We have audited the standalone financial statements of RelianceCapital Limited, which comprise the Standalone Balance Sheetas at March 31, 2024, the Standalone Statement of Profit andLoss (including Other Comprehensive Income), the StandaloneStatement of Changes in Equity and Standalone Statement ofCash Flows for the year then ended, and notes to the StandaloneFinancial Statements, including a summary of material accountingpolicy information and other explanatory information (“the financialstatements”).
In our opinion and to the best of our information and according tothe explanations given to us, except for the effects of the mattersdescribed in the “Basis for qualified opinion” paragraph of ourreport, the aforesaid financial statements give the informationrequired by Companies Act, 2013 (“the Act”) in the mannerso required and give true and fair view in conformity with theaccounting principle generally accepted in India, of the state ofaffairs of the Company as at March 31, 2024, and loss, othercomprehensive loss, changes in equity and its cash flows for theyear ended on that date.
a. We draw attention to Note no. 1 to the standalone financialstatements which explains that the amount of the claimsincluding claims on account of corporate guaranteesinvoked, admitted or to be admitted by the Administratormay differ from the amount reflecting in the books of accountof the Company. Pending implementation of the ApprovedResolution Plan, no adjustments have been made in thebooks for the differential amounts, if any, in the claimsadmitted as on the date of the financial statements ascompared to the liabilities reflected in the books of accountof the Company, which have not been quantified.
b. We draw attention to Note no. 1 to the standalonefinancial statements which explains that in view of pendingimplementation of the Approved Resolution Plan, theCompany has provided for interest expense on financialliabilities which may be applicable on the financial debt onlyupto December 06, 2021. Accordingly, interest expensepertaining to the year ended March 31, 2024 amounting toRs.1,60,085 lakhs respectively has not been recognised.
Had such interest been recognised, the loss before tax forthe year ended March 31, 2024 would have been higherby Rs.1,60,085 lakhs respectively. Further, the aggregateinterest expense not recognized by the Company postDecember 6, 2021 is Rs.3,70,007 lakhs and had suchinterest been recognized, the net worth of the Company asat March 31, 2024 would have been lower by Rs.3,70,007lakhs.
c. We have been informed that certain information, includingthe minutes of meetings of the Committee of Creditors(“COC”) and Monitoring Committee (“MC”) are confidentialin nature and accordingly have not been shared with us. TheAdministrator and the management have confirmed that theCoC and MC discussions held during the year till the date ofapproval of the resolution plan do not have any implicationson the standalone financial statements.
We conducted our audit in accordance with the Standards onAuditing (“the SAs”) specified under section 143(10) of the Act.Our responsibilities under those SAs are further described in theAuditor's Responsibilities for the Audit of the standalone financialstatements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (“the ICAI”) togetherwith the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rulesthereunder, and we have fulfilled our other ethical responsibilitiesin accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.
We draw attention to Note no. 1 to the standalone financialstatements which explains that the Company has been admittedunder the CIRP process effective December 06, 2021 and asstipulated under Section 20 of the IBC, it is incumbent upon theAdministrator to manage the operations of the Company as agoing concern. The Administrator had filed an application beforethe NCLT for the approval of resolution plan submitted by IIHL,which was approved by the NCLT on February 27, 2024 (“theApproved Resolution Plan”). Accordingly, the standalone financialstatements for the year ended March 31,2024 have been preparedon going concern basis. However, the Company has defaulted inrepayment of the obligations to the lenders and debenture holderswhich is outstanding, has incurred losses during the period as wellas during the previous periods, has reported negative net worthas at March 31, 2024 and previous periods and as described inNote no. 15 to the standalone financial statements, the assetcover for Listed Secured Non-Convertible Debentures of theCompany has fallen below one hundred percent. An applicationhas also been filed with the NCLT seeking an extension of 90days from May 27, 2024 for the implementation of the ApprovedResolution Plan. The application was heard on May 22, 2024, andthe next date of hearing in June 06, 2024. These events indicatethat material uncertainty exists, that may cast significant doubton the Company's ability to continue as a Going Concern. Ouropinion on the standalone financial statements is not modified inrespect of the above matter.
a. We draw attention to Note no. 1 of the standalone financialstatements which refers to the valuation of all assets held bythe Company and subsequent measurement of impairmentloss under Ind AS 36, if any, on implementation of theApproved Resolution Plan.
