Add: Finance costs (IV) |
246.08 | 90.98 | 31.24 |
Add: Depreciation and amortization expenses (V) |
164.14 | 144.24 | 132.02 |
Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) (VIII = I - II + III + IV + V) |
3,531.31 | 2,512.97 | 1,114.59 |
Reconciliation of total borrowings to Net Debt and Net Debt to Equity
(Rs. in lakhs, unless stated otherwise) |
|||
Particulars |
Year ended March 31, |
||
| 2025 | 2024 | 2023 | |
Total Borrowings (Current + Non-Current) (I) |
570.81 | 353.52 | 803.42 |
Adjustments: |
|||
Less: Cash and cash equivalents (II) |
8,511.14 | 13,006.98 | 2,837.68 |
Less: Other Bank Balance (III) |
7,342.30 | 4,544.86 | 7,444.71 |
Add: Fixed Deposit under Lien (IV)* |
13,089.25 | 13,378.71 | 7,312.65 |
Net Debt (IV = I - II - III + IV) |
-2,193.38 | -3,819.61 | -2,166.33 |
Total Equity (V) |
16,808.98 | 15,054.13 | 11,745.98 |
Net Debt to Equity (VI = IV/V) |
NA | NA | NA |
*Fixed deposits held as lien with stock exchanges/clearing corporations are excluded from Cash & Bank Balances for the purpose of Net Debt calculation.
Reconciliation of Revenue from Operations to Net Fixed Assets Turnover Ratio
(Rs. in lakhs, unless stated otherwise) |
|||
Particulars |
Year ended March 31, |
||
| 2025 | 2024 | 2023 | |
Revenue from Operations (I) |
9,427.39 | 7,782.36 | 5,168.30 |
Investment Property (II) |
86.35 | 90.77 | - |
Property, plant and equipment (III) |
1,995.47 | 1,972.67 | 1,949.44 |
Capital work-in-progress (IV) |
107.54 | 39.84 | 7.23 |
Right to use assets (V) |
108.27 | 112.99 | 117.71 |
Intangible assets under development (VI) |
13.94 | 13.94 | 1.50 |
Intangible assets (VII) |
58.13 | 60.48 | 65.47 |
Total Net Fixed Assets (VIII = II + III + IV + V + VI+ |
2,369.71 | 2,290.70 | 2,141.35 |
Particulars |
Year ended March 31, |
||
| 2025 | 2024 | 2023 | |
VII) |
|||
Net Fixed Assets Turnover Ratio (IX = I/ VIII) |
3.98 | 3.40 | 2.41 |
key components of our restated consolidated statement of profit and loss
Set forth below are the key components of our statement of profit and loss from our restated statement of profit and loss for Fiscal 2025, Fiscal 2024 and Fiscal 2023:
Total Income
Our total income comprises (i) Revenue from Operations; and (ii) Other Income.
Revenue from Operations
Revenue from Operations comprises (i) Interest Income; (ii) Dividend income; and (iii) Rental Income (iv) Fees and Commission Income (v) Net gain/ (loss) on fair value changes (vi) Sale of Product (Commodities) (vii) Sale of Service (Consultancy) and other operating income.
Other Income
Other income comprises (i) Interest Income, Profit / (loss) on sale of fixed assets, Foreign Exchange Fluctuations, LES Incentive, Business Support Services and Miscellaneous Incomes.
Expenses
Our expenses comprise of Fees and Commission expenses, purchase of stock-in-trade, change in inventories of commodities, Impairment on financial instruments, employee benefit expenses, finance costs, depreciation & amortisation expenses, and other expenses.
Fees and Commission Expenses
Fees and Commission Expenses encompass following key components: (i) Brokerage & Commission Expenses; and (ii) Depository Charges; (iii) Exchange Transaction Charges.
Purchase of stock-in-trade
Purchase of stock-in-trade consists of purchase of commodities for which gross delivery has been taken to settle the transaction.
Changes in inventories of stock-in-trade
Changes in inventories of Stock-in-trade (Commodities) consists of a difference in inventories at the end of the year and inventories at the beginning of the year.
Employee Benefits Expenses
Employee benefits expenses primarily comprise of salaries, bonus, incentives, director remuneration, contribution to provident and other funds, staff welfare expenses, gratuity and other long term benefits.
Finance Costs
Finance cost primarily comprises of Interest cost on borrowings.
Details of our finance cost on consolidated basis for Fiscals 2025, 2024 and 2023 are set out below:
| (in Rs. lakhs) | |||
Particulars |
Fiscal 2025 | Fiscal 2024 | Fiscal 2023 |
Interest cost on borrowings |
246.08 | 90.98 | 31.24 |
Depreciation and Amortization Expenses
Depreciation and amortization expenses primarily comprises depreciation on property, plant and equipment, depreciation on right of use assets and depreciation on intangible assets.
