2.17 Provisions, Contingent Liabilities and Contingent
Assets
2.17.1 Provisions
A provision is recognized if, as a result of
a past event, the company has a present
legal or constructive obligation that is
reasonably estimable, and it is probable
that an outflow of economic benefits will be
required to settle the obligation. Provisions
are determined by discounting the expected
future cash flows at a pre-tax rate that
reflects current market assessments of the
time value of money and the risks specific
to the liability. Provisions are determined
based on the best estimate required to
settle the obligation at the Balance Sheet
date.
2.17.2 Contingent Liabilities
Contingent liabilities are not recognized but
disclosed in Notes when the company has
possible obligation due to past events and
existence of the obligation depends upon
occurrence or non-occurrence of future
events not wholly within the control of the
company. Contingent liabilities are assessed
continuously to determine whether
outflow of economic resources has become
probable. If the outflow becomes probable,
then relative provision is recognized in the
financial statements.
2.17.3 Contingent Assets
Contingent Assets are not recognized but
disclosed in Notes which usually arise from
unplanned or other unexpected events that
give rise to the possibility of an inflow of
economic benefits.
Contingent assets are assessed continuously
to determine whether inflow of economic
benefits becomes virtually certain, then
such assets and the relative income will be
recognized in the financial statement.
2.18 Earnings per Share
Basic earnings per share are calculated by dividing
the net profit or loss for the period attributable
to equity shareholders by the weighted average
number of equity shares outstanding during the
period.
For calculating diluted earnings per share, the net
profit or loss for the year attributable to equity
shareholders and the weighted average number of
shares outstanding during the year are adjusted for
the effects of all dilutive potential equity shares.
36 Operating Segments (Ind AS - 108)
a) Based on the "Management Approach" as defined in Ind AS 108, the Chief Operating Decision Maker (CODM) evaluates
the performance and allocates resources based on an analysis of various performance indicators by business segments.
The Managing Director (MD) has been identified as CODM. The accounting principles used in the preparation of the
financial statements are consistently applied to record revenue and expenditure in individual business segment, and are
as set out in the significant accounting policies.
b) The company operates in a single segment namely "Financing and Investment Activities" taking into account the different
risks and returns, the organisational structure and the internal reporting systems.
c) Entity-Wide Disclosures-
(i) Information about major customers
The company is not reliant on single customer for revenue and hence revenue from no single external customer
amounts to 10 per cent or more of an entity's revenues.
(A) Credit risk
i. The company manages and controls credit risk by setting limits on the amount of risk it is willing to accept for
individual counterparties and for geographical and industry concentrations, and by monitoring exposures in relation
to such limits.
ii. Significant estimates and judgements
Impairment of financial assets:-
The impairment provisions for financial assets disclosed above are based on assumptions about risk of default and
expected loss rates. The company uses judgement in making these assumptions and selecting the inputs to the impairment
calculation, based on the company's history for past 10 years, existing market conditions as well as forward looking
estimates at the end of each reporting period.
Company has adopted policy to recognise impairment loss (ECL) in books and has categorized all loans, in tourism & non¬
tourism segments based on nature of substantive security, in three stages:
Stage-1 - Standard Assets (with no overdues or default upto 30 days)
Stage-2 - Standard Assets (with overdues between 31 days to 90 days)
Stage-3 - Non-Performing Assets / Restructured Assets - Credit impaired.
ECL is calculated based on past ten years data as follows:-
ECL= Exposure at Default X Probability of Default (PD) X Loss given default (LGD)
Probability of Default (PD):
Stage-1: No of Borrowers moving to Stage-3 X Loan Exposure (in % terms)
Total No of Borrowers
Stage-2: No of Borrowers moving to Stage-3 (in % terms)
Total No of Borrowers in Stage-2
Stage-3: 100% (Since default has already incurred)
Loss given Default: LGD = 1 - (PV Recovery - Cost of recovery) (in % terms)
Exposure at Default
Where PV recovery is the sum of discounted cash flows of the recovery made (discounted at weighted average cost of
borrowings).
It is presumed that there is increase in credit risk whenever past dues exceed 30 days, however the presumption is
rebuttable if there are sufficient at supportable information that demonstrates that the credit risk has not increased
despite past overdues exceeding 30 days but less than 60 days, such as availability of tangible security, confirmed
availability of buyer/auction price for exceeding the value of the loan asset. All such cases are reviewed by the Audit
Committee of the Board before finalisation.
Further, Wherever the management believes that there is increase in credit risk, the Company may provide additional ECL
over and above the stagewise ECL requirement.
Collateral and other credit enhancements
The amount and type of collateral required depends on an assessment of the credit risk of the counterparty.
Guidelines are in place covering the acceptability and valuation of each type of collateral.
The main types of collateral obtained are, as follows:
- The lending to tourism sector is secured by first charge by way of mortgage/hypothecation on all the fixed
assets of the project, charge on the current assets/receivables and other collaterals as deemed appropriate.
- The lending to infrastructure sector is secured by first charge by way of mortgage/hypothecation of all the fixed
assets of the project, charge on the current assets/receivables and other collaterals as deemed appropriate.
- The lending to manufacturing sector is secured by first charge by way of mortgage/hypothecation of all the
fixed assets, charge on the current assets/receivables and other collaterals as deemed appropriate.
- The lending to real estate sector is secured by first charge on fixed assets of the project, hypothecation of
project receivables and other current assets and collaterals, as deemed appropriate.
- The lending to NBFC/HFC/ARC/Finance Companies is primarily secured by hypothecation of receivables and
collaterals, as deemed appropriate.
