Auditor Report of Northern Arc Capital Ltd.

Mar 31, 2025

1. We have audited the accompanying standalone financial
statements of Northern Arc Capital Limited (''the Company''),
which comprise the Standalone Balance Sheet as at 31 March
2025, the Standalone Statement of Profit and Loss (including
Other Comprehensive Income), the Standalone Statement of
Cash Flow and the Standalone Statement of Changes in Equity
for the year then ended, and notes to the standalone financial
statements, including material accounting policy information
and other explanatory information.

2. In our opinion and to the best of our information and
according to the explanations given to us, the aforesaid
standalone financial statements give the information
required by the Companies Act, 2013 (''the Act'') in the manner
so required and give a true and fair view in conformity with
the Indian Accounting Standards (''Ind AS'') specified under
section 133 of the Act read with the Companies (Indian
Accounting Standards) Rules, 2015 and other accounting
principles generally accepted in India, of the state of affairs
of the Company as at 31 March 2025, and its profit including
other comprehensive income, its cash flows and the changes
in equity for the year ended on that date.

Basis for Opinion

3. We conducted our audit in accordance with the Standards
on Auditing specified under section 143(10) of the Act. Our
responsibilities under those standards are further described
in the Auditor''s Responsibilities for the Audit of the
Standalone Financial Statements section of our report. We
are independent of the Company in accordance with the Code

of Ethics issued by the Institute of Chartered Accountants of
India (''ICAI'') together with the ethical requirements that are
relevant to our audit of the standalone financial statements
under the provisions of the Act and the rules thereunder,
and we have fulfilled our other ethical responsibilities in
accordance with these requirements and the Code of Ethics.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter: Exclusion of FLDG credit in
calculation of ECL

4. We draw attention to Note 83 to the accompanying
standalone financial statements, which describes the impact
of the regulatory directions received by the Company from
the Reserve Bank of India (RBI) vide e-mail communication
dated 16 May 2025, pursuant to which the Company is
required to exclude credit enhancements under First Loss
Default Guarantee (FLDG) arrangement available at portfolio
level as at 31 March 2025 from the computation of Expected
Credit Losses (ECL) calculated as per Ind AS 109, Financial
Instruments and provide for additional ECL on account of
such change by 30 June 2025. Our opinion is not modified in
respect of this matter.

Key Audit Matters

5. Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the
standalone financial statements of the current period. These
matters were addressed in the context of our audit of the
standalone financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.

