K) Provisions and contingent liabilities
Provisions are recognized only when there is a present obligation (legal or constructive], as a result of past events and when a reliable estimate of the amount of obligation can be made at the reporting date. Provisions are determined based on management estimates required to settle the obligation at the balance sheet date, supplemented by experience of similar transactions. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. Provisions are discounted to their present values, where the time value of money is material. Contingent liability is disclosed for:
• Possible obligations which will be confirmed only by future events not wholly within the control of the Company or
• Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are neither recognized nor disclosed except when realisation of income is virtually certain, related asset is disclosed.
L) Impairment
Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication based on internal/ external factors, that an asset may be impaired. If any such indication exists, the recoverable amount of the asset or the cash generating unit is estimated. If such recoverable amount of the asset or 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 recognized in the statement of profit and loss. If, at the reporting date, there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is re-assessed and the asset is reflected at the recoverable amount. Impairment losses previously recognized are accordingly reversed in the statement of profit and loss.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets.
ECL is the weighted-average of difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original effective interest rate, with the respective risks of default occurring as the weights. When estimating the cash flows, the Company is required to consider:
All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets; and;
Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Other financial assets
In respect of its other financial assets, the Company assesses if the credit risk on those financial assets has increased significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the Company measures the loss allowance at an amount equal to 12-month expected credit losses, else at an amount equal to the lifetime expected credit losses.
M) Operating Segment
The Company has only one business, being trading in financial instruments. The operations of the Company are in India and accordingly, there are no reportable geographical segments as per ind AS 108 "Operating Segments".
N) Dividends
Being appropriately authorized and no longer at the discretion of the entity, provision is made for the amount of any dividend declared, on or before the end of the reporting period but not distributed at the end of the reporting period.
Final Dividend is recorded as liability on the date of approval by shareholders in their General Meeting. Interim Dividend is declared as liability on the date of declaration by Board of Directors.
O) 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.
P) Standards issued and effective
Ministry of Corporate Affairs ("MCA") has notified the Companies (Indian Accounting Standards) Amendment Rules, 2023 dated 31-March-2023 to amend the following Ind AS which are effective from 01-April-2023. However, these amendments does not have an impact on Financial Statements and material accounting policy information.
Ind AS 1 Presentation of Financial Statements This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after 01-April-2023. The Company has evaluated the amendment, and the impact of the amendment is insignificant in the Company's financial statements.
Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors This amendment has introduced a definition of accounting estimates' and included amendments. to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after 01-April-2023. The Company has evaluated the amendment and there is no impact on its financial statements.
Ind AS 12 Income Taxes This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on or after 01-April-2023. The Company has evaluated the amendment and there is no impact on its financial statement.
Q) Standards notified but not yet effective
There are no standards that are notified and not yet effective as on the date.
28 Financial Instruments
(A) Fair value hierarchy
Some of the Company's 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. Financial assets and financial liabilities measured at fair value in the financial statements are grouped into three levels of a fair value hierarchy under Ind AS categorised 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: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data rely as little as possible on entity specific estimates; 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.
During the year, there were no transfers between level 1 and level 2, and no transfers into and out of level 3 fair value measurements.
Fair value of financial assets and financial liabilities that are not measured at fair value (but fair value disclosures are required)
Other financial assets and liabilities. The management consider the carrying values of Other Cash and cash equivalents, Bank balances other than cash and cash equivalents, trade receivables, trade payables and other financial liabilities (except derivative financial instruments) approximate their carrying amounts largely due to the short-term maturities of these instruments.
29 Financial risk management
(A) Risk Management
The Company has a system-based approach to risk management, anchored to policies and procedures and internal financial controls aimed at ensuring early identification, evaluation and management of key financial risks (such as market risk, credit risk and liquidity risk) that may arise as a consequence of its investing and financing activities. Accordingly, the Company's risk management framework has the objective of ensuring that such risks are managed within acceptable and approved risk parameters in a disciplined and consistent manner and in compliance with applicable regulation. It also seeks to drive accountability in this regard.
Financial risk management
Financial Risk Evaluation and Management is an ongoing process within the Company. The Company has a system based risk management framework to identify, monitor, mitigate and minimise risks arising from financial instruments. The Company is exposed to market, credit and liquidity risks. The Board of Directors ('Board') oversee the management of these risks through its Risk Management Policy. The Company's Risk Management Policy has been formulated and approved by the Board. The Policy articulates on the Company's approach to address uncertainties in its endeavour to achieve its stated and implicit objectives. It also prescribes the roles and responsibilities of the Company's management, the structure for managing risks and the framework for risk management. The framework seeks to identify, assess and mitigate risks in order to minimise potential adverse effects on the Company's financial performance. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. The Board of Directors reviews and agrees on policies for managing each of these risks, which are summarised below. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk.
(I) Credit risk
The Company's activities expose it to market risk, liquidity risk and credit risk. The Company's board of directors has overall responsibility for the establishment and oversight of the Company's risk management framework. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements. The Company's risk management is carried out as per the policies approved by the board of directors.
(a) Credit risk management (i) Credit risk rating
The Company assesses and manages credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets.
