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PTC India Financial Services Ltd.

BSE: 533344 Sector: Financials
NSE: PFS ISIN Code: INE560K01014
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NSE 00:00 | 27 Jan 16.65 -0.60
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OPEN 17.10
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VOLUME 134870
52-Week high 20.60
52-Week low 12.40
P/E 7.90
Mkt Cap.(Rs cr) 1,066
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 17.10
CLOSE 17.20
VOLUME 134870
52-Week high 20.60
52-Week low 12.40
P/E 7.90
Mkt Cap.(Rs cr) 1,066
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

PTC India Financial Services Ltd. (PFS) - Auditors Report

Company auditors report

To the Members of

PTC India Financial Services Limited

Report on the Audit of the Standalone Financial Statements

Qualified Opinion

We have audited the standalone financial statements of PTC IndiaFinancial Services Limited ("the Company") which comprise the Balance Sheet asat March 31 2022 and the Statement of Profit and Loss Statement of Changes in Equityand Statement of Cash Flows for the year then ended and notes to the standalone financialstatements including a summary of significant accounting policies and other explanatoryinformation.

In our opinion and to the best of our information and according to theexplanations given to us except for the possible effect of the matters described in theBasis for Qualified Opinion section of our report the aforesaid standalone financialstatements 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 IndianAccounting Standards prescribed under section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended and other accounting principles generallyaccepted in India of the state of affairs of the Company as at March 31 2022 and itstotal comprehensive income (comprising of profits and other comprehensive income) changesin equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

On January 19 2022 three independent directors of the Companyresigned mentioning lapses in governance and compliance. The Company basis directions ofthe audit committee in its meeting held on April 26 2022 appointed an independent firm(the "Forensic auditor") vide engagement letter dated July 18 2022 toundertake a forensic audit in relation to the allegations raised by exIndependentdirectors.

On November 4 2022 the Forensic auditor submitted its final report tothe Company which included in addition to other observations instances of modificationof critical sanction terms post sanction approval from the Board non-compliance withpre-disbursement conditions disbursements made for clearing overdues (evergreening)disproportionate disbursement of funds and delayed presentation of critical information tothe Board. The Company's management has appointed a professional services firm (the"External Consultant") to assist the management in responding to suchobservations and subsequently also obtained a legal opinion contesting certain matterswith respect to the contents including matters highlighted as evergreening in theForensic audit report and approach adopted by the Forensic Auditor. Accordingly themanagement has rebutted the observations made by the Forensic auditor and has confirmedthat in their view there is no additional impact on the Company's standalonefinancial statements for financial year 2021-22 and that there are no indications of anyfraud or suspected fraud. The Company has uploaded Forensic audit report themanagement's responses report from External Consultant and legal opinion on thewebsite of stock exchanges.

In the adjourned audit committee meeting held on Nov 13 2022 thecommittee considered the Forensic audit report and management's responses thereon andaccepted the findings in the report by majority but with dissent of two directors out offive directors. We have been informed about the discussions held in the meeting andreasons for dissent expressed by two directors as set out in the Company'scommunication to us dated November 15 2022 as attached in Annexure A accompanying ourreport.

In the board meeting held on November 13 2022 the board of directorsof the Company (with the absence of Chairperson of the Audit Committee in the meeting whorecorded a dissent on the matters being discussed in his absence) considered the Forensicaudit report Management's responses Report of External Consultant and legalopinions. We have been informed about the observations and views expressed in the meetingas set out in the Company's communication to us dated November 16 2022 as attachedin Annexure B accompanying our report.

Due to resignation of the former independent directors the Company hasnot complied with the various provisions of Companies Act 2013 and Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 related to constitution of committees and sub-committees of the Board timely conductof their meetings and filing of annual and quarterly results with respective authorities.The Company intends to file for condonation of delay for non-compliance of such provisionswith respective authorities. The Company has also not finalized the minutes of auditcommittee meetings held since November 9 2021 which results in non-compliance withapplicable provisions. (Refer Note 55(c) of the Standalone Financial Statements)

In light of the constraints and limitations highlighted by the Forensicauditor while preparing the Forensic audit report and as also noted by the AuditCommittee several concerns raised therein as described in the second paragraph above(including observations around evergreening) and lack of specific procedures andconclusions thereon divergent views among directors regarding forensic audit report (asfurther detailed in Annexure A and B accompanying our report) we are unable to satisfyourselves in relation to the extent of forensic audit procedures and conclusion thereonincluding remediation of the additional concerns raised therein.

Considering the above and indeterminate impact of potential fines and/or penalties due to noncompliance of various provisions as mentioned above we are unableto obtain sufficient and appropriate audit evidence to determine the extent ofadjustments if any that may be required to the standalone financial statements for theyear ended March 31 2022.

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit ofthe Standalone Financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the standalone financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence obtained byus is sufficient and appropriate to provide a basis for our qualified opinion.