Key audit matter	How our audit addressed the key audit matter
1) Impairment of loan asset based on Expected Credit Losses (ECL) (Refer note 3 for material accounting policies and note 7 for
financial disclosures in the accompanying standalone financial statements
As at 31 March 2025, the Company reported gross loans of ^1,083,753.97 lakhs against which provision for expected credit loss of
^26,516.19 lakhs has been recorded in accordance with Ind AS 109 -		Financial Instruments. The Company has written off loans of ^
60,930.24 lakhs during the current year.
Ind AS 109, Financial Instruments (Ind AS 109) requires the	Our audit procedures were focused on assessing the
Company to provide for impairment of its loan assets using the	appropriateness of management''s judgment and estimates used in
expected credit loss (''ECL'') approach. The Company has applied	the impairment analysis that included, but were not limited to, the
a three-stage approach based on changes in credit quality of loan	following:
assets which is primarily determined based on number of days past	?	Examined the Board of Director''s policy approving
due for each loan asset apart from other factors considered by the		methodology for computation of ECL that addresses policies
management for ascertaining significant increase in credit risk.		and procedures for assessing and measuring credit risk on
The ECL is measured at 12-month ECL for Stage 1 loan assets and		the lending exposures of the Company in accordance with the
at lifetime ECL for Stage 2 and Stage 3 loan assets in accordance		requirements of Ind AS 109.
with the accounting policy adopted by the Company. Significant management judgements and assumptions are involved in measuring ECL with respect to: ? management overlays	?	Involved auditor''s specialists and obtained an understanding of the modelling techniques adopted by the Company including the key inputs and assumptions. Since modelling assumptions and parameters are based on historical data, industry benchmarks and macro-economic factors, we
? determining the criteria for significant increase in credit risk		assessed whether such historical experience and the industry
and default risk i.e. staging of loan assets		information was representative of current circumstances and
? factoring in forward-looking information (including		was relevant in view of the recent impairment losses incurred
macroeconomic factors on a portfolio level)		within the portfolios. Further, assessed reasonableness for the macro-economic factors considered for the portfolio segments.
? techniques used to determine probability of default, loss given default and exposure at default. These parameters are derived from the Company''s internally developed statistical models, historical data, macro-economic factors. Any change in such models or assumptions could have a material impact on the accompanying standalone financial statements.	?
		Assessed and tested the design and operating effectiveness of the key controls over the completeness and accuracy of the key inputs and assumptions considered for calculation, recording and monitoring of the impairment loss recognized. Also, evaluated the controls over the modelling process, validation of data and related approvals.
	?	Tested the underlying forecast of future cash flows used in
Similarly, the Company is also required to make judgements to		impairment workings with the agreed repayment schedules
identify the loan assets which are non-recoverable and thereby determined to be written off. Further as described in note 83		on a test check basis
to the accompanying standalone financial statements as per	?	Evaluated the appropriateness of the Company''s determination
the Reserve Bank of India RBI e-mail communication dated 16		of significant increase in credit risk in accordance with
May 2025, the management has excluded credit enhancements		the applicable accounting standard and the basis for
under First Loss Default Guarantee (FLDG) arrangements from		classification of exposures into various stages. For a sample
the computation of ECL per Ind AS 109 as at 31 March 2025 and		of exposures, we also tested the appropriateness of the
to provide the same in the financial statements by 30 June 2025.		Company''s categorization across various stages by evaluating
This matter has also been considered as fundamental to the		management''s assessment of parameters.
users'' understanding of the financial statements	?	Evaluated the appropriateness of the methodology and policy
Considering the significance of the above matter to the standalone		laid down and implemented by the Company for the loan
financial statements, degree of estimation uncertainty and		portfolio written-off during the year and tested its compliance
significant management judgment involved, this area required significant auditor attention to test such complex accounting estimates, and accordingly, this matter has been identified as a key audit matter for the current year audit.		on a sample basis.

Key audit matter	How our audit addressed the key audit matter
	?	Evaluated Company''s compliance with the RBI directions vide e-mail communication dated 16 May 2025, with respect to exclusion of credit enhancements under FLDG arrangements from the computation of ECL as on 31 March 2025 and verified the mathematical accuracy in such computation.
	?	Challenged the management on post model adjustments, considering the size and complexity of management overlays, in order to assess the reasonableness of the adjustments.
	?	Assessed the appropriateness and adequacy of the related presentation and disclosures in the accompanying standalone financial statements in accordance with the applicable accounting standards and related RBI circulars.
	?	Obtained appropriate written representations from the management.
2) Information Technology("IT") systems and controls for accounting and financial reporting process
The Company is highly dependent on its IT systems for carrying on its operations which require large volume of transactions to be processed on daily basis and use of multiple software applications at central level The Company uses various loan management system (LMS) for different loan products for sourcing, processing, recording and management of loan database some of which are integrated with the financial accounting and reporting software. Transfer of data from/to LMS to financial reporting systems are critical for accurate compilation of financial information. As a result, there is a high degree of reliance and dependency on such IT systems for the accounting and financial reporting process of the Company which impacts key financial accounting and reporting items such as loans, interest income, computation of daily DPD, impairment on loans amongst others. Appropriate IT general controls and application controls are required to ensure that such IT systems are able to process the data, as required, completely, accurately and consistently for reliable financial reporting. The Company has put in place IT General Controls and automated IT controls to ensure the integrity, accuracy, completeness, validity and reliability of the information produced by the Company which is used for its financial reporting. Among other things, the management also uses the information produced by the Company''s IT systems for accounting and the preparation and presentation of the standalone financial statements. Since our audit strategy included focus on key IT systems and controls relevant to our audit due to their pervasive impact on the standalone financial statements, we have determined the use of IT systems for accounting and financial reporting as a key audit matter for current year audit.	Our key audit procedures with the involvement of our IT specialists included, but were not limited to, the following: ? Obtained an understanding of the Company''s IT related control environment and conducted risk assessment and identified IT applications, data bases and operating systems that are relevant to our audit. ? Tested the design and operating effectiveness of the Company''s IT controls over the IT applications as identified above; ? Reviewed the report on the assessment of cyber security breach prepared by the management''s expert and evaluated that there is no impact of the same on the financial reporting IT systems. ? Tested controls for segregations of duties around program maintenance, security administration and key business processes. ? Tested IT General Controls such as, logical access, change management and aspects of IT operational controls. Tested that request for access to systems were appropriately reviewed and authorized; tested controls around Company''s periodic review of access rights; inspected requests of changes to systems for appropriate approval and authorization. ? Tested related interfaces, integration, configuration and other application layer controls identified during our audit and report logic for system generated reports relevant to the audit mainly for loans, interest income and impairment of loan assets for evaluating completeness and accuracy. ? Where deficiencies were identified, tested compensating controls or performed alternative procedures. ? Obtained appropriate written representations from the management.

