Reliance Capital Limited

Report on the audit of standalone financial statements

Introduction

The Reserve Bank of India ("RBI") vide its letter and press release dated November 29, 2021 ("RBI Order") issued under Section 45-IE(1) of the Reserve Bank of India Act, 1934, superseded the Board of Directors of Reliance Capital Limited ("the Company") and appointed an Administrator to run the Company. Subsequently, in accordance with the order dated December 06, 2021 passed by the National Company Law Tribunal (Mumbai Bench) ("NCLT Order"), the application for commencement of Corporate Insolvency Resolution Process ("CIRP") of the Company under the Insolvency and Bankruptcy Code, 2016 ("IBC") was admitted.

Qualified opinion

We have audited the standalone financial statements of Reliance Capital Limited, which comprise the Standalone Balance Sheet as at March 31, 2023, the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Standalone Statement of Changes in Equity and Standalone Statement of Cash Flows for the year then ended, and notes to the Standalone Financial Statements, including a summary of significant accounting policies and other explanatory information ("the financial statements").

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the "Basis for qualified opinion" paragraph of our report, the aforesaid financial statements give the information required by Companies Act, 2013 (the "Act") in the manner so required and give true and fair view in conformity with the accounting principle generally accepted in India, of the state of affairs of the Company as at March 31, 2023, and loss, other comprehensive loss, changes in equity and its cash flows for the year ended on that date.

Basis for qualified opinion

a. We draw attention to Note no. 1 of the financial statements which explains that the Company is undergoing CIRP under the provisions of IBC. As per the provisions of IBC, the fair value and liquidation value of the assets of the Company as on the insolvency commencement date is required to be determined. As stated in Note no. 1, the valuation reports have been received. The Management and the Administrator have represented that the liquidation value of the assets is higher than the book values and therefore no impairment charge is called for as at March 31, 2023. However, on completion of the CIRP, the Company will consider carrying out a comprehensive review of all the assets including investments, other assets and intangible assets, liabilities and accordingly provide for impairment loss on assets and write back of liabilities, if any. Though these have been placed before the Committee of Creditors, these have not been provided for audit on grounds of confidentiality. Consequently, we are unable to comment on the impact thereof on the financial statements, if any.

b. We draw attention to Note no. 1 to the financial statements which explains that the amount of the claims including claims on account of corporate guarantees invoked, admitted or to be admitted by the Administrator may differ from the amount reflecting in the books of account of the Company. The NCLT by its order dated April 1 2, 2023 has granted extension for completion of CIRP till July 1 6, 2023 and therefore pending final outcome of the CIRP no adjustments have been made in the books for the differential amounts, if any, in the claims admitted as on the date of the financial

statements as compared to the liabilities reflected in the books of account of the Company.

c. We draw attention to Note no. 1 to the financial statements which explains that in view of the ongoing CIRP the Company has provided for interest expense on financial liabilities which may be applicable on the financial debt only upto December 06, 2021. Accordingly, interest expense pertaining to the year ended March 31, 2023 amounting to '1,60,859 lakh has not been recognised. Had such interest been recognised, the loss before tax for the year ended March 31, 2023 would have been higher by '1,60,859 lakh. Further, the aggregate interest expense not recognized by the Company post December 06, 2021 is '2,09,949 lakh and had such interest been recognized, the net worth of the Company as at March 31, 2023 would have been lower by '2,09,949 lakh.

d. We have been informed that certain information, including the minutes of meetings of the Committee of Creditors are confidential in nature and accordingly have not been shared with us. The Administrator and the management has confirmed that the CoC discussions held during the year do not have any implications on the financial statements since resolution plan is yet to be approved by the CoC as on the date of this report.

We conducted our audit in accordance with the Standards on Auditing ("the SAs") specified under section 143(10) of the Act. Our responsibilities under those SAs 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 ("the ICAI") 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 ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to Note no. 1 of the standalone financial statements which explains that the Company has been admitted under the CIRP effective December 06, 2021 and as stipulated under Section 20 of the IBC, it is incumbent upon the Administrator to manage the operations of the Company as a going concern. The last date for completion of CIRP process has been extended by the NCLT to July 1 6, 2023. Accordingly, the standalone financial statements for the year ended March 31, 2023 have been prepared on going concern basis. However, the Company has defaulted in repayment of the obligations to the lenders and debenture holders which are outstanding, has incurred losses during the period as well as during the previous periods, has reported negative net worth as at March 31, 2023 and previous periods and as described in Note no. 15 of the standalone financial statements, the asset cover for listed secured non-convertible debentures of the Company has fallen below one hundred percent, which indicates that material uncertainty exists, that may cast significant doubt on the Company's ability to continue as a going concern.

Our opinion on the standalone financial statements is not modified in respect of the above matter.

Emphasis of Matter

a. We draw attention to Note no. 40(e) of the standalone financial statements which refers to filling under Section 143(12) of the Act of Ministry of Corporate Affairs by one

of the previous auditors for the financial year 2018-19. Based on the facts as described in the aforesaid, the Company has concluded that there were no matters attracting the said Section and the matter is under consideration with the Ministry of Corporate Affairs.

b. We draw attention to Note no. 40(a) of the financial statements which refers to disposal of the Company's wholly owned subsidiary viz. Reliance Commercial Finance Limited on October 14, 2022 for a total consideration of '100 lakh.

Our opinion is not modified in respect of the above matters.

Key audit matters

Key audit matters are those matters that, in our professional judgement, 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. For each matter below, our description of how our audit addressed the matter is provided in that context.

Information other than the standalone financial statements and auditor's report thereon

The Company's management and the Administrator are responsible for the preparation of the other information. The other information comprises the information included in the Annual Report but does not include the Standalone Financial Statements, Consolidated Financial Statements and our 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 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 when it becomes available 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.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

Responsibilities of Management and Administrator for the standalone financial statements

The standalone financial statements of the Company for the year ended March 31, 2023 have been taken on record by the Administrator while discharging the powers of the Board of Directors of the Company which were conferred by the RBI Order and in accordance with the NCLT Order. For the said purpose, as explained in Note no. 1 of the standalone financials statements, the Administrator has relied upon the assistance provided by the existing staff and present key management personnel ("KMPs") and has assumed, without any further assessment, that information and data provided by the existing staff and present KMPs are in the conformity with the Act and other applicable laws and regulations with respect to the preparation of the standalone financial statements. The standalone financial statements are the responsibility of the Company's management and the Administrator under the provisions of Section 45-IE (4) of the Reserve Bank of India Act, 1 934, and has been approved by them for issuance.

The Company's management and the Administrator are responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentation of these financial statements that give a true and fair view of the state of affairs, loss and other comprehensive loss, changes in equity and cash flows 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. 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 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.

In preparing the standalone financials statements, management and the Administrator, are 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 Administrator either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Administrator is also responsible for overseeing the Company's financial reporting process.

Auditors' 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financials statements.

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

a. Identify and assess the risks of material misstatement of the 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.

b. 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 through a separate report on the complete set of financial statements on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

c. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures in the standalone financial statements made by the management and the Administrator.

d. Conclude on the appropriateness of the management's and Administrator'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 appropriateness of this assumption and on the ability of the Company 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.

e. 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 of the financial year ended March 31, 2023 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 (Auditors' Report) Order, 2020 ("the Order") issued by the Central Government in terms of sub-section (11) of section 143 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.

2. As required by Section 143(3) of the Act, we report 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, except wherever stated otherwise;

b. In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c. The standalone balance sheet, the standalone statement of profit and loss, (including other comprehensive income), the standalone statement of changes in equity and the standalone statement of cash flow dealt with by this Report are in agreement with the books of account;

d. Except for the effects of the matters described in the basis for qualified opinion section the standalone financial statements comply with the Ind AS specified under Section 133 of the Act;

e. The matters described in the paragraph "a to d" under "Basis of Qualified Opinion" section and "Material Uncertainty related to Going Concern" section, in our opinion, may have an adverse effect on the functioning of the Company.

f. As explained in the "Introduction" section of our report, the RBI vide its letter and press release dated November 29, 2021 issued under Section 45-IE(1) of the Reserve Bank of India Act, 1 934, superseded the Board of Directors of the Company and appointed an Administrator to run the Company. Hence, we do not comment on whether any Director is disqualified from being appointed as a Director under Section 164(2).

g. With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure B";

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, 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 Financial Statements - Refer Note no. 38 to the standalone financial statements.

ii. The Company has made provisions, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts. Refer Note no. 47 to the standalone financial statements.

iii. Other than for dividend amounting to ' 22 lakh pertaining to financial year 2010-11 to financial year 2013-14 which could not be transferred on account of pendency of various investor legal cases and ' 286 lakh which were due for transfer as on October 29, 2022 but were not transferred, there has been no delay in transferring amounts required to be transferred, to the Investor Education and Protection Fund by the Company.

iv. In respect of Rule 11 (e) of the Companies (Audit and Auditors) Rules, 2014,

a. The Administrator and management has represented that, to the best of its knowledge and belief, as disclosed in Note no. 52(a) of the standalone financial statements, no funds (which are material either individually or in the aggregate) 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 or entity, including foreign entity ("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. Further, the Administrator and management has represented, that, to the best of its knowledge and belief, as disclosed in Note no. 52(b) of the standalone financial statements, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity ("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;

c. Based on the audit procedures 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 (a) and (b) above, contain any material misstatement.

v. In respect of Rule 1 1 (g) of the Companies (Audit and Auditors) Rule, 2014, since proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of accounts using accounting software which has a feature of recording audit trail (edit log) facility is applicable for the company only w.e.f April 01, 2023, reporting under this clause is not applicable for the year ended March 31, 2023.

vi. In our opinion and according to the information and explanations given to us, the Company has not declared or paid dividend during the year.

3. The RBI vide its letter and press release dated November 29, 2021 issued under Section 45-IE( 1) of the Reserve Bank of India Act, 1934, superseded the Board of Directors of the Company and appointed an Administrator to run the Company. Hence, section 197 of the Act is not applicable.

For Gokhale & Sathe

Chartered Accountants

Firm Regn. No.103264W

Rahul Joglekar

Partner

Membership No.:1 29389

UDIN:

Place: Mumbai

Date: May 29, 2023