We have jointly audited the accompanying standalone
financial statements of Poonawalla Fincorp Limited
("the Company”), which comprise the Balance Sheet
as at 31 March 2026, the Statement of Profit and
Loss (including Other Comprehensive Income), the
Statement of Changes in Equity and the Statement of
Cash Flows for the year then ended, and notes to the
standalone financial statements, including material
accounting policy information and other explanatory
information (hereinafter referred to as the "standalone
financial statements”).
In our opinion and to the best of our information and
according to the explanations given to us and based
on the consideration of report of other auditor on
the separate financial statements of PFL Employee
Welfare Trust (‘the Welfare Trust’), 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
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, its profit
(including other comprehensive income), changes
in equity and its cash flows for the year ended on
that date.
BASIS FOR OPINION
We have jointly conducted our audit of the
standalone financial statements 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 ("the 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 obtained
by us and on consideration of audit report of other
auditor referred to in the "Other Matter” section
below, is sufficient and appropriate to provide a basis
for our opinion.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our
professional judgment, were of most significance in
our audit of the standalone financial statements for
the year ended 31 March 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. 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 matters
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How our audit addressed the key audit matter
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Allowance on Expected credit losses (ECL) on loan assets
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Our audit procedures in respect of this matter included the
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Indian Accounting Standard 109 - Financial Instruments
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following, but not limited to:
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(‘Ind AS 109') requires the Company to provide for
impairment of its financial assets using the expected credit
loss (‘ECL’) approach involving an estimation of probability
of loss on such financial assets, considering reasonable
and supportable information about past events, current
conditions and forecasts of future economic conditions which
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• Examined policies approved by the Board of Directors
for computation of ECL that addresses procedures
and controls for assessing and measuring credit risk
on all lending exposures commensurate with the size,
complexity and risk profile specific to the Company.
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could impact the credit quality of the Company's financial
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• Tested the design and operating effectiveness of key
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assets. The estimation of impairment loss allowance on loan
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controls over completeness and accuracy of the key inputs
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assets involves significant judgement and estimates, which
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and assumptions considered for calculations, validation
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are subject to uncertainty, and involves applying appropriate
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of data and monitoring of impairment loss recognised
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measurement principles in case of loss events.
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based on historical and external data.
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As at 31 March 2026, the Company has reported gross
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• Tested the modelling assumptions and inputs which are
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financial assets (loans) aggregating to I 56,790.39 crores
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based on industry experience (new products) as collated
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against which provision for expected credit loss of I 838.90
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by external credit bureau in line with the Company’s ECL
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crores has been recorded as at reporting date in accordance
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policy. While for remaining loan portfolio, since modelling
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with Ind AS 109 - Financial Instruments (‘Ind AS 109'). The
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assumptions and parameters are based on historical data,
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Company has written off (net of recoveries) I 974.94 crores
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assessed whether historical experience was representative
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during the current year.
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of current circumstances and was relevant in view of the
recent impairment losses incurred within the portfolios.
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Key audit matters
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How our audit addressed the key audit matter
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The Expected Credit Loss (ECL) is calculated using the
percentage of probability of default (PD), loss given default
(LGD) and exposure at default (EAD) for each of the stages
of loan portfolio. Significant management judgment and
assumptions involved in measuring ECL is required with
respect to:
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• Verified the completeness of loans included in the ECL
calculations as of 31 March 2026.
• Selected samples and verified appropriateness of
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classification of loan assets in stage 1, 2 and 3 in
accordance with the policy approved by the Board of
Directors.
• Selected samples of exposure and verified the
appropriateness of determining EAD, PD and LGD.
Further, also checked the appropriateness of information
used in the estimation of PD and LGD for the different
stages depending on the nature of the portfolio.
• Evaluated the appropriateness of the Company’s
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• Segmentation of loan book in buckets based on common
risk characteristics;
• Staging of loans and in particular determining the
criteria, which includes qualitative factors for identifying a
significant increase in credit risk (i.e. Stage 2) and credit-
impaired (i.e. Stage - 3);
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• factoring in future macro-economic and industry specific
estimates and forecasts;
• past experience and forecast data on customer behaviour
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determination of significant increase in credit risk in
accordance with the applicable Ind AS and the basis for
classification of various exposures into various stages. For
a sample of exposures, also tested the appropriateness of
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on repayments;
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the Company’s categorization across various stages;
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• varied statistical modelling techniques to determine
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• Obtained the management’s rational for writing off the
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probability of default, loss given default and exposure
at default basis, the default history of loans, subsequent
recoveries made and other relevant factors using
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loans during the current year and tested for appropriate
management approvals for the same.