Key audit matter	How our audit addressed the key audit matter
3) Classification and measurement of Loans - Business model assessment and Fair valuation of loans held at fair value through
other comprehensive income ("FVTOCI") - (Refer note 3 for material accounting policies and note 7 for financial disclosures
in the accompanying standalone financial statements
As at 31 March 2025, the Company has loans amounting to ^ 2,17,633.08 lakhs (31 March 2024: ^ 2,61,483.91 lakhs) that are carried
and measured at FVTOCI in accordance with Ind AS 109.
Financial assets, i.e. loan assets have been classified and	Our audit procedures in relation to the business model and
measured as per Ind AS 109, Financial Instruments.	loans measured at FVTOCI included, but were not limited, to the
The assessment as to how an asset should be classified is made	following:
on the basis of both the entity''s business model for managing the	?	Obtained an understanding of the ''Business Model Policy
financial asset and the contractual cash flow characteristics of		Note'' approved by the Board of Directors of the Company,
the financial asset.		and evaluated whether the identified loans satisfy the
The management has assessed its business model on the basis of its approved credit policies, business plan and history of sale of loan assets wherein certain loans have been held to collect contractual cash flows (solely payments of principal and interest on the amount outstanding) and certain loans are held to collect		conditions of Ind AS 109 for measurement at amortized cost or FVTOCI. Tested the sale of loan assets made during the year and compared with the management''s plan and intent, to validate the management''s conclusion for classification and measurement of loans.
contractual cash flows and also for sale, and consequently, loans	?	Assessed the design and tested the operating effectiveness of
have been classified and measured at ''amortized cost'' and		internal controls over classification of loans on the basis of
''Fair value through Other Comprehensive Income'' (FVTOCI)		management''s intent and managements'' key internal controls
respectively in accordance with principles of Ind AS 109.		over inputs used in the valuation model.
In measuring the fair value of loans, valuation methods are	?	Involved auditor''s specialists and assessed whether the
used based on inputs that are not directly observable from		fair valuation methodology adopted by the management is
market information and certain other unobservable inputs. The		appropriate and tested the reasonableness of the underlying
management has an internal team for arriving at the fair value of		assumptions used such as discount rates, future cash flows, etc
aforesaid loans. Such fair value is derived using discounted cash		to estimate the fair value of the such loans. Also, on test check
flow models wherein the key assumptions include discount rate,		basis tested the completeness of source data and arithmetical
adjustment for credit risk including default risk.		accuracy of the management working.
Given the subjectivity and degree of complexity involved in	?	Assessed the appropriateness and adequacy of the related
ascertaining the business model and the fair valuation of the		presentation and disclosures in the accompanying standalone
aforesaid loans, relative significance of these loans to the		financial statements in accordance with the applicable
standalone financial statements and the nature and extent of audit		accounting standards.
procedures involved, we determined this to be a key audit matter.	?	Obtained appropriate written representations from the management

Information other than the Financial Statements and
Auditor''s Report thereon

6. The Company''s Board of Directors are responsible for the
other information. The other information comprises the
information included in the Annual Report but does not
include the standalone financial statements and our auditor''s
report thereon. The Annual Report is expected to be made
available to us after the date of this auditor''s report.