b. We draw attention to Note no. 40(d) of the standalonefinancial statements which refers to the filing under Section143(12) of the Act of Ministry of Corporate Affairs by one ofthe previous Auditors for the financial year 2018-2019. Basedon the facts as described in the aforesaid, the Company hasconcluded that there were no matters attracting the saidsection and the matter is under consideration by the Ministryof Corporate affairs.
c. We draw attention to Note no. 40(c) of the standalonefinancial statements pertaining to award passed by thearbitrator on August 19, 2023 in respect invocation of pledgeof equity shareholding of the Company in Nippon Life IndiaAsset Management Limited by IndusInd Bank Limited onNovember 18, 2019.
d. We draw attention to Note no. 40(a) of the standalonefinancial statements which refers to the sale of 23,23,69,188equity shares held by the Company in Reliance HomeFinance Limited (“RHFL”). RHFL has ceased to be anassociate of the Parent Company w.e.f August 09, 2023.
Our opinion is not modified in respect of the above matters.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the standalone financialstatements of the current period. These matters were addressed in the context of our audit of the standalone financial statements asa whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, ourdescription of how our audit addressed the matter is provided in that context.
Key Audit Matter
How the matter was addressed in our audit
Loans and Investments - Recognition, Measurement and Impairment
Refer to the accounting policy and other information in Note No. 2.e Financial Instruments, Note No.2.h Financial Guarantee Contracts,Note No.3 Critical estimates and judgements, Note No. 7 Loans and Advances, Note No. 8 Investments and Note No. 49 FinancialRisk Management of the standalone financial statements.
The Company has total loans outstanding of Rs.8,63,029 lakhs on which100% ECL provision is made as per books of accounts and investments ofRs. 11,08,816 lakhs as on March 31,2024.
The Company's investment in subsidiaries and associates are measured atcost less provision for impairment. if any.
During the CIRP, the Administrator appointed 2 registered valuers whohave submitted their report. Vide the Approved Resolution Plan and onthe basis of these reports, as and when values are assigned to individualassets, the Company will consider the impact of impairment, if any, onimplementation of approved resolution plan. However, the managementhas made prudential provisions in respect of its loans or investments inentities where the net worth has been eroded as at March 31,2024.
Considering the significance of the matter to the overall standalone financialstatements, the level of management's judgement and considering theimplementation of the Approved Resolution Plan, this item is consideredas a key audit matter.
• We read and assessed the Company's accountingpolicies for recognition, measurement andimpairment of investments and their compliancewith relevant Ind AS.
• Evaluating the audited financial statementsprovided by subsidiaries and associates to assesswhether their net worth as at March 31,2024 haseroded and wherever indication of impairmentexists whether management has recognizedappropriate provisions.
• Assessing appropriateness of the disclosure madeby the management in the standalone financialstatements.
• We have also obtained managementrepresentations wherever considered necessary.
The Company's management and the Administrator areresponsible for the preparation of the other information. The otherinformation comprises the information included in the AnnualReport but does not include the Standalone Financial Statements,Consolidated Financial Statements and our report thereon. TheAnnual Report is expected to be made available to us after thedate of this auditor's report.
Our opinion on the standalone financial statements does notcover the other information and we do not express any form ofassurance conclusion thereon. In connection with our audit of thestandalone financial statements, our responsibility is to read theother information identified above when it becomes available and,in doing so, consider whether the other information is materiallyinconsistent with the standalone financial statements or ourknowledge obtained in the audit, or otherwise appears to bematerially misstated.
If, based on the work we have performed, we conclude thatthere is a material misstatement of this other information, we arerequired to report that fact.
Responsibilities of Management and Administrator for thestandalone financial statements
The standalone financial statements of the Company for theyear ended March 31, 2024 have been taken on record by theAdministrator while discharging the powers of the Board ofDirectors of the Company which were conferred by the RBI Orderand in accordance with the NCLT Order. For the said purpose, asexplained in Note no. 1 of the standalone financials statements,the Administrator has relied upon the assistance providedby the existing staff and present key management personnel(“KMPs”) and has assumed, without any further assessment, thatinformation and data provided by the existing staff and presentKMPs are in the conformity with the Act and other applicable lawsand regulations with respect to the preparation of the standalonefinancial statements. The standalone financial statementsare the responsibility of the Company's management and the
Administrator under the provisions of Section 45-IE (4) of theReserve Bank of India Act, 1934 and has been approved by themfor issuance.