Other Expenses
Other expenses primarily comprise office expenses, legal and professional charges, software expense and bank charges, stock exchange charges, telephone & communication expense, travelling & conveyance expense, corporate social responsibility expenditure, electricity charges, rent, rates & taxes and miscellaneous expenses.
results of operations
The following table sets forth our selected financial data from our restated statement of profit and loss for Fiscal 2025, Fiscal 2024 and Fiscal 2023, the components of which are also expressed as a percentage of total income for such years:
Fiscal 2025 |
Fiscal 2024 |
Fiscal 2023 |
||||
Particulars |
In Rs. Lakhs | As a % of Total Income | In Rs. Lakhs | As a % of Total Income | In Rs. Lakhs | As a % of Total Income |
Income |
||||||
Revenue from Operations |
9,427.39 | 99.80% | 7,782.36 | 98.44% | 5,168.30 | 98.76% |
Other income |
19.12 | 0.20% | 122.93 | 1.56% | 64.66 | 1.24% |
Total income (A) |
9,446.51 | 100.00% | 7,905.29 | 100.00% | 5,232.96 | 100.00% |
Expenses |
||||||
Fees and commission expense |
3,801.13 | 40.24% | 3,378.43 | 42.74% | 2,256.57 | 43.12% |
Purchases of stock-in-trade |
- | - | 35.74 | 0.45% | - | - |
Changes in inventories of finished goods, work-inprogress and stock-in-trade |
207.05 | 3.96% | ||||
Impairment on Financial Instruments |
(0.87) | (0.01%) | (1.82) | (0.02%) | 22.23 | 0.42% |
Employee benefits expenses |
1,151.50 | 12.19% | 1,092.19 | 13.82% | 957.05 | 18.29% |
Finance costs |
246.08 | 2.61% | 90.98 | 1.15% | 31.24 | 0.60% |
Depreciation and amortization expenses |
164.14 | 1.74% | 144.24 | 1.82% | 132.02 | 2.52% |
Other expenses |
944.31 | 10.00% | 764.85 | 9.68% | 638.10 | 12.19% |
Total expenses (B) |
6,306.29 | 66.76% | 5,504.61 | 69.63% | 4,244.26 | 81.11% |
Profit before tax (C= A-B) |
3,140.22 | 33.24% | 2,400.68 | 30.37% | 988.70 | 18.89% |
Tax expense |
||||||
- Current tax |
831.30 | 8.80% | 591.20 | 7.48% | 257.87 | 4.93% |
- Deferred tax |
(28.36) | (0.30%) | 5.30 | 0.07% | (0.92) | (0.02%) |
- Prior year tax adjustments |
(4.28) | (0.05%) | (1.02) | (0.01%) | (8.72) | (0.17%) |
Total tax expenses (D) |
798.66 | 8.45% | 595.48 | 7.53% | 248.23 | 4.74% |
Profit for the year (E= C-D) |
2,341.56 | 24.79% | 1,805.20 | 22.84% | 740.47 | 14.15% |
Share of profit from associate |
- | - | - | - | 27.30 | 0.52% |
Profit after tax and share in profit in associate |
2,341.56 | 24.79% | 1,805.20 | 22.84% | 767.77 | 14.67% |
Net Profit attribute to: |
||||||
Owners of parent |
2,338.50 | 24.76% | 1,793.38 | 22.69% | 763.17 | 14.58% |
Non-Controlling Interest |
3.06 | 0.03% | 11.82 | 0.15% | 4.60 | 0.09% |
KEY BUSINESS HIGHLIGHTS
Our Revenue from Operations increased from Rs.5,168.30 lakhs in Fiscal 2023 to Rs.9,427.39 lakhs in Fiscal 2025.
Revenue split: Product category
Our business is categorized into product families, namely, (i) Fees, Commission & Brokerage Income; (ii) Interest Income (iii) Dividend income; and (iv) Rental Income (v) Net gain/ (loss) on fair value changes (vi) Sale of Product (Commodities) (vii) Sale of Service (Consultancy) and Other Operations.
Fees and Commission Income
We derive the majority of our income from fees and commissions, which mainly include brokerage income and depository income. Our Fees and Commission Income stood at Rs.6,759.19 lakhs in Fiscal 2025, Rs.5,843.20 lakhs in Fiscal 2024, and Rs.3,932.46 lakhs in Fiscal 2023. This steady growth has been driven by an increase in trading volumes, higher client participation, and consistent growth in our depository services. Brokerage income remains the largest contributor, accounting for the bulk of this revenue, while depository income provides a stable recurring stream that supports our overall business operations.
Interest Income
We derive a portion of our Revenue from Operations from Interest Income, which primarily comprises interest on loans, deposits with banks, margin funding, delayed payments, bonds, and late payment charges on AMC. Revenue from Interest Income was Rs.2,503.63 lakhs in Fiscal 2025, Rs.1,578.60 lakhs in Fiscal 2024, and Rs.1,141.73 lakhs in Fiscal 2023. The significant growth in Fiscal 2025 was primarily driven by higher income from interest on delayed payments and deposits with banks, along with the introduction of interest from margin funding.
Dividend Income
We also generate a portion of our Revenue from Operations through Dividend Income arising from our investments. Dividend Income stood at Rs.61.27 lakhs in Fiscal 2025, Rs.74.92 lakhs in Fiscal 2024, and Rs.47.98 lakhs in Fiscal 2023. The movement across the years reflects fluctuations in returns from our investment portfolio, which are largely dependent on the performance and dividend distribution policies of the underlying companies however, its not a part of our core broking business, Dividend Income provides an additional source of steady returns and supports overall profitability.