Emphasis of Matter

We draw attention to the following matters in the Notes to thestandalone financial statements:

1. SEBI vide its email dated March 2 2022 did not accede theCompany's request for conducting Board Meeting without an independent director.Subsequent to this with recommendation of the Holding Company the Company appointed fourindependent directors through circular resolution who have been also the independentdirectors on the Board of PTC India Limited (the "Holding Company"). TheCompany basis email from SEBI acknowledging Company's email which summarised themode of appointment of these directors through circular resolution and opinion receivedfrom external legal firm believes that there is no non-compliance with SEBI'sdirections vide its email dated March 2 2022. (Refer Note 55(b) of the StandaloneFinancial Statements)

2. The Company had received a communication from ROC on March 28 2018pursuant to complaints received from identified third parties alleging mismanagement inthe Company's operations. The Company had submitted a reply dated April 18 2018after discussion with the audit committee and denied all allegations and regarded them asfrivolous attempt made by such identified third parties. On September 24 2021 theCompany received another notice from ROC u/s 206(4) of the Companies Act 2013 pursuantto its previous communication in 2017-18 and reference to complaints received by them in2017-18 seeking further information on certain matters including details about erosion ofinvestments made in associate companies and actions taken by the management includingother details and details about NPA accounts. While the Company responded to this noticeon October 22 2021 and no further intimation from ROC has been received till date theCompany does not expect any action by ROC on this matter. (Refer Note 57 of the StandaloneFinancial Statements)

3. In assessing the recoverability of loans and advances the Companyhas considered internal and external sources of information (i.e. valuation report fromResolution Professional for loan assets under IBC proceedings or otherwise one timesettlement (OTS) proposal asset value as per latest available financials of the borrowerswith appropriate haircut as per ECL policy). The Company expects to recover the netcarrying value of these assets basis assessment of current facts and ECL methodologywhich factors in future economic conditions as well. However the eventual recovery fromthese loans may be different from those estimated as on the date of approval of thesestandalone financial statements. (Refer Note 56 of the Standalone Financial Statements)

4. As at March 31 2022 the Company has assessed its financialposition including expected realization of assets and payment of liabilities includingborrowings and believes that sufficient funds will be available to pay-off theliabilities through availability of High Quality Liquid Assets (HQLA) and undrawn lines ofcredit to meet its financial obligations in atleast 12 months from the reporting date.(Refer Note 58 of the Standalone Financial Statements)

5. We have been informed by the Company that RBI's officialsvisited the premises of the Company in May 2022 and reviewed few documents in context ofallegations made by former Independent directors of the Company. The management hasrepresented that while the Company has satisfactorily responded to queries of officialsno formal response has come from RBI so far in this regard. (Refer Note 55(a) of theStandalone Financial Statements)

Our opinion is not modified in respect of these matters.

Information Other than the Standalone Financial Statements andAuditor's Report Thereon

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in theChairman's Statement Director's Report etc but does not include the standalonefinancial statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. The other information has notbeen shared with us upto the date of this report and therefore at this stage we havenothing to report in this regard.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements for the yearended March 31 2022. These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters.