The Company's management and the Administrator areresponsible for the matters stated in section 134(5) of theAct with respect to the preparation and presentation of thesefinancial statements that give a true and fair view of the stateof affairs, loss and other comprehensive loss, changes inequity and cash flows of the Company in accordance with theaccounting principles generally accepted in India, including theIndian Accounting Standards (“Ind AS”) specified under section133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selectionand application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; anddesign, implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuringaccuracy and completeness of the accounting records, relevant tothe preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement,whether due to fraud or error.
In preparing the standalone financials statements, managementand the Administrator, are responsible for assessing theCompany's ability to continue as a going concern, disclosing,as applicable, matters related to going concern and using thegoing concern basis of accounting unless the Administrator eitherintends to liquidate the Company or to cease operations, or hasno realistic alternative but to do so.
The Administrator is also responsible for overseeing theCompany's financial reporting process.
Auditors’ responsibilities for the audit of the standalonefinancial statements
Our objectives are to obtain reasonable assurance about whetherthe standalone financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and toissue an auditor's report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee thatan audit conducted in accordance with SAs will always detect amaterial misstatement when it exists. Misstatements can arisefrom fraud or error and are considered material if, individuallyor in aggregate, they could reasonably be expected to influencethe economic decisions of users taken on the basis of thesestandalone financial statements.
As part of an audit in accordance with SAs, we exerciseprofessional judgment and maintain professional skepticismthroughout the audit. We also:
a. Identify and assess the risks of material misstatement of thefinancial statements, whether due to fraud or error, designand perform audit procedures responsive to those risks,and obtain audit evidence that is sufficient and appropriateto provide a basis for our opinion. The risk of not detectinga material misstatement resulting from fraud is higher thanfor one resulting from error, as fraud may involve collusion,forgery, intentional omissions, misrepresentations, or theoverride of internal control.
b. Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriatein the circumstances. Under Section 143(3)(i) of the Act, we
are also responsible for expressing our opinion through aseparate report on the complete set of financial statementson whether the Company has adequate internal financialcontrols with reference to financial statements in place andthe operating effectiveness of such controls.
c. Evaluate the appropriateness of accounting policies usedand the reasonableness of accounting estimates and relateddisclosures in the standalone financial statements made bythe management and the Administrator.
d. Conclude on the appropriateness of the management's andAdministrator's use of the going concern basis of accountingand, based on the audit evidence obtained, whether amaterial uncertainty exists related to events or conditionsthat may cast significant doubt on the appropriatenessof this assumption and on the ability of the Company tocontinue as a going concern. If we conclude that a materialuncertainty exists, we are required to draw attention in ourauditor's report to the related disclosures in the standalonefinancial statements or, if such disclosures are inadequate,to modify our opinion. Our conclusions are based on theaudit evidence obtained up to the date of our auditor'sreport. However, future events or conditions may cause theCompany to cease to continue as a going concern.
e. Evaluate the overall presentation, structure and content of thestandalone financial statements, including the disclosures,and whether the standalone financial statements representthe underlying transactions and events in a manner thatachieves fair presentation.
We communicate with those charged with governance regarding,among other matters, the planned scope and timing of the auditand significant audit findings, including any significant deficienciesin internal control that we identify during our audit.
We also provide those charged with governance with a statementthat we have complied with relevant ethical requirements regardingindependence, and to communicate with them all relationshipsand other matters that may reasonably be thought to bear on ourindependence, and where applicable, related safeguards.
From the matters communicated with those charged withgovernance, we determine those matters that were of mostsignificance in the audit of the standalone financial statements ofthe financial year ended March 31,2024 and are therefore the keyaudit matters. We describe these matters in our auditor's reportunless law or regulation precludes public disclosure about thematter or when, in extremely rare circumstances, we determinethat a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of suchcommunication.