Our opinion on the standalone financial statements does
not cover the other information and we do not and will not
express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial
statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other
information is materially inconsistent with the standalone

financial statements or our knowledge obtained in the audit
or otherwise appears to be materially misstated.

When we read the Annual Report, if we conclude that there
is a material misstatement therein, we are required to
communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged
with Governance for the Standalone Financial
Statements

7. The accompanying standalone financial statements have
been approved by the Company''s Board of Directors. The
Company''s Board of Directors are responsible for the
matters stated in section 134(5) of the Act with respect
to the preparation and presentation of these standalone
financial statements that give a true and fair view of the

financial position, financial performance including other
comprehensive income, changes in equity and cash flows
of the Company in accordance with the Ind AS specified
under section 133 of the Act and other accounting principles
generally accepted in India. This responsibility also includes
maintenance of adequate accounting records in accordance
with the provisions of the Act for safeguarding of the assets
of the Company and for preventing and detecting frauds and
other irregularities; selection and application of appropriate
accounting policies; making judgments and estimates that
are reasonable and prudent; and design, implementation
and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy
and completeness of the accounting records, relevant to the
preparation and presentation of the financial statements
that give a true and fair view and are free from material
misstatement, whether due to fraud or error.

8. In preparing the standalone financial statements, the Board
of Directors is responsible for assessing the Company''s ability
to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern
basis of accounting unless the Board of Directors either
intends to liquidate the Company or to cease operations, or
has no realistic alternative but to do so.

9. The Board of Directors is also responsible for overseeing the
Company''s financial reporting process.

Auditor''s Responsibilities for the Audit of the
Standalone Financial Statements

10. Our objectives are to obtain reasonable assurance about
whether the standalone financial statements as a whole
are free from material misstatement, whether due to fraud
or error, and to issue an auditor''s report that includes our
opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance
with Standards on Auditing will always detect a material
misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis
of these standalone financial statements.

11. As part of an audit in accordance with Standards on Auditing,
specified under section 143(10) of the Act we exercise
professional judgment and maintain professional skepticism
throughout the audit. We also:

Identify and assess the risks of material misstatement
of the standalone financial statements, whether due to
fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for

one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or
the override of internal control;

? Obtain an understanding of internal control relevant to
the audit in order to design audit procedures that are
appropriate in the circumstances. Under section 143(3)
(i) of the Act we are also responsible for expressing our
opinion on whether the Company has adequate internal
financial controls with reference to financial statements
in place and the operating effectiveness of such controls.

? Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting estimates
and related disclosures made by management;

? Conclude on the appropriateness of Board of Directors''
use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions
that may cast significant doubt on the Company''s
ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to
draw attention in our auditor''s report to the related
disclosures in the standalone financial statements or, if
such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence
obtained up to the date of our auditor''s report. However,
future events or conditions may cause the Company to
cease to continue as a going concern; and

? Evaluate the overall presentation, structure and content
of the standalone financial statements, including the
disclosures, and whether the standalone financial
statements represent the underlying transactions and
events in a manner that achieves fair presentation.

12. We communicate with those charged with governance
regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.

13. We also provide those charged with governance with a
statement that we have complied with relevant ethical
requirements regarding independence, and to communicate
with them all relationships and other matters that may
reasonably be thought to bear on our independence, and
where applicable, related safeguards.

14. From the matters communicated with those charged with
governance, we determine those matters that were of
most significance in the audit of the standalone financial
statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor''s
report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in
our report because the adverse consequences of doing so

would reasonably be expected to outweigh the public interest
benefits of such communication.