Rental Income
We also generate some income by giving out a part of our premises on rent. Rental Income was Rs.10.08 lakhs in Fiscal 2025, Rs.8.94 lakhs in Fiscal 2024, and Rs.6.00 lakhs in Fiscal 2023. This shows a steady increase over the years and provides us with an additional source of income, though it is not part of our core broking operations.
Net gain/ (loss) on fair value changes
We also generate income and incur loss from changes in the fair value of our trading and investment portfolio, which includes Future & Option Derivatives, Equity Securities held for trading, and Mutual Fund Investments. Net gain on fair value changes was Rs.72.02 lakhs in Fiscal 2025, Rs.198.59 lakhs in Fiscal 2024, compared to a net loss of Rs.191.44 lakhs in Fiscal 2023. These movements are mainly linked to realized and unrealized gains or losses arising from market fluctuations. While such income is not part of our core broking operations, it reflects the performance of our proprietary trading and treasury activities and can vary from year to year depending on market conditions.
Sale of Product (Commodities)
We also generate income from the sale of commodities, though this is not a core part of our broking business. Net sales from commodities were Nil in Fiscal 2025, Rs.35.42 lakhs in Fiscal 2024, and Rs.199.34 lakhs in Fiscal 2023. The decline over the last two years reflects our strategic focus on core broking and financial services, with limited reliance on commodity trading as a source of revenue.
Sale of Service (Consultancy)
We also generate income from consultancy services offered to clients through our subsidiary company, SIHL Consultancy. The Consultancy Income was Rs.21.20 lakhs in Fiscal 2025, Rs.40.48 lakhs in Fiscal 2024, and Rs.17.13 lakhs in Fiscal 2023. These earnings vary from year to year depending on the demand for advisory and related services. While not a major part of our core broking operations, consultancy services provide us with an additional source of revenue and help strengthen our client relationships.
FISCAL 2025 COMPARED TO FISCAL 2024 INCOME
Total income increased by 19.50% from Rs.7,905.29 lakhs in Fiscal 2024 to Rs.9,446.51 lakhs in Fiscal 2025. This was primarily attributable to an increase in Revenue from Operations and other income.
Revenue from Operations
In Fiscal 2025, our Revenue from Operations grew by 21.14%, rising from Rs.7,782.36 lakhs in Fiscal 2024 to Rs.9,427.39 lakhs in Fiscal 2025. This growth was mainly driven by Brokerage and fees income, which grew by 15.68% amounting to Rs.5,843.20 lakhs in Fiscal 2024 to Rs.6,759.19 lakhs in Fiscal 2025, reflecting higher client activity and increased traded value which increased from Rs. 47,59,230.71 lakhs in fiscal 2024 to Rs. 59,44,704.02 lakhs. An increase in interest income, which rose by 58.60% to Rs. 2,503.63 lakhs in Fiscal 2025, was supported by higher delayed payment charges, better returns on bank deposits, and the introduction of margin trading facility during the year. Rental income also registered a steady growth of 12.75%, increasing to Rs.10.08 lakhs in Fiscal 2025 from Rs. 8.94 lakhs in Fiscal 2024.
On the other hand, dividend income decreased by 18.22% to Rs.61.27 lakhs in Fiscal 2025 as compared to Rs.74.92 lakhs in Fiscal 2024, net gains on fair value changes contracted by 63.73% to Rs.72.02 lakhs in Fiscal 2025 from Rs. 198.59 lakhs in Fiscal 2024 due to lower derivative and mutual fund gains.
Further, sale of services which consists of consultancy income fell by 47.63% amounting to Rs.21.20 lakhs in Fiscal 2025 to Rs.40.48 lakhs in Fiscal 2024. In addition, there were no commodity sales or other operating income recorded in Fiscal 2025 compared to income of Rs. 35.42 lakhs in Fiscal 2024.
Overall, in Fiscal 2025, our revenue profile became even more concentrated in our core brokerage segment which alone contributed 71.70% of total revenues, highlighting the Companys stronger focus on its main broking business while reducing reliance on smaller, non-core income sources.
Other income
In Fiscal 2025, Other income stood at Rs.19.12 lakhs, which saw a steep decline of 84.45% compared to Rs.122.93 lakhs in Fiscal 2024 and shrinking its contribution to total income from 1.56% in Fiscal 2024 to 0.20% in Fiscal 2025 reaffirming the Companys dependence on core operating revenues. This fall was primarily attributable to a decline in interest on IT refunds arising out of favourable decision in an on-going litigation, which had contributed Rs.106.05 lakhs in Fiscal 2024 as compared to Rs. 0.50 lakhs in Fiscal 2025. Similarly, other interest income reduced to Rs.0.34 lakhs to Rs.3.38 lakhs, while income from business support services fell to Rs.12.93 lakhs in fiscal 2025 from Rs.31.73 lakhs in fiscal 2024. On the positive side, the Company reported a profit on sale of fixed assets of Rs.1.46 lakhs in Fiscal 2025, reversing a loss of Rs.22.63 lakhs in Fiscal 2024, and foreign exchange fluctuation gains arising from our operations increased slightly to Rs.3.89 lakhs from Rs.2.10 lakhs in Fiscal 2024 while there was no incentive income from liquidity enhancement scheme reported in Fiscal 2025 as compared to Rs.2.21 lakhs in Fiscal 2024.