(ii) Discontinued operations
The Company's current assets aggregate to Rs.95.11 Lakh [Previous year- Rs.95.11 Lakh] against an aggregate current Liability of Rs.281.92 Lakh [Previous year- Rs.322.21 lakh];
Further, while the Company's total equity stands at Rs.4,425.50 lakh [Previous year- Rs. 3,428.70 lakh]. In such circumstances, liquidity risk or the risk that the Company may not be able to settle or meet its obligations as they become due, is low.
Prudent Liquidity risk management implies maintaining sufficient cash and marketable securities to meet obligations when due.
Management monitors rolling forecasts of the Company's liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates. In addition, the Company's liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and evaluation of debt financing plans, if any required.
(c) Market risk
Market risk has been further classified into Foreign currency risk, Interest rate risk and Price risk
(i) Foreign currency risk
The Company does not have a significant foreign currency risk as it does not have any exposure in foreign currency as at the year end. The Company has no-hedge policy for its foreign currency items as these are insignificant. Therefore, the sensitivity to foreign currency fluctuation is not relevant.
(ii) Price risk
The Company holds investments and measures them at fair value through Profit and Loss/other comprehensive income. The fair value of investments of such equity instruments (FVTPL) as at 31-March-2024 is Rs. 567.87 lakh [previous year - Rs.1,266.88 lakh] and FVOCI is Rs. Nil [previous year - Rs. 549.40 lakh]. Accordingly, fair value fluctuations arising from market volatility is recognised in statement of Profit and Loss/other comprehensive income. The sensitivity analysis has been presented as below:
30 Capital management policies and procedures
For the purpose of the Company's capital management, capital includes issued capital and all other equity reserves attributable to the equity shareholders of the Company. The primary objective of the Company when managing capital is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder value. As at 31-March-2024, the Company has only one class of equity shares. In order to maintain or achieve an optimal capital structure, the Company allocates its capital for the re-investment into business based on its long-term financiaL pLans.
As stated in the below table, as of 31-March-2024 the Company has short-term borrowings of Rs. 2039.14 lakhs and longterm borrowings of Rs. 33.42 lakhs.
(iii) The Company has not traded or invested in Crypto currency or Virtual Currency.
(iv) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (intermediaries) with the understanding that the intermediary shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries); or
b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;
(v) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the company shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or;
b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(vi) The Company does not have any such transactions which are not recorded in the books of account that have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
(vii) The Company has borrowings from bank or financial institution. However, there is no charge on any assets of the Company that is required to be registerd with ROC. Accordingly, no disclosure is required with reference to wilful defaulter and registration/satisfaction of charges with registrar of companies.
(viii) The Company does not have any investment in any downstream subsidiary, joint venture, associate. Therefore, compliance with number of layers of subsidiary is not applicable on the Company.
(ix) The Company did not enter into any scheme of arrangements on terms of section 230 to 237 of the Companies Act, 2013 except as explained at note 36.
35 Employee benefit plan
Defined Benefit Plans - As per actuarial valuation on 31-March-2024
i. The Company operates a Gratuity Plan which is unfunded. Every employee who has completed
minimum five years of service is entitled to gratuity at 15 days salary for each completed year of service in accordance with Payment of Gratuity Act, 1972.
36 The Board of Directors of the Company in their meeting held on 10-March-2023, approved a draft Composite Scheme of Arrangement {"the Scheme") between the Algoquant Fintech Limited ("Company, Amalgamated, AFL, or Resulting Company""), Growth Securities Private Limited {"Growth Securities, GSPL, or Demerged Company") and Algoquant Investments Private Limited ("AIPL, Amalgamating Company") and their respective shareholders and creditors, whereby the stock broking business, DP Business of Growth Securities along with stock exchange membership (defined in detail in the Scheme of Arrangement) shall be demerged into the Company on a going concern basis and also Algoquant Investments Private Limited shall amalgamate in to the Company.
The Company had filed the Scheme with the National Company Law Tribunal (Ahmedabad) (NCLT) for its approval on 19-December-2023. After duly completing the pre-requisite formalities/approvals, the Company has filed the second motion application with Hon'ble NCLT (Ahmedabad) for final approval. The approval of the Scheme is awaited and consequently, no adjustments have been made to the financial statements of the Company for the year ended 31-March-2024 with respect to the Scheme."
37 The Company has only one business, being trading in financial instruments. The operations of the Company are in India and accordingly, there are no reportable geographical segments as per Ind AS 108 "Operating Segments".
38 The financial statements for the year ended 31-March-2024 were authorized and approved for issuance by the Board of Directors on 30-May-2024.
As per our report of even date. For and on the behalf of the Board of Directors
For O P Bagla & Co. LLP Chartered Accountants
Firm Registration No : 000018N/N500091
sd/- sd/-
Dhruv Gupta Devansh Gupta
Director Managing Director
sd/- DIN: 06920431 DIN: 06920376
Deepanshu Saini
Partner
Membership No : 510573
sd/- sd/-
Yogesh Gusain Barkha Sipani
Place: New Delhi Chief Financial Officer Company Secretary
Date: 30-May-2024 BGGPG8044R LF0PS3524R
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