You are here » Home » Companies » Company Overview » Reliance Home Finance Ltd

Reliance Home Finance Ltd.

BSE: 540709 Sector: Financials
NSE: RHFL ISIN Code: INE217K01011
BSE 00:00 | 21 Jan 5.75 -0.08
(-1.37%)
OPEN

5.54

HIGH

5.90

LOW

5.54

NSE 00:00 | 21 Jan 5.70 -0.05
(-0.87%)
OPEN

5.75

HIGH

5.95

LOW

5.50

OPEN 5.54
PREVIOUS CLOSE 5.83
VOLUME 474529
52-Week high 6.90
52-Week low 2.05
P/E
Mkt Cap.(Rs cr) 279
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 5.54
CLOSE 5.83
VOLUME 474529
52-Week high 6.90
52-Week low 2.05
P/E
Mkt Cap.(Rs cr) 279
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Reliance Home Finance Ltd. (RHFL) - Auditors Report

Company auditors report

To The Members Reliance Home Finance Limited

Report on the Audit of the Ind AS Financial Statements Qualified Opinion

We have audited the accompanying Ind AS financial statements of Reliance HomeFinance Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2021 the Statement of Profit and Loss including the Statement of OtherComprehensive Income the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion section of our report the aforesaid Ind AS financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2021its loss including other comprehensive income its cash flows and the changes in equityfor the year ended on that date.

Basis for Qualified Opinion

We draw attention to Note 5(2) of the Ind AS financial Statements with regards to theloan advanced under the ‘General-Purpose Corporate Loan' product with significantdeviations to certain bodies corporate including group companies and outstanding as at March31 2021 aggregating to Rs 7965.24 crores and secured by charge on current assets ofborrowers. As stated in the said note majority of Company's borrowers have undertakenonward lending transactions and end use of the borrowings from the Company includedborrowings by or for repayment of financial obligation to some of the group companies. TheOutstanding exposure amounting to Rs 7965.24 Crores under General purpose corporate loanprovided by the company had become Non Performing asset (NPA) as on March 31 2021. Inview of the same we are unable to substantiate the management assertion on therecoverability of principal and interest including time frame of recovery of aforesaidloans outstanding as on March 31 2021. The Company's exposure to the borrowers aresecured against charge on current assets and is dependent on the recovery of onwardlending of the borrowers which depends on external factors not wholly within control ofthe Company/borrower. Further we draw attention to Note 46 of the Ind AS financialstatements on the material shift in primary business of the Company from Housing Financeto Non-Housing Finance which comprise more than 50% of total loan portfolio raisingconcern about Company continuing as a Housing Finance Company. We conducted our audit ofthe Ind AS financial statements in accordance with the Standards on Auditing (SAs) asspecified under section 143(10) of the Act. Our responsibilities under those Standards arefurther described in the ‘Auditor's Responsibilities for the Audit of the Ind ASfinancial statements' section of our report. We are independent of the Company inaccordance with the ‘Code of Ethics' issued by the Institute of Chartered Accountantsof India together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our qualified audit opinion on the Ind AS financialstatements.

