Auditor Report of SBFC Finance Ltd.

Mar 31, 2025

Key Audit Matter	How our audit addressed the key audit matter
Impairment of loans and advances to customers
(Refer Note 2 for material accounting policies and Note 48.1 for credit risk disclosures)
As at 31 March 2025, the Company has reported	Our audit focused on assessing the appropriateness
gross loan assets of '' 76,416.78 million against	of management’s judgment and estimates used in the
which an impairment loss of '' 1,375.84 million has	impairment analysis through procedures that included, but
been recorded. The Company recognized impairment provision for loan assets based on the Expected Credit	were not limited to, the following:
Loss (“ECL”) approach laid down under ‘Ind AS 109 -	• Obtained an understanding of the modelling techniques
Financial Instruments’.	adopted by the Company including the key inputs and assumptions;
The estimation of ECL on financial instruments involves significant management judgement and estimates and	• Considered the Company''s accounting policies for
the use of modelling techniques and assumptions	estimation of expected credit loss on loans and
which could have a material impact on reported profits.	assessing compliance with the policies in terms of Ind
Significant management judgement and assumptions involved in measuring ECL is required with respect to:	AS 109;
	• Assessed reasonableness of the methodology and
• ensuring completeness and accuracy of the data	assumption used to determine management overlays;
used to create assumption in the model.	• Tested the design and operating effectiveness of key
• factoring in future economic assumptions	controls over completeness and accuracy of the key
techniques used to determine probability of	inputs and assumptions considered for calculation,
default, loss given default and exposure at	recording, monitoring of the impairment loss
default.	recognized and staging of assets;

Key Audit Matter	How our audit addressed the key audit matter
These parameters are derived from the Company’s	• Assessed the critical assumptions and input data
internally developed statistical models and other	used in the estimation of expected credit loss models
historical data.	for specific key credit risk parameters, such as the movement logic between stages, Exposure at default
On the basis of an estimate made by the management,	(EAD), probability of default (PD) or loss given default
an overlay to the tune of '' 46.56 millions has been	(LGD);
carried by the Company as at 31 March 2025 on loans basis their performance and outstanding position.	• Evaluated the reports and working for the methodology
The basis of estimates and assumptions involved in	used in the computation of Through The Cycle PD,
arriving at the overlay are monitored by the Company	Point In Time PD and LGD, among others;
periodically and significantly depend on future developments in the company’s portfolio and the	• Performed test of details over calculation of ECL, in
economy.	relation to the completeness and accuracy of the data;
Disclosure	• Obtained written representations from management
The disclosures regarding the Company’s application	and those charged with governance on whether they
of Ind AS 109 are key to explaining the key judgements	believe significant assumptions used in calculation of
and material inputs to the ECL results. Further, disclosures to be provided as per RBI circulars with	expected credit losses are reasonable;
regards to non-performing assets and provisions is	• Assessed the appropriateness and adequacy of
also an area of focus.	the related presentation and disclosures of Note 48 “Financial risk management” disclosed in the
Considering the significance of the above matter	accompanying financial statements in accordance with
to the overall financial statements and extent of	the applicable accounting standards and related RBI
management’s estimates and judgements involved, it required significant auditor attention. Accordingly, we have identified this as a key audit matter.	circulars and Resolution Framework.

1. We have audited the accompanying standalone financial
statements of SBFC Finance Limited (‘the Company’),
which comprise the Standalone Balance Sheet as at
31^st March 2025, the Standalone Statement of Profit
and Loss (including Other Comprehensive Income), the
Standalone Statement of Cash Flow and the Standalone
Statement of Changes in Equity for the year then ended,
and notes to the Standalone financial statements,
including a summary of the material accounting policies
and other explanatory information (hereinafter referred
to as the ‘standalone financial statement’).