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probability-weighted scenarios.
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• Assessed the appropriateness and adequacy of the related
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The Expected Credit Loss (‘ECL') is measured at 12-month
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presentation and disclosures of Note 49 "Financial risk
management” disclosed in the accompanying standalone
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ECL for Stage 1 loan assets and at lifetime ECL for Stage 2
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financial statements in accordance with the applicable
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and Stage 3 loan assets.
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Ind AS and related Reserve Bank of India (‘RBI') circulars.
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The management has calculated the PD and LGD as follows:
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• For new products launched from time to time and where
the Company does not have sufficient historical data to
estimate PD, the Company has relied on the external
benchmarking report obtained in the previous period
from leading credit bureau and accordingly PD rates
have been considered based on industry data sourced
from the aforesaid credit bureau.
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• For the remaining portfolio, the Company continues
to use their existing internally developed modelling
techniques using historical observable data and inputs to
estimate PD and LGD.
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Refer Note 2 of material accounting policies, Note 7 for the
details of provision and Note 49 (ii) for credit risk disclosures.
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Considering the significance of the above matter to
the standalone financial statements, significant level of
estimates and judgements involved in determination of ECL
and write offs, this matter required our significant attention.
Accordingly, we have determined Provision for Expected
Credit Losses (ECL) on Loans as Key Audit Matter.
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Information Technology ("IT”) Systems and Controls for
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Our audit procedures in respect of this matter included the
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accounting and financial reporting process:
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following, but not limited to:
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The Company is dependent on its information technology
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• Involved IT specialists as part of the audit for the purpose
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(‘IT') systems due to the significant number of transactions
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of testing the IT general controls and application controls
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that are processed daily across such multiple and discrete IT
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to determine the accuracy of the information produced by
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systems. Also, IT application controls are critical to ensure that
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the Company's IT systems.
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changes to applications and underlying data are made in an
appropriate manner and under controlled environment.
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• Obtained an understanding of the Company’s IT
applications, databases and operating systems relevant
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Appropriate controls contribute to mitigating the risk of
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to financial reporting and the control environment,
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potential fraud or errors as a result of changes to applications
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including an understanding of the process, mapping of
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and data. On account of the pervasive use of IT systems
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applications and understanding financial risks posed by
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across varied different phases of business, the testing with
respect to general computer controls of the IT systems used
in financial reporting was identified to be a key audit matter.
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people, process and technology.
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Key audit matters
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How our audit addressed the key audit matter
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The Company has a complex IT architecture to support its
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• Tested IT General Controls particularly, logical access,
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day-to-day business operations. High volume of transactions
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change management and aspects of IT operational
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is processed and recorded on single or multiple applications.
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controls. Tested that request for access to systems were
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The reliability and security of IT systems plays a key role in the
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appropriately reviewed and authorized; tested controls
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business operations of the Company. Since large volume of
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around Company's periodic review of access rights;
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transactions are processed daily, IT controls are required to
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inspected requests of changes to systems for appropriate
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ensure that applications process data as expected and that
changes are made in an appropriate manner.
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approval and authorization;
• Performed procedures for a selected group of key
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Further, the Company's accounting and financial reporting
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controls over financial and reporting system to determine
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processes are dependent on automated controls enabled
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that these controls remained unchanged during the
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by IT systems which impacts key financial accounting and
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year or were changed following the standard change
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reporting items such as loans, interest income, impairment
on loans amongst others.
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management process.
• Tested key automated and manual business cycle controls
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The Company's key financial accounting and reporting
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including testing of alternate procedures to assess
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processes are highly dependent on information systems
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whether there were any unaddressed IT risks that would
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including automated controls in systems, such that there
exists a risk that gaps in the IT control environment could
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materially impact the standalone financial statements.
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result in the financial accounting and reporting records being
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• Tested the design and operating effectiveness of the
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materially misstated. The Company uses several systems
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Company's IT controls over the IT applications as identified
above.