Emphasis of Matters (i) Going concern

We draw attention to note 18(d) to the Ind AS Financial statements which states thatthe Company has engaged with its lenders to enter into an Inter Creditor Agreement (ICA)for the resolution of its debt in accordance with the circular dated June 7 2019 issuedby the Reserve Bank of India for prudential framework for resolution of stressed assetswith Bank of Baroda acting as the lead lender. The lenders have made the appointment ofprofessional viz resolution plan advisors forensic auditor legal counsel cash flowmonitoring agency and valuation agencies for the resolution process. The timeline of 180days as envisaged in the RBI Circular expired on January 3 2020. However as informed thelenders had extended the ICA till March 31 2021. We are further informed the lead bankerhad confirmed that resolution process under way and ICA lenders are taking all steps inresolving the stress situation of the company. Bank of Baroda as lead lender and on behalfof ICA lender has as part of debt resolution process has invited expression of interest(EOI) and bids from interested bidders the resolution process is in final stage with thelenders having received the final plan from interested investors. The company is expectingthat lenders will finalize the resolution plan which will be implemented. There issubstantial reduction in the lending business during the year. The Company has defaultedin payment of borrowings obligations amounting to Rs 7828.87 crores as on March 31 2021and the asset cover has also fallen below hundred percent of outstanding debenturesamounting to Rs 5966.67 crores. The Company's ability to meet its obligation dependent onmaterial uncertain events including restructuring of loan portfolio implementation ofResolution Plan by Inter Creditor Agreement for the resolution of its debt under the ICAas stated above and revival of housing finance business. In view of steps taken by thecompany and resolution process being in the final stage the expected implementation andfurther extension of resolution the Ind AS financial statements of the Company have beenprepared by the management on a going concern basis. Our opinion is not modified inrespect of this matter.

(ii) Impact of COVID-19 pandemic

The outbreak of Corona virus (COVID-19) pandemic globally and in India is causingsignificant disturbance and slowdown of economic activity. The Company's operations andrevenue during the period were impacted due to COVID-19. The Company has taken intoaccount the possible impact of COVID-19 in preparation of the audited financial resultsincluding its assessment of recoverable value of its assets such as loans receivablesintangible assets (including goodwill) deferred tax assets investments and investmentproperties during the year and as on 31st March 2021 based on internal and externalinformation including credit reports economic forecasts and industry reports upto thedate of approval of these audited financial results and current indicators of futureeconomic conditions. Since the situation is rapidly evolving its effect on the operationsof the Company may be different from that estimated as at the date of approval of theseaudited Ind AS financial statements. We draw attention to Note 57 to the Ind AS Financialstatements which describes the extent to which the COVID-19 pandemic will impact theCompany's results will depend on future developments which are highly uncertain. The notefurther states that in accordance with the RBI guidelines relating to COVID-19 RegulatoryPackage dated March 27 2020 April 17 2020 and May 23 2020 the Company has granted amoratorium of upto six months on the payment of all installments comprising of principaland / or

Independent Auditor's Report interest as applicable falling due between March 12020 and August 31 2020 to all eligible borrowers classified as Standard even ifoverdue as on February 29 2020. For all such accounts where the moratorium is grantedthe asset classification has remained stand still during the moratorium period (i.e. thenumber of days past-due shall exclude the moratorium period for the purposes of assetclassification under the Income Recognition Asset Classification and Provisioning norms).The Company has provided Stage 3 provisioning on all such cases mentioned above in theStatement of Profit & Loss for the quarter and year ended March 31 2021. Our opinionis not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Ind AS financial statements for the financial year endedMarch 31 2021. These matters were addressed in the context of our audit of the Ind ASfinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. For each matter below our description of how ouraudit addressed the matter is provided in that context. We have determined the mattersdescribed below to be the Key audit matters to be communicated in our report. We havefulfilled the responsibilities described in the Auditor's responsibilities for the auditof the Ind AS financial statements section of our report including in relation to thesematters. Accordingly our audit included the performance of procedures designed to respondto our assessment of the risks of material misstatement of the Ind AS financialstatements. The results of our audit procedures including the procedures performed toaddress the matters below provide the basis for our qualified audit opinion on theaccompanying Ind AS financial statements.