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

Basis for Opinion

3. We conducted our audit in accordance with the
Standards on Auditing specified under section 143(10)
of the Act. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities
for the Audit of the Standalone Financial Statements
section of our report. We are independent of the
Company in accordance with the Code of Ethics issued
by the Institute of Chartered Accountants of India (‘ICAI’)
together with the ethical requirements that are relevant
to our audit of the standalone financial statements
under the provisions of the Act and the rules thereunder,
and we have fulfilled our other ethical responsibilities
in accordance with these requirements and the Code
of Ethics. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis
for our opinion.

Key Audit Matter

4. 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.

5. We have determined the matters described below to be
the key audit matters to be communicated in our report.

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

6. The Company’s Board of Directors are responsible for
the other information. The other information comprises
the information included in the Board’s Report (including
annexures thereto) and Management Discussion and
Analysis (“MD&A”) (collectively referred to as “other
information”) but does not include the 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, 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 (Revised)
‘The Auditor’s responsibilities Relating to Other
Information’.

Board of Director’s Responsibilities for the
Standalone Financial Statements

7. The accompanying standalone financial statements
have been approved by the Company’s Board of
Directors. The Company’s Board of Directors are
responsible for the matters stated in section 134(5) of
the Act with respect to the preparation and presentation
of these standalone financial statements that give
a true and fair view of the financial position, financial
performance including other comprehensive income,
changes in equity and cash flows of the Company in
accordance with the Ind AS specified under section
133 of the Act, RBI Guidelines and other accounting
principles generally accepted in India. This responsibility
also includes maintenance of adequate accounting
records in accordance with the provisions of the Act
for safeguarding of the assets of the Company and for
preventing and detecting frauds and other irregularities;
selection and application of appropriate accounting
policies; making judgments and estimates that are
reasonable and prudent; and design, implementation
and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy
and completeness of the accounting records, relevant
to the preparation and presentation of the standalone
financial statements that give a true and fair view and
are free from material misstatement, whether due to
fraud or error.

8. In preparing the standalone financial statements, the
Board of Directors 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 Board of Directors either intend to liquidate
the Company or to cease operations, or has no realistic
alternative but to do so.

9. The 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

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

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

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

• Obtain an understanding of internal 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 with reference to
standalone financial statements in place and the
operating effectiveness of such controls based on
our audit;

• Evaluate the appropriateness of accounting
policies used and the reasonableness of

accounting estimates and related disclosures
made by the Board of Directors;

• Conclude on the appropriateness of Board of
Directors and 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; and

• Obtain sufficient appropriate audit evidence
regarding the standalone financial statements
of the Company to express an opinion on the
standalone financial statements.

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

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

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

Other Matters

15. The standalone financial statements of the Company
for the year ended 31 March 2024 were audited by
the predecessor auditor, Suresh Surana & Associates
LLP, Chartered Accountants, who have expressed
an unmodified opinion on those standalone financial
statements vide their audit report dated April 27, 2024.
Accordingly, we do not express any opinion on the
figures reported in the standalone financial statements
for the year ended as at March 31, 2024.

Report on Other Legal and
Regulatory Requirements

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

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

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

b) 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, except for the
matters stated in paragraph 17(h)(vi) below on reporting
under Rule 11(g) of the Companies (Audit and Auditors)
Rules, 2014 (as amended) (“the Rules”);

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

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

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

f) with respect to the adequacy of the internal financial
controls with reference to standalone financial
statements of the Company as on 31 March 2025 and
the operating effectiveness of such controls, refer to our
separate Report in Annexure B. 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.