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for its overall financial reporting. In addition to it, large
transaction volumes and the increasing challenges to protect
the integrity of the Company's systems and data, we have
identified ‘IT systems and automated controls' as key audit
matter because of the high-level automation, significant
number of systems being used by the management and
the complexity of the IT architecture and its impact on the
financial reporting system.
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INFORMATION OTHER THAN THE STANDALONE
FINANCIAL STATEMENTS AND AUDITOR’S
REPORT THEREON
The Company's Board of Directors is responsible
for the other information. The other information
comprises the information included in the Annual
Report, but does not include the standalone financial
statements and our auditor's report thereon.
The Annual Report is expected to be made available
to us after the date of this auditor's report.
Our opinion on the standalone financial statements
does not cover the other information and we will not
express any form of assurance conclusion thereon.
In connection with our audit of the standalone
financial statements, our responsibility is to read the
other information 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. 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 under SA 720 ‘The Auditor's
responsibilities relating to Other Information'.
RESPONSIBILITIES OF MANAGEMENT AND BOARD
OF DIRECTORS/BOARD OF TRUSTEES FOR THE
STANDALONE FINANCIAL STATEMENTS
The Company's Board of Directors and the Board
of Trustees 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, changes in equity and
cash flows of the Company in accordance with the
accounting principles generally accepted in India,
including the Indian Accounting Standards specified
under section 133 of the Act. This responsibility
also includes maintenance of adequate accounting
records in accordance with the provisions of the
Act for safeguarding of the assets of the Company
and for preventing and detecting frauds and
other irregularities; selection and application of
appropriate accounting policies; making judgments
and estimates that are reasonable and prudent;
and design, implementation and maintenance
of adequate internal financial controls, that were
operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to
the preparation and presentation of the standalone
financial statement that give a true and fair view and
are free from material misstatement, whether due to
fraud or error.
In preparing the standalone financial statements, the
Board of Directors of the Company and the Board
of Trustees of the Welfare Trust are responsible for
assessing the ability of the Company and the Welfare
Trust 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/Board of Trustees either
intends to liquidate the Company/the Welfare Trust or
to cease operations, or has no realistic alternative but
to do so.
The Board of Directors of the Company and the Board
of Trustees of the Welfare Trust are also responsible
for overseeing the financial reporting process of the
Company and the Welfare Trust.
AUDITOR’S RESPONSIBILITIES FOR THE
AUDIT OF THE STANDALONE FINANCIAL
STATEMENTS
Our objectives are to obtain reasonable assurance
about whether the standalone financial statements
as a whole are free from material misstatement,
whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance
with SAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in
the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on
the basis of these standalone financial statements.
We give in ‘‘Annexure A” a detailed description of
Auditor's responsibilities for Audit of the Standalone
Financial Statements.
OTHER MATTER:
We did not audit the financial statements of the
Welfare Trust included in the standalone financial
statements of the Company whose financial
statements reflects total assets of I 1.71 crores
as at 31 March 2026, total revenue of I Nil, total
net loss after tax of I Nil, and net cashflows of
I (3.05) crores respectively for the year ended
on that date, as considered in the standalone
financial statements. These financial statements
have been audited by other auditor whose report
has been furnished to us by the management.
These financial statements have been prepared
in accordance with the Accounting Standards
specified under section 133 of the Act, read with
the Companies (Accounting Standards) Rules,
2021. The Company's management has converted
these financial statements to accounting principles
under Indian Accounting Standards specified under
section 133 of the Act read with the Companies
(Indian Accounting Standards) Rules 2015 as
applicable to the Company. We have audited these
conversion adjustments made by the Company's
management and our opinion on the standalone
financial statements, in so far as it relates to the
amounts and disclosure included in respect of
the Welfare Trust, and our report in terms of sub¬
section (3) of Section 143 of the Act, in so far as it
relates to the aforesaid Welfare Trust, is solely based
on the report of the other auditor and conversion
adjustments prepared by the management of the
Company and audited by us.
Our opinion is not modified in respect of the above
matter with respect to our reliance on the work done
by and the report of the other auditor.
REPORT ON OTHER LEGAL AND REGULATORY
REQUIREMENTS
1. As required by the Companies (Auditor's
Report) Order, 2020 ("the Order”), issued by the
Central Government of India in terms of sub¬
section (11) of section 143 of the Act, we give
in "Annexure B”, a statement on the matters
specified in paragraphs 3 and 4 of the Order, to
the extent applicable.
