We have audited the accompanying standalone financial
statements of Muthoot Finance Limited ("the Company"),
which comprise the Balance Sheet as at March 31, 2025, 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 then ended, and notes
to the standalone financial statements, including a summary of
material 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, 2025, and its profits, total
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 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 of the current year. 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.
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Key Audit Matters
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How our audit addressed the Key Audit Matters
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1. Allowances for expected credit losses ('ECL'):
As at March 31, 2025, the carrying value of loan assets carried
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We have examined the policies approved by the Board of Directors of
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at amortised cost, aggregated H 10,86,809.72 million (net of
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the Company that articulate the objectives of managing each portfolio
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allowance for expected credit loss H 15,730.78 million) constituting
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and their business models. We have also checked the methodology
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89.63% of the Company's total assets. Significant judgement is
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adopted for computation of the ECL Model, including the policies
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used in classifying these loan assets and applying appropriate
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approved by the Board of Directors, procedures, and controls for
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measurement principles. ECL on such loan assets carried at
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assessing and measuring credit risk on all lending exposures carried
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amortised cost is a critical estimate involving greater level of
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at amortised cost, and its compliance with Ind AS 109. Additionally,
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Management judgement. As part of our risk assessment, we
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we have confirmed that adjustments to the output of the ECL Model
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determined that the ECL on such loan assets has a high degree
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are consistent with the documented rationale and basis for such
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of estimation uncertainty, with a potential range of reasonable
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adjustments and that the amount of adjustments have been approved
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outcomes for the standalone financial statements. The elements
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by the Audit Committee of the Board of Directors. Our audit procedures
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of estimating ECL which involved increased level of audit focus are
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related to the allowance for ECL included the following, among others:
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the following:
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Testing the design and operating effectiveness of the following:
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• Qualitative and quantitative factors used in staging the loan
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• Completeness and accuracy of the EAD and the classification thereof
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assets carried at amortised cost;
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into stages consistent with the definitions applied in accordance
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• Basis used for estimating probabilities of default ('PD'), loss
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with the policy approved by the Board of Directors including the
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given default ('LGD') and exposure at default ('EAD') at product
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appropriateness of the qualitative factors to be applied;
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level with past trends;
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Key Audit Matters
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How our audit addressed the Key Audit Matters
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• Judgements used in projecting economic scenarios and
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• Completeness, accuracy and appropriateness of information
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probability weights applied to reflect future economic
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used in the estimation of the PD and LGD for the different stages
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conditions; and
• Adjustments to model driven ECL results to address emerging
trends.
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depending on the nature of the portfolio;
• Accuracy of the computation of the ECL estimate including
reasonableness of the methodology used to determine macro¬
economic overlays and adjustments to the output of the ECL
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(Refer note no. 8 and 42 to the standalone financial statements).
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model; and
Test of details on a sample basis in respect of the following:
• Accuracy and completeness of the input data such as period of
default and other related information used in estimating the PD;
• The mathematical accuracy of the ECL computation by using the
same input data as used by the Company.
• Completeness and accuracy of the staging of the loans and
the underlying data based on which the ECL estimates have
been computed.
• Evaluating the adequacy of the adjustment after stressing the
inputs used in determining the output as per the ECL model to
ensure that the adjustment was in conformity with the overlay
amount approved by the Audit Committee of the Company.
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2.
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Information technology and general controls:
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The Company relies heavily on its information technology (IT)
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We obtained an understanding of the Company's IT applications,
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systems due to the high volume of transactions processed daily
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databases and operating systems relevant to financial reporting.
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across multiple, discrete platforms. Effective IT application controls
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Our focus areas within the IT infrastructure included access security,
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are essential to ensure that any changes to applications and the
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program change controls, database management, and network
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underlying data are implemented appropriately and within a
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operations. Specifically:
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controlled environment. These controls play a vital role in mitigating
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• We tested the design, implementation, and operating effectiveness
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the risk of errors or potential fraud arising from unauthorized or
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of the Company's general IT controls over systems relevant to
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inappropriate changes. Given the pervasive use of IT systems in
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financial reporting. This included an assessment of controls related
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the Company's financial reporting processes, the evaluation and
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to segregation of duties and the provisioning or modification of
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testing of general IT controls were considered a key audit matter.
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access rights based on appropriately authorized requests.
• We also evaluated key automated business process controls and the
logic of system-generated reports that were relevant to financial
reporting or were used in the operation of internal financial
controls over the standalone financial statements. In addition, we
performed alternate procedures to assess whether any unmitigated
IT risks existed that could materially impact the standalone
financial statements.
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3.
