1. We have audited the accompanying Standalone Financial Statements of Cholamandalam Investment and Finance Company Limited('the Company'), which comprise the Standalone Balance Sheet as at 31 March 2025, and the Standalone Statement of Profit And Loss(including Other Comprehensive Income/loss), Standalone Statement of Changes in Equity and Standalone Statement of Cash Flowsfor the year ended on that date, and notes to the Standalone Financial Statements, including a summary of material accounting policyinformation and other explanatory information ('the Standalone Financial Statements').
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone FinancialStatements give the information required by the Companies Act, 2013 ('Act') in the manner so required and give a true and fairview in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules, 2015, as amended, ('Ind AS') and other accounting principles generally accepted in India, of the State ofAffairs of the Company as at 31 March 2025, and its Profit and Other Comprehensive Income/loss, Changes in Equity and its Cash Flowsfor the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing ('SAs') specified under section 143(10) of the Act. Ourresponsibilities under those SAs are further described in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India ('ICAI') together with the ethical requirements that are relevant to our audit of the StandaloneFinancial Statements under the provisions of the Act, and the rules thereunder, and we have fulfilled our other ethical responsibilitiesin accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion on the Standalone Financial Statements.
Key audit matters
4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the StandaloneFinancial Statements of the current year. These matters were addressed in the context of our audit of the Standalone FinancialStatements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
How the matter was addressed in our audit
Assessment of impairment loss allowance based on expectedcredit loss (ECL) on Loans (Refer Note 9 of the standalonefinancial statements)
The loan balances towards vehicle finance, home loans,loans against property, and other loans aggregating to" 1,85,340.34 crores and the associated impairment allowancesaggregating to " 3,410.44 crores are significant to the standalonefinancial statements and involves judgement around thedetermination of the impairment allowance in line withthe requirements of the Ind AS 109 "Financial Instruments".Impairment allowances represent management's estimate of thelosses incurred within the loan portfolios at the balance sheetdate and are inherently judgmental. Impairment, based on ECLmodel, is calculated using main variables, viz. 'Staging', 'Exposureat Default', 'Probability of Default' and 'Loss Given Default' asspecified under Ind AS 109. Quantitative factors like days past due,behaviour of the portfolio, historical losses incurred on defaultsand macro-economic data points identified by the Management'sexpert and qualitative factors like nature of the underlying loan,deterioration in credit quality, correlation of macro-economicvariables to determine expected losses, uncertainty overrealisability of security, judgement in relation to managementoverlays and related Reserve Bank of India (RBI) guidelines, to
The audit procedures performed by us to assess appropriatenessof the impairment allowance based on ECL on loans included thefollowing:
• We understood and evaluated the design and tested theoperating effectiveness of the key controls put in place by themanagement over:
i. the assumptions used in the calculation of ECL and itsvarious aspects such as determination of Probability ofDefault, Loss Given Default, Exposure at Default, Stagingof Loans, etc.
ii. the completeness and accuracy of source data used by theManagement in the ECL computation; and
iii. ECL computations for their reasonableness
• We, along with the assistance of the auditor's IT expert, verifiedthe appropriateness of methodology and models used bythe Company and reasonableness of the assumptions usedwithin the computation process to estimate the impairmentprovision.
• We test-checked the completeness and accuracy of sourcedata used.
• We recomputed the impairment provision for a sample ofloans across the loan portfolio to verify the arithmeticalaccuracy and compliance with the requirements of Ind AS 109.
the extent applicable, etc. have been taken into account in theECL computation. Given the inherent judgmental nature and thecomplexity of model involved, we determined this to be a KeyAudit Matter.
• We evaluated the reasonableness of the judgement involvedin management overlays that form part of the impairmentprovision, and the related approvals.
• We evaluated the adequacy of presentation and disclosuresin relation to impairment loss allowance in the standalonefinancial statements
Audit in an Information Technology (IT) enabled environment- including considerations on exceptions identified in ITEnvironment.
The IT environment of the entity involves a few independent andinter-dependent IT systems used in the operations of the entityfor processing and recording of the business transactions.
As a result, there is a high degree of reliance and dependency onsuch IT systems for the financial reporting process of the entity.Appropriate IT general controls and IT application controls arerequired to ensure that such IT systems can process the data asrequired, completely, accurately, and consistently for reliablefinancial reporting.
We have identified certain key IT applications and the related ITinfrastructure (herein after referred to as "In-scope IT systems"),which have an impact on the financial reporting process and therelated controls as a key audit matter because of the increasedlevel of automation; a few systems being used by the entityfor processing financial transactions; the complexity of the ITarchitecture; and its impact on the financial records and financialreporting process of the entity
Our audit procedures with respect to this matter included the
following:
In assessing the controls over the IT systems, we have involved our
Technology Assurance specialists to obtain an understanding of
the IT environment, IT infrastructure and IT systems.