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

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

i. The Company, as detailed in note 47 to the
standalone financial statements, has disclosed
the impact of pending litigations on its financial
position as at 31 March 2025;

ii. The Company, as detailed in note 54.16.1 to
the standalone financial statements, has made
provision as at 31 March 2025, as required under
the applicable law or accounting standards, for
material foreseeable losses, if any, on long-term
contracts including derivative contracts;

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

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

best of its knowledge and belief, as disclosed
in note 52.13 to the standalone financial
statements, no funds have been advanced
or loaned or invested (either from borrowed
funds or securities premium or any other
sources or kind of funds) by the Company to
or in any person or entity, including foreign
entities (‘the intermediaries’), with the
understanding, whether recorded in writing
or otherwise, that the intermediary shall,
whether, directly or indirectly lend or invest
in other persons or entities identified in any
manner whatsoever by or on behalf of the
Company (‘the Ultimate Beneficiaries’) or
provide any guarantee, security or the like on
behalf of the Ultimate Beneficiaries;

b. The management has represented that,
to the best of its knowledge and belief, as
disclosed in note 52.13, to the standalone
financial statements no funds have been
received by the Company from any person(s)
or entity(ies), including foreign entities (‘the
Funding Parties’), with the understanding,
whether recorded in writing or otherwise,
that the Company shall, whether directly or
indirectly, lend or invest in other persons or

entities identified in any manner whatsoever
by or on behalf of the Funding Party (‘Ultimate
Beneficiaries’) or provide any guarantee,
security or the like on behalf of the Ultimate
Beneficiaries; and

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

. The company has not declared any dividend
during the year ended 31 March 2025 Accordingly,
the provision of section 123 of the Act is not
applicable; and

vi. Based on our examination, which included
test checks, the Company has used various
accounting software for maintaining its books
of account which have a feature of recording
audit trail (edit log) facility, which have operated
throughout the year for all relevant transactions
recorded in the software, except in respect of
one accounting software where the audit trail
feature at the database level (DML logs) was not
enabled throughout the year to log any direct data
changes. Based on our procedures performed, we
did not notice any instance of the audit trail feature
being tampered with. In respect of the aforesaid
database, in the absence of audit trail for the said
period, the question of our commenting on whether
the audit trail was tampered with, does not arise.
Additionally, the audit trail has been preserved by
the Company as per the statutory requirements for
record retention.

For M M Nissim & Co LLP

Chartered Accountants

Firm''s Registration No: 107122W/W100672

Hiren P Muni

Partner

Membership No. 142067
UDIN: 25142067BMNARR7438

Mumbai
April 26, 2025

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Mar 31, 2024

SBFC Finance Limited (Erstwhile SBFC Finance Private Limited)

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying Standalone Financial Statements of SBFC Finance Limited (Erstwhile SBFC Finance Private Limited) (“the Company”), which comprise the balance sheet as at 31 March 2024, 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 the 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 31 March 2024, the profit and 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 (“SA”s) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Standalone financial statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the 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 31 March 2024. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Key Audit Matters	How our audit addressed the key audit matter
1. Impairment of Loans based on expected credit	Principal audit procedure performed:
loss model (ECL): As at 31 March 2024, the carrying value of loan assets carried at amortised cost, aggregated '' 58,364.91 million (net of allowance for expected credit loss ''1,104.15 million) constituting approximately 82.64% of the Company’s total assets has been recorded as at reporting date in accordance with Ind AS 109 - Financial Instruments (‘Ind AS 109’).	• We examined Board Policy approving methodologies for computation of ECL that address policies, procedures and controls for assessing and measuring credit risk on all lending exposures, commensurate with the size, complexity and risk profile specific to the Company. The parameters and assumptions used and their rationale and basis are clearly documented.
Significant management judgement is used in classifying these loan assets, applying appropriate measurement	• We evaluated the design and operating effectiveness of
principles, use of different modelling techniques and	controls across the processes relevant to ECL, including the
assumptions which could have a material impact on reported	judgements and estimates.
profits. ECL on such loan assets carried at amortised cost is a critical estimate involving greater level of management	• These controls, among others, included controls over the
judgement. As part of our risk assessment, we determined	allocation of assets into stages including management’s
that the ECL on such loan assets has a high degree of	monitoring of stage effectiveness, model monitoring including
estimation uncertainty, with a potential range of reasonable	the need for post model adjustments, model validation, credit
outcomes for the standalone financial statements.	monitoring, multiple economic scenarios, individual provisions
The elements of estimating ECL which involved increased	and recording of journal entries and disclosures.
level of audit focus in measuring ECL especially while	• We tested the completeness of loans and advances included
calculating the PD and LGD and which also includes	in the Expected Credit Loss calculations as of 31 March 2024
management overlays involves the following critical factors which are applied to such modelling techniques:	by reconciling it with the balances as per loan balance register.