Key audit matters How our audit addressed the key audit matter
Subjective Estimate Our audit procedures included considering the appropriateness of the Company's accounting policies for impairment of financial assets and assessing compliance with Ind AS 109.
1. Recognition and measurement of impairment relating to loans and advances to customers involves significant management judgement.
(as described in Note 38 of the Ind AS Financial Statements) Understood Company's new processes systems and controls implemented relating to impairment allowance process including governance controls over the development and implementation of the ECL model;
As per Ind AS 109 credit loss assessment is now based on Expected Credit Loss (ECL) model and applicable to the Company. Test checked the design and implementation of key internal financial controls over loan impairment process used to calculate the impairment charge and test checked management review controls over measurement of impairment allowances and disclosures in the financial statements;
The Impairment loss provision is computed based on management estimates including the historical default and loss ratios. Management exercises judgement in determining the quantum of loss based on a range of factors. Evaluated appropriateness of the impairment principles based on the requirements of Ind AS 109 considering our business understanding and industry practice;
The most significant areas involving significant management estimates are: Loan staging criteria Calculation of probability of default / Loss given default/ Exposure at default. Performed substantive procedures over validating completeness and accuracy of the data and reasonableness of assumptions used in the model;
Consideration of probability weighted scenarios and forward looking macro-economic factors. We engaged our specialists to test the working of the ECL model and reasonableness of assumptions used;
Ind AS 109 requires an entity to determine Expected Credit Loss (ECL) amount on a probability weighted basis. There is a large increase in the data inputs required for the computation of ECL. This increases the risk of completeness and accuracy of the data that has been used as a basis of significant assumptions in the model. Broadly evaluated management's judgement in the determination of ECL;
Performed cut off procedures on a sample basis relating to recoveries at year end that would impact staging of loans;
2. Valuation of Market Linked Debentures: Our audit procedures included an assessment of internal controls over valuation methodologies inputs judgments made and assumptions used by management in determining fair valuation of MLD.
(as described in Note 17 and Note 37(c) of the Ind AS Financial Statements)
The Company has outstanding balance of Market Linked Debentures (MLD) as on March 31 2021 of Rs 282.54 crores. These MLDs are economically hedged with Exchange instruments like Nifty Bank Nifty & Stock Options. The Company has done an internal valuation of the outstanding MLD using internal valuation techniques. We have assessed and reviewed the fair valuation of MLD by the Company for compliance with Ind AS.
Considering that internal valuation of MLD is significant to overall financial statements and the degree of management's judgement involved in the estimate any error in the estimate could lead to material misstatement in the financial statements. Therefore it is considered as a key audit matter. We compared resulted valuations against independent sources and externally available market valuation data for sample cases.
Key audit matters How our audit addressed the key audit matter
4. Impairment of Goodwill:
(As described in Note 1(k) and Note 12 of the Ind AS Financial Statements) The Company has recognised goodwill of 209.96 crores Rs generated pursuant to the scheme of arrangements approved by NCLT on April 5 2017 and August 10 2017 and under Indian GAAP the Company had determined to amortize the goodwill so generated over the next few years. We have understood the basis of significant estimate judgement and assumptions taken by management for annual impairment test of goodwill allocated to a cash-generating unit with respect to following criterion:
As required under Ind AS 36-Impairment of Assets A cash- generating unit to which goodwill has been allocated shall be tested for impairment annually and whenever there is an indication that the unit may be impaired by comparing the carrying amount of the unit including the goodwill with the recoverable amount of the unit which is based on many factors involving significant management estimate and judgement. Considering that goodwill impairment is significant to overall financial statements and the degree of management's judgement involved in the estimate any error in the estimate could lead to material misstatement in the financial statements. Therefore it is considered as a key audit matter. Future growth and long-term life of housing industry. Long term benefits to the Company from the use of existing assets.
Government focus on housing finance sector.
Market exposure having a Company's stock listed on an exchange could attract the attention of mutual and hedge funds market makers and institutional traders.
Other various economic factors and conclusion that goodwill generated will bring additional benefit in future and fair value is more than the carrying value hence no impairment triggered as required under Ind AS 36.
As per Management the debt resolution of Reliance Home Finance Limited (RHFL) under 07th June 2019 Circular of RBI Prudential Framework for Resolution of Stressed Assets is presently in final stages and the lead bank and Resolution Advisors had received the final bids from interested investors and looking at the above benefits to the Company in the foreseeable future the management believes that there shall be no Impairment for the said goodwill
We have assessed the management contention as mentioned above and also considered various steps taken by the management including entering into ICA for resolution of debts as mentioned in Note 18(d) and continue to be going concern various government policy for housing finance company and company's focusing on retail loan segment.
4. Deferred Tax Assets :
The Company has recognized Deferred Tax Assets on unused tax losses amounting to Rs 782.98.Crores during the year. As required under Ind AS 12 the Management may consider the following criteria in assessing the probability that taxable profit will be available against which the unused tax losses or unused tax credits can be utilised:
As required under Ind AS 12-Income Taxes A deferred tax asset shall be recognised for the carry forward of unused tax losses or tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses or tax credits can be utilised. (a) whether the Company has sufficient taxable temporary differences relating to the same taxation authority and the same taxable entity which will result in taxable amounts against which the unused tax losses or unused tax credits can be utilised before they expire;
The criteria for recognising deferred tax assets arising from the carry forward of unused tax losses and tax credits are the same as the criteria for recognizing deferred tax assets arising from deductible temporary differences. However the existence of unused tax losses is strong evidence that future taxable profit may not be available. Therefore when an entity has a history of recent losses the entity recognises a deferred tax asset arising from unused tax losses or tax credits only to the extent that the entity has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which the unused tax losses or unused tax credits can be utilised by the entity. (b) whether it is probable that the entity will have taxable profits before the unused tax losses or unused tax credits expire;
(c) whether the unused tax losses result from identifiable causes which are unlikely to recur; and
(d) whether tax planning opportunities are available to the entity that will create taxable profit in the period in which the unused tax losses or unused tax credits can be utilized.
(e) In view of the on-going debt resolution process being in the final stages there is potential scope for the Company to utilize the Deferred Tax Asset subject to the nature of the final resolution plan to be selected by the lenders and implemented
The management recognized the deferred tax asset on unused tax losses after due assessment of the above criterions which also includes various steps taken by the management including entering into ICA for resolution of debts as mentioned in Note 18(d) and continue to be going concern various government policy for housing finance company and company's focusing on retail loan segment..