Other Matter

15. The standalone financial statements of the Company for the
year ended 31 March 2024 were audited by the predecessor
auditor, S.R. Batliboi & Associates LLP, who have expressed an
unmodified opinion on those standalone financial statements
vide their audit report dated 29 May 2024.

Report on Other Legal and Regulatory Requirements

16. As required by section 197(16) of the Act, based on our
audit, we report that the Company has paid remuneration
to its directors during the year in accordance with the
provisions of and limits laid down under section 197 read
with Schedule V to the Act.

17. As required by the Companies (Auditor''s Report) Order, 2020
(''the Order'') issued by the Central Government of India in
terms of section 143(11) of the Act we give in the Annexure
A, a statement on the matters specified in paragraphs 3 and 4
of the Order, to the extent applicable.

18. Further to our comments in Annexure A, as required by
section 143(3) of the Act based on our audit we report, to the
extent applicable, that:

a) We have sought and obtained all the information and
explanations which to the best of our knowledge and
belief were necessary for the purpose of our audit of the
accompanying standalone financial statements;

b) Except for the matters stated in paragraph 18(h)(vi)
below on reporting under Rule 11(g) of the Companies
(Audit and Auditors) Rules, 2014 (as amended), in our
opinion, proper books of account as required by law
have been kept by the Company so far as it appears from
our examination of those books;

c) The standalone financial statements dealt with by this
report are in agreement with the books of account;

d) In our opinion, the aforesaid standalone financial
statements comply with Ind AS specified under section
133 of the Act;

e) On the basis of the written representations received
from the directors and taken on record by the Board of
Directors, none of the directors is disqualified as on 31
March 2025 from being appointed as a director in terms
of section 164(2) of the Act;

f) The qualification relating to the maintenance of
accounts and other matters connected therewith are
as stated in, paragraph 18(b) above on reporting under
section 143(3)(b) of the Act and paragraph 18(h)(vi)

below on reporting under Rule 11(g) of the Companies
(Audit and Auditors) Rules, 2014 (as amended);

g) With respect to the adequacy of the internal financial
controls with reference to financial statements of
the Company as on 31 March 2025 and the operating
effectiveness of such controls, refer to our separate
report in Annexure B wherein we have expressed an
unmodified opinion; and

h) With respect to the other matters to be included in
the Auditor''s Report in accordance with rule 11 of
the Companies (Audit and Auditors) Rules, 2014
(as amended), in our opinion and to the best of our
information and according to the explanations given to us;

i. The Company, as detailed in note 38 to the
standalone financial statements, has disclosed
the impact of pending litigations on its financial
position as at 31 March 2025

ii. The Company, as detailed in note 12 to the
standalone financial statements, has made
provision as at 31 March 2025, as required under
the applicable law or accounting standards, for
material foreseeable losses, if any, on long-term
contracts including derivative contracts;

iii. There were no amounts which were required
to be transferred to the Investor Education and
Protection Fund by the Company during the year
ended 31 March 2025;

iv. a. The management has represented that, to the

best of its knowledge and belief, as disclosed
in note 86 (B)(v) to the standalone financial
statements, no funds have been advanced or
loaned or invested (either from borrowed
funds or securities premium or any other
sources or kind of funds) by the Company to
or in any person(s) or entity(ies), including
foreign entities (''the intermediaries''), with
the understanding, whether recorded in
writing or otherwise, that the intermediary
shall, whether, directly or indirectly lend or
invest in other persons or entities identified
in any manner whatsoever by or on behalf of
the Company (''the Ultimate Beneficiaries'')
or provide any guarantee, security or the like
on behalf the Ultimate Beneficiaries;

b. The management has represented that,
to the best of its knowledge and belief,
as disclosed in note 86 (B)(vi) to the
standalone financial statements, no funds
have been received by the Company from
any person(s) or entity(ies), including
foreign entities (''the Funding Parties''),

with the understanding, whether recorded
in writing or otherwise, that the Company
shall, whether directly or indirectly, lend or
invest in other persons or entities identified
in any manner whatsoever by or on behalf of
the Funding Party (''Ultimate Beneficiaries'')
or provide any guarantee, security or the like
on behalf of the Ultimate Beneficiaries; and

c. Based on such audit procedures performed
as considered reasonable and appropriate
in the circumstances, nothing has come to
our notice that has caused us to believe that
the management representations under
sub-clauses (a) and (b) above contain any
material misstatement.