Sr. Key Audit Matter No How the Key Audit Matter was addressed in our audit
1 Expected Credit Losses (ECL) model Audit Procedures
As described in the notes to the standalone financial statements the impairment losses have been determined in accordance with Ind AS 109 Financial Instruments requiring considerable judgment and interpretation in its implementation which also involved significant judgement by management in measuring the expected credit losses. Key areas of judgment included: We assessed the appropriateness of the Company's policy on Expected Credit Loss recognition on financial instruments with reference to the applicable accounting standards and prudential norms laid down by RBI.
Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing:
• Determining the criteria for a significant increase in credit risk ('SICR') • We evaluated and tested the design and tested the operating effectiveness of
• Techniques used to determine the Probability of Default (TD') and Loss Given Default ('LGD') Company's controls over the data used to determine the impairment reserve internal credit quality assessments
• Assumptions used in the expected credit loss model such as the financial condition of the counterparty expected future cash flows etc. external credit ratings and methodology followed for computation of ECL.
Refer Notes 2 (g) 2 (q) 7 and 44A.2 to the standalone financial statements. • For Expected Credit Losses computed by the management we performed the following procedures:
(a) Assessed the reasonableness of assumptions and judgement made by management on model adoption and parameters selection;
(b) Examined the key data inputs (valuation of collateral the timing of cash flows and realisations) to the ECL model on a sample basis to assess their accuracy and completeness;
(c) Evaluated and tested on sample basis the appropriateness of staging including determination of significant increase in credit risk.
(d) Assessed the Company's methodology for ECL provisioning Classification and
Measurement with the assistance of our internal experts;
(e) Assessed accuracy and completeness of disclosures made as required by relevant accounting standards.
2 Impairment of loans to customers Audit Procedures
Allowance for impairment losses on loans to customers involves significant judgement by management to determine the timing and amount of the asset to be impaired. We assessed the appropriateness of the Company's impairment review and provisioning policy by comparing with the RBI prudential norms and applicable accounting standards;
Refer Notes 2 (g) 2 (q) 7 and 44A.2 to the standalone financial statements
Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing:
• We evaluated and tested the design and operating effectiveness of the relevant controls over the impairment assessments and impairment allowance computations for loans and advances to customers.
• We tested the management assumptions estimates and judgements which could give rise to material misstatement:
a. The completeness and timing of recognition of loss events;
b. The measurement of provisions for individual instances of loans which is dependent on the valuation of security provided and the collaterals against each loan the timing of cash flows and realisations;
c. We discussed with management and scrutinised the appropriateness of those key assumptions applied in management's impairment assessment and compared them with available external evidence where necessary.
d. The measurement of modelled provisions which is dependent upon key assumptions relating to probability of
default loss given default and expected future recoveries;
e. Performed procedures to obtain comfort on the accuracy of the impairment calculation process through recalculation of the provision charge based on inputs;
f. Assessed accuracy and completeness of disclosures made as required by relevant accounting standards.
3 Evaluation of uncertain tax positions for Income taxes Principal Audit Procedures
The Company has material uncertain tax positions relating to matters under litigation for Income taxes. These matters involve significant management judgement to determine the possible outcome of disputes. We obtained details of completed income tax assessments during the year ended March 31 2022 from the management. We involved our internal experts to challenge the management's underlying assumptions in estimating the tax provisions and the possible outcome of the disputes. Our internal experts also considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions relating to Income taxes.
Refer Note 2 (j) 2 (q) and 34 to the standalone financial statements.
Additionally we considered the effect of new information in respect of uncertain tax positions to evaluate whether any change was required to management's position on these uncertainties.

Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements

The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance changes in equity and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statement that give a true andfair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements the Board ofDirectors is responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless the Board of Directors either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so. The Board ofDirectors are also responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue 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 auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

We give in "Annexure C" a detailed description ofAuditor's responsibilities for Audit of the Standalone Financial Statements.

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 the "Annexure D" a statement on thematters 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) Except for the possible effect of the matters described in theBasis of Qualified Opinion section above we have sought and obtained all the informationand explanations which to the best of our knowledge and belief were necessary for thepurposes of our audit.

(b) Except for the possible effect of the matters described in theBasis of Qualified Opinion section above in our opinion proper books of account asrequired by law have been kept by the Company so far as it appears from our examination ofthose books.

(c) The Balance Sheet the Statement of Profit and Loss the Statementof Changes in Equity and the Statement of Cash Flow dealt with by this Report are inagreement with the books of account.

(d) Except for the matter described in the Basis of Qualified Opinionsection above in our opinion the aforesaid standalone financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

(e) The matter described in Basis of Qualified Opinion paragraph abovein our opinion may have an adverse effect on the functioning of the Company.

(f) On the basis of the written representations received from thedirectors as on March 31 2022 taken on record by the Board of Directors none of thedirectors are disqualified as on March 31 2022 from being appointed as a director interms of Section 164 (2) of the Act.

(g) With respect to the adequacy of the internal financial controlswith reference to standalone financial statements of the Company and the operatingeffectiveness of such controls refer to our separate Report in "Annexure E".

(h) With respect to the other matters to be included in theAuditor'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 theexplanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements - Refer Note 52 to thestandalone financial statements;

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.

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

iv. a) The Management has represented that to the best of itsknowledge and belief no funds have been advanced or loaned or invested (either fromborrowed funds or share premium or any other sources or kind of funds) by the Company toor in any other person(s) or entity(ies) including foreign entities("Intermediaries") with the understanding whether recorded in writing orotherwise that the Intermediary shall directly or indirectly lend or invest in otherpersons or entities identified in any manner whatsoever by or on behalf of the Company("Ultimate Beneficiaries") or provide any guarantee security or the like onbehalf of the Ultimate Beneficiaries;

b) The Management has represented that to the best of its knowledgeand 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 inwriting or otherwise that the Company shall whether directly or indirectly lend orinvest in other persons or entities identified in any manner whatsoever by or on behalf ofthe Funding Party ("Ultimate Beneficiaries") or provide any guarantee securityor the like on behalf of the Ultimate Beneficiaries; and

c) Based on such audit procedures as considered reasonable andappropriate in the circumstances except for the possible effect of matters described inthe Basis of Qualified Opinion section above nothing has come to our notice that hascaused us to believe that the representations under sub-clause iv(a) and iv(b) contain anymaterial misstatement; and

3. As required by The Companies (Amendment) Act 2017 in our opinionaccording to information and explanations given to us the remuneration paid by theCompany to its directors is within the limits laid prescribed under Section 197 of the Actand the rules thereunder.

