1. We have jointly audited the accompanying Standalone
Financial Statements of Manappuram Finance Limited (the
'Company'), which comprise the Standalone Balance Sheet
as at 31 March 2026, and the Standalone Statement of
Profit and Loss (including Other Comprehensive Income),
Standalone Statement of Changes in Equity and Standalone
Statement of Cash Flows for the year ended on that
date, and notes to the Standalone Financial Statements,
including a summary of material accounting policies and
other explanatory information (hereinafter referred to as
the 'Standalone Financial Statements').
2. I n 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 2026, and its
Profit and Other Comprehensive Income, Changes in Equity
and its Cash Flows for the year ended on that date.
Basis for Opinion
3. We conducted our joint audit in accordance with the
Standards on Auditing ('SAs') specified under section
143(10) of the Act. Our responsibilities under those SAs
are further described in the 'Auditor's Responsibilities for
the Audit of the Standalone Financial Statements' section
of our report. We are independent of the Company in
accordance with the Code of Ethics issued by the Institute
of Chartered Accountants of India ('ICAI') together with the
ethical requirements that are relevant to our audit of the
Standalone Financial Statements under the provisions of
the Act, and the rules 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 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
Standalone Financial Statements of the current year.
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 ('KAM')
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How the KAM was addressed in our audit
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Interest Income on Gold Loans:
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Our audit procedures in respect of this matter included the following:
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Interest Income on Gold Loans for the financial year ended
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• Obtained an understanding of various schemes approved
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31 March 2026: INR 61,382.23 million.
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by the management and process, applications and controls
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Refer note no.27 (i) to the Standalone Financial Statements.
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implemented in relation to computation & recognition of interest
income on gold loans and rebates provided to the customer on
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Interest Income on Gold Loan is based on the various gold
loan schemes provided by the Company which is netted off
against the rebates & discounts given for prompt or early re¬
payments. The calculation of the rebates & discount amounts
netted off against the interest income involve complexities
on account of discretion & management judgement which
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prompt and early re-payment.
• Evaluated the IT Architecture, process flow and operating
effectiveness of key internal financial controls pertaining to
the recognition of the various gold loan schemes and interest
income thereon, including rebates & discounts.
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is dependent upon the timing and period of repayment
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• Tested the relevant IT General Controls around access and
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under the different schemes. Considering the significance
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change management relating to interest income computation
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of interest income on gold loans and the complexity of
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and related information used in interest computation.
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multiple schemes, judgement in EIR estimation, IT system
dependency, we have considered Interest Income on gold
loan as Key Audit Matter.
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• For loans settled during the year, on test check basis, examined
the accuracy of interest income and the rebates recognised under
various gold loans schemes by performing re-computation.
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• For loans disbursed during the year and remaining outstanding
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as at the reporting date, re-computation of interest income was
performed for the entire outstanding loans.
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Key Audit Matter ('KAM')
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How the KAM was addressed in our audit
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•
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Performed analytical procedures and test of details procedures
for testing the accuracy and completeness of revenue
recognized.
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•
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Obtained the list of modifications made in the interest scheme
master during the year and verified the same on test check
basis.
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•
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Reconciliation of balances as per general ledger and sub¬
ledgers were performed to ascertain the completeness of the
transactions recognised. Further reconciliation was performed
between sub-ledger and customer transaction history for
selected transactions.
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•
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Assessed the appropriateness, accuracy and adequacy of
related presentation and disclosures in accordance with the
applicable accounting standards.
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Impairment of Financial Instruments (Expected Credit
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Our audit procedures in respect of this matter included the following,
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Losses on Loans):
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but not limited to:
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Total Gross Loans as at 31 March 2026: INR 5,62,280 million;
Impairment Provision as at 31 March 2026: INR 4,347.22
million
Refer note no. 10 to the Standalone Financial Statements
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•
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Obtained understanding of the credit risk attached to each
portfolio or business segment of the Company and the derivation
of the model used by the Company for determination of ECL for
each major portfolio.
Examined policies approved by the Board of Directors for
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•
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In accordance with Ind AS 109 'Financial Instruments'
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computation of ECL that addresses procedures and controls for
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the Company applies ECL model for measurement and
recognition of impairment loss on the loan assets. ECL
involves an estimation of probability weighted loss on
financial instruments over their life, considering reasonable
and supportable information about past events, current
conditions, and forecasts of future economic conditions
which could impact the credit quality of the Company's
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•
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assessing and measuring credit risk on all lending exposures
commensurate with the size, complexity and risk profile specific
to the Company.