v. The Company has not declared or paid any

dividend during the year ended 31 March 2025.

vi. As stated in Note 85 to the standalone financial
statements and based on our examination which
included test checks, except for instances/
matters mentioned below, the Company, in
respect of financial year commencing on 1
April 2024, has used accounting software for
maintaining its books of account which have a
feature of recording audit trail (edit log) facility
and the same have been operated throughout
the year for all relevant transactions recorded
in the software. Further, during the course of
our audit we did not come across any instance
of audit trail feature being tampered with, other
than the consequential impact of the exceptions
given below. Furthermore, except for instances/
matters mentioned below the audit trail has been
preserved by the Company as per the statutory
requirements for record retention.

Nature of exception noted

Details of Exception

Instances of accounting software for maintaining books of account for which the feature of recording audit trail (edit log) facility was not operated throughout the year for all relevant transactions recorded in the software Instances of accounting software maintained by a third party where we are unable to comment on the audit trail feature at database level

(i) The audit trail feature was not enabled at the database level for one loan management system to log any direct data changes. (ii) The audit trail (edit logs) was not retained for the period 01 April 2024 to 07 July 2024 at the database level for another loan management system to log any direct data changes The loan management systems for two other loan products are operated by third-party software service providers. In the absence of any information on existence of audit trail (edit logs) for any direct changes made at the database level in the ''Independent Service Auditor''s Assurance Report on the Description of Controls, their Design and Operating Effectiveness'' (''Type 2 report'' issued in accordance with SAE 3402, Assurance Reports on Controls at a Service Organization), we are unable to comment on whether audit trail feature with respect to the database of the said softwares were enabled and operated throughout the year.

For Walker Chandiok & Co LLP

Chartered Accountants
Firm''s Registration No: 001076N/N500013

Khushroo B. Panthaky

Partner

Membership No.: 042423
UDIN: 25042423BMNRBP8866

Place: Nagpur
Date: 19 May 2025

---

Mar 31, 2024

We have audited the accompanying standalone financial statements of Northern Arc Capital Limited Limited (“the Company”), which comprise the Balance Sheet as at March 31 2024, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of material accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013, as amended (“the Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2024, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ''Auditor''s Responsibilities for the Audit of the Standalone Financial Statements'' section of our report. We

are independent of the Company in accordance with the ''Code of Ethics'' issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the financial year ended March 31, 2024. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor''s responsibilities for the audit of the standalone financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone financial statements.

1 Key audit matters	How our audit addressed the key audit matter
Impairment loss allowance for financial instruments (loan and		investments) based on expected credit loss model -
refer notes 3.e, 3.f, 7, 8, 18, 28 and 37 to the standalone financial statements
Financial instruments, which include Loans and Investments,	Our audit procedures included the following:
represents a significant portion of the total assets of the Company. The Company has loans aggregating INR 9,30,987.15 lakh and investments aggregating INR 1,65,268.61 lakh as at March 31, 2024.	•	Read and assessed the Company''s accounting policies for impairment of financial assets considering the requirements of Ind AS 109 and the governance framework approved by the Board of Directors pursuant
As per the expected credit loss model of the Company		to Reserve Bank of India guidelines.
developed in accordance with the principles set out in Ind-AS 109 on Financial Instruments, the Company is required to estimate the probability of loss and expected loss based on past experience and future considerations. This involves a significant degree of estimation and judgement, including determination of staging of financial assets; estimation of probability of defaults, loss given defaults, exposure at defaults; and forward-looking, micro and macro-economic factors, in estimating the expected credit losses.	•	For provision of expected credit loss- (ECL) against outstanding exposures classified across various stages, we obtained an understanding of the Company''s provisioning methodology (including factors that affect the probability of default, loss given defaults and exposure at default; various forward looking micro- and macro-economic factors), the underlying assumptions and the sufficiency of the data used by management and tested the same on a sample basis.