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Related Party Transactions:
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We identified related party transactions as a key audit matter
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• We obtained an understanding of the Company's policies
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due to their financial and regulatory significance, the complexity
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for identifying and disclosing related party relationships
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involved in their identification and approval, and the inherent risk
of non-disclosure or misstatement in the financial statements.
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and transactions.
• We inspected minutes of meetings of the Board of Directors and
the Audit Committee to assess whether related party transactions
were deliberated, reviewed, and approved in line with regulatory
and governance requirements.
• On a sample basis, we tested related party transactions by examining
underlying agreements, approvals, and supporting documentation
to evaluate whether the transactions were appropriately recorded,
disclosed, and conducted in the ordinary course of business and at
arm's length.
• We assessed compliance with Sections 177 and 188 of the
Companies Act, 2013 and SEBI (LODR) Regulations—with respect
to authorisation, approvals, disclosures, and required reporting.
• We evaluated the completeness and accuracy of related party
disclosures in the financial statements in accordance with Ind AS 24.
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Information other than the Standalone Financial
Statements and Auditor's Report thereon
The Company's Management and 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 financial statements and our
auditor's report thereon. The Annual Report is expected to be
made available to us after that 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 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 as required
under SA 720 'The Auditor's responsibilities Relating to Other
Information'.
Responsibility of Management and Board
of Directors' for the standalone financial
statements
The Company's Management and 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 accounting principles generally accepted
in India, including the 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 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
and Board of Directors' 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 management and
Board of Directors' either intends to liquidate the Company or
to cease operations, or has no realistic alternative but to do so.
The Management and Board of Directors 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 scepticism
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 controls
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 standalone 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 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.
Other Matters
The annual standalone financial statements of the Company
for the year ended March 31, 2024, were audited by erstwhile
joint auditors whose audit report dated May 30, 2024,
expressed an unmodified opinion on those annual standalone
financial statements. Our opinion is not modified in respect of
this matter.
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 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.
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;
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 paragraph 2(i)(vi) below on
reporting under Rule 11(g) of the Companies (Audit
and Auditors) Rules, 2014 (as amended). Since the
key operations of the Company are automated with
the key applications integrated to core banking
system/MIS, the audit is carried out centrally as all
the necessary records and data required for the
purposes of our audit are available therein.
c) The Balance Sheet, the Statement of Profit and Loss
including the Statement of Other Comprehensive
Income, the Statement of Changes in Equity and the
Statement of Cash Flows dealt with by this Report
are in agreement with the relevant books of account;
d) In our opinion, the aforesaid standalone financial
statements comply with the Ind AS specified under
Section 133 of the Act.
e) On the basis of the written representations received
from the directors as on March 31, 2025 taken
on record by the Board of Directors, none of the
directors are disqualified as on March 31, 2025 from
being appointed as a director in terms of Section
164 (2) of the Act.
f) The reservation relating to the maintenance of
accounts and other matters connected therewith are
as stated in the paragraph 2(b) above on reporting
under Section 143(3)(b) of the Act and paragraph
(2)(i)(vi) below on reporting under Rule 11(g) of the
Companies (Audit and Auditors) Rules, 2014.
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" to this report.
Our report expresses an unmodified opinion on
the adequacy and operating effectiveness of the
Company's internal financial controls with reference
to standalone financial statements.
h) With respect to the other matters to be included
in the Auditors' 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.
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, 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
no. 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.
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, as disclosed in Note 61 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 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,
as disclosed in Note 61 to the standalone
financial statements, no funds 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 dividend declared/paid during the year by
the Company is in compliance with section 123
of the Act. The interim dividend declared and
paid by the Company during the year and until
the date of this audit report is in compliance
with Section 123 of the Act.
VI. Based on our examination which included test
checks, the Company has used accounting
software for maintaining its books of account
for the year ended March 31, 2025, 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
software except that audit trail feature was not
enabled at the database level to log any direct
data changes.
Further, during the course of our audit we
did not come across any instance of audit
trail feature being tampered with, where
such functionality was enabled and logs
were maintained. Additionally, except for the
database-level changes as mentioned above,
the audit trail has been preserved by the
Company as per the statutory requirements for
record retention.
For Krishnamoorthy & Krishnamoorthy For P S D Y & Associates
Chartered Accountants Chartered Accountants
Firm Registration No.001488S Firm Registration No. 010625S
R. Venugopal Sreenivasan P R
Partner Partner
Membership No: 202632 Membership No: 213413
UDIN: 25202632BMIMJF8022 UDIN:25213413BMOWZW5713
Place: Kochi Place: Kochi
Date: May 14, 2025 Date: May 14, 2025
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