Expenses
Total expenses increased by 14.56% from Rs.5,504.61 lakhs in Fiscal 2024 to Rs.6,306.29 lakhs in Fiscal 2025 because of the reasons set out below.
Fees and commission expense
Fees and Commission Expense increased by 12.51%, from Rs.3378.43 lakhs in Fiscal 2024 to Rs.3801.13 lakhs in Fiscal 2025. The increase was primarily driven by higher brokerage sharing with intermediaries, which rose from Rs.3,078.94 lakhs in Fiscal 2024 to Rs.3,463.18 lakhs in Fiscal 2025, attributable to increased trading volumes and client activity. Exchange transaction charges also increased from Rs.283.60 lakhs in Fiscal 2025 to Rs.245.17 lakhs, contributing to the overall rise in expenses. Other component such as depository charges remained relatively stable.
Purchases of stock-in-trade
Purchases of Commodities is Nil in Fiscal 2025 whereas in Fiscal 2024 its Rs.35.74 lakhs.
Employee benefits expenses
Employee Benefit Expense has increased by 5.43% from 1,092.20 lakhs in Fiscal 2024 to Rs.1,151.50 lakhs in Fiscal 2025. Our companys number of employees increased from 145 on March 31, 2024 to 171 on March 31, 2025, which increased the salary expense of the employees by 8.94% to Rs. 756.10 lakhs from Rs. 694.06 lakhs. On the other hand due to decrease in Director Remuneration by 5.55% to Rs. 321.44 lakhs in Fiscal 2025 from Rs. 340.34 lakhs in Fiscal 2024. Contributions to provident and other funds, as well as gratuity and other long-term benefits, saw minor increases.
Finance costs
Finance cost on borrowings increased significantly by 170.48% from Rs.90.98 lakhs in Fiscal 2024 to Rs.246.08 lakhs in Fiscal 2025. In addition to the increase in borrowings from Rs.353.51 lakhs as on March 31, 2024 to Rs.570.80 lakhs as on March 31, 2025, this sharp rise is due to the finance cost reflecting a timing difference between the average borrowings during the year and the closing balance as on the balance sheet date.
Depreciation and amortization expenses
Depreciation and amortization expenses increased by 13.80% from Rs.144.24 lakhs in Fiscal 2024 to Rs.164.14 lakhs in Fiscal 2025, primarily due to higher depreciation on property, plant and equipment on account of net addition in fixed assets by Rs.163.13 lakhs during the year.
Other expenses
In Fiscal 2025, other expenses increased by 23.46% to Rs.944.31 lakhs from Rs.764.85 lakhs in Fiscal 2024, largely driven by increased business and operational activities. Travelling and conveyance expenses doubled from Rs. 33.81 lakhs in fiscal 2024 to Rs. 67.87 lakhs in fiscal 2025, reflecting greater business development initiatives, while communication expenses and selling & distribution costs also recorded increases. Selling & distribution costs increased from Rs. 18.35 lakhs in fiscal 2024 to Rs. 51.28 lakhs in fiscal 2025. Exchange charges and miscellaneous expenses witnessed significant growth in line with increased financial and administrative activities. Exchange charges increased from Rs. 56.39 lakhs in fiscal 2024 to Rs. 95.42 lakhs. Legal and professional charges continued to remain a major cost component, rising moderately, whereas office management expenses and software expenses remained largely stable with marginal fluctuations. CSR expenditure also increased during the year.
Profit/ (loss) before tax
Our profit before tax increased by 30.81% from Rs.2,400.68 lakhs in Fiscal 2024 to Rs.3,140.22 lakhs in Fiscal 2025 for the reasons laid out above.
Income tax expense
Income tax expenses increased by 40.61% from Rs.595.48 lakhs in Fiscal 2024 to Rs.798.66 lakhs in Fiscal 2025, primarily on account of higher current tax provisions. Current tax expense increased by 40.61%, from Rs.591.20 lakhs in Fiscal 2024 to Rs.831.30 lakhs in Fiscal 2025, mainly due to a rise in profit before tax during the year.
Profit/ (loss) for the year
Profit after tax increased by 29.71% from Rs.1,805.20 lakhs in Fiscal 2024 to Rs.2,341.56 lakhs in Fiscal 2025. The PAT margin attributable to owners of the company improved from 23.04% of total revenue in Fiscal 2024 to 24.81% of total revenue in Fiscal 2025. This improvement was primarily driven by overall improvement in Operating EBITDA margin.
fiscal 2024 compared TO FISCAL 2023
Income
Total income increased by 51.07% from Rs.5,232.96 lakhs in Fiscal 2023 to Rs.7,905.29 lakhs in Fiscal 2024 for the reasons mentioned below.