1 Key audit matters	How our audit addressed the key audit matter
In view of the high degree of management''s judgement		Evaluated the management estimates by understanding
involved in estimation of expected credit loss and the overall		the process of ECL estimation and related assumptions
significance of the impairment loss allowance to the financial		and tested the controls around data extraction, validation
statements, it is considered as a key audit matter.		and computation.
	•	Assessed the criteria for staging of loans based on their past due status as per the requirements of Ind AS 109. Tested a sample of performing loans to assess whether any SICR or loss indicators were present requiring them to be classified under higher stages.
	•	Performed tests of controls and details on a sample basis in respect of the staging of outstanding exposure and implementation of Company policy.
	•	Involved internal experts for testing of the ECL model and computation, including factors that affect the PD, LGD and EAD considering various forward looking, micro and macro-economic factors.
	•	Tested assumptions used by the management in determining the overlay for macro-economic and other factors.
	•	Assessed disclosures included in the standalone financial statements in respect of expected credit losses.
Fair valuation of financial assets held at fair value through other comprehensive income (“FVTOCI”) or fair value through profit and loss (“FVTPL”) (collectively “fair value”) - refer notes 3.g, 7, 8, 24 and 35 to the standalone financial statements
The Company has classified loans aggregating to	In	view of the significance of the matter, we applied the
INR 2,61,483.91 lakh and investments aggregating to	following key audit procedures, among others to obtain
INR 1,30,417.23 lakh as held at fair value through OCI	sufficient appropriate audit evidence:
(FVTOCI) and investments aggregating to INR 18,993.49 lakh as held at fair value through profit and loss (FVTPL) in accordance with Ind AS 109. Additionally, the Company is also required to disclose fair value of its financial assets		Evaluated and tested the design and operating effectiveness of the Company''s control over the assessment of classification and valuation of investments.
and liabilities held at amortised cost in accordance with Ind	•	Involved the internal expert to assess the reasonableness
AS 107.		of the valuation methodology and underlying
The determination of the fair value of financial assets is		assumptions used by the management to estimate the
considered to be a significant area in view of the materiality		fair value.
of amounts involved, judgements involved in selecting the valuation basis, and use of market data.	•	Assessed the appropriateness of the valuation methodology and challenged the valuation model
Given the degree of complexity involved in valuation of		considered for fair value computation.
financial instruments, relative significance of these financial instruments to the financial statements and the nature and extent of audit procedures involved, we determined this to be a key audit matter.	•	Validated the source data and the arithmetical accuracy of the calculation of valuation of investments on a test check basis.
	•	Assessed the adequacy of disclosure in the standalone financial statements.
Information Technology (IT) systems and controls
Financial accounting and reporting processes, especially in	Our audit procedures assisted by specialised IT auditors,
the financial services sector, are fundamentally reliant on IT	focused on the IT infrastructure and applications relevant to
systems and IT controls to process significant transaction.	financial reporting of the Company:
Automated accounting procedures and IT environment	•	The aspects covered in the assessment of IT General
controls, which include IT governance, general IT controls		Controls (ITGCs) comprised: (i) User Access Management;
over program development and changes, access to programs		(ii) Program Change Management; (iii) Other related
and data and IT operations, are required to be designed and		ITGCs - to understand the design and test the operating
to operate effectively to ensure reliable financial reporting.		effectiveness of such controls in respect of information
Further, the extant regulations require the Company to		systems that are important to financial reporting ("in-
maintain a daily back-up of its books of account and to		scope applications”).
use accounting software which has an audit trail (edit log) feature.	•	Tested the changes that were made to the in-scope applications during the audit period to assess changes that have impact on financial reporting.