Annexure A

1. Resolution as agreed by (adjourned) Audit Committee in meetingdated: 13th November 2022 and confirmed by all members.

"It is noted that the Forensic Auditor has given his findings inthe Final Forensic Audit Report submitted by him on 4th November 2022. It is also notedthat the forensic auditor has concluded that the findings as given by him in the draftreport are not significantly altered by the explanations given by the management. TheAudit Committee discussed these findings in reasonable detail and noted that the auditcommittee can go into even further detail in giving its observations on the forensic auditreport. However as emphasized repeatedly by the management considering the urgency ofadoption of the annual accounts for the year ended March 22 it is felt that thesignificant and salient aspects of the forensic audit report have been brought out in thediscussion and also the statutory auditor who was present as an invitee during thisdiscussion has taken note of these observations and examined the report of the forensicauditor in complete detail. Therefore at this stage the audit committee decides not togo into a further detailed discussion of the contents of the forensic audit report itsfindings and conclusions in light of the priorities mentioned by the management.Accordingly the audit committee takes on record Final Forensic Audit Report submitted byCNK & Associates LLP and thanks them for their services. After this discussion it wasresolved that:-

The audit committee accepts findings of the forensic auditor as givenin the Final Forensic Audit Report. The committee recommends them to the Board forappropriate follow up action. The Committee notes the constraints and scope limitationsoperating on the forensic auditor which find mention in the Forensic Audit Report andthat but for such limitations the forensic auditor would probably have been able to giveeven more specific findings. The Committee has also taken note of the responses given bythe management. The Committee also notes that an external agency was appointed by themanagement to act as advisors to the management in responding to the findings given by theforensic auditor. It is noted that the views expressed by the said advisors contain manyreservations disclaimers and limitations. Some of the salient disclaimers are mentionedin the email dt 8th Oct 22 sent by the Chairman of the Committee to the board members. Itis seen that the advisors state that they have relied on the justification provided by themanagement; and it is possible that there are factual inaccuracies where we have not beenprovided with the complete picture/information/documentation on a particular matter by theprocess owners. In turn the management states that it has relied upon theconsultant's findings to prepare their response to the forensic audit report. Theaudit committee therefore has given limited weightage to the recommendations of theconsultant. The committee also notes that the statutory auditor assures that allsignificant aspects of the forensic audit report have been taken into consideration bythem and further that these aspects have been taken into consideration in auditing thefinancial results for the year ended March 22 and that appropriate modifications based onthese findings have been suitably incorporated in their reports.

The above resolution was proposed by the Chairman (D1) and approved ofby D4 & D5.

D2 expressed his dissent stating that in addition to the other pointsas mentioned by him during the course of discussions he did not agree with the concept ofevergreening as interpreted / applied by the forensic auditor. He also felt that theforensic auditor had been selective in the presentation of certain facts and also he wasnot in agreement with the findings given by the forensic auditor in regard to Shri Ratneshand related matters. He was not in agreement with scope limitation or constraintsmentioned by Forensic Auditor. The Forensic Auditor has not done weekly discussions withthe management as stipulated in the engagement letter which is legally binding on him. Healso pointed out that the limitations mentioned in the Advisor's Report should beread in full not selectively and the limitations as expressed are as per generallyaccepted norms.

D3 recorded his dissent on the basis of numerous issues mentioned byhim in the course of earlier discussion including all the points specifically stated byD2. Further Advisors has clarified that the facts mentioned in their note were based onindependent review of supporting documents in relation to reply submitted by PFS. Thus itwas their independent assessment.

Basis the above the Resolution was adopted and passed with a majorityof 3 against 2 dissents."

This is issued on specific requirement of Statutory Auditors and aboveresolution was passed during the meeting and minutes will be finalised shortly.

Annexure B

2. Resolution as agreed by Board Meeting dated: 13th November 2022 andconfirmed by all members present in the meeting (except one Director -Audit committeechairman who was not present in the meeting)

The Board considered the forensic audit report of CNK along withmanagement replies E&Y remarks legal opinion by Former CJI legal opinion of CAM andFormer Director (Finance) of PFC. The Board noted that the Audit Committee considered theforensic audit report of CNK on 11 12 and 13th Nov and accepted the report by majority(3:2). The Board deliberated the report and observed that;

i. CNK report is that CNK has not identified any event having materialimpact on the financials of the Company. Hence not quantified.

ii. CNK has not identified any instance of fraud and diversion of fundsby the company.

iii. Procedural / operational issues identified by CNK needs to dealtwith expeditiously.

iv. The Issue related to Mr. Ratnesh has already been examined by RMCcommittee of PTC (Holding Company) and approved by Board of PTC India. The report isalready submitted to the regulators.