Revenue from Operations
In Fiscal 2024, our revenue from operations grew by 50.58%, increasing from Rs.5,168.30 lakhs in Fiscal 2023 to Rs.7,782.36 lakhs in Fiscal 2024. The growth was mainly supported by increased income in brokerage and fees income, which rose by 48.59% to Rs.5,843.20 lakhs in fiscal 2024 from Rs. 3,932.46 lakhs in fiscal 2023 reflecting higher client activity and increased traded value which increased to Rs. 47,59,230.71 lakhs in fiscal 2024 from Rs. 41,33,386.81 lakhs. Growth in interest income is by 38.26% from Rs.1,141.73 lakhs in Fiscal 2023 to Rs.1,578.60 lakhs in Fiscal 2024, driven by higher bank deposits and delayed payment charges. Dividend income increased by 56.15% to Rs.74.92 lakhs, while rental income improved by 49.00% to Rs.8.94 lakhs.
A notable turnaround was seen in net gain on fair value changes, which moved from a loss of Rs.191.44 lakhs in Fiscal 2023 to a gain of Rs.198.59 lakhs in Fiscal 2024, driven by improved performance in the derivatives segment. On the other hand, commodity sales fell sharply by 82.23% amounting to Rs.35.42 lakhs in fiscal 2024 from Rs.199.34 lakhs in fiscal 2023, while consultancy income increased to Rs.40.48 lakhs from Rs.17.13 lakhs in Fiscal 2023. Other operating income from the trading of listed bonds declined significantly from Rs.15.10 lakhs to Rs. 2.21 lakhs.
Overall, in Fiscal 2024, the Companys revenue mix was dominated by its core brokerage segments, which contributed nearly 75.08% of total revenues.
Other income
Other income increased significantly by 90.12%, rising from Rs.64.66 lakhs in Fiscal 2023 to Rs.122.93 lakhs in Fiscal 2024. The growth was primarily attributable to interest on IT refunds, which surged from Rs.0.62 lakhs in Fiscal 2023 to Rs.106.05 lakhs in Fiscal 2024, due to a favourable outcome in an ongoing income tax litigation, alongside a 34.11% increase in income from business support services and miscellaneous income from Rs.23.66 lakhs to Rs. 31.73 lakhs. These gains were partly offset by adverse movements such as a loss on sale of fixed assets of Rs. (22.63) lakhs in Fiscal 2024 as compared to a profit of Rs.17.33 lakhs in Fiscal 2023, and a reduction in foreign exchange fluctuation gains from Rs.16.64 lakhs to Rs.2.10 lakhs over the same period, attributable to the IFSC operations. However, additional contributions came from the liquidity enhancement scheme ("LES") incentive of Rs.2.21 lakhs during Fiscal 2024, which were absent in the prior year. Overall, the increase in other income was largely driven by the one-time IT refund and higher business support income, which outweighed losses on asset sales and lower foreign exchange gains.
Expenses
Total expenses increased by 29.70% from Rs.4,244.26 lakhs in Fiscal 2023 to Rs.5,504.61 lakhs in Fiscal 2024 for the reasons mentioned below.
Fees and commission expense
In Fiscal 2024, Fees and Commission Expense increased by 49.72%, from Rs.2,256.57 lakhs in Fiscal 2023 to Rs.3,378.43 lakhs. The sharp rise was primarily driven by higher brokerage sharing with intermediaries, which grew from Rs. 1,964.08 lakhs in Fiscal 2023 to Rs. 3,078.94 lakhs in Fiscal 2024, reflecting growth in trading volumes and brokerage income. Depository charges also rose moderately to Rs.40.95 lakhs from Rs.53.84 lakhs, while brokerage & commission expense reduced from Rs.0.52 lakhs in Fiscal 2025 to Rs.0.48 lakhs. In contrast, exchange transaction charges declined slightly from Rs.251.02 lakhs in Fiscal 2023 to Rs.245.17 lakhs in Fiscal 2024, slightly offsetting the overall increase. Overall, the rise in Fees and Commission Expense was directly aligned with revenue growth, indicating higher business activity while maintaining cost scalability.
Purchases of stock-in-trade
Purchases of stock-in-trade of commodities is Nil in Fiscal year 2023 as compared to Rs. 35.74 lakhs in Fiscal 2024.
Employee benefits expenses
Employee Benefit Expense has increased by 14.12% from Rs.957.05 lakhs in Fiscal 2023 to Rs.1,092.19 lakhs in Fiscal 2024. Our companys number of employees increased from 139 on March 31, 2023 to 145 on March 31, 2024, which increased the salary expense of the employees by 36.01% to Rs.694.06 lakhs from Rs.510.29 lakhs. On the other hand there is a decrease in Director Remuneration by 5.43% to 340.34 lakhs from 359.88 lakhs.
Contributions to provident and other funds, as well as gratuity and other long-term benefits, remained consistent. Finance costs
Finance cost increased from Rs.31.24 lakhs in Fiscal 2023 to Rs.90.98 lakhs in Fiscal 2024. This was primarily attributable to higher average borrowings during the year, even if the closing balance of borrowings as on March 31, 2024 does not capture the extent of borrowing levels throughout the year.