1 Key audit matters	How our audit addressed the key audit matter
Any gaps in the IT control environment could result in	•	Tested the periodic review of access rights, inspected
a material misstatement of the financial accounting and		requests of changes to systems for appropriate approval
reporting records or non-compliance with regulatory		and authorisation.
requirements.	•	Performed tests of controls (including other
Therefore, due to the pervasive nature and complexity of		compensatory controls, wherever applicable) on the IT
the IT environment and enhanced reporting requirements,		application controls and IT dependent manual controls
the assessment of relevant system configuration, general		in the system.
IT controls and the application controls specific to the accounting and preparation of the financial information is considered to be a key audit matter.	•	Tested the design and operating effectiveness of compensating controls. Where deficiencies were identified and, where necessary, extended the scope of our substantive audit procedures.
	•	Tested the configuration of the audit trail feature in the accounting software and maintenance of back-up as per extant regulatory requirements.

We have determined that there are no other key audit matters to communicate in our report.

Other Information

The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report, but does not include the standalone and consolidated financial statements and our auditor''s report thereon. The Other information is expected to be made available to us after the date of this auditor''s report.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards

(Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Charged with Governance are also responsible for overseeing the Company''s financial reporting process.

Auditor’s Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance

is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the

underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements for the financial year ended March 31, 2024 and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2020 (“the Order"), issued by the Central Government of India in terms of subsection (11) of section 143 of the Act, we give in the “Annexure 1" a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act, we report, to the extent applicable, that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) I n our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books, except for the matters stated in the paragraph (f) below on reporting under Rule 11(g);

(c) The Balance Sheet, the Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in

Equity dealt with by this Report are in agreement with the books of account;

(d) I n our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

(e) On the basis of the written representations received from the directors as on March 31, 2024 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2024 from being appointed as a director in terms of Section 164 (2) of the Act;

(f) The modification relating to the maintenance of accounts and other matters connected therewith are as stated in paragraph (b) above on reporting under Section 143(3)(b) and paragraph (i) (vi) below on reporting under Rule 11(g);

(g) With respect to the adequacy of the internal financial controls with reference to these standalone financial statements and the operating effectiveness of such controls, refer to our separate Report in “Annexure 2” to this report;

(h) In our opinion, the managerial remuneration for the year ended March 31, 2024 has been paid/provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;

(i) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our information and according to the explanations given to us

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 38 to the standalone financial statements;

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 12 to the standalone financial statements;

iii. There were no amounts which were

required to be transferred to the

Investor Education and Protection Fund

by the Company.

iv. a) The management has represented

that, to the best of its knowledge and belief, other than as disclosed in the note 84C(v) to the standalone financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (“Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

b) The management has represented that, to the best of its knowledge and belief, other than as disclosed in the note 84C(vi) to the standalone financial statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (“Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

c) Based on such audit procedures performed that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under subclause (a) and (b) contain any material misstatement.

v. No dividend has been declared or paid during the year by the Company.

vi. Based on our examination, which included test checks and as explained in note 85, the Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the accounting software. During the course of our audit we have not noted any instances of the audit trail feature being tampered at the application level. However, in the absence of service organisation controls (SOC) report covering the audit trail feature at a database level, we are unable to comment on whether audit trail feature of the said software was enabled and operated throughout the year or whether there were any instances of the audit trail feature being tampered with at a database level.

Further, the Company uses various loan management system software for recording transactions relating to respective loan products. These loan management systems have a feature of recording audit trail (edit log) facility. However, such applications either

have limitation in those applications in obtaining relevant information with regard to audit trail due to which we are unable to perform testing of audit trail feature, or for third party managed loan management systems, the service organisation controls (SOC) report covering the audit trail feature was not available as mentioned in Note 85 to the standalone financial statements. Accordingly, we are unable to comment on whether audit trail feature of the said loan management systems was enabled and operated throughout the year or whether there were any instances of the audit trail feature being tampered with in this regard

For S.R. Batliboi & Associates LLP

Chartered Accountants ICAI Firm Registration Number: 101049W/E300004

per Bharath N S

Partner

ICAI Membership Number: 210934 UDIN: 24210934BKFUNL4103

Place of Signature: Chennai Date: May 29, 2024