Mahindra & Mahindra Financial Services Limited Report on the Audit of the Standalone Financial Statements
Opinion
1. We have audited the accompanying StandaLone Financial Statements of Mahindra & Mahindra Financial Services Limited ('the Company'), which comprise the StandaLone BaLance Sheet as at March 31, 2026, the StandaLone Statement of Profit and Loss (including Other Comprehensive Income), the StandaLone Statement of Cash FLow and the StandaLone Statement of Changes in Equity for the year then ended, and notes to the StandaLone FinanciaL Statements, incLuding a summary of the materiaL accounting poLicies and other expLanatory information (hereinafter referred to as 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 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') prescribed 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, 2026, 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 judgement, were of most significance in our audit of the StandaLone FinanciaL Statements for the financiaL year ended March 31, 2026. These matters were addressed in the context of our audit of the StandaLone FinanciaL Statements as a whoLe, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
5. We have determined the matters described beLow to be the key audit matters to be communicated in our report.
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Key Audit Matter
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How our audit addressed the key audit matter
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Impairment of loans and advances
(Refer Note 2.5 (ii) for materiaL accounting poLicies and Note 49.2 for credit risk discLosures)
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As at March 31, 2026, the Company has reported gross Loan assets of ^ 1,34,096.05 crores against which an impairment Loss of ^ 3,935.91 crores has been recorded. The Company recognized impairment provision for Loan assets based on the Expected Credit Loss ("ECL’) approach Laid down under 'Ind AS 109 -FinanciaL Instruments'.
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Our audit incLuded assessing the appropriateness of management's judgement and estimates used in the impairment anaLysis through procedures that incLuded, but were not Limited to, the foLLowing:
• Obtained an understanding of the modeLLing techniques adopted by the Company incLuding the key inputs and assumptions;
• Considered the Company's accounting poLicies for estimation of Expected Credit Loss on Loans and assessing compLiance with the poLicies in terms of Ind AS 109;
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• Obtained an understanding of the management's updated processes, systems and controLs impLemented in reLation to impairment aLLowance process.
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Key Audit Matter
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How our audit addressed the key audit matter
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The estimation of ECL on financiaL instruments invoLves significant management judgement and estimates and the use of different modeLLing techniques and assumptions which couLd have a materiaL impact on reported profits. Significant management judgement and assumptions invoLved in measuring ECL is required with
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• Accuracy of the computation of the ECL estimate incLuding reasonabLeness of the methodoLogy and assumption used to determine macro-economic overLays;
• Tested the design and operating effectiveness of key controLs over compLeteness and accuracy of the key inputs and assumptions considered for caLcuLation, recording, monitoring of the impairment Loss recognized and staging of assets;
• Assessed the criticaL assumptions and input data used in the estimation of Expected Credit Loss modeLs for specific key credit risk parameters, such as the movement Logic between stages, Exposure at defauLt (EAD), probabiLity of defauLt (PD) or Loss given defauLt (LGD);
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respect to:
• ensuring compLeteness and accuracy of the data used to create assumptions in the modeL.
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• determining the criteria for a significant increase in credit risk.
• factoring in future economic assumptions
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techniques used to determine probabiLity
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• EvaLuated the reports and working for the
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of defauLt, Loss given defauLt and exposure
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methodoLogy used in the computation of Through
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at defauLt.
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The CycLe PD, Point In Time PD and LGD, among others;
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• Factoring in forward Looking scenario-
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• Performed test of detaiLs over caLcuLation of ECL,
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based assessment of evoLving domestic macroeconomic factors and reguLatory, geopoLiticaL deveLopments impacting
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in reLation to the compLeteness and accuracy of the data;
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industry and specific segments.
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• Obtained written representations from management
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and those charged with governance on whether they
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These parameters are derived from the
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beLieve significant assumptions used in caLcuLation of
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Company's internaLLy deveLoped statisticaL
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expected credit Losses are reasonabLe;
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modeLs and other historicaL data.
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• Assessed the appropriateness and adequacy of
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Disclosure
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the reLated presentation and discLosures of Note 49 "FinanciaL Risk Management” discLosed in the
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The discLosures regarding the Company's
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accompanying financiaL statements in accordance
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appLication of Ind AS 109 are key to expLaining
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with the appLicabLe accounting standards and reLated
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the key judgements and materiaL inputs to the ECL resuLts. Further, discLosures to be
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RBI circuLars and ResoLution Framework.
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provided as per RBI circuLars with regards to Non-Performing Assets and provisions is aLso an area of focus.