Information Other than the Ind AS Financial Statements and Auditor's Report Thereon.

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe Ind AS financial statements and our Auditor's Report thereon. Our opinion on the IndAS financial statements does not cover the other information and we do not express anyform of assurance conclusion thereon. In connection with our audit of the Ind AS financialstatements our responsibility is to read the other information and in doing so considerwhether the other information is materially inconsistent with the 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. We have nothing to report inthis regard.

Responsibilities of Management and Those Charged with Governance for the FinancialStatements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Ind AS financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error. In preparing the Ind AS financial statements the Board of Directors isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the Ind AS FinancialStatements as a whole are free from material misstatement whether due to fraud or errorand to issue an Auditor's Report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these Ind AS financial statements. As part of an audit in accordance with SAs weexercise professional judgment and maintain professional skepticism throughout the audit.We also:

Identify and assess the risks of material misstatement of the Ind AS FinancialStatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

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

Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

Evaluate the overall presentation structure and content of the Financial Statementsincluding the disclosures and whether the

Financial Statements represent the underlying transactions and events in a manner thatachieves fair presentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Ind AS financial statements forthe financial year ended March 31 2021 and are therefore the key Audit Matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order.

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 bestof our knowledge and belief were necessary for the purposes of our audit; (b) In ouropinion proper books of account as required by law have been kept by the Company so faras it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss including the statement ofOther Comprehensive Income the Cash Flow Statement and Statement of Changes in Equitydealt with by this Report are in agreement with the books of account. (d) In our opinionthe aforesaid Ind AS financial statements comply with the Accounting Standards specifiedunder Section 133 of the Act read with Companies (Indian Accounting Standards) Rules2015 as amended; (e) The Company is prohibited to dispose off alienate encumber eitherdirectly or indirectly or otherwise part with the possession of any assets except in theordinary course of business such as payment of salary and statutory dues vide Order datedNovember 20 2019 passed by the Hon'ble Delhi High Court. Consequently the interest andprincipal amounts in relation to various series of debentures have remained unpaid andoutstanding as on March 31 2021. Based on the legal opinion obtained by the Company andbased on the written representations received from the directors as on March 31 2021taken on record by the Board of Directors none of the directors is disqualified as onMarch 31 2021 from being appointed as a director in terms of Section 164(2) of the Act.