Evaluated the Company's accounting policy in respected of ECL
provisioning in compliance with requirements of Ind AS 109
'Financial Instruments'
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financial assets (loan portfolio).
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•
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Assessed & validated the design and operating effectiveness
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Impairment loss measurement requires use of statistical
models to estimate the Probabilities of Default (PD), Loss
Given Default (LGD) and Exposure at Default (EAD). These
models are the key drivers to measure Impairment loss.
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of controls across the processes relevant to allowance for
ECL. These controls, among others, included controls over the
appropriateness of data used for measurement, allocation of
assets into stages including management's monitoring of stage
effectiveness, financial information used for deriving PD and
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Further, the Company undertakes technical write-offs of
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LGD, computation of PD, LGD and consequently the ECL as at
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certain loan exposures in accordance with its internal policy
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the reporting date and posting of related journal entries.
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and regulatory guidelines, wherein loans are written off in
the books while recovery efforts continue. Such technical
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•
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Verified on sample basis, the completeness of loans included in
the Expected Credit Loss calculations as of 31 March 2026 and
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write-offs involve significant judgment in determining the
recoverability of exposures, including consideration of
collateral realisation and recovery timelines.
Significant judgement is used in classifying loan assets
and applying appropriate measurement principles. The
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•
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the accuracy of the source data
Selected samples & verified appropriateness of classification
of loan assets in stage I, II and III in accordance with the policy
approved by the Board of Directors.
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allowance for ECL, including the impact of technical write¬
offs, involves a significant level of management judgement
and estimation uncertainty in the following key areas:
• Assessing whether there has been a significant increase
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•
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Examined the appropriateness of information used in the
estimation of the Probability of Default ('PD') and recomputed
the average PD to applied for measurement of ECL as at the
reporting date. Further, validated the information of the macro¬
economic factors used for determining the PD from external
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in credit risk for exposures since its initial recognition by
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comparing the risk of default occurring over the expected
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life of the asset between the date of initial recognition and
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•
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Validating the recoverability analysis performed by the
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the reporting date, which involves estimation uncertainty
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management for cases tagged as non-performing assets as at
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in computing the default risk over life of the assets which
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the reporting date for determining the Loss given Default ('LGD')
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is likely to be more than one year.
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for the different stages depending on the nature of the portfolio.
Performed re-computation of LGD at each pledge level.
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Key Audit Matter ('KAM')
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How the KAM was addressed in our audit
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Classification of loan assets to stage I, II, or III using
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• Selected samples of exposure and verified the appropriateness
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criteria in accordance with Ind AS 109 where no
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of determining Exposure at Default (EAD), PD and LGD.
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significant increase in credit risk has been observed,
such assets are classified in 'Stage I', loans that are
considered to have significant increase in credit risk are
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• Performed an overall assessment of the ECL provision levels at
each stage.
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not credit impaired are considered to be in 'Stage II' and
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• Our procedures included evaluating the Company's policy and
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those which are in default or for which there is objective
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controls over technical write-offs, testing samples for eligibility
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evidence of impairment are considered to be in 'Stage
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and approvals, reviewing supporting documentation and
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III'. Such classification requires significant management
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recovery efforts, and assessing consistency with ECL estimates
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judgements due to the nature of loan assets and
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and related disclosures.
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assessment required thereon.
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• Assessed the adequacy and appropriateness of disclosures in
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• Determination of EAD, PD and estimation of LGD. The
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compliance with the Ind AS 107 in relation to ECL especially in
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probability of default for the pools are computed based
on the historical losses incurred on defaults, adjusted
with any forward-looking macro-economic factors
which is subject to estimation uncertainty. Similarly,
the Company computes the Loss Given Default based
on the recovery rates, which are determined based on
the expected period of realization from sale of collateral
security as estimated by management.
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relation to judgements used in estimation of ECL provision.
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• The Company has undertaken technical write-offs
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of loan exposures across its portfolios during the
year amounting to INR 3,898.29 million, involving
derecognition of loans while continuing recovery efforts.