Key Audit Matters	How our audit addressed the key audit matter
• Segmentation of portfolios into homogenous risk pools • Qualitative and quantitative factors used in staging the loan assets carried at amortised cost using criteria in accordance with Ind AS 109, • Basis used for estimating of probability of defaults (PD) at product level with past trends, • Basis used for estimating loss given defaults (LGD) based on the value of collaterals at product level with past trends, • Estimation of exposure at defaults (EAD), • Consideration of probability weighted scenarios and	• We tested assets in stage 1, 2 and 3 on sample basis to verify that they were allocated to the appropriate stage. For samples of exposure, we tested the appropriateness of determining EAD, PD and LGD and performed test of details over calculation of impairment allowance for assessing completeness and accuracy of data.
	• For exposure determined to be individually impaired, we tested samples of loans and advances and examined management’s estimate of future cash flows, assessed their reasonableness and checked the resultant provision calculations. • We read the Company’s policies for identification, classification and assessing compliance for Stage 3 / NPAs customers in line with the norms. We performed substantial audit procedure relating to identification and classification of Stage 3 / NPAs by the Company.
forward-looking factors, micro and macro-economic
scenarios in estimating the expected credit losses.
• Criteria for a significant increase in credit risk	• We have checked on sample basis that the stage classification for the borrowers has been given in accordance with the
• Use of judgement for identification and classification of	Resolution Framework issued by Reserve Bank of India (the
loans as Stage 3 / NPAs applying quantitative as well	‘RBI’) and the Board approved policy for ECL provisioning
as qualitative factors. The risk of identification of such	and stage classification with respect to such accounts.
assets as Stage 3 / NPAs is affected by factors like	• Assessed the criteria for staging of loans based on their past
stress and liquidity concerns of such assets.	due status as per the requirements of Ind AS 109. Tested a
Further, the management has adopted a methodology	sample of performing loans to assess whether any significant
which in addition to the model adopted as above is further	increase in credit risk or loss indicators were present requiring
analyzed on case-to-case basis and wherever impairment	them to be classified under higher stages.
impact needs to be changed the same is considered in the financial statements.	• We assessed the adequacy and appropriateness of disclosures in compliance with the Ind AS 107 in relation to
The disclosures made in standalone financial statements	ECL especially in relation to judgements used in estimation
for ECL especially in relation to judgements and estimates	of ECL provision.
made by the Management in determination of the ECL. Refer note 48.1.1 to the standalone financial statements.	• We have Involved internal experts for testing of the ECL model and computation, including factors that affect the PD, LGD and EAD considering various forward looking, micro and macro-economic factors.

Information Other than the Standalone Financial Statements and Auditor’s Report Thereon

The Company’s management and Board of Directors are responsible for the preparation of the other information. The other information comprises the information included in the Board’s Report including Annexures to Board’s Report and Shareholder’s Information/ Management Analysis and Discussion but does not include the standalone financial statements and our auditor’s report thereon. The Reports are expected to be made available to us after the date of this auditors’ 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, 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 (Revised) ‘The Auditor’s responsibilities Relating to Other Information’.

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 of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the 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, the 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 the management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are 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 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 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 with reference to the 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 financial year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

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

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

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

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 except for the matters stated in the paragraph i (vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014;

c) The Balance sheet, the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity, and 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 Indian Accounting Standards specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015 as amended.