(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to these Ind AS financial statements and theoperating effectiveness of such controls refer to our separate Report in "AnnexureB" to this report; (g) In our opinion and as per information and explanation providedto us the managerial remuneration for the year ended March 31 2021 has not beenpaid/provided by the Company to its directors. Hence the provisions of section 197 readwith Schedule V to the Act are not applicable to the Company. ; (h) With respect to theother matters to be included in the Auditor's Report in accordance with Rule 11 of theCompanies (Audit and Auditors) Rules 2014 as amended in our opinion and to the best ofour information and according to the explanations given to us: i. The Company hasdisclosed the impact of pending litigations as at March 31 2021 on its financial positionin its financial statements. Refer Note 49. ii. The Company has made provision as at March31 2021 wherever required under the applicable law or accounting standards for materialforeseeable losses on long-term contracts including derivative contracts. Refer Note 56.iii. There were no amounts which were required to be transferred to the Investor Educationand Protection Fund by the Company.

For Dhiraj & Dheeraj

Chartered Accountants

Firm's Registration Number: 102454W

CA Shailendra Dadhich

Partner

Membership Number: 425098

Place : Mumbai

Date : May 07 2021

UDIN: 21425098AAAADH4599

Annexure A to the Independent Auditors' Report on the Financial Statement ANNEXURE‘A' TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of

Reliance Home Finance Limited of even date) i. In respect of the Company's fixedassets:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The fixed assets of the Company have been physically verified by the managementduring the year and no material discrepancies have been noticed on such verification. Inour opinion this frequency of verification is reasonable.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records the title deeds of immovable properties as disclosed in Note11 on Property plant and equipment to the financial statements are held in the name ofthe Company. ii. The Company is in the business of rendering services and consequentlydoes not hold any physical inventory. Accordingly the requirements under paragraph 3(ii)of the Order are not applicable to the Company. iii. According to the information andexplanation given to us and based upon audit procedure performed during the year theCompany has not granted any loan secured or unsecured to companies firms limitedliability partnerships or other parties covered in the register maintained under section189 of the Companies Act 2013. Accordingly provisions of clause 3(iii) (a) (b) and (c)of the order are not applicable to the Company. iv. In our opinion and according to theinformation and explanations given to us by the management the Company has not grantedany loan or provided any guarantee or security in connection with any loan taken byparties covered under section 185 of the act. The Company is registered as a HousingFinance Company with the National Housing Bank. Therefore the provisions of Section 186except sub section (1) of Section 186 of the Act are not applicable to the Company.Further the Company has not made any investments to the parties covered under Section 186.Therefore the provisions of Clause 3(iv) of the order in respect of section 186 (1) arenot applicable to the Company. v. The Company has not accepted any deposits from publicwithin the meaning of Sections 73 to 76 of the Act and the rules framed there under to theextent notified. vi. The Central Government of India has not specified the maintenance ofCost records under section 148 (1) of Act for any of the products of the Company. vii.According to the information and explanations given to us and records examined by us inrespect of statutory dues: (a) The Company is generally being regular in deposit ofundisputed statutory dues including Income Tax Provident Fund Goods and Service Tax andany other material statutory dues applicable to the Company. As explained to us theCompany does not have any dues on account of Sales Tax Wealth Tax duty of Custom andduty of Excise.

According to the information and explanations given to us and based on audit proceduresperformed there are no undisputed statutory dues payable in respect of Income TaxProvident Fund Goods and Service Tax and any other material statutory dues applicable tothe Company which are outstanding as on March 31 2021 for a period of more than sixmonths from the date they became payable. As explained to us the Company does not have anydues on account of Sales Tax Wealth Tax duty of Custom and duty of Excise.

