Poonawalla Fincorp Ltd Auditor Reports

To the Members of

POONAWALLA FINCORP LIMITED

Report on the Audit of the Standalone Financial Statements

OPINION

We have audited the accompanying standalone financial statements of Poonawalla Fincorp Limited

("the Company"),which comprise the Balance Sheet as at March 31, 2025, the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity and 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 March 31, 2025, its loss (including other comprehensive income), changes in equity and its cash flows for the year ended on that date.

BASIS FOR OPINION

We 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 Standards are further described in the ‘Auditors 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 obtained by us and on consideration of the audit report of other auditor referred to in the "Other Matters" 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 March 31, 2025. 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.

Key audit matters	How our audit addressed the key audit matter
Allowance on Expected credit losses (ECL) on loan assets	Our audit procedures in respect of this matter included the following, but not limited to:
Indian Accounting Standard 109 - Financial Instruments (‘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 could impact the credit quality of the Companys financial assets. The estimation of impairment loss allowance on loan assets involves significant judgement and estimates, which are subject to uncertainty, and involves applying appropriate measurement principles in case of loss events.	• 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.
As at March 31, 2025, the Company has reported gross financial assets (loans) aggregating to H 33,637.37 crores against which provision for expected credit loss of H 942.41 crores has been recorded as at reporting date in accordance with Ind AS 109 - Financial Instruments (‘Ind AS 109). The Company has written off (net of recoveries) H 1,279.90 crores during the current year.	• Tested the design and operating effectiveness of key controls over completeness and accuracy of the key inputs and assumptions considered for calculations, validation of data and monitoring of impairment loss recognised based on historical and external data.
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:	• Tested the modelling assumptions and inputs which are based on industry experience (new products) as collated by external credit bureau in line with the Companys ECL policy. While for remaining loan portfolio, since modelling assumptions and parameters are based on historical data, assessed whether historical experience was representative of current circumstances and was relevant in view of the recent impairment losses incurred within the portfolios.
• Segmentation of loan book in buckets based on common risk characteristics;	• Verified the completeness of loans included in the ECL calculations as of March 31, 2025.
• 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);	• Selected samples and verified appropriateness of classification of loan assets in stage 1, 2 and 3 in accordance with the policy approved by the Board of Directors.
• factoring in future macro-economic and industry specific estimates and forecasts;	• 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.
• past experience and forecast data on customer behaviour on repayments;	• Evaluated the appropriateness of the Companys 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 the Companys categorization across various stages;
• varied statistical modelling techniques to determine probability of default, loss given default and exposure at default basis, the default history of loans, subsequent recoveries made and other relevant factors using probability-weighted scenarios.	• Obtained the managements rational for writing off the loans during the current year and tested for appropriate management approvals in line with approved write off policy.
The Expected Credit Loss (‘ECL) is measured at 12- month ECL for Stage 1 loan assets and at lifetime ECL for Stage 2 and Stage 3 loan assets.	• Assessed the appropriateness and adequacy of the related presentation and disclosures of Note 50 "Financial risk management" disclosed in the accompanying standalone financial statements in accordance with the applicable accounting standards and related Reserve Bank of India (‘RBI) circulars.
The management has calculated the PD and LGD as follows:
• For new products launched from time to time and where the Company does not have sufficient historical data to estimate PD, the Company has engaged external leading credit bureau and accordingly PD rates have been considered based on industry data sourced from the aforesaid credit bureau.
• 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.
Refer note 2(h) of material accounting policies, Note 7 for the details of provision and Note 50 (ii)for credit risk disclosures.
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.