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

f) The modifications 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 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 over financial reporting 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 control over financial reporting.

h) 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, including sitting fees paid to directors, during the year is in excess of the limits prescribed under Section 197 of the Act, in respect of which approvals from the shareholders have been obtained as prescribed,

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

(i) The Company has disclosed the impact of pending litigations as at 31 March 2024 on its financial position in its standalone financial statements (Refer Note 47 to the standalone financial statements);

(ii) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

(iii) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

(iv) (a) The management has represented to us that, to

the best of its knowledge and belief, as disclosed in the notes to the accounts, 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(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any

guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(b) The management has also represented to us, that, to the best of its knowledge and belief, as disclosed in the notes to the accounts, no funds (which are material either individually or in the aggregate) have been received by the Company from any person(s) or entity(ies), including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend to 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 such audit procedures that were 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 Company has not declared or paid any dividend during the year and has not proposed a final dividend for the year.

(vi) Based on our examination, which included test checks, the Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year except in respect of software which is used for maintenance of accounting and financial records (Oracle) wherein the features of recording audit trail (edit log) facility was not enabled at the data base level to log any direct data changes and at application layer for the period from April 1, 2023 to June 30, 2023. Further, for the audit periods where audit trail (edit log) facility was enabled and operated throughout the year, we did not come across any instance of the audit trail feature being tampered with.

Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 1,2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended March 31,2024

For Suresh Surana & Associates LLP

Chartered Accountants

Firm''s Reg. No.: 121750W / W-100010

Ramesh Gupta Partner

Membership No. 102306 UDIN: 24102306BKCFZW1697

Place: Mumbai Date : April 27, 2024

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Mar 31, 2023

SBFC Finance Limited

(Erstwhile SBFC Finance Private Limited)

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying Standalone Financial Statements of SBFC Finance Limited (Erstwhile SBFC Finance Private Limited) (“the Company"), which comprise the Balance Sheet as at 31 March 2023, 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 the 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 31 March 2023, profit and 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 (“SA"s) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Standalone financial statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the 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 statement':.

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 31 March 2023. 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.

Key Audit Matters

How our audit addressed the key audit matter

1. Impairment of Financial Assets Management estimates impairment provision using Expected Credit loss model (ECL) for the loan exposure. Measurement of loan impairment involves application of significant judgement by the management. The most significant judgements are: •    Timely identification and classification of the impaired " ‘ loans, and •    Determination of probability of defaults (PD) and estimation of loss given defaults (LGD) based on the ^ , value of collaterals and relevant factors. The estimation of Expected Credit Loss on financial instruments involves significant judgements and estimates. Following are points with increased level of audit focus: •    Classification of assets to stage 1,2, or 3 using criteria in accordance with Ind AS 109; •    Key assumptions in respect of theprobability of default and loss given default (including taking industry comparatives) assessed by the Company including consideration of collateral values.

Principal audit procedure performed: •    We examined Board Policy approving methodologies for computation of ECL that address policies, procedures and controls for assessing and measuring credit risk on all lending exposures, commensurate with the size, complexity and risk profile specific to the Company.The parameters and assumptions used and their rationale and basis are clearly documented. •    We evaluated the design and operating effectiveness of controls across the processes relevant to ECL, including the judgements and estimates. •    These controls, among others, included controls over the allocation of assets into stages including management's monitoring of stage effectiveness, model monitoring including the need for post model adjustments, model validation, credit monitoring, multiple economic scenarios, individual provisions and recording of journal entries and disclosures. •    We tested the completeness of loans and advances included in the Expected Credit Loss calculations as of 31 March 2023 by reconciling it with the balances as per loan balance leimmi.