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Considering the significance of the above matter to the overaLL financiaL statements and extent of management's estimates and judgements invoLved, it required significant auditor attention. AccordingLy, we have identified this as a key audit matter
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Information Technology and General Controls
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The Company is highLy dependent upon its
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Our audit procedures for assessment of the IT systems
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Information TechnoLogy (IT) systems for
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and controLs over financiaL reporting, which incLudes
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carrying out its operations and owing to the
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carrying out the key audit procedures, but were not
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significant voLume of transactions that are
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Limited to the foLLowing:
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processed daiLy basis as part of the operations, which impacts key financiaL accounting and reporting. The Company has put in pLace the IT GeneraL ControLs and appLication controLs to
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• Obtained an understanding of the Company's key IT systems, IT GeneraL ControLs which covered access controLs, program/system changes, program
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ensure that the information produced by the
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deveLopment and computer operations i.e., job
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Company is compLete, accurate and reLiabLe.
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processing, data/system backup and incident management and appLication controLs reLevant to our audit.
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Key Audit Matter
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How our audit addressed the key audit matter
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Among other things, the Management aLso uses the information produced by the entity's IT systems for accounting and preparation and the presentation of the of the financiaL statements.
Since our audit strategy incLuded focus on entity's key IT systems reLevant to our audit due to their potentiaL pervasive impact on the financiaL statements, we have determined the use of IT systems and reLated controL environment for accounting and financiaL reporting as a key audit matter.
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• Tested the design, impLementation and operating effectiveness of the generaL IT controLs over the key IT systems that are criticaL to financiaL reporting. This incLuded evaLuation of entity's controLs to check segregation of duties and access rights being provisioned/modified based on duLy approved requests, access for exit cases being revoked in a timeLy manner and access of aLL users being recertified during the period of audit.
• Tested appLication controLs (automated controLs) reLevant to the audit of Loans, expenses, payroLL, borrowings and investment among others, for evaLuating compLeteness and accuracy and;
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• Tested compensating controLs or performed aLternate procedures to assess whether there were any unaddressed IT risks that wouLd impact the controLs or compLeteness and accuracy of data.
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• We have aLso reLied on IS and other technoLogy audits conducted during the year.
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• We have obtained management representations wherever considered necessary.
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Information other than the Financial Statements and Auditor's Report thereon
6. The Company's Board of Directors is responsible for the preparation of other information. This 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 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.
7. In connection with our audit of the StandaLone FinanciaL Statements, our responsibiLity is to read the Other Information identified above when it becomes avaiLabLe 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.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
8. 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 judgements 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.
9. 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.
10. 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
11. 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 wilt 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.
12. As part of an audit in accordance with Standards on Auditing, specified under section 143(10) of the Act we exercise professional judgement 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 Statement.
13. 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.
14. 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.
15. 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 financial year ended March 31, 2026 and are therefore the Key Audit Matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
16. As required by Section 197(16) of the Act based on our audit, we report that the Company has paid 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.
17. 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 I, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent appLicabLe.
18. Further to our comments in Annexure I, 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(g)(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, read with Companies (Indian Accounting Standards) RuLes, 2015, as amended;
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 March 31, 2026 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 March 31, 2026 and the operating effectiveness of such controLs, refer to our separate Report in Annexure II
wherein we have expressed an unmodified opinion; and
g) 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 43 to the StandaLone FinanciaL Statements, has discLosed the impact of pending Litigations on its financiaL position as at March 31, 2026;
ii. The Company, as detaiLed in Note 47 to the StandaLone FinanciaL Statements, has made provision as at March 31, 2026, 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 March 31, 2026. The Company, as detaiLed in Note 18 to the StandaLone FinanciaL Statements, has reguLarLy transferred the required amounts to the Investor Education and Protection Fund;
iv. a. The management has represented
that, to the best of its knowLedge and beLief, as discLosed in Note 37 (vi) 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 37 (vi), 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.
v. The final, dividend proposed in the previous year, decLared and paid by the Company during the year is in accordance with the provision of section 123 of the Act; 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 for one accounting software wherein master LeveL Logs were enabLed from JuLy 02, 2025, eLeven accounting software (incLuding two software migrated during the year) wherein, the audit traiL Logs were not maintained at database LeveL throughout the year and two accounting software wherein, the Limited audit traiL Logs were enabLed from March 02, 2026 to Log 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 masters and databases, 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 apart from the exceptions mentioned above.
For M M NISSIM & CO LLP
Chartered Accountants ICAI FRN: 107122W/W100672
Sanjay Khemani
Partner
ICAI Membership No.: 044577 UDIN: 26044577RMJDJH3777
Place: Mumbai Date: April 24, 2026
For M. P. Chitale & Co.
Chartered Accountants ICAI FRN: 101851W
Ashutosh Pednekar
Partner
ICAI Membership No.: 041037 UDIN: 26041037SXSNWS7637
Place: Mumbai Date: ApriL 24, 2026
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