Report on other legal and regulatory requirements
1. As required by the Companies (Auditors' Report) Order,2020 (“the Order”) issued by the Central Government interms of sub-section (11) of section 143 of the Act, we givein the “Annexure A” a statement on the matters specified inparagraphs 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 andexplanations which to the best of our knowledge andbelief were necessary for the purposes of our audit,except wherever stated otherwise;
b. In our opinion proper books of account as required by lawhave been kept by the Company so far as appears from ourexamination of those books;
c. The standalone balance sheet, the standalone statementof profit and loss, (including other comprehensive income),the standalone statement of changes in equity and thestandalone statement of cash flow dealt with by this Reportare in agreement with the books of account;
d. Except for the effects of the matters described in the basis forqualified opinion section the standalone financial statementscomply with the Ind AS specified under Section 133 of theAct;
e. The matters described in paragraphs “a to c” under “Basis ofQualified Opinion” section and “Material Uncertainty relatedto Going Concern” section of our report, in our opinion, mayhave an adverse effect on the functioning of the Company.
f. As explained in the “Introduction” section of our report, theRBI vide its letter and press release dated November 29,2021 issued under Section 45-IE(1) of the Reserve Bankof India Act, 1934, superseded the Board of Directors ofthe Company and appointed an Administrator to run theCompany. Hence, we do not comment on whether anyDirector is disqualified from being appointed as a Directorunder Section 164(2).
g. With respect to the adequacy of the internal financial controlswith reference to standalone financial statements of theCompany and the operating effectiveness of such controls,refer to our separate report in "Annexure B";
h. With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Auditand Auditors) Rules, 2014, in our opinion and to the best ofour information and according to the explanations given tous:
i. The Company has disclosed the impact of pendinglitigations on its financial position in its FinancialStatements - Refer Note no. 38 to the standalonefinancial statements.
ii. The Company has made provisions, as required underthe applicable law or accounting standards, for materialforeseeable losses, if any, on long-term contractsincluding derivative contracts. Refer Note no. 47 to thestandalone financial statements.
iii. Other than for dividend amounting to Rs. 35 lakhspertaining to financial year 2010-11 to financial year2015-16 which could not be transferred on account ofpendency of various investor legal cases and Rs. 329lakhs which were due for transfer as on October 26,2023 but were not transferred on dues date (whichwere subsequently transferred on April 23, 2024), therehas been no delay in transferring amounts required tobe transferred, to the Investor Education and ProtectionFund by the Company.
iv. In respect of Rule 11(e) of the Companies (Audit andAuditors) Rules, 2014,
a. The Administrator and management has representedthat, to the best of its knowledge and belief, as disclosedin Note no. 52 of the standalone financial statements,no funds (which are material either individually or in theaggregate) have been advanced or loaned or invested(either from borrowed funds or share premium or anyother sources or kind of funds) by the Company to or
in any other person or entity, including foreign entity(“Intermediaries”), with the understanding, whetherrecorded in writing or otherwise, that the Intermediaryshall, whether, directly or indirectly lend or invest inother persons or entities identified in any mannerwhatsoever by or on behalf of the Company (“UltimateBeneficiaries”) or provide any guarantee, security or thelike on behalf of the Ultimate Beneficiaries;
b. Further, the Administrator and management hasrepresented, that, to the best of its knowledge andbelief, as disclosed in Note no. 52 of the standalonefinancial statements, no funds (which are materialeither individually or in the aggregate) have beenreceived by the Company from any person or entity,including foreign entity (“Funding Parties”), withthe understanding, whether recorded in writing orotherwise, that the Company shall, whether, directlyor indirectly, lend or invest in other persons or entitiesidentified in any manner whatsoever by or on behalf ofthe Funding Party (“Ultimate Beneficiaries”) or provideany guarantee, security or the like on behalf of theUltimate Beneficiaries;
c. Based on the audit procedures that have beenconsidered reasonable and appropriate in thecircumstances, nothing has come to our notice that hascaused us to believe that the representations under (a)and (b) above, contain any material misstatement.
v. Based on our examination, which included test checks,the Company has used accounting softwares formaintaining its books of account for the financial yearended March 31,2024 which has a feature of recordingaudit trail (edit log) facility and the same has operatedthroughout the year for all relevant transactionsrecorded in the softwares. Further, during the courseof our audit we did not come across any instance of theaudit trail feature being tampered with.
As 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 preservationof audit trail as per the statutory requirements forrecord retention is not applicable for the financialyear ended March 31,2024.
vi. In our opinion and according to the informationand explanations given to us, the Company hasnot declared or paid dividend during the year.
3. The RBI vide its letter and press release dated November29, 2021 issued under Section 45-IE(1) of the ReserveBank of India Act, 1934, superseded the Board of Directorsof the Company and appointed an Administrator to run theCompany. Hence, section 197 of the Act is not applicable.
Chartered AccountantsFirm Regn. No.103264W
Partner
Membership No.:129389UDIN: 24129389BKASRG4055
Place: Mumbai
Date: May 30, 2024