 

Key Audit Matters	How our audit addressed the key audit matter
_ • Use of judgement for identification and classification ¦ of loans as Stage 3 / NPAs applying quantitative as well as qualitative factors. The risk of identification of such assets as Stage 3 / NPAs is affected by factors like stress and liquidity concerns of such assets. • The disclosures made in standalone financial _ statements for ECL especially in relation to , judgements and estimates made by the Management in determination ofthe ECL. Refer note 48.1.2.1 to the standalone financial statements.	•    We tested assets in stage 1, 2 and 3 on sample basis to verify that they were allocated to the appropriate stage. For samples of exposure, we tested the appropriateness of determining EAD, PD and LGD and performed test of details over calculation of impairment allowance for assessing completeness and accuracy of data. •    For exposure determined to be individually impaired, we tested .. samples of loans and advances and examined management's estimate of future cash flows, assessed their reasonableness and checked the resultant provision calculations. •    We read the Company's policies for identification, classification and assessing compliance for Stage 3 / NPAs ' customers in line with the norms. We performed substantial ' audit procedure relating to identification and classification of ‘ Stage 3 / NPAs by the Company. - •    We have checked on sample basis that the stage classification for the borrowers has been given in accordance with the Resolution Framework issued by Reserve Bank of India (the ‘RBI') and the Board approved policy for ECL provisioning and stage classification with respect to such accounts. •    We assessed the adequacy and appropriateness of disclosures in compliance with the Ind AS 107 in relation to ECL especially in relation to judgements used in estimation of ECL provision.
2. IT systems and controls Financial accounting and reporting processes, especially in the financial services sector, are fundamentally reliant on IT systems and IT controls to process significant transaction volumes, hence we identified IT systems and controls over . financial reporting as a key audit matter for the Company. "="’_ Automated accounting procedures and IT environment controls, which include IT governance, general IT controls over program development and changes, access to programs and data and IT operations, are required to be designed and to operate effectively to ensure reliable financial reporting.	Principal audit procedure performed: •    We tested the design and operating effectiveness of the Company's IT access controls over the information systems that are important to financial reporting and various interfaces, configuration and other identified application controls. •    We tested IT general controls (logical access, changes management and aspects of IT operational controls). This included testing requests for access to systems were ^ reviewed and authorized. •    We tested the Company's periodic review of access rights. We also tested requests of changes to systems for approval and authorization. •    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.

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

The Company's management and Board of Directors are responsible for the preparation of the other information. The other information comprises the information included in the Board's Report including Annexures to Board's Report and Shareholder's Information but does not include the standalone financial statements and our auditor's report thereon. The Reports are expected to be made available to us after the date of this auditors' 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, 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 (Revised) 'The Auditor's responsibilities Relating to Other Information'.

Management's Responsibility 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 of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making

judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the 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, the 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 the management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are 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 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 with reference to the 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

piHsentation.

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 financial year and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

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

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

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

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 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 Indian Accounting Standards specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015 as amended.

e)    On the basis of written representations received from the directors as on 31 March 2023 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2023, 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 over financial reporting 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 control over financial reporting.

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, including sitting fees paid to directors, during the year is in accordance with the provisions of Section 197 read with Schedule V 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 as at 31 March 2023 on its financial position in its standalone financial statements (Refer Note 47 to the standalone financial statements);

(ii)    The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

(iii)    There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

(iv)    (a) The management has represented to us that, to the

best of its knowledge and belief, as disclosed in the notes to the accounts, 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(s) or

entity(ies), including foreign entities (“Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (“Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(b)    The management has also represented to us, that, to the best of its knowledge and belief, as disclosed in the notes to the accounts, no funds (which are material either individually or in the aggregate) have been received by the Company from any person(s) or entity(ies), including foreign entities (“Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend to 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 such audit procedures that were 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 Company has not declared or paid any dividend during the year and has not proposed final dividend for the year.

(vi)    Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31,2023.

For Suresh Surana & Associates LLP Chartered Accountants Firm's Reg. No.: 121750W / W-100010

Ramesh Gupta Partner

Membership No. 102306 UDIN: 23102306BGWKSQ5943

Place: Mumbai Date: 27 April 2023