• With respect to the "In-scope IT systems" identified as relevantto the audit of the standalone financial statements andfinancial reporting process of the entity, we have evaluatedand tested relevant IT general controls or relied upon serviceauditor's report, where applicable.
• On such "In-scope IT systems", we have covered the key ITgeneral controls with respect to the following domains:
• Program change management, which includes that programchanges are moved to the production environment as perdefined procedures and relevant segregation of environmentis ensured.
• User access management, which includes user accessprovisioning, de-provisioning, access review, passwordmanagement, sensitive access rights and segregation of dutiesto ensure that privileged access to applications, operatingsystem and databases in the production environment weregranted only to authorized personnel.
• Other areas that were assessed under the IT controlenvironment included backup management, businesscontinuity and disaster recovery, incident management, batchprocessing and monitoring, cybersecurity controls, end usercomputing and physical security and datacentre controls.
• We have also evaluated the design and tested the operatingeffectiveness of key IT application controls within key businessprocesses, which included testing automated calculations,automated accounting procedures, system interfaces, systemreconciliation controls and key system generated reports, asapplicable.
• Where control deficiencies have been identified, we havetested a combination of compensating controls, remediatedcontrols and/ or performed alternative audit procedures,where necessary
5. The Company's Board of Directors are responsible for the other information. The other information comprises the informationincluded in the Company's annual report but does not include the Standalone Financial Statements and our auditors' reportthereon. The Other Information is expected to be made available to us after the date of this auditor's report
6. Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any formof assurance conclusion thereon. In connection with our audit of the Standalone Financial Statements, our responsibilityis to read the other information identified above when it becomes available and, in doing so, consider whether the otherinformation is materially inconsistent with the Standalone Financial Statements, or our knowledge obtained in the audit
or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is amaterial misstatement of this other information, we are required to report that fact. When we read the Annual Report, if weconclude that there is a material misstatement therein, we are required to communicate the matter to those charged withgovernance and take appropriate action as applicable under the relevant laws and regulations.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
7. The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act, with respect to thepreparation of these Standalone Financial Statements that give a true and fair view of the State of Affairs, profit andOther Comprehensive Income/loss, Changes in Equity and Cash Flows of the Company in) conformity with the IndianAccounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards)Rules, 2015, as amended and other accounting principles generally accepted in India. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities; selection of the appropriateaccounting software for ensuring compliance with applicable laws and regulations including those related to retentionof audit logs; selection and application of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, thatwere operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to thepreparation and presentation of the Standalone Financial Statements that give a true and fair view and are free frommaterial misstatement, whether due to fraud or error.
8. In preparing the Standalone Financial Statements, the Board of Directors is responsible for assessing the Company'sability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the goingconcern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations,or has no realistic alternative but to do so.
9. The Board of Directors is also responsible for overseeing the Company's financial reporting process.
Auditor's responsibilities for the audit of the Standalone Financial Statements
10. Our objectives are to obtain reasonable assurance about whether the Standalone Financial Statements as a wholeare free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes ouropinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected to influence the economicdecisions of users taken on the basis of these Standalone Financial Statements. As part of an audit in accordance withSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
10.1. Identify and assess the risks of material misstatement of the Standalone Financial Statements, whether due tofraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that issufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentionalomissions, misrepresentations, or the override of internal control.
10.2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances. Under section 143(3)(i) the Act, we are also responsible for expressing ouropinion on whether the Company has adequate internal financial controls with reference to Standalone FinancialStatements in place and the operating effectiveness of such controls.
10.3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by the Management.
10.4. Conclude on the appropriateness of the Management's use of the going concern basis of accounting and, basedon the audit evidence obtained, whether a material uncertainty exists related to events or conditions that maycast significant doubt on the Company's ability to continue as a going concern. If we conclude that a materialuncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in theStandalone Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusionsare based on the audit evidence obtained up to the date of our auditor's report. However, future events orconditions may cause the Company to cease to continue as a going concern.
10.5. Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including thedisclosures, and whether the Standalone Financial Statements represent the underlying transactions and eventsin a manner that achieves fair presentation.
11. We communicate with those charged with governance regarding, among other matters, the planned scope and timingof the audit and significant audit findings, including any significant deficiencies in internal control that we identifyduring our audit.
12. We also provide those charged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence, and to communicate with them all relationships and other matters that mayreasonably be thought to bear on our independence, and where applicable, related safeguards.
13. From the matters communicated with those charged with governance, we determine those matters that were of mostsignificance in the audit of the Standalone Financial Statements of the current year and are therefore the key auditmatters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure aboutthe matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.