Depreciation and amortization expenses
Depreciation and amortization expenses increased by 9.26% from Rs.132.02 lakhs in Fiscal 2023 to Rs.144.24 lakhs in fiscal 2024 primarily due to an increase in depreciation on Property, plant & equipment i.e. from Rs. 122.94 lakhs in fiscal 2023 to Rs. 141.72 lakhs in fiscal 2024.
Other expenses
In fiscal 2024, the companys other expenses increased by 19.86% to Rs.764.85 lakhs from Rs.638.10 lakhs in Fiscal 2023, mainly due to the increase in Office Management Expenses by Rs.70.44 lakhs from Rs. 55 lakhs in fiscal 2023 to Rs. 125.44 lakhs in fiscal 2024 and Exchange charges which increased by Rs. 35.08 lakhs from Rs. 21.31 lakhs in fiscal 2023 to Rs. 56.39 lakhs in fiscal 2024 indicating higher business activity. Overall, the expense pattern demonstrates effective cost management while supporting business growth.
Profit/ (loss) before tax
Profit before tax increased by 142.81% from Rs.988.70 lakhs in Fiscal 2023 to Rs.2,400.66 lakhs in Fiscal 2024 primarily due to the reasons set out above.
Income tax expense
In Fiscal 2024, the companys total tax expense increased by 139.89% to Rs. 595.48 lakhs from Rs. 248.23 lakhs in Fiscal 2023, primarily due to a higher current tax liability, which rose from Rs. 257.87 lakhs to Rs. 591.20 lakhs, reflecting improved profitability during the year.
Profit/(Loss) for the year
Profit for the year increased by 135.12% from Rs.767.77 lakhs in Fiscal 2023 to Rs.1,805.20 lakhs in Fiscal 2024, for the reasons set out above. Majorly due to employee benefit expenses which increased in absolute term but decreased as a percentage of total income from 18.29% of total income in fiscal 2023 to 13.82% of total income in fiscal 2024 and other expenses which increased in absolute term but decreased as a percentage of total income from 12.19% of total income in fiscal 2023 to 9.68% of total income in fiscal 2024. The PAT margin attributable to owners of the company improved from 14.58% of total income in Fiscal 2023 to 22.69% of total income in Fiscal 2024. This improvement was primarily driven by overall improvement in Operating EBITDA margin.
LIQUIDITY AND CAPITAL RESOURCES
Capital Requirements
Historically, our Company has been able to finance the growth of our business through the funds generated from our operations, debt facilities from banks and equity. Our Company believes that, with the portion of the Issue Proceeds which will be utilised for working capital, it will have sufficient capital to meet its anticipated capital requirements for working capital requirements.
Cash Flow
Our anticipated cash flows are dependent on various factors that are beyond our control. The following table sets forth certain information relating to our cash flows in Fiscal 2025, 2024 and 2023:
| (in Rs. lakhs) | |||
Particulars |
For the year ended March 31, 2025 | For the year ended March 31, 2024 | For the year ended March 31, 2023 |
Net cash generated from/ (used in) operating activities |
(3,186.22) | 11,019.42 | 0.45 |
Particulars |
For the year ended March 31, 2025 | For the year ended March 31, 2024 | For the year ended March 31, 2023 |
Net cash generated from/(used in) investing activities |
(1,123.27) | (152.17) | (1,988.83) |
Net cash generated from/ (used) in financing activities |
(186.35) | (697.95) | 689.79 |
Net increase/ (decrease) in cash and cash equivalents |
(4,495.84) | 10,169.30 | (1,298.59) |
Cash Flows of Operating Activities Fiscal 2025
In Fiscal 2025, net cash used in operating activities stood at Rs.3,186.22 lakhs. The Company reported a profit before tax of Rs.3,140.22 lakhs, with operating profit before working capital changes amounting to Rs.3,414.82 lakhs after adjustments for depreciation and amortization of Rs.164.14 lakhs, finance costs of Rs.246.08 lakhs, dividend income of Rs.61.27 lakhs and unrealized fair value loss of Rs. 72.02 lakhs.
Moreover, decrease movements in working capital had a significant impact during the year, decrease was primarily driven by other bank balances of Rs. 2,797.44 lakhs, trade and other receivables of Rs. 907.12 lakhs, loans given of Rs.578.06 lakhs and trade payables of Rs.1,237.90 lakhs, along with changes in other non-financial assets, liabilities and provisions. Net income tax paid for Fiscal 2025 was Rs.963.07 lakhs.
Fiscal 2024
In Fiscal 2024, net cash generated from operating activities amounted to Rs.11,019.42 lakhs. The Company reported a profit before tax of Rs.2,400.68 lakhs, with operating profit before working capital changes at Rs.2,383.20 lakhs, after incorporating adjustments such as depreciation and amortization of Rs.144.24 lakhs, finance costs of Rs. 90.98 lakhs, dividend income of Rs.74.92 lakhs, impairment on financial instruments of Rs.1.82 lakhs, unrealized fair value gains of Rs.198.59 lakhs, and loss on sale of fixed assets of Rs.22.63 lakhs.