This was considered significant due to the materiality
of amounts involved and the significant management
judgement in identifying accounts eligible for write-off
and assessing recoverability. Further, compliance with
guidelines issued by the Reserve Bank of India and the
impact on Expected Credit Loss (ECL) under Ind AS 109
Financial Instruments increase the complexity. There
is also an inherent risk that such write-offs may not
appropriately reflect the underlying credit risk or could
impact reported asset quality metrics.
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• Considering the above, allowance for Expected Credit
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Loss on Loan Assets requires a high degree of judgement
and estimation uncertainty, with a potential range of
outcomes which have a significant impact on the financial
statements. Accordingly, we have determined Provision
for ECL on Loans as Key Audit Matter.
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Information Technology ('IT') Systems and Controls:
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Our audit procedures with respect to this matter included the
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The IT environment of the Company is complex
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following, but were not limited to the following:
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and involves a large number of independent and
interdependent modules used in the operations of the
Company for processing and recording a large volume of
transactions. As a result, there is a high degree of reliance
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• 1 nvolved IT specialists as part of the audit for the purpose of
testing the IT general controls and application controls to
determine the accuracy of the information produced by the
Company's IT systems;
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and dependency on such IT systems for the financial
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• Obtained a comprehensive understanding of IT Environment, IT
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reporting process of the Company
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Applications and related infrastructure to assess the controls
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In particular, the IT system is used for recording all
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with reference to preparation of financial statements.
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disbursements and collections, identification and tagging of
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• Tested design and operating effectiveness of key controls
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pledged loans to customers and calculating interest income
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operating over user access management, change management
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and overdue days.
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and other IT operations (which includes testing of key controls
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The Company's accounting and financial reporting
processes are dependent on automated controls enabled
by IT systems which impacts key financial accounting and
reporting items such as loans, interest income, impairment
on loans amongst others.
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pertaining to, backup and incident management and data centre
security), System interface controls. This included testing that
requests for access to systems were appropriately logged,
reviewed, and authorized;
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Key Audit Matter ('KAM')
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How the KAM was addressed in our audit
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The reliability and security of IT systems play a key role
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• Testing the controls laid down by the management over
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in the business operation. The controls implemented
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modification of transactions recognised in the accounting
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by the Company in its IT environment determine the
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modules or insertion or deletion of transactions in the accounting
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integrity, accuracy, completeness and validity of data that
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module. Further tested the controls with respect to insertion or
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is processed by the applications and is ultimately used for
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modification of interest rate masters and customer transaction
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financial reporting.
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history.
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Accordingly, we have identified 'IT systems and controls'
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• Examined the process and procedures and other documentations
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as key audit matter because of the high-level automation,
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for complying with the requirements of the RBI Master Direction
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significant number of modules being used by the
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on Information Technology Governance, Risk, Controls and
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management and the complexity of the IT architecture and
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Assurance Practices
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its impact on the financial reporting system.
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(DoS. CO. CSITEG / SEC.7 / 31.01.015 /2023-24 dated November
7, 2023)
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Other Information
6. The Company's Management and the Board of Directors are
responsible for the other information. The other information
comprises the information included in the Company's
annual report but does not include the Standalone Financial
Statements and our auditors' report thereon. The Other
Information is expected to be made available to us after the
date of this auditor's report.
7. Our opinion on the Standalone Financial Statements does
not cover the other information and we do not express any
form of assurance conclusion thereon.
8. I n 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 in the audit or
otherwise appears to be materially misstated. If, based on
the work we have performed, we conclude that there is
a material misstatement of this other information, we are
required to report that fact.
9. When we read the Annual Report, if we conclude that
there is a material misstatement therein, we are required to
communicate the matter to those charged with governance
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
10. The Company's Management and Board of Directors are
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, change in equity and Cash Flows
of the Company 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 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 of the
appropriate accounting software for ensuring compliance
with applicable laws and regulations including those
related to retention of audit logs; 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.
11. I n preparing the Standalone Financial Statements, the
Company's Management and 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 intends
to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
12. 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
13. 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:
13.1. 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.
13.2. Obtain an understanding of internal control relevant
to the audit in order to design audit procedures that
are appropriate in the circumstances. Under section
143(3)(i) the Act, we are also responsible for
expressing our opinion on whether the Company has
adequate internal financial controls with reference
to Standalone Financial Statements in place and the
operating effectiveness of such controls.
13.3. Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting estimates
and related disclosures made by the Management
and the Board of Directors.