14. The Financial Statements of the Company for the year ended 31 March 2024 were audited by erstwhile Statutory auditorswhose reports dated 30 April 2024 expressed an unmodified opinion on those Financial Statements. Our opinion is notmodified in respect of this matter.
Report on Other Legal and Regulatory Requirements
15. As required by the Companies (Auditor's Report) Order, 2020 ('the Order'), issued by the Central Government of India interms of sub-section (11) of section 143 of the Act, we give in the 'Annexure A' a statement on the matters specified inparagraphs 3 and 4 of the Order, to the extent applicable.
16. As required by Section 143(3) of the Act, we report that:
16.1. We have sought and obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit.
16.2. In our opinion, proper books of accounts as required by law have been kept by the Company so far as it appearsfrom our examination of those books except for the matters stated in paragraph 17.8 below on reporting underRule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended).
16.3. The standalone balance sheet, the standalone statement of profit and loss including Other ComprehensiveIncome, the Statement of Changes in Equity and the Standalone Cash Flow Statement dealt with by this Reportare in agreement with the books of account.
16.4. In our opinion, the aforesaid Standalone Financial Statements comply with the Ind AS specified under Section133 of the Act read with the relevant rules thereunder.
16.5. On the basis of the written representations received from the directors as on 31 March 2025 taken on recordby the Board of Directors, none of the directors is disqualified as on 31 March 2025 from being appointed as adirector in terms of Section 164(2) of the Act.
16.6. The modification relating to the maintenance of books of accounts and other matters connected therewithare as stated in the paragraph 16.3 above on reporting under Section 143(3)(b) and paragraph 17.8 below onreporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended).
16.7. With respect to the adequacy of the internal financial controls with reference to Standalone Financial Statementsof the Company and the operating effectiveness of such controls, refer to our separate Report in 'Annexure B'.
16.8. In our opinion and according to the information and explanations given to us, the remuneration paid by theCompany to its directors during the current year is in accordance with the provisions of Section 197 of the Act.The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act.
17. 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:
17.1. The Company has disclosed the impact of pending litigations as at 31 March 2025 on its financial position in itsStandalone Financial Statements - Refer Note 38 to the Standalone Financial Statements;
17.2. The Company has made provision, as required under the applicable law or Ind AS, for material foreseeablelosses, if any, on long-term contracts including derivative contracts - Refer Note 7 to the Standalone FinancialStatements;
17.3. There has been no delay in transferring amounts, required to be transferred, to the Investor Education andProtection Fund by the Company.
17.4. The Management has represented, to best of their knowledge and belief, that no funds have been advancedor loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) bythe Company to or in any other person(s) or entity(ies), including foreign entities ('Intermediaries'), with theunderstanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectlylend 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.
17.5. The Management has represented, to best of their knowledge and belief, that no funds have been received by theCompany 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 or investin other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ('UltimateBeneficiaries') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
17.6. Based on such audit procedures, that have been considered reasonable and appropriate in the circumstances,performed by us, nothing has come to our notice that has caused us to believe that the representation underpara 17.4 and 17.5 contain any material misstatement.
17.7. In our opinion and according to the information and explanations given to us, the dividend declared and paidduring the year by the Company is in compliance with Section 123 of the Act.
17.8. Based on our examination which included test checks, except for the instance mentioned in the paragraphbelow, the company has used an accounting software for maintaining its books of account which has a feature ofrecording audit trail (edit log) facility, and the same has operated throughout the year for all relevant transactionsrecorded in the software. Audit trail was operational throughout the year in eleven application systems. Further,during the course of our audit we did not come across any instance of audit trail feature being tampered with.
For six systems, the company adopted a holistic approach of enabling audit trail through change data capture(CDC) approach in a separate database to overcome the limitations in the respective applications.
As explained in Note 2.3 to the standalone financial statements, one of the system without an audit trailfunctionality was discontinued during the year and was replaced with another system. Audit trails in theapplication systems and database was not disabled during the year. Adequate internal controls are in place toprotect audit trail from any modification.
Additionally, the audit trail has been preserved by the Company as per the statutory requirements for recordretention.
For B.K. Khare & Co. For KKC & Associates LLP
Chartered Accountants Chartered Accountants (formerly Khimji Kunverji & Co LLP)
Firm Registration Number- 105102W Firm Registration Number: 105146W/W100621
Padmini Khare Kaicker Devang Doshi
Partner Partner
ICAI Membership Number: 44784 ICAI Membership Number: 140056
UDIN: 25044784BNQMGK3693 UDIN: 25140056BMLIIX3081
Place : Chennai Place : Chennai
Date : April 25, 2025 Date : April 25, 2025