Working capital changes during the year had a substantial positive impact, primarily driven by an increase in bank balances of Rs.2,899.84 lakhs, trade and other receivables of Rs.317.27 lakhs and loans given of Rs. 498.00 lakhs, along with a significant increase in trade payables of Rs.5,315.61 lakhs. Additional movements included a decrease in other non-financial assets of Rs. 51.05 lakhs, an increase in other financial liabilities of Rs. 8.67 lakhs, an increase in other non-financial liabilities of Rs.63.06 lakhs, and an increase in provisions of Rs.106.03 lakhs, all of which further supported the cash inflows during the year.
The Company also paid net income tax of Rs. 546.79 lakhs during the year.
Fiscal 2023
In Fiscal 2023, net cash generated from operating activities amounted to Rs.0.45 lakhs. Our Company reported a profit before tax of Rs.988.70 lakhs, with operating profit before working capital changes at Rs.1,033.58 lakhs, after considering adjustments such as depreciation and amortization of Rs.132.02 lakhs, finance costs of Rs.31.24 lakhs, dividend income of Rs. 47.98 lakhs, impairment on financial instruments of Rs.22.23 lakhs, unrealized fair value losses of Rs. 75.30 lakhs, and a gain on sale of fixed assets of Rs.17.73 lakhs.
Working capital movements during the year had a mixed impact. Significant changes included a decrease in other bank balances of Rs.1,519.31 lakhs, a decrease in loans given of Rs.617.11 lakhs, and an increase in inventories of Rs. 207.05 lakhs, which negatively affected cash flows. On the other hand, positive contributions arose from an increase in trade and other receivables of Rs.120.28 lakhs, an increase in other non-financial assets of Rs.70.33 lakhs, and a substantial increase in trade payables of Rs.1,065.82 lakhs. Additional changes comprised a decrease in other financial liabilities of Rs. 60.38 lakhs, a decrease in other non-financial liabilities of Rs.18.12 lakhs, and a reduction in provisions of Rs. 7.29 lakhs.
The Company also paid net income tax of Rs.276.00 lakhs during the year.
Cash Flow of Investing Activities
Fiscal 2025
In Fiscal 2025, net cash used in investing activities stood at Rs. 1,123.27 lakhs. The major outflow was driven by purchase of investments amounting to Rs.943.14 lakhs and capital expenditure of Rs. 241.40 lakhs towards fixed assets. These outflows were partially offset by dividend income of Rs.61.27 lakhs received during the year. Overall, the firm recorded a substantial cash outflow under investing activities, primarily reflecting its increased allocation towards investments and asset acquisition.
Fiscal 2024
During Fiscal 2024, net cash used in investing activities was Rs.152.17 lakhs. The outflows were mainly due to purchase of fixed assets worth Rs.164.39 lakhs and investment purchases of Rs. 62.70 lakhs. These were offset to some extent by dividend income of Rs.74.92 lakhs, which reduced the overall outflow. The lower level of investment activity compared to the prior and subsequent year indicates a relatively stable year in terms of capital allocation.
Fiscal 2023
In Fiscal 2023, the firm reported a significant cash outflow of Rs. 1,988.83 lakhs under investing activities. This was primarily attributable to a large investment outlay of Rs.1,348.07 lakhs and fixed asset purchases of Rs.689.10 lakhs. Dividend income of Rs.48.34 lakhs provided only a limited offset. The magnitude of outflows in this year highlights a phase of heavy investment activity, both in terms of financial investments and asset acquisition.
Cash Flow of Financing Activities
Fiscal 2025
During Fiscal 2025, the Company reported a net cash outflow of Rs.186.35 lakhs from financing activities. Comprising primarily proceeds from borrowing of Rs.217.29 lakhs, payment of finance costs amounted to Rs.246.08 lakhs and dividend pay-outs aggregated to Rs.157.56 lakhs. The negative financing cash flow reflects higher finance costs and shareholder pay-outs relative to borrowing inflows.
Fiscal 2024
In Fiscal 2024, financing activities resulted in a net cash outflow of Rs.697.95 lakhs. The primary contributor to this outflow was repayment of borrowings of Rs.449.89 lakhs. This, coupled with dividend payments of Rs.157.08 lakhs and finance cost outgo of Rs. 90.98 lakhs, led to a sizeable net reduction in cash from financing. The year reflects higher repayment.
Fiscal 2023
In Fiscal 2023 recorded a net cash inflow of Rs.689.79 lakhs from financing activities. The inflow was largely driven by fresh borrowings of Rs.799.80 lakhs. Against this, outflows were limited to dividend payments of Rs.78.77 lakhs and finance costs of Rs.31.24 lakhs. This indicates that financing requirements in Fiscal 2023 were primarily met through borrowings, resulting in a net positive cash flow.