(b) According to the information and explanations given to us there are no dues ofGoods and Service Tax and other material statutory dues applicable to the Company whichhave not been deposited with the appropriate authorities on account of any dispute.However according to information and explanations given to us the following dues ofincome tax have not been deposited by the Company on account of disputes:

Name of the Statute Nature of the dues Amount (Rs In Crores) Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Income Tax 0.48* Assessment Year 2018-19 CIT(Appeals)

*The Company has deposited Rs 0.12 crores against the disputed amount.

viii. According to the records of the Company examined by us and the information andexplanation given to us the Company has defaulted in repayment of loans and borrowingsobtained from financial institutions banks and debenture holders details of which areas follows:

Particulars

Amount of Default as at the

Period of Default (Days)

Balance Sheet Date (Rs in crore)

Name of the lenders Principal Interest* Principal Interest
1. Term Loans from Banks and Financial Institutions
Andhra Bank 129.26 16.04 644 517
Axis Bank Ltd 38.16 6.16 608 548
Bank of Bahrain and Kuwait 7.50 1.19 398 517
Bank of Baroda 343.34 68.88 635 517
Bank of India 150.00 34.31 640 517
Canara Bank 210.00 35.14 471 517
Dena Bank 236.44 65.67 643 517
HDFC Bank Ltd 46.67 6.15 548 517
ICICI Bank - 10.48 - 517
Indian Bank 60.00 16.97 495 517
Karnataka Bank 20.00 2.62 550 517
Punjab & Sind Bank 280.00 69.33 557 517
Punjab National Bank 80.00 16.43 456 517
State Bank of Bikaner and Jaipur 40.00 10.21 548 517
State Bank of Hyderabad 20.00 5.11 559 517
State Bank of Patiala 40.00 10.13 378 517
Syndicate Bank 100.00 44.51 184 517
The Federal Bank Ltd. 100.00 20.63 593 517
The Jammu and Kashmir Bank Limited 60.00 8.22 511 517
UCO Bank 100.00 25.83 689 517
United Bank of India 175.00 23.80 640 517
Vijaya Bank 75.00 11.52 478 517
2. Cash Credit from Banks and Financial
Institutions
Axis Bank Ltd 40.00 0.34 607 548
Bank of Baroda 9.74 6.04 414 517
Canara Bank 40.48 9.33 470 517
Punjab & Sind Bank 100.00 14.79 312 517
The Jammu and Kashmir Bank Limited 50.00 8.92 487 517
The Lakshmi Vilas Bank 50.00 11.63 670 517
3. Commercial Paper
Axis Bank Ltd 124.00 12.04 471 456
Yes Bank 360.00 50.95 562 548
4. Non-Convertible Debentures 2780.44 1098.90

Refer Note

Note -

The Company is prohibited to dispose off alienate encumber either directly orindirectly or otherwise part with the possession of any assets except in the ordinarycourse of business such as payment of salary and statutory dues vide Order dated November20 2019 passed by the Hon'ble Delhi High Court. Consequently the interest and principalamounts in relation to various series of debentures have remained unpaid for a periodranging between 365 to 583 days.

