LIC Housing Finance Limited
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the accompanying standalone financial statements of LIC Housing Finance Limited (“the Company”), which comprise the standalone balance sheet as at March 31, 2026, 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 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, as amended (“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 (“Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2026, its profit and 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) specified under sub-section (10) of Section 143 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 (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 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, 2026. 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.
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.
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The Key audit matters
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How our audit addressed the key audit matter
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Assessment of impairment loss allowance based on expected credit loss (ECL) on Loans and Advances (Also refer Note 3.13.i Use of estimates and judgements and 36.4.2 Credit Risk to the standalone financial statements)
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Impairment of loans and advances, including off-balance sheet elements
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Charge: ' (330.38) Crores for year ended March 31, 2026 Provision: ' 4,568.63 Crores as on March 31, 2026
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Subjective estimate - Expected Credit Loss (ECL) under Ind
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Our audit procedures included the following:
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AS 109
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Understanding of the process and testing of controls
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Under Ind AS 109, Financial Instruments, the Company recognises impairment allowances on loans and advances using the Expected Credit Loss (ECL) model. The ECL represents a probability-weighted estimate of credit losses over the expected life of a financial instrument and incorporates reasonable and supportable information, including historical default and loss experience, current conditions and forwardlooking macroeconomic information.
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• We obtained an understanding of the Company's impairment methodology, accounting policies and governance framework for Expected Credit Loss (ECL) and assessed their compliance with the requirements of Ind AS 109 and the applicable Reserve Bank of India (RBI) guidelines.
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The Key audit matters
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How our audit addressed the key audit matter
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The estimation of ECL involves significant management
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• We evaluated the design and tested the operating
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judgement and estimation uncertainty. The key areas where
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effectiveness of key controls over the ECL process,
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we identified increased levels of management judgement, and
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including controls relating to data extraction and validation,
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consequently greater audit focus, are as follows:
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model governance, approval of key assumptions and
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• Data inputs - The application of the ECL model requires
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review of the impairment allowance.
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the use of large volumes of data from multiple sources.
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• We tested controls over the completeness and accuracy
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This increases the risk relating to the completeness,
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of data used in the ECL models, including controls over
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accuracy and appropriateness of the data used in
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system-generated reports used in determining default
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developing the assumptions underlying the ECL model.
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status, ageing and other credit risk indicators.
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• Loan staging and credit risk assessment - Significant
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• We tested controls over the identification of significant
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judgement is applied in determining whether there
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increase in credit risk (SICR), staging of financial assets
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has been a significant increase in credit risk since
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and timely recognition of impairment.
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initial recognition and in classifying financial assets into the appropriate stage under the ECL framework. This assessment considers various qualitative and quantitative factors, including borrower characteristics, internal credit risk ratings, repayment behaviour, remaining
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• We tested controls over the selection of forward-looking macroeconomic variables, development of economic scenarios and application of probability weightings used in estimating ECL.
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tenor, collateral valuations, expected recovery timelines,
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• We evaluated controls over the identification, approval,
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industry outlook and other relevant information.
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calculation and review of post-model adjustments
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• Model estimations - The estimation of ECL involves
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(management overlays), where applicable.
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the use of inherently judgmental models to determine
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Substantive audit procedures
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the key inputs, namely Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD). Among these, PD and LGD are the primary drivers of estimation complexity and represent the most significant areas of judgement in the Company's ECL
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• We tested the completeness of loans and advances, including off-balance sheet credit exposures, included in the ECL computation by reconciling them to the underlying accounting records and loan reports.
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modelling approach.
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• On a sample basis, we tested the completeness,
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• Economic scenarios - Ind AS 109 requires ECL to be measured on an unbiased, probability-weighted basis by incorporating a range of possible future economic
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accuracy and relevance of key data inputs used in the ECL models by agreeing the data to the underlying books, loan documentation and other supporting records.
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scenarios. Significant management judgement is
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• We tested samples of financial assets classified in Stages
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applied in selecting forward-looking macroeconomic
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1, 2 and 3 to assess whether they had been appropriately
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assumptions, developing alternative economic
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staged in accordance with the requirements of Ind AS
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scenarios and assigning probability weightings to those
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109. This included evaluating whether indicators of
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scenarios, particularly in light of uncertainties arising
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significant increase in credit risk had been appropriately
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from geopolitical developments, inflationary pressures
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identified and whether the resulting stage allocation
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and the prevailing economic environment.
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was appropriate.
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• Post-model adjustments (management overlays) -
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• We evaluated the reasonableness of assumptions and
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Where considered necessary, management applies
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estimates used in determining Probability of Default (PD),
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post-model adjustments (management overlays)
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Loss Given Default (LGD) and Exposure at Default (EAD)
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to reflect risks and uncertainties that are not
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by considering historical performance, observed default
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adequately captured by the underlying ECL models.
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experience, recovery trends, collateral information,
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The determination of such adjustments involves
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available external information and other corroborative
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significant judgement and estimates.
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evidence, where appropriate.
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The Key audit matters
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How our audit addressed the key audit matter
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• Assessment of project finance exposures - For project
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We assessed the reasonableness of management's
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finance exposures, additional judgement is exercised
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forward-looking macroeconomic assumptions,
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in assessing expected credit losses based on factors
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economic scenarios and probability weightings used in
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such as the borrower's financial performance, solvency,
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estimating ECL.
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liquidity, project execution status and industry outlook.
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Where management overlays were recognised, we
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The combined effect of these judgements results in a
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evaluated the rationale, supporting evidence, methodology
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high degree of estimation uncertainty in measuring
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and consistency of their application to determine whether
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impairment allowances on loans and advances, including
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they appropriately reflected risks not captured by the
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off-balance sheet credit exposures. Consequently, there
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underlying ECL models.