2. As required by Section 143(3) of the Act, we
report that:
(a) We have sought and obtained all the
information and explanations which to
the best of our knowledge and belief were
necessary for the purposes of our audit of the
aforesaid standalone financial statements;
(b) I n our opinion, proper books of account as
required by law relating to preparation of the
aforesaid standalone financial statements
have been kept by the Company so far as
it appears from our examination of those
books except for the matters stated in the
paragraph 2(h)(vi) below on reporting under
Rule 11(g);
(c) The Balance Sheet, the statement of profit
and loss (including other comprehensive
income), the statement of changes in equity
and the statement of cash flows dealt
with by this Report are in agreement with
the books of account maintained for the
purpose of preparation of the standalone
financial statements;
(d) In our opinion, the aforesaid standalone
financial statements comply with the Ind AS
specified under Section 133 of the Act;
(e) On the basis of the written representations
received from the directors as on 31
March 2026 taken on record by the Board
of Directors, none of the directors are
disqualified as on 31 March 2026 from being
appointed as a director in terms of Section
164 (2) of the Act;
(f) The modification relating to the maintenance
of accounts and other matters connected
therewith are as stated in paragraph 2(b)
above on reporting under Section 143(3)(b)
and paragraph 2(h)(vi) below on reporting
under Rule 11(g);
(g) 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 C”; and
(h) With respect to the other matters to
be included in the Auditor's Report in
accordance with Rule 11 of the Companies
(Audit and Auditors) Rules, 2014, in our
opinion and to the best of our information
and according to the explanations given
to us:
i. The Company has disclosed the impact
of pending litigations on its financial
position in its standalone financial
statements - Refer Note 47 to the
standalone financial statements.
ii. The Company has made provision,
as required under the applicable law
or accounting standards, for material
foreseeable losses, if any, on long-term
contracts including derivative contracts
- Refer Note 47 to the standalone
financial statements.
iii. There has been no delay in transferring
amounts, to the Investor Education and
Protection Fund by the Company during
the year ended 31 March 2026.
iv. The Management has represented that:
a. To the best of our knowledge
and belief, as disclosed in the
note 54 (f) 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, directly
or indirectly lend or invest in other
persons or entities identified in
any manner whatsoever by or on
behalf of the Company ("Ultimate
Beneficiaries”) or provide any
guarantee, security or the like on
behalf of the Ultimate Beneficiaries.
b. To the best of our knowledge and
belief, as disclosed in the note
54 (g) 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, 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.
c. Based on the audit procedures
performed that have been
considered reasonable and
appropriate in the circumstances,
nothing has come to our notice that
has caused us to believe that the
representations under sub-clause
(i) and (ii) of Rule 11(e) contain any
material misstatement.
v. The Company has neither declared nor
paid any dividend during the year.
vi. Based on our examination, which
included test checks, the Company
has used accounting software systems
for maintaining its books of account
(managed and maintained by a third-
party software service provider) which
has a feature of recording audit trail (edit
log) facility and the same has operated
throughout the year for all relevant
transactions recorded in the softwares.
Further, during the course of our audit,
we did not come across any instance of
audit trail feature being tampered with.
Additionally, the audit trail of prior year
has been preserved by the Company
as per the statutory requirements
for record retention except for one
accounting software wherein the audit
trail logs have been preserved effective
26 June 2024. Refer Note 54 (j) for
audit trail disclosure in the standalone
financial statements.
3. In our opinion, according to information,
explanations given to us, the remuneration paid
or provided by the Company to its directors is
within the limits laid prescribed under Section
197 read with Schedule V of the Act.
For Kirtane & Pandit LLP For M S K A & Associates LLP
Chartered Accountants (Formerly known as M S K A & Associates)
Firm Registration No:105215W/W100057 Chartered Accountants
Firm Registration No. 105047W/W101187
Sandeep D Welling Vikram Dhanania
Partner Partner
Membership No.: 044576 Membership No.: 060568
UDIN: 26044576QSAYJZ3066 UDIN: 26060568BLRSET2443
Place: Mumbai Place: Mumbai
Date: 05 May 2026 Date: 05 May 2026
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