The Company has already complied by SEBI (LODR) by submitting the sameto Stock Exchanges along with management comments and E&Y remarks. The management isdirected to submit the report of Forensic Audit with management comments E&Y remarkslegal opinion by Former CJI legal opinion of CAM and former Director (Finance) of PFC andthis Board resolution to SEBI.

The Board is of the view that recommendation of E&Y may be obtainedby management to strengthen the business processes & operational issues and submit tothe Board at the earliest.

This is issued on specific requirement of Statutory Auditors and aboveresolution was passed during the meeting and minutes will be finalised shortly.

ANNEXURE C TO THE INDEPENDENT AUDITOR'S REPORT ON EVEN DATE ON THESTANDALONE FINANCIAL STATEMENTS OF PTC INDIA FINANCIAL SERVICES LIMITED

Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

Obtain an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether thecompany has internal financial controls with reference to standalone financial statementsin place and the operating effectiveness of such controls.

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

• Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements for the year ended March 31 2022 (current period) and are thereforethe key audit matters. We describe these matters in our auditor's report unless lawor regulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.

ANNEXURE D TO INDEPENDENT AUDITORS' REPORT OF EVEN DATE ON THESTANDALONE FINANCIAL STATEMENTS OF PTC INDIA FINANCIAL SERVICES LIMITED FOR THE YEAR ENDEDMARCH 31 2022

[Referred to in paragraph 1 under ‘Report on Other Legal andRegulatory Requirements' in the Independent Auditors' Report]

i. (a) A. The Company has maintained proper records showing fullparticulars including quantitative details and situation of Property Plant and Equipment.

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

(b) Property Plant and Equipment have been physically verified by themanagement at reasonable intervals during the year and no material discrepancies wereidentified on such verification.

(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties (other than properties where the Company is the lessee and the lease agreementsare duly executed in favour of the lessee if any) as disclosed in the standalonefinancial statements are held in the name of the Company.

(d) According to the information and explanations given to us theCompany has not revalued its property plant and Equipment (including Right of Use assetsif any) and its intangible assets. Accordingly the requirements under paragraph 3(i)(d)of the Order are not applicable to the Company.

(e) According to the information and explanations given to us noproceeding has been initiated or pending against the Company for holding benami propertyunder the Benami Transactions (Prohibition) Act 1988 and rules made thereunder.Accordingly the provisions stated in paragraph 3(i) (e) of the Order are not applicableto the Company.

ii. (a) The Company is involved in the business of rendering services.Accordingly the provisions stated in paragraph 3(ii)(a) of the Order are not applicableto the Company.

(b) According to the information and explanations provided to us whilethe Company has been sanctioned working capital limits on the basis of security of loanassets no limits have been sanctioned on the basis of security of current assets. We havebeen informed by the Company that banks/ financial institutions have not considered loanassets (which are expected to be recovered in next twelve months) as current assets giventheir underlying nature of recovery over the longer tenure. Accordingly the requirementsunder paragraph 3(ii)(b) of the Order is not applicable to the Company.

iii. (a) According to the information explanation provided to us theCompany's principal business is to give loans. Hence the requirements underparagraph 3(iii) (a) of the Order are not applicable to the Company.

(b) Based on our examination and the information and explanations givento us except for the possible effect of the matters described in the Basis of QualifiedOpinion section of our main report in respect of the loans granted investments made andguarantees provided (letter of comfort) in our opinion the terms and conditions underwhich such loans and guarantees provided are not prejudicial to the interest of theCompany.

(c) In respect of the aforesaid loans the schedule of repayment ofprincipal and payment of interest have been stipulated by the Company. Considering thatthe Company is a Non-Banking Financial Company engaged in the business of infrastructurefinance lending the borrower-wise details of

the amount due date for payment and extent of delay (that has beensuggested in the Guidance Note on CARO 2020 issued by the Institute of CharteredAccountants of India for reporting under this clause) have not been detailed hereunderbecause it is not practicable to furnish such details owing to the voluminous nature ofdata generated in the normal course of the Company's business. Further except forthe possible effect of the matters described in the Basis of Qualified Opinion section ofour main report while there are delays the parties are generally regular in repaying theprincipal amounts as stipulated and interest as applicable and wherever the amounts areoverdue as at March 31 2022 the Company has evaluated and recognized provisions ifnecessary in accordance with the principles of Indian Accounting Standards (Ind AS) andthe guidelines issued by the Reserve Bank of India ("RBI") for IncomeRecognition and Asset Classification (which has been disclosed by the Company in Note 46to the standalone financial statements).

(d) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the details of amount overduefor more than ninety days are as follows:

No. of Cases Principal amount overdue* (INR Lakhs) Interest amount overdue (INR Lakhs) Total overdue Remarks (specify whether reasonable steps have been taken by the Company for recovery of principal amount and interest)
10 95284.11 9910.29 105194.40 According to the information and explanation given to us except for the possible effect of the matters described in the Basis of Qualified Opinion section of our main report reasonable steps have been taken by the Company for recovery of principal amount and interest.