 

Information Technology ("IT") Systems and Controls for accounting and financial reporting process:	Our audit procedures in respect of this matter included the following, but not limited to:
The Company is dependent on its information technology (‘IT) systems due to the significant number of transactions that are processed daily across such multiple and discrete IT systems. Also, IT application controls are critical to ensure that changes to applications and underlying data are made in an appropriate manner and under controlled environment.	• Involved 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 Companys IT systems.
Appropriate controls contribute to mitigating the risk of potential fraud or errors as a result of changes to applications and data. On account of the pervasive use of IT systems 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.	• Obtained an understanding of the Companys IT applications, databases and operating systems relevant to financial reporting and the control environment, including an understanding of the process, mapping of applications and understanding financial risks posed by people process and technology.
The Company has a complex IT architecture to support its day-to-day business operations. High volume of transactions is processed and recorded on single or multiple applications. The reliability and security of IT systems plays a key role in the business operations of the Company. Since large volume of transactions are processed daily, IT controls are required to ensure that applications process data as expected and that changes are made in an appropriate manner.	• Tested IT General Controls particularly, logical access, change management and aspects of IT operational controls. Tested that request for access to systems were appropriately reviewed and authorized; tested controls around Companys periodic review of access rights; inspected; requests of changes to systems for appropriate approval and authorization
Further, the Companys 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.	• Performed procedures for a selected group of key controls over financial and reporting system to determine that these controls remained unchanged during the year or were changed following the standard change management process.
The Companys key financial accounting and reporting processes are highly dependent on information systems including automated controls in systems, such that there exists a risk that gaps in the IT control environment could result in the financial accounting and reporting records being materially misstated. The Company uses several systems for its overall financial reporting. In addition to it, large transaction volumes and the increasing challenges to protect the integrity of the Companys 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.	• Tested key automated and manual business cycle controls including testing of alternate procedures to assess whether there were any unaddressed IT risks that would materially impact the standalone financial statements.
	• Tested the design and operating effectiveness of the Companys IT controls over the IT applications as identified above.

INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITORS REPORT THEREON

The Companys 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 auditors report thereon.

The Annual Report 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 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 Auditors responsibilities relating to Other Information.

RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE/ BOARD OF TRUSTEES FOR THE STANDALONE FINANCIAL STATEMENTS

The Companys Board of Directors is 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 Accounting Standards specified under section 133 of the Act. The Board of Directors of the Company and the Board of Trustees of the Welfare Trust are also responsible maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and the Welfare Trust 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 Management and Board of Directors of the Company and Trustees of the Welfare Trust are responsible for assessing the Companys/ Welfare Trusts 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/ Trustees of the Welfare Trust either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The respective Board of Directors/Trustees of the Welfare Trust are also responsible for overseeing the Companys/Welfare Trusts financial reporting process.

AUDITORS 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 auditors 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 Auditors responsibilities for Audit of the Standalone Financial Statements.

OTHER MATTERS:

(a) 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 H 184.56 crores as at March 31, 2025, total revenue of H 0.59 crores, net loss after tax of H 77.55 crores, and net cashflows of H 2.32 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 Companys management has converted these financial statements to accounting principles under Ind AS as applicable to the Company. We have audited these conversion adjustments

made by the Companys 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 based solely 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.

(b) The standalone financial statements of the Company for the year ended March 31, 2024 was audited by Walker Chandiok & Co LLP, one of the previous joint auditors of the Company, whose report dated 29 April 2024 expressed an unmodified opinion on those standalone financial statements.

Our opinion is not modified in respect of the above matter.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditors 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;

(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 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;

(d) In our opinion, the aforesaid standalone financial statements comply with the

Accounting Standards specified under Section 133 of the Act;

(e) On the basis of the written representations received from the directors as on March 31, 2025 taken on record by the Board of Directors, none of the directors are disqualified as on March 31, 2025 from being appointed as a director in terms of Section 164 (2) of the Act;

(f) The reservation 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 2h(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 Auditors 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 48 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 48 to the standalone financial statements;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

iv. a. The Management has represented

that, to the best of its knowledge and belief, 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. The Management has represented, that, to the best of its knowledge and belief, 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, as on the date of this audit report, 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, and according to the information and explanations provided to us by the Management in this regard 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) as provided under (1) and (2) above, contain any material mis-statement.

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 an accounting software 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 software. 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 June 26, 2024. Refer Note 55 (j) for audit trail disclosure in the standalone financial statements.

3. In our opinion, according to information, explanations given to us, the remuneration paid by the Company to its directors is within the limits laid prescribed under Section 197 read with Schedule V of the Act and the rules thereunder.