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is a potential range of reasonable outcomes that could materially affect the impairment allowance recognised in the standalone financial statements. Refer to Note 36.4.2 to the standalone financial statements for details of the Company's credit risk management framework and the Expected Credit Loss allowance recognised.
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For selected project finance exposures, we assessed management’s impairment evaluation by examining borrower-specific information, including financial performance, solvency, liquidity, project execution status, collateral values, repayment capacity and industry outlook.
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Disclosures
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Assessing disclosures
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The disclosures relating to the Company's application of Ind AS 109 are significant in explaining the judgements, assumptions and estimation techniques applied in determining the Expected Credit Loss allowance. In addition, disclosures required under the applicable RBI regulations relating to non-performing assets and provisioning involve significant judgement and estimation and were therefore an area of audit focus.
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We assessed whether the disclosures in the standalone financial statements appropriately describe the Company's application of the Expected Credit Loss methodology, significant judgements and assumptions applied, estimation uncertainty involved and the related impairment allowances recognised, in accordance with the requirements of Ind AS 109 and applicable RBI regulations.
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Considering the significant management judgement involved in estimating the Expected Credit Loss allowance and the materiality of the related impairment provision to the standalone financial statements, we determined this matter to be a Key Audit Matter for the current year's audit.
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Information technology (IT)
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IT systems and controls relating to Loan Management System
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IT Systems and Controls
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With the assistance of our IT specialists, we performed the
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The Company’s processes relating to the sanctioning,
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following procedures:
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disbursement, and recovery of loans and advances are
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(a)
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Obtained an understanding of the Company’s information
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highly dependent on automated controls embedded within
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processing systems, IT general controls, and automated
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its information technology (“IT”) systems. The Company uses
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controls relevant to applications, databases, and
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a Loan Management System to manage its loan portfolio
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operating systems that are significant to our audit.
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and process a significant volume of transactions. Given the pervasive use of IT systems, deficiencies in the IT control environment, including controls over data integrity, system access, and changes to applications, could result in material
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(b)
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Obtained an understanding of changes made to the IT applications during the audit period and evaluated the relevant controls over such changes.
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misstatements in the financial accounting and reporting
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(c)
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Tested the design and operating effectiveness of key IT
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records.
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general controls, including:
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Accordingly, IT systems and controls relating to the Loan
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(i) User access management controls, controls over
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Management System were identified as a Key Audit Matter due
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changes to the IT environment, and segregation of
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to the significant volume of transactions processed through
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duties relating to program maintenance and security
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the system and the importance of maintaining effective
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administration for key financial accounting and
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controls to ensure the integrity, accuracy, and reliability of
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reporting processes.
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financial information.
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(ii) Controls over periodic review of user access rights
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and tested selected system change requests to verify appropriate approval and authorization.
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(iii) Automated controls, including interfaces, system
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configurations, and reports generated from the Company's information processing systems relating to loans, borrowings, deposits, interest income, interest expense, and other significant financial statement items.
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Information Other than the Financial Statements and Auditor's Report Thereon
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 consolidated financial statements, standalone financial statements and our auditor’s report thereon. The Annual Report is expected to be made available to us after the date of 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. 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. We have nothing to report in this regard.
Responsibilities of Management and Board of Directors for the Standalone Financial Statements
The Company’s Management and Board of Directors are responsible for the matters stated in sub-section (5) of Section 134 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 Ind AS. 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 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, the 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 the 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 financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under clause (i) of sub-section (3) of Section 143 of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to these 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 the management.
• Conclude on the appropriateness of management and 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.
• 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 financial controls 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, 2026, 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
The standalone financial statements of the company for the year ended March 31,2025 were audited by previous joint auditors under the Act who, vide their joint audit report dated May 15,2025, expressed an unmodified opinion on those standalone financial statements.
Our opinion on the standalone financial Statements is not modified in respect of the above 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, to the extent applicable.
2. As required by sub-section (3) of Section 143 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. 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 balance sheet, 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 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, 2026 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2026 from being appointed as a director in terms of sub-section (2) of Section 164 of the Act.
f. 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 B” wherein we have expressed an unmodified opinion.
g. In our opinion, the managerial remuneration for the year ended March 31, 2026 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.
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 - Refer note 38 to the standalone financial statements;
ii. The Company has made a provision, as required under the applicable law or Indian 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, 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(es), 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 to or on behalf of the Ultimate Beneficiaries.
(b) The Management has represented that, to the best of its knowledge and belief, no funds have been received by the Company from any person(s) or entity(es), 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 Parties (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
(c) Based on the 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 sub-clause (a) and (b), contain any material misstatement.
v. The final dividend paid by the Company during the year in respect of the same declared for the previous year is in accordance with section 123 of the Act to the extent it applies to payment of dividend.
As stated in note 40 to the standalone financial statements, the Board of Directors of the Company has proposed dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.
vi. Based on our examination which included test checks, the Company has used accounting software systems for maintaining its books of account for the financial year ended March 31, 2026 which have 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 systems. Further, during the course of our audit, we did not come across any instance of the audit trail feature being tampered with and, the audit trail has been preserved by the Company as per the statutory requirements for record retention.
For SHAH GUPTA & CO., For BATLIBOI & PUROHIT
Chartered Accountants Chartered Accountants
Firm Registration No.: 109574W Firm Registration No.: 101048W
Heneel K Patel Parag Hangekar
Partner Partner
M. No. 114103 M. No. 110096
UDIN: 26114103VTZGUT1658 UDIN: 26110096LZVOJQ2199
Place: Mumbai Place: Mumbai
Date: May 13, 2026 Date: May 13, 2026
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