*The amount indicates the total principal outstanding in case of theoverdue accounts as at March 31 2022.

(e) The Company's principal business is to give loans. Hence theprovisions stated under paragraph 3(iii) (e) of the Order are not applicable to theCompany.

(f) According to the information explanation provided to us theCompany has not granted any loans and / or advances in the nature of loans during the yearwhich are either repayable on demand or without stipulating the schedule for repayment ofprincipal and interest. Hence the requirements under paragraph 3(iii)(f) of the Order arenot applicable to the Company.

iv. In our opinion and according to the information and explanationsgiven to us the Company is in the business of lending loans which are given at theinterest rates which are generally higher than the minimum rates stipulated in section185 and therefore section 185 is not applicable to the Company. The Company has not madeinvestments through more than two layers of investment companies in accordance with theprovisions of section 186 of the Act. Accordingly provisions stated in paragraph 3(iv) ofthe Order are not applicable to the Company.

v. In our opinion and according to the information and explanationsgiven to us the Company has not accepted any deposits from the public within the meaningof Sections 73 74 75 and 76 of the Act and the rules framed there under. Accordinglythe provisions stated in clause 3(v) of the Order are not applicable to the Company.

vi. The provisions of sub-section (1) of section 148 of the Act are notapplicable to the Company as the Central Government of India has not specified themaintenance of cost records for any of the products of the Company. Accordingly theprovisions stated in paragraph 3 (vi) of the Order are not applicable to the Company.

vii.

(a) According to the information and explanations given to us and therecords of the Company examined by us in our opinion undisputed statutory dues includinggoods and services tax provident fund income-tax cess and other statutory dues asapplicable have generally been regularly deposited with the appropriate authorities.

According to the information and explanations given to us noundisputed amounts payable in respect of goods and services tax provident fundincome-tax cess and other material statutory dues applicable to it were outstanding atthe year end 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 therecords of the Company examined by us there are no dues of goods and services tax cessand any other statutory dues as applicable which have not been deposited on account ofany dispute except as below:

Name of the statute Nature of dues Amount Involved* (INR lakhs) Amount Unpaid (INR lakhs) Period to which the amount relates Forum where dispute is pending
Income tax Act 1961 Income Tax 2936.70 937.09 2012-2017 Income Tax Appellate Authority
Income tax Act 1961 Income Tax 754.58 94.99 2012-13 201415 2017-18 Upto Commissioner (Appeals)

*Amount as per demand orders including interest and penalty whereverindicated in the order.

viii. According to the information and explanations given to us thereare no transactions which are not accounted in the books of account which have beensurrendered or disclosed as income during the year in tax assessment of the Company. Alsothere are no previously unrecorded income which has been now recorded in the books ofaccount. Hence the provision stated in paragraph 3(viii) of the Order is not applicableto the Company.

ix.

(a) In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in repayment of loans or borrowings or inpayment of interest thereon to any lender.

(b) According to the information and explanations given to us and onthe basis of our audit procedures we report that the Company has not been declared wilfuldefaulter by any bank or financial institution or government or any government authority.

(c) In our opinion and according to the information and explanationsprovided to us money raised by way of term loans during the year have been applied forthe purpose for which they were raised.

(d) According to the information and explanations given to us and theprocedures performed by us and on an overall examination of the standalone financialstatements of the Company we report that no funds raised on short-term basis have beenused for long-term purposes by the Company.

(e) According to the information explanation given to us and on anoverall examination of the standalone financial statements of the Company we report thatthe Company has not taken any funds from an any entity or person on account of or to meetthe obligations of its associates. The Company does not have any subsidiary or jointventure.

(f) According to the information and explanations given to us andprocedures performed by us we report that the Company has not raised loans during theyear on the pledge of securities held in its associate companies. The Company does nothave any subsidiary or joint venture.

x.

(a) The Company did not raise any money by way of initial public offeror further public offer (including debt instruments) during the year. Accordingly theprovisions stated in paragraph 3 (x)(a) of the Order are not applicable to the Company.

(b) According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully partly or optionallyconvertible debentures during the year. Accordingly the provisions stated in paragraph 3(x)(b) of the Order are not applicable to the Company.

xi.