- LAP is secured by mortgage of the property, escrow charge on rent/other receivables and collateral as deemed
appropriate. LAS is secured by Category-I listed shares and mutual funds.
(B) Liquidity risk
Liquidity is the risk that suitable sources of funding for Company's business activities may not be available. The Company's
objective is to maintain optimum level of liquidity to meet its cash requirements. The Company closely monitors its
liquidity position and deploys a robust cash management system. It also maintains adequate sources to finance its short
term and long term fund requirement suchas overdraft facility and Long term borrowing through domestic market.
(i) Financing arrangements
(ii) Maturity profile of financial liabilities
The tables below analyse the company's financial liabilities into relevant maturity companyings based on their
contractual maturities for: all non-derivative financial liabilities for which the contractual maturities are essential for
an understanding of the timing of the cash flows:-
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months
equal their carrying balances as the impact of discounting is not significant :-
(C) Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market prices. Market risk comprises three types of risk :- interest rate risk, currency risk and other price risk, such as
equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings.
(i) Cash flow and fair value interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market interest rates. The Company's exposure to the risk of changes in market interest rates relates
primarily to the long term loans with floating interest rates. The Company manages its interest rate risk according to
its Board approved Interest Rate Risk Management policy'. Market interest rate risk is mitigated by proper review of
market conditions, factors etc.
The company's borrowings are carried at amortised cost.
The fixed costs borrowings are not subject to interest rate risk as defined in Ind AS 107, since neither the carrying
amount nor the future cash flows will fluctuate because of a change in market interest rates.
ii Price risk
(a) Exposure
The company's exposure to equity securities price risk arises from investments held by the company and
classified in the balance sheet either as fair value through OCI or at fair value through profit or loss
To manage its price risk arising from investments in equity securities, the company diversifies its portfolio.
Diversification of the portfolio is done in accordance with the limits set by the company
(b) Sensitivity
Company has insignificant investment in indexed linked equity and also there is no significant change in
movement in last two years. Hence, sensitivity not required to be disclosed.
Profit for the period would increase/decrease as a result of gains/losses on equity securities classified as fair
value through profit or loss. Other components of equity would increase/decrease as a result of gains/losses
on equity instrument classified as fair value through other comprehensive income.
43 Capital Management (Ind AS -1)
The primary objective of the Company's capital management policy is to ensure compliance with regulatory capital requirements.
In line with this objective, the Company ensures adequate capital at all times and manages its business in a way in which capital
is protected, satisfactory business growth is ensured, cash flows are monitored, borrowing covenants are honoured and ratings
are maintained.
Regulatory capital-related information is presented as part of the RBI mandated disclosures. The RBI norms require capital to
be maintained at prescribed levels. In accordance with such norms, Tier I capital of the company comprises of share capital,
share premium, reserves and perpetual debt, Tier II capital comprises of subordinated debt and provision on loans that are not
credit-impaired. There were no changes in the capital management process during the periods presented."
45 Approval of Financial Statements (Ind AS - 10)
These financial statements are approved by the Board of Directors and authorized for issue on May 13, 2026
46 Recent Accounting Pronouncements (Ind AS - 8) :
No New/Amended Standard have been issued which will have any impact on the financial statement of the company.
8.15.6 Institutional Set Up for Liquidity Risk Management
The Liquidity Risk management of the Company is governed by the Liquidity Risk Management Framework and Asset
& Liability Management(ALM) Policy approved by the Board. The Board of Directors of the Company has the overall
responsibility for management of liquidity risk. The Board decides the strategy, policies and procedures to manage
liquidity risk in accordance with the liquidity risk tolerance/limits approved by it. The Risk Management Committee of
Directors (RMCD) is responsible for evaluating the overall risks faced by the company including liquidity risks. The Asset
Liability Management Committee (ALCO) is responsible for ensuring adherence to the liquidity risk tolerance/limit set by
the Board as well as implementing the liquidity risk management strategy. The role of ALCO with respect to liquidity risk
includes, inter alia, decision on desired maturity profile and mix of incremental assets and liabilities, responsibilities and
controls for managing liquidity risk and overseeing the liquidity positions at an entity level.
Note:
In terms of the requirement as per RBI notification no. RBI/2019-20/170 DOR (NBFC).CC.PD.No.109/22.10.106/2019-20
dated March 13, 2020 on Implementation of Indian Accounting Standards, NBFCs are required to create an impairment
reserve for any shortfall in impairment allowances under Ind AS 109 and IRACP norms (including provision on standard
assets). The impairment allowances under Ind AS 109 made by the Company exceeds the total provision required under
IRACP as at March 31, 2026 and accordingly, no amount is required to be transferred to impairment reserve.
55 In the opinion of the Management, the All Financial Assets,including Loans & Advances, have a value on realization in the
ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet and necessary provision
has been made in the cases wherever it is considered as doubtful.
56 Miscellaneous Expenses do not include items of expenses exceeding 1% of the total revenue of the company or Rupees Ten Lakh
which ever is higher.
57 Figures in Financial Statements have been rounded off to the nearest lakh (except number of shares) and previous years figures
have been re-grouped, re-arranged wherever necessary to make them comparable with those of the current year's figures.
58 TFCI has availed financial assistance from banks and financial institutions against the security of loan receivables. TFCI submits to
banks/financial institutions statement of loan outstanding and other required returns certified by management on monthly basis
and duly certified by statutory auditors on quarterly basis. These statements are in agreement with the books of accounts.
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