13.4. Conclude on the appropriateness of the Management
and Board of Director'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.
13.5. 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.
14. 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.
15. 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.
16. 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 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
17. 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.
18. As required by Section 143(3) of the Act, we report that:
18.1 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.
18.2 I n our opinion, proper books of accounts 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 '19.8' below on reporting under Rule
11(g) of the Companies (Audit and Auditors) Rules, 2014
(as amended).
18.3 The Standalone Balance Sheet, the Standalone Statement
of Profit and Loss including Other Comprehensive Income,
the Standalone Statement of Changes in Equity and the
Standalone Statement of Cash Flow dealt with by this
Report are in agreement with the books of account.
18.4 In our opinion, the aforesaid Standalone Financial
Statements comply with the Ind AS specified under Section
133 of the Act read with the relevant rules thereunder.
18.5 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 2026
from being appointed as a director in terms of Section
164(2) of the Act.
18.6 The modification relating to the maintenance of books of
accounts and other matters connected therewith are as
stated in the paragraph '18.2' above on reporting under
Section 143(3)(b) and paragraph '19.8' below on reporting
under Rule 11(g) of the Companies (Audit and Auditors)
Rules, 2014 (as amended).
18.7 With respect to the adequacy of the internal financial
controls with reference to Standalone Financial Statements
of the Company and the operating effectiveness of such
controls, refer to our separate Report in 'Annexure B'.
18.8 I n our opinion and according to the information and
explanations given to us, the remuneration paid by the
Company 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.
19. 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:
19.1. The Company has disclosed the impact of pending
litigations as at 31 March 2026 on its financial position in
its Standalone Financial Statements - Refer Note no. 41 to
the Standalone Financial Statements;
19.2. The Company has recognised the expected credit loss
on the loans as per the requirements of the Ind AS 109
'Financial Instruments' (Refer note no. 10 to the Standalone
Financial Statements). As represented to us the Company
did not have any long-term contracts including derivative
contracts for which there were any material foreseeable
losses (Refer Note no. 76 to the Standalone Financial
Statements)
19.3. There has been no delay in transferring amounts, required
to be transferred, to the Investor Education and Protection
Fund by the Company. (Refer Note no. 77 to Standalone
Financial Statements)
19.4. The Management has represented that to best of their
knowledge and belief, as disclosed in Note no. 64B to the
Standalone Financial Statements, no funds have been
advanced or loaned or invested (either from borrowed
funds or share premium or any other sources or kind
of funds) by the Company to or in any other person(s)
or entity(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.
19.5. The Management has represented that to best of their
knowledge and belief, as disclosed in Note no. 64B to the
Standalone Financial Statements, no funds 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 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.
19.6. 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 under sub
clause (i) and (ii) of Rule 11(e), as provided under paragraph
'19.4' and '19.5' above, contain any material misstatement.
19.7. The interim dividend declared and paid by the Company
during the financial year and until the date of this audit
report is in compliance with Section 123 of the Act.
19.8. Based on our examination which included test checks, the
company has used an accounting software for maintaining
its books of account which has a feature of recording audit
trail (edit log) facility. Further, the audit trail facility has been
operating throughout the year for all relevant transactions
recorded in the software. The master records of certain
modules can be accessed by the database administrator
wherein trail of changes made by database administrator
is now captured from 30 April 2025.
Further, during the course of our audit based on our
examination and representation made by the management,
we did not come across any instance of audit trail feature
being tampered with.
Additionally, the audit trail has been preserved by the
Company as per the statutory requirements for record
retention. The audit trail at the database level for certain
modules forming part of the application has been made
effective from 30 April 2025 and accordingly the aforesaid
audit trail for prior periods are not available.
For and on behalf of For and on behalf of
KKC & Associates LLP Chokshi & Chokshi LLP
(formerly known as Khimji Kunverji & Co LLP) Chartered Accountants
Chartered Accountants ICAI Firm Registration No.: 101872W/W100045
ICAI Firm Registration No.: 105146W/W100621
Soorej Kombaht Vineet Saxena
Partner Partner
ICAI Membership No.: 164366 ICAI Membership No.: 100770
UDIN: 26164366SZYZMR8755 UDIN:26100770IHNLLV7921
Place: Valapad Place: Valapad
Date: 4 May 2026 Date: 4 May 2026
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