(a) During the course of our audit examination of the books andrecords of the Company carried out in accordance with the generally accepted auditingpractices in India and according to the information and explanations given to us nofraud by the Company or on the Company has been noticed or reported during the yearexcept:

I. the possible effect of the matters described in the Basis forQualified Opinion section of our main report;

II. Following matters have been reported by the Company to the ReserveBank of India (RBI) during the year:

- NSL Nagapatnam - The Company has loan recoverable from NSL Nagapatnamamounting to Rs. 12500 lakhs as at March 31 2022. The underlying project has beenreferred for resolution under IBC proceedings wherein the Company is also the party.Basis facts of the case during the year the Board has reviewed and directed themanagement to report this loan as "suspected fraud" to RBI basis report of theforensic auditor appointed by the Company to investigate the borrower's books andaccounts wherein such auditor couldn't verify the transactions within group entitiesand therefore the report remains inconclusive. We have been informed that vide itsletter dated August 12 2021 the Company sent a letter to RBI explaining all facts of thematter. In the previous year the Company had accrued 100% provision for ECL against theoutstanding balance and therefore net balance (net off provision for ECL) is NIL as atMarch 31 2022.

- ILFS - The Company has loan recoverable from ILFS Tamil Naduamounting to Rs. 23069.47 lakhs (including accrued interest amounting to Rs. 4685.29lakhs) as at March 31 2022 with corresponding provision for ECL amounting to Rs.9400.16 lakhs as at March 31 2022. The Company has also recognized Rs. 13669.31 lakhsin Impairment Reserve as at March 31 2022 related to this matter. On Feb 4 2022 theCompany reported this account as "Fraud" in FMR 1 to RBI basis position taken byother lenders in the consortium. Basis forensic audit report from the Forensic auditorappointed by the consortium the nature of fraud primarily comprises of diversion andmisappropriation of borrowed funds routing of sales proceeds with accounts maintainedwith non-lender banks and availing services from vendors at higher prices compared toquotes available with the borrower.

(b) We are in the process of filing a letter with the CentralGovernment in relation to inter alia matters included in the Basis of Qualified opinionpara of our main report. This is not a filing in Form ADT-4 as prescribed under rule 13 ofCompanies (Audit and Auditors) Rules 2014.

(c) As represented to us by the management there are no whistle-blowercomplaints received by the Company during the year. Accordingly the provisions stated inparagraph (xi)(c) of the Order is not applicable to Company. However we draw yourattention to the resignation letters from former Independent directors as set out in thebasis of Qualified Opinion section of our main report.

xii. In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi Company. Accordingly the provisions stated inparagraph 3(xii) (a) to (c) of the Order are not applicable to the Company.

xiii. According to the information and explanations given to us andbased on our examination of the records of the Company except for the possible effect ofthe matters included in the Basis of Qualified Opinion section of our main reporttransactions with the related parties are in compliance with sections 177 and 188 of theAct where applicable and details of such transactions have been disclosed in thestandalone financial statements as required by the applicable accounting standards.

xiv.

(a) In our opinion and based on our examination the Company has aninternal audit system commensurate with the size and nature of its business.

(b) We have considered internal audit reports issued by internalauditors during our audit in accordance with the guidance provided in SA 610 - ‘Usingthe work of Internal Auditors'.

xv. According to the information and explanations given to us in ouropinion the Company has not entered into non-cash transactions with directors or personsconnected with its directors during the year and hence provisions of section 192 of theAct are not applicable to the Company. Accordingly the provisions stated in paragraph3(xv) of the Order are not applicable to the Company.

xvi.

(a) The Company is required to and has been registered under Section45-IA of the Reserve Bank of India Act 1934 as Non-banking Institution - Non-Deposittaking Systematically Important (NBFC- ND-SI) Company.

(b) The Company has conducted the Non-Banking Financial activities witha valid Certificate of Registration (CoR) from the Reserve Bank of India (RBI) as per theReserve Bank of India Act 1934. The Company has not conducted any Housing Financeactivities.

(c) The Company is not a Core investment Company (CIC) as defined inthe regulations made by Reserve Bank of India. Hence the reporting under paragraph clause3 (xvi)(c) of the Order are not applicable to the Company.

(d) The Company does not have any CIC as part of its group. Hence theprovisions stated in paragraph clause 3 (xvi) (d) of the order are not applicable to theCompany.

xvii. Based on the overall review of standalone financial statementsthe Company has not incurred cash losses in the current financial year and in theimmediately preceding financial year. Hence the provisions stated in paragraph clause 3(xvii) of the Order are not applicable to the Company.

xviii. There has been no resignation of the statutory auditors duringthe year. Hence the provisions stated in paragraph clause 3 (xviii) of the Order are notapplicable to the Company. However vide our letter dated June 30 2022 read with ouremail dated May 14 2022 to the Company we have

sent our intimation for proposed resignation as statutory auditors ofthe Company after completion of our responsibilities as statutory auditors for the yearended March 31 2022.

xix. According to the information and explanations given to us andbased on our examination of financial ratios ageing and expected date of realization offinancial assets and payment of liabilities other information accompanying the standalonefinancial statements our knowledge of the Board of Directors and management plans exceptof the possible effect of the matters described in Basis of Qualified Opinion section ofour main report we are of the opinion that no material uncertainty exists as on the dateof audit report and the Company is capable of meeting its liabilities existing at the dateof balance sheet as and when they fall due within a period of one year from the balancesheet date. We however state that this is not an assurance as to the future viability ofthe Company. We further state that our reporting is based on the facts upto the date ofthis audit report and we neither give any guarantee nor any assurance that all liabilitiesfalling due within a period of one year from the balance sheet date will get dischargedby the Company as and when they fall due.

xx.