*Including accrued interest

Annexure A to the Independent Auditors' Report on the Financial Statement ix. TheCompany did not raise any money by way of initial public offer or further public offer(including debt instruments) during the year. According to the information and explanationprovided to us the Company did not raise any money by way of term loans during the year.x. During the course of our examination of the books and records of Company carried out inaccordance with the generally accepted auditing practice in India and according to theinformation and explanation given to us by the management we have neither came across anyinstance of fraud by the Company or any fraud on the Company by its officer or employeenoticed or reported during the year nor have we been informed of any such instance by themanagement. xi. According to the information and explanations given to us by themanagement the Company has not paid/provided for managerial remuneration in accordancewith the provision of section 197 read with Schedule V of the act hence this clause isnot applicable to the Company. xii. In our opinion and according to the information andexplanations given to us the Company is not a nidhi company. Accordingly therequirements under paragraph 3(xii) of the Order are not applicable. xiii. According tothe information and explanations given to us and records examined by us transactions withthe related parties are in compliance with sections 177 and 188 of the Act whereapplicable and details of such transactions have been disclosed in the Ind AS financialstatements as required by the applicable accounting standards. Also refer Note 5(2) of IndAS Financial Statements. xiv. According to the information and explanations give to us andrecords examined by us the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year.Accordingly the requirements under paragraph 3(xiv) of the Order are not applicable tothe Company. xv. According to the information and explanations given to us and recordsexamined by us the Company has not entered into non-cash transactions with directors orpersons connected with him. Accordingly the requirements under paragraph 3(xv) of theOrder are not applicable to the Company. xvi. The Company is not required to be registeredunder section 45-IA of the Reserve Bank of India Act 1934.

For Dhiraj & Dheeraj

Chartered Accountants

Firm's Registration Number: 102454W

CA Shailendra Dadhich

Partner

Membership Number: 425098

Place : Mumbai

Date : May 07 2021

UDIN: 21425098AAAADH4599

Annexure B to the Independent Auditor's Report on the Financial Statement

(Referred to in paragraph 2(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Reliance Home Finance Limitedof even date)

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

We have audited the internal financial controls over financial reporting of RelianceHome Finance Limited ("the Company") as of March 31 2021 in conjunction withour audit of the Ind AS financial statements of the Company for the year ended on thatdate.

Management's Responsibility for Internal Financial Controls

The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting with reference to these Ind AS financial statementsbased on our audit. We conducted our audit in accordance with the Guidance Note on Auditof Internal Financial Controls Over Financial Reporting (the "Guidance Note")and the Standards on Auditing as specified under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls and both issued by the Institute ofChartered Accountants of India. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting withreference to these Ind AS financial statements was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls over financial reporting with reference to these Ind ASfinancial statements and their operating effectiveness. Our audit of internal financialcontrols over financial reporting included obtaining an understanding of internalfinancial controls over financial reporting with reference to these Ind AS financialstatements assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the internal financial controls overfinancial reporting with reference to these Ind AS financial statements.

Meaning of Internal Financial Controls Over Financial Reporting with Reference to theseInd AS Financial Statements

A Company's internal financial control over financial reporting with reference to theseInd AS financial statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accountingprinciples. A Company's internal financial control over financial reporting with referenceto these Ind AS financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the Company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the Company are being made only in accordance withauthorizations of management and directors of the Company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the Company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting withReference to these Ind AS Financial Statements

Because of the inherent limitations of internal financial controls over financialreporting with reference to these Ind AS financial statements including the possibilityof collusion or improper management override of controls material misstatements due toerror or fraud may occur and not be detected. Also projections of any evaluation of theinternal financial controls over financial reporting with reference to these Ind ASfinancial statements to future periods are subject to the risk that the internal financialcontrol over financial reporting with reference to these Ind AS financial statements maybecome inadequate because of changes in conditions or that the degree of compliance withthe policies or procedures may deteriorate.

Basis for Qualified Opinion

According to the information and explanation given to us and based on our audit thefollowing material weaknesses have been identified in operating effectiveness of Company'sInternal Financial Control during the financial year 2020-21: a. The Company's internalfinancial control over financial reporting is not operating effectively in respect of"General-Purpose Corporate Loan product" and risk assessment recovery measuresand related documentation to mitigate the risk of the Company recognizing revenue withoutestablishing reasonable certainty for ultimate collection. The Company needs tosubstantially strengthen its recovery measures for these loan products and make it promptmore effective and robust.

b. In our opinion scope of internal auditor was not commensurate with the size andnature of Company's business and operations specifically in respect of loan sanctionedunder General Purpose Corporate Loan product and hence the scope should be enlarged andextended.

A ‘material weakness' is a deficiency or a combination of deficiencies inInternal Financial Control with reference to financial statements such that there is areasonable possibility that a material misstatement of the Company's annual or interimfinancial statements will not be prevented or detected on a timely basis.

Qualified Opinion

In our opinion except for the possible effects of the material weaknesses describedabove on the achievement of the objectives of the control criteria the Company has inall material respects adequate internal financial controls over financial reporting andsuch internal financial controls over financial reporting were operating effectively as atMarch 31 2021 based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India. We have considered the materialweaknesses identified and reported above in determining the nature timing and extent ofaudit tests applied in our audit of the Ind AS financial statements of the Company as atand for the year ended March 31 2021 and these material weaknesses have affected ouropinion on the Ind AS financial statements of the Company and we have issued a qualifiedopinion on the Ind AS financial statements.

For Dhiraj & Dheeraj

Chartered Accountants

Firm's Registration Number: 102454W

CA Shailendra Dadhich

Partner

Membership Number: 425098

Place : Mumbai

Date : May 07 2021

UDIN: 21425098AAAADH4599

Auditor's Additional Report pursuant to the requirements of Housing Finance Companies-Auditor's Report (National Housing Bank) Directions 2016.

To

The Board of the Directors Reliance Home Finance Limited The Ruby 11thFloor North-West Wing Plot No. 29 Senapati Bapat Marg Dadar (West) Mumbai 400 028

1. This report is issued pursuant to the requirements of Paragraph 2 of Housing FinanceCompanies- Auditor's Report (National Housing Bank) Directions 2016 (the"Directions") on matters mentioned in Paragraph 3 and 4 of the Directions.

2. We have audited the financial statements of Reliance Home Finance Limited(hereinafter referred to as the "Company") comprising Balance Sheet as at March31 2021 and the related Statement of Profit and Loss and Cash Flow Statement for the yearended on that date on which we have issued qualified opinion in our audit report datedMay 7 2021.

Management's Responsibility for the Financial Statements

3. The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of the Ind AS financial statements thatgive a true and fair view of the financial position financial performance including othercomprehensive income cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Ind AS financial statements that give a true and fairview and are free from material misstatement whether due to fraud or error.

In preparing the Ind AS financial statements the Board of Directors is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so. The Board of Directors are also responsible foroverseeing the Company's financial reporting process.

4. The Management is also responsible for compliance with the National Housing BankAct 1987 (NHB Act) The Housing Finance Companies (NHB) Directions 2010 as amendedfrom time to time (NHB Directions) read with other relevant NHB circulars and guidelinesapplicable to Housing Finance Companies as amended from time to time and for providingall the required information in stipulated time period to the National Housing Bank (NHB).

Auditor's Responsibility

5. Pursuant to the requirements of the Directions referred to in paragraph 1 above itis our responsibility to examine the audited books and records of the Company for the yearended March 31 2021 and report on the matters specified in the Directions to the extentapplicable to the Company.

6. We conducted our examination in accordance with the ‘Guidance Note on reportsor Certificates for Special Purposes' issued by the Institute of Chartered Accountants ofIndia. The Guidance Note requires that we comply with the ethical requirements of the Codeof Ethics issued by the Institute of Chartered Accountants of India.

7. We have complied with the relevant applicable requirements of the Standard onQuality Control (SQC) 1 Quality Control for Firms that Perform Audits and Reviews ofHistorical Financial Information and other assurance and Related Services Engagements.

Opinion

8. Based on our examination of the audited books and records of the Company for theyear ended March 31 2021 as produced for our examinations and the information andexplanations given to us we report that: 8.1 The Company is engaged in the business ofproviding finance for housing and has initially obtained a certificate of registration(COR) no. 02.0069.09 dated January 06 2009 in the name of Reliance Homes Finance PrivateLimited and pursuant to name change the same has been reissued with COR