Financial Indebtedness
As of August 31, 2025, we had outstanding working capital facilities amounting to Rs. 9,458.62 lakhs. The details of our indebtedness (on a consolidated basis) as on August 31, 2025 is provided below:
| (in Rs. lakhs) | ||
Sr. No. Nature of facility |
Sanctioned amount | Amount outstanding as on August 31, 2025 |
Secured |
||
Fund Based Borrowings |
||
1. Intraday facility |
2,000.00 | - |
2. Cash credit |
1,000.00 | - |
3. Overdraft Against Property (Sub limit: Overdraft Against Shares) |
3,000.00 | 1,239.52 |
4. Overdraft Against Fixed Deposit |
2500.00 | 73.24 |
5. Vehicle Loan |
99.45 | 78.33 |
6. Loan Against Security |
4,000.00 | 1,968.71 |
Sub total (A) |
12,599.45 | 3,359.80 |
Non Fund Based Borrowings |
||
7. Bank Guarantee |
1,1500.00 | 6,000.00 |
Sub total (B) |
1,1500.00 | 6,000.00 |
Total (C= A+B) |
24,099.45 | 9,359.80 |
Unsecured |
||
8. Inter Company Loan |
98.82 | 98.82 |
Total (D) |
98.82 | 98.82 |
Total (C+D) |
24,198.27 | 9,458.62 |
Contingent liabilities
As of March 31, 2025, our contingent liabilities and guarantees identified under the Ind AS 37, on a consolidated basis, were as follows:
| (in Rs. lakhs) | |
Contingent liabilities: |
As at March 31,2025 |
Bank Guarantees given |
6,000.00 |
Demand in respect of income tax matters for which appeal is pending |
419.94 |
Total |
6419.94 |
There are no Capital commitments for the year ended March 31, 2025.
For details of our contingent liability and guarantees as at March 31, 2025 as per Ind AS 37, see "Restated Financial Information - Note - 34: Notes to Restated Ind AS Consolidated Summary Statements - Contingent Liability and Commitment" on page 503.
Off-balance sheet arrangements
There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that we believe are material to investors.
Qualifications and Emphasis of Matter
There have been no reservations or qualifications or adverse remarks of our Statutory Auditors in fiscals 2025, 2024 and 2023.
Related Party Transactions
We enter into various transactions with related parties in the ordinary course of business. These transactions principally include rent payments, capital advances, repayment of advances given and remuneration paid to Directors.
For details, see "Related Party Transactions" on page 577. Also, see "Risk Factors - We have in the past entered into related party transactions and may continue to enter into such transactions under Ind AS 24, in the future, and there can be no assurance that we could not have achieved more favourable terms had such transactions not been entered into with related parties" on page 57.
Quantitative and Qualitative Disclosures About Market Risk
Our management monitors and manages key financial risk relating to our operations by analysing exposures by degree and magnitude of risk. The risks include credit risk, liquidity risk and market risk. Our Board of Directors has overall responsibility for the establishment and oversight of our risk management framework. Our risk management policies are established to identify and analyse the risks faced by us, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and our activities.
Unusual or infrequent events or transactions
Except as described in this Draft Red Herring Prospectus, to our knowledge, there have been no unusual or infrequent events or transactions that have in the past or may in the future affect our business operations or future financial performance.
Extent to which material increases in net sales or revenue are due to increased sales volume, and increased sales prices.
The reasons for the increase in revenue from operations and total income has been described above under ‘Fiscal 2025 compared with Fiscal 2024and ‘Fiscal 2024 compared with Fiscal 2023.
Significant economic changes that materially affect or are likely to affect income from continuing operations
Our business has been subject, and we expect it to continue to be subject, to significant economic changes that materially affect or are likely to affect income from continuing operations identified above in "Managements Discussion and Analysis Of Financial Condition and Results Of Operations - Significant Factors Affecting our Results of Operations and Financial Condition " and the uncertainties described in the section "Risk Factors " on pages 578 and 40 respectively.
Known trends or uncertainties
Other than as described in the section "Risk Factors" on page 40, to our knowledge, there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations.
Future relationship between cost and income
Other than as described in the sections "Risk Factors", "Our Business" and "Managements Discussion and Analysis of Financial Position and Results of Operations" on pages 40, 438 and 578, respectively, to our knowledge there are no known factors that may adversely affect our business prospects, results of operations and financial condition.
Publicly announced new products or business segments /material increases in revenue due to increased disbursements and introduction of new products
As on the date of this Draft Red Herring Prospectus, except as disclosed in "Our Business" on page 438, there are no new products or business segments that have or are expected to have a material impact on our business prospects, results of operations or financial condition.
Significant dependence on single or few customers
Given the nature of our business operations, we do not believe that our business is dependent on any single client or a few clients.
Seasonality of business
Our business is not seasonal in nature.
Competitive conditions
We operate in a competitive environment. Please refer to the section "Industry Overview ", "Our Business", and "Risk Factors " on pages 382, 438 and 40 respectively, for further information on our industry and competition.
Change in accounting policies
Except as described in this Draft Red Herring Prospectus, there have been no changes in our accounting policies in the last three Fiscals.
Significant developments after March 31, 2025 that may affect our future results of operations
Except as set out in this Draft Red Herring Prospectus, to our knowledge, no circumstances have arisen since the date of the last financial statements as disclosed in this Draft Red Herring Prospectus which materially or adversely affect or are likely to affect, the trading or profitability of our Company, or the value of our assets or our ability to pay our material liabilities within the next 12 months.
IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000
IIFL Capital Services Support WhatsApp Number
+91 9892691696
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