(a) According to the information and explanations given to us theprovisions of Section 135 of the Act are applicable to the Company. In respect of otherthan ongoing projects the Company has transferred the amount remaining unspent to a Fundspecified in Schedule VII to the Companies Act 2013 within a period of six months fromthe end of the financial year as permitted under the second proviso to sub-section (5) ofsection 135 of the Act.

(b) The Company does not have any ongoing projects as at March 312022. Accordingly reporting under clause xx(b) of the Order is not applicable.

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

ANNEXURE E TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THESTANDALONE FINANCIAL STATEMENTS OF PTC INDIA FINANCIAL SERVICES LIMITED FOR THE YEAR ENDEDMARCH 31 2022

[Referred to in paragraph 2(g) under ‘Report on Other Legal andRegulatory Requirements' in the Independent Auditors' Report]

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

Qualified Opinion

We have audited the internal financial controls with reference tostandalone financial statements of PTC India Financial Services Limited ("theCompany") as of March 31 2022 in conjunction with our audit of the standalonefinancial statements of the Company for the year ended on that date.

In our opinion except for the possible effect of the matters describedin the Basis for qualified opinion below on the achievement of the objectives of thecontrol criteria the Company has maintained in all material respects adequate internalfinancial controls with reference to standalone financial statements and such internalfinancial controls with reference to standalone financial statements were operatingeffectively as of March 31 2022 based on the internal control with reference tostandalone financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (ICAI) (the "Guidance Note").

We have considered the above in determining the nature timing andextent of audit tests applied in our audit of the standalone financial statements of theCompany for the year ended March 31 2022 and it affects our opinion on the standalonefinancial statements of the Company for the year ended on that date and we have issuedqualified opinion on the standalone financial statements. Refer Qualified Opinion para ofour main audit report.

Basis for Qualified Opinion

According to the information and explanations given to us and based onour audit we draw your attention to the following:

1. Matters described in the Basis of Qualified Opinion section of ourmain report including matters relating to divergent views among directors regardingforensic audit report constraints and limitations highlighted by the Forensic auditorwhile preparing the Forensic audit report as also noted by the Audit Committee severalconcerns raised therein (including the observations around evergreening) and lack ofspecific procedures and conclusions thereon; and

2. The Board at its meeting held on November 13 2022 gave certaindirections to expeditiously address the operational issues identified by the Forensicauditor including on obtaining recommendations from the External Consultant forstrengthening the business processes and operational issues (as fully detailed in AnnexureB). We understand that these steps are yet to be taken by the management.

Pending conclusion of these matters we are unable to determine theirimpact on the design and operating effectiveness of internal financial controls overfinancial reporting including entity level controls as at March 31 2022.

A ‘material weakness' is a deficiency or a combination ofdeficiencies in internal financial control with reference to standalone financialstatements such that there is a reasonable possibility that a material misstatement ofthe company's annual or interim financial statements will not be prevented or detected ona timely basis.

Management's Responsibility for Internal Financial Controls

The Company's Management is responsible for establishing andmaintaining internal financial controls based on the internal control with reference tostandalone financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to Company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial 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 Auditingissued by ICAI and deemed to be prescribed under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls withreference to standalone financial statements was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of internal financial controls with reference to standalone financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to standalone financial statements included obtaining an understanding ofinternal financial controls with reference to standalone financial statements assessingthe risk that a material weakness exists and testing and evaluating the design andoperating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our qualified audit opinion on the Company'sinternal financial controls with reference to standalone financial statements.

Meaning of Internal Financial Controls with reference to StandaloneFinancial Statements

A Company's internal financial control with reference to standalonefinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of standalone financial statementsfor external purposes in accordance with generally accepted accounting principles. ACompany's internal financial control with reference to standalone financial statementsincludes those policies and procedures that (1) pertain to the maintenance of recordsthat in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of standalone financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the standalone financial statements.

Inherent Limitations of Internal Financial Controls with reference toStandalone Financial Statements

Because of the inherent limitations of internal financial controls withreference to standalone financial statements including the possibility of collusion orimproper management override of controls material misstatements due to error or fraud mayoccur and not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial control with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

For M S K A & Associates
Chartered Accountants
ICAI Firm Registration No. 105047W
Sd/-
Rahul Aggarwal
Membership No. 505676
UDIN: 22505676BDGXSP5731
Place: Gurugram
Date: November 16 2022

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