For Kirtane & Pandit LLP	For M S K A & Associates
Chartered Accountants	Chartered Accountants
Firm Registration No: 105215W/W100057	Firm Registration No. 105047W
Sandeep D. Welling	Vikram Dhanania
Partner	Partner
Membership No.: 044576	Membership No.: 060568
UDIN: 25044576BMKQXF8783	UDIN: 25060568BMJJQG1477
Place: Mumbai	Place: Mumbai
Date: April 25, 2025	Date: April 25, 2025

Auditors Responsibilities for the Audit of the 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:

• 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 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 with reference to standalone financial statements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management and Board of Directors.

• Conclude on the appropriateness of management and Board of Directors 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 Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors 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 auditors 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.

• Obtain sufficient appropriate audit evidence regarding the financial information of the Welfare Trust to express an opinion on the standalone financial statements. We are responsible for the direction, supervision and performance of the audit of financial statements of the Company of which we are the independent auditors. For the Welfare Trust included in the standalone financial statements, which have been audited by other auditor, such other auditor remains responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion.

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.

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.

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 for the year ended March 31, 2025 and are therefore, the key audit matters. We describe these matters in our auditors 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.

For Kirtane & Pandit LLP	For M S K A & Associates
Chartered Accountants	Chartered Accountants
Firm Registration No: 105215W/W100057	Firm Registration No. 105047W
Sandeep D. Welling	Vikram Dhanania
Partner	Partner
Membership No.: 044576	Membership No.: 060568
UDIN: 25044576BMKQXF8783	UDIN: 25060568BMJJQG1477
Place: Mumbai	Place: Mumbai
Date: April 25, 2025	Date: April 25, 2025

ANNEXURE B TO INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE STANDALONI FINANCIAL STATEMENTS OF POONAWALLA FINCORP LIMITED FOR THE YEAR ENDED 31 MARCH 2025

[Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements in the Independen Auditors Report]

i. a. A. The Company has maintained proper records showing full particulars including quantitativ details and situation of property, plant and equipment, investment property and relevant detail of right of use assets.

B. The Company has maintained proper records showing full particulars of intangible assets.

b. Property, plant and equipment, investment property and right of use assets were physically verifiei by the management according to a phased programme designed to cover all items over a period c 3 years which, in our opinion, is reasonable having regard to the size of the Company and the natur of its assets. Pursuant to the programme, a portion of property, plant and equipment, investmen property and right of use assets have been physically verified by the management during the year. N material discrepancies were noticed on such verification.

c. According to the information and explanations given to us, the title deeds of immovable propertie (other than properties where the Company is the lessee and the lease agreements are duly execute* in favour of the lessee), as disclosed in the standalone financial statements, are held in the name o the Company, except for the following immovable property:

Sr. No. Description of property	Gross carrying value (Rs.) crores	Held in name of	Whether promoter, director or their relative or employee	Period held	Reason for not being held in name of company
1 Investment Property	0.09	Gouri Shankar Rajgarhia and Om Prakash Rajgarhia	No	Since July 2004	Disputed

d. According to the information and explanations given to us, the Company has not revalued its property, plant and equipment including right of use assets and intangible assets during the year. Accordingly, the provisions stated under clause 3(i)(d) of the Order are not applicable to the Company.

e. According to the information and explanations given to us, no proceeding has been initiated or pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988, as amended and rules made thereunder. Accordingly, the provisions stated under clause 3(i)(e) of the Order are not applicable to the Company.

ii. a. The Company is involved in the business of rendering services and does not hold any inventory.

Accordingly, the provisions stated under clause 3(ii)(a) of the Order are not applicable to the Company.

b. During the year, the Company has been sanctioned working capital limits in excess of H 5 crores in aggregate from Banks and financial institutions on the basis of security of current assets. Based on the records examined by us in the normal course of audit of the standalone financial statements, quarterly returns / statements filed with such Banks/ financial institutions are in agreement with the books of accounts of the Company.

iii. a. The Companys principal business is to give loans and is a registered Non-Banking Finance Company

(‘NBFC). Accordingly, provisions stated under clause 3(iii)(a) of the Order is not applicable to the Company.

b. According to the information and explanations given to us and based on the audit procedures performed by us, we are of the opinion that the guarantee provided, security given, investments made and terms and conditions in relation to grant of all loans and advances in the nature of loans, are not prejudicial to the interest of the Company, wherever applicable.

c. The Company, being a Non-Banking Financial Company, is registered under provisions of the Reserve Bank of India Bank, 1934 and rules made thereunder. In pursuance of its compliance with provisions of the said Act / Rules, particularly, the Income Recognition, Asset Classification and Provisioning Norms and generally accepted business practices by the lending institutions, repayment schedules are stipulated basis the nature of the loan products. In respect of loans and advances in the nature

of given where repayment or receipts are irregular, given the voluminous nature of loan transactions, it is not practicable to furnish entity-wise details of amounts, dates for repayment or receipt and the extent of delay in this report (as suggested in the Guidance Note on CARO 2020, issued by the Institute of Chartered Accountants of India for reporting under this clause) - Refer Note 50 to the standalone financial statements.

d. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the details of amount overdue for more than ninety days, for the loans and advances in the nature of loans, are as follows:

No. of Cases	Principal amount overdue (in Crore)	Interest overdue ( in crores)	Total overdue ( in crores)	Remarks, if any
35,526	97.13	41.71	138.84	The Company has taken reasonable steps as per the policies and procedures of the Company for recovery of such principal and interest amounts overdue.

e. The Companys principal business is to give loans and it is a registered NBFC, accordingly, provisions stated under clause 3(iii)(e) of the Order is not applicable.

f. According to the information explanation provided to us, the Company has not any granted loans and / or advances in the nature of loans, including to promoters or related parties as defined in clause (76) of section 2 of the Companies Act, 2013 ("the Act") either repayable on demand or without specifying any terms or period of repayment during the year. Accordingly, the requirement to report under clause 3(iii)(f) of the Order is not applicable to the Company.

iv. According to the information and explanations given to us, the Company has complied with the provisions of section 186 of the Act in respect of investments made during the year. Further, the Company has not entered into any transaction covered under section 185 and section 186 of the Act in respect of loans, guarantees and security, wherever applicable.

v. According to the information and explanations given to us, the Company has neither accepted any deposits from the public nor any amounts which are deemed to be deposits, within the meaning of the provisions of Sections 73 to 76 of the Act and the rules framed there under. Accordingly, the requirement to report under clause 3(v) of the Order is not applicable to the Company.

vi. The provisions of sub-section (1) of Section 148 of the Act are not applicable to the Company as the Central Government of India has not specified the maintenance of cost records for products/services of the Company. Accordingly, the requirement to report on clause 3(vi) of the Order is not applicable to the Company.

vii. a. According to the information and explanations given to us and the records examined by us, in our

opinion, undisputed statutory dues including goods and services tax, provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other statutory dues have been regularly deposited by the Company with appropriate authorities in all cases during the year. No undisputed amounts payable in respect of these statutory dues were outstanding as at March 31, 2025 for a period of more than six months from the date they became payable.

b. According to the information and explanation given to us and the records examined by us, dues relating to goods and services tax, income tax, value added tax and service tax which have not been deposited as on March 31, 2025 on account of any dispute, are as follows:

Name of the statute	Nature of dues	Amount Demanded H in crores	Amount Paid H in crores	Period to which the amount relates	Forum where dispute is pending
Income Tax Act, 1961	Income Tax	0.01	0.01	2009-10	Commissioner of Income Tax (Appeals)
		1.27	1.00	2014-15 to 2016-17	Commissioner of Income Tax (Appeals)
		0.21	0.21	2017-18	Commissioner of Income Tax (Appeals)
		0.16	0.16	2018-19	Commissioner of Income Tax (Appeals)
		0.89	0.89	2019-20	Commissioner of Income Tax (Appeals)
		0.11	0.11	2020-21	Commissioner of Income Tax (Appeals)
Finance Act, 1994	Service Tax	10.22	4.04	2002-03 to 2006-07	High Court, Kolkata
Finance Act, 1994	Service Tax	1.85	-	2010-11 to 2013-14	High Court, Kolkata
Madhya Pradesh Value Added Tax Act, 2002	VAT	1.34	-	2008-09 to 2009-10	Madhya Pradesh High Court, Jabalpur
Delhi Value Added Tax Act, 2004	VAT	0.01	-	2014-15	Special Commissioner
Haryana VAT Act	VAT	4.36	-	2013-14	Punjab and Haryana High Court
WBCGST Act	GST	0.61	0.10	2017-18	High Court, Kolkata
WBCGST Act	GST	0.98	0.05*	2017-18	Appeal to Appellate Authority
WBCGST Act	GST	0.01	-	2017-18	Appeal to Appellate Authority
Odisha GST Act	GST	0.01	0.01	2019-20	Appeal to Appellate Authority

*Paid subsequently on April 25, 2025

There are no dues relating to provident fund, employees state insurance, duty of customs, duty of excise, cess and other statutory dues which have not been deposited on account of any dispute.

viii. According to the information and explanations given to us, there are no transaction which are not recorded in the books of account which have been surrendered or disclosed as income during the year in Income- tax Assessment under the Income Tax Act, 1961. Accordingly, the requirement to report as stated under clause 3(viii) of the Order is not applicable to the Company.

ix. a. In our opinion and according to the information and explanations given to us and the records of the

Company examined by us, the Company has not defaulted in repayment of loans or borrowings or in payment of interest thereon to any lender.

b. According to the information and explanations given to us and on the basis of our audit procedures, we report that the Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

c. In our opinion and according to the information and explanations provided to us, money raised by way of term loans during the year have been applied for the purpose for which they were raised. Refer Note 21(e) to the standalone financial statements.

d. According to the information and explanations given to us, and the procedures performed by us, and on an overall examination of the standalone financial statements of the Company, we report that no funds raised on short-term basis have been used for long-term purposes by the Company.

e. According to the information explanation given to us and on an overall examination of the standalone financial statements of the Company, we report that the Company has not taken any funds from any

entity or person on account of or to meet the obligations of its joint venture. The Company does not have any subsidiary.

f. According to the information and explanations given to us and procedures performed by us, we report that the Company has not raised loans during the year on the pledge of securities held in its joint venture. Accordingly, the requirement to report under Clause 3(ix)(f) of the order is not applicable to the Company.

x. a. In our opinion and according to the information explanation given to us, the Company did not raise

any money by way of initial public offer or further public offer (including debt instruments) during the year. Accordingly, the reporting requirement under clause 3(x)(a) of the Order is not applicable to the Company.

b. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or convertible debentures (fully, partly, or optionally convertible) during the year. Accordingly, the requirements to report under clause 3(x)(b) of the Order is not applicable to the Company.

xi. a. Based on our examination of the books and records of the Company and according to the information

and explanations given to us, we report that no fraud by the Company or no material fraud on the Company has been noticed or reported during the year in the course of our audit.

b. During the year, no report under Section 143(12) of the Act, has been filed by us in Form ADT-4 as prescribed under Rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government.

c. We have taken into consideration the whistle blower complaints received by the Company during the year while determining the nature, timing, and extent of audit procedures.

xii. The Company is not a Nidhi Company. Accordingly, the provisions stated under clause 3(xii)(a) to (c) of the Order are not applicable to the Company.

xiii. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with Sections 177 and 188 of the Act, where applicable and details of such transactions have been disclosed in the standalone financial statements as required by the applicable accounting standards.

xiv. a. In our opinion and based on our examination, the Company has an internal audit system

commensurate with the size and nature of its business.

b. We have considered the internal audit reports of the Company issued till the date of our audit report, for the period under audit.

xv. According to the information and explanations given to us and based on our examination of the records of the Company, in our opinion during the year the Company has not entered into any non- cash transactions with its directors or persons connected with its directors and accordingly, the requirement to report on clause 3(xv) of the Order is not applicable to the Company.

xvi. a. The Company is required to and has been registered under Section 45-IA of the Reserve Bank of India

Act, 1934 as Non-Banking Financial Institution.

b. The Company has conducted non-banking financial activities during the year and the Company holds a valid Certificate of Registration from the Reserve Bank of India as per the Reserve Bank of India Act, 1934.

c. The Company is not a Core investment Company (CIC) as defined in the regulations made by Reserve Bank of India. Accordingly, the requirement to report under clause 3 (xvi)(c) of the Order is not applicable to the Company.

d. The Group (as defined in the Core Investment Companies (Reserve Bank) Directions, 2016) does not have any Core Investment Company (as part of its group). Accordingly, the requirement to report under clause 3(xvi)(d) of the Order is not applicable to the Company.

xvii. Based on the overall review of standalone financial statements, the Company has not incurred cash losses in the current financial year and in the immediately preceding financial year. Accordingly, the requirement to report under clause 3(xvii) of the Order is not applicable to the Company.

xviii. There has been no resignation of the statutory auditors during the year. Accordingly, the provisions stated under clause 3(xviii) of the Order are not applicable to the Company.

xix. According to the information and explanations given to us and on the basis of the financial ratios, ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the standalone financial statements, our knowledge of the Board of Directors and management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report that Company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. We, however, state that this is not an assurance as to the future viability of the Company. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date will get discharged by the Company as and when they fall due.

xx. According to the information and explanations given to us and based on our verification, the provisions of Section 135 of the Act are applicable to the Company. The Company has made the required contributions during the year and there are no unspent amounts which are required to be transferred either to a Fund specified in Schedule VII of the Act or to a Special Account as per the provisions of Section 135 of the Act read with Schedule VII to the Act. Accordingly, reporting under clause 3(xx)(a) and 3(xx)(b) of the Order is not applicable to the Company.

xxi. The reporting under clause 3(xxi) of the Order is not applicable in respect of audit of standalone financial statements. Accordingly, no comment in respect of the said clause has been included in the report.

For Kirtane & Pandit LLP	For M S K A & Associates
Chartered Accountants	Chartered Accountants
Firm Registration No:105215W/W100057	Firm Registration No. 105047W
Sandeep D. Welling	Vikram Dhanania
Partner	Partner
Membership No.: 044576	Membership No.: 060568
UDIN: 25044576BMKQXF8783	UDIN: 25060568BMJJQG1477
Place: Mumbai	Place: Mumbai
Date: April 25, 2025	Date: April 25, 2025

Referred to in paragraph 2(g) under ‘Report on Other Legal and Regulatory Requirements in the Independent Auditors Report of even date to the Members of Poonawalla Fincorp Limited on the Standalone Financial Statements for the year ended March 31, 2025

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls with reference to standalone financial statements of Poonawalla Fincorp Limited ("the Company") as of March 31, 2025 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

OPINION

In our opinion, the Company, has, in all material respects, an adequate internal financial controls with reference to standalone financial statements and such internal financial controls with reference to standalone financial statements were operating effectively as at March 31, 2025, based on the internal control with reference to standalone financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") issued by the Institute of Chartered Accountants of India (‘ICAI).

MANAGEMENTS AND BOARD OF DIRECTORS RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Companys Board of Directors are responsible for establishing and maintaining internal financial controls based on the internal control with reference to standalone financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by ICAI. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

AUDITORS RESPONSIBILITY

Our responsibility is to express an opinion on the Companys internal financial controls with reference to standalone financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section

143(10) of the Act, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to standalone financial statements was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to standalone financial statements and their operating effectiveness. Our audit of internal financial controls with reference to standalone financial statements included obtaining an understanding of internal financial controls with reference to standalone financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls with reference to standalone financial statements.

MEANING OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO STANDALONE FINANCIAL STATEMENTS

A companys internal financial control with reference to standalone financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of standalone financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control with reference to standalone financial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of standalone financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of

the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the standalone financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO STANDALONE FINANCIAL STATEMENTS

Because of the inherent limitations of internal financial controls with reference to standalone financial

statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to standalone financial statements to future periods are subject to the risk that the internal financial control with reference to standalone financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

For Kirtane & Pandit LLP	For M S K A & Associates
Chartered Accountants	Chartered Accountants
Firm Registration No:105215W/W100057	Firm Registration No. 105047W
Sandeep D. Welling	Vikram Dhanania
Partner	Partner
Membership No.: 044576	Membership No.: 060568
UDIN: 25044576BMKQXF8783	UDIN: 25060568BMJJQG1477
Place: Mumbai	Place: Mumbai
Date: April 25, 2025	Date: April 25, 2025