REPORT ON THE AUDIT OF THE STANDALONE FINANCIALSTATEMENTS
Opinion
We have audited the accompanying standalone financial statements of Satin Creditcare Network Limited (the "Company"), which comprise the Balance Sheet as at March 31,2022, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as the "standalone financial statements").
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 prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2022 and its profit & other comprehensive income, changes in equity and its cash flows 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") 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 made 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 obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements. Emphasis of Matter
We draw attention to Note No. 53 to the accompanying Statement, which describes significant uncertainties due to the outbreak of COVID-19 pandemic. The impact of the pandemic on the operations of the Company and its financial position as at March 31,2022 including the measurement of expected credit losses on the loan assets are significantly dependent on uncertain future economic conditions. Our opinion is not modified in respect of this matter.
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 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.
We have determined the matters described below to be the key audit matters to be communicated in our report. 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.
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Key Audit Matter
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Auditor's Response
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use of information processing system for accounting and financial reporting
The Company is operating in Financial Services Sector, where in due to large volume processing, accounting & reporting of financial information is reliant on information processing systems and IT backed internal controls. The controls implemented by the Company in its IT environment determine the integrity, accuracy, completeness and validity of data that is processed by the applications and is ultimately used for financial reporting. Since our audit strategy included focus on entity’s information processing systems relevant to our audit due to their pervasive
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Audit Procedures
Our key audit procedures on this matter included, but were not limited,
to the following:
(a) obtained an understanding of the Company’s information processing systems, IT General Controls and automated IT controls for applications, databases and operating systems relevant to our audit;
(b) Performance of the following procedures:
(i) tested the IT General Controls around user access management, system change management, and IT operational controls along with segregation of duties around program maintenance, security administration and over key financial accounting and reporting processes;
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Key Audit Matter
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Auditor's Response
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impact on the standalone financial statements, we have
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(ii) tested the design and operating effectiveness of the
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determined the use of information processing system
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Company’s periodic review of access rights. We also
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for accounting and financial reporting as a key audit
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tested requests of changes to systems for approval and
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matter for the current year audit.
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authorization; and
(iii) tested the automated controls like interfaces and information generated by the entity’s information processing systems for loans, interest income and other significant financial statement items.
(iv) In addition to the above, we tested the design and operating effectiveness of certain automated controls that were considered as key internal controls over financial reporting
(c) obtained written representations from management and those charged with governance on whether IT general controls and automated IT controls are designed and were operating effectively during the period covered by our audit.
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Impairment of Financial Assets as at Balance
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Audit Procedures
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Sheet date (Expected Credit losses on loans) and
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Our audit focused on assessing the appropriateness of management’s
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implementation of COVID-19 relief measures
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judgment and estimates used in the impairment analysis through the
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[Refer Note No. 3(k) for the accounting policy and Note
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following procedures, but were not limited to the following procedures:
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No. 43 for the related disclosures]
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a) performed a walkthrough of the impairment loss allowance
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As at March 31,2022, the Company has financial assets
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process and assessed the design effectiveness of controls;
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(loans) amounting to INR 4,89,739.76 lakh including loans which are carried at fair value through other comprehensive income amounting to INR 3,88,533.16
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b) Read and assessed the Company’s accounting policies for impairment of financial assets and their compliance with Ind AS
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lakh. As per Ind AS 109 - Financial Instruments, the
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109 and the governance framework approved by the Board of
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Company is required to recognize loss allowance for
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Directors pursuant to guidelines issued by Reserve Bank of India
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expected credit losses (ECL) on financial assets.
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and relief announced by the State Govt. of Assam
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ECL involves an estimation of probability weighted loss
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c) obtained an understanding of the model adopted by the Company
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on financial instruments over their life, considering
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including key inputs, assumptions and management overlays
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reasonable and supportable information about past
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for calculation of expected credit losses including the impact of
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events, current conditions, and forecasts of future
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COVID 19 on the assumptions and how management calculated
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economic conditions which could impact the credit
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the expected credit losses and the appropriateness of data on
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quality of the Company’s loans and advances.
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which the calculation is based;
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ECL is calculated using the percentage of probability of
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d) Obtained the reports of the expert appointed by the management
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default (PD), loss given default (LGD) and exposure at
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and assessed the expert’s professional competence,
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default (EAD) for each of the stages of loan portfolio.
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independence and objectivity in developing the ECL model;
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ECL is measured at 12-month ECL for Stage 1 loan assets
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e) obtained the policy on Restructuring of loan under resolution
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and at lifetime ECL for Stage 2 and Stage 3 loan assets.
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framework duly approved by the Board of Directors pursuant to
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Significant management judgment and assumptions
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the RBI circulars and ensured that such policy is in compliant
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involved in measuring ECL is required with respect to:
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with the requirements of the RBI circular;
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• determining the criteria for a significant increase in
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f) evaluated the appropriateness of the Company’s determination
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credit risk (SICR)
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of significant increase in credit risk in accordance with the
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• factoring in future economic assumptions
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applicable Ind AS considering the impact of COVID-19 and the
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• techniques used to determine probability of
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basis for classification of various exposures into various stages;
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default, loss given default and exposure at default.
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g) as modeling assumptions and parameters are based on
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These parameters are derived from the Company’s
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historical data, we assessed whether historical experience was
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internally developed statistical models with the help
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representative of current circumstances and was relevant in view
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of experts appointment by the management and other historical data.
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of the recent impairment losses incurred within the portfolios;
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Key Audit Matter
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Auditor's Response
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COVID-19
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Assessed the criteria for staging of loans based on their past due
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In continuation of various relief measures announced
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status to check compliance with requirement of Ind AS 109. Tested
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by RBI in earlier years for the borrowers, during the
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a sample of performing (stage 1) loans to assess whether any SICR
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year, the Company has implemented the RBI circular on
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or loss indicators were present requiring them to be classified under
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"Asset Classification and Income Recognition following
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higher stages
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the expiry of Covid-19 regulatory package" dated
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h)
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tested the design and operating effectiveness of the key
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April 7, 2021 besides considering the Relief package
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controls over completeness and accuracy of the key inputs
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announced by State Govt. of Assam and restructuring of
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and assumptions considered for calculation, recording and
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loans of borrowers under resolution framework 2.0 and
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monitoring of the impairment loss recognized;
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have been collectively considered by the management
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in identification, classification and provisioning of loan
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i)
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tested the accuracy of inputs through substantive procedures
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assets for impairment..
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and assessed the reasonableness of the assumptions used;
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The basis of estimates and assumptions involved in
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j)
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developed a point estimate by making reference to the expected
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arriving at the provisions during the year were monitored
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credit losses recognized by entities that carry comparable
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by the Company periodically and significantly depend on
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financial assets;
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future developments in the economy due to COVID-19
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k)
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tested the arithmetical calculation of the expected credit losses;
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including any new relief measures’ announcements
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by the RBI or by any State/Centre Govt. Considering
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l)
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assessed the appropriateness and adequacy of the related
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the significance of the above matter to the standalone
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presentation and disclosures in the accompanying financial
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financial statements and since the matter required our
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statements in accordance with the applicable Ind As and related
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significant attention to test the calculation of expected
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RBI circulars and Resolution Framework; and
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credit losses, we have identified this as a key audit
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m)
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obtained written representations from management and those
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matter for current year audit.
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charged with governance whether they believe significant
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We also draw attention to Note No. 53 of the
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assumptions used in calculation of expected credit losses are
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accompanying standalone financial statements,
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reasonable.
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regarding uncertainties involved due to outbreak of
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COVID-19 pandemic with respect to the measurement
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of expected credit loss on such loan assets which
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are significantly dependent on uncertain future
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developments as the same is fundamental to the
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understanding of the users of financial statements.
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INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON
The Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Board’s Report including Annexures to Board’s Report, Business Responsibility Report, Corporate Governance and Shareholder’s Information, but does not include the consolidated financial statements, standalone 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 the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated. When we read the other information identified above, 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, changes in equity and cash flows of the Company in accordance with the Ind AS 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 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 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.
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
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 financial 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 system 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 the 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 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.
• 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.
Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone financial statements.
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 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.
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 in terms of Section 143 (11) of the Act, we give in "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act, based on our audit 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.
b) 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 Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account.
d) In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014.
e) On the basis of the written representations received from the directors as on March 31,2022 taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2022 from being appointed as a director in terms of Section 164(2) of the Act.
f) With respect to the adequacy of the internal financial controls with reference to the financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls with reference to the financial statements.
g) With respect to the other matters to be included in the Auditor’s Report in accordance with the requirements of section 197(16) of the Act, as amended:
In our opinion and to the best of our information and according to the explanations given to us,
the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act. 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 has disclosed the impact of pending litigations on its financial position in its standalone financial statements.
ii. The Company has made provision, as required under the applicable law or Ind AS, for material foreseeable losses, if any, on long-term contracts including derivative contracts.
iii. There has been no delay in transferring amounts, 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, 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. The Management has represented, that, to the best of its knowledge and belief, 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 sub-clause (i) and (ii) of Rule 11 (e), as provided under (a) and (b) above, contain any material misstatement.
v. The final dividend declared and paid on Cumulative, Non-Participative, NonConvertible, Compulsorily Redeemable Preference Shares by the Company during the year and until the date of this report is in compliance with Section 123 of the Act (Refer Note No. 35 to the standalone financial statements).
For S S Kothari Mehta & Company
Chartered Accountants Firm’s Registration No.: 000756N
Naveen Aggarwal
Partner
(Membership No.094380) UDIN: 22094380AJQMSG6758 Place: New Delhi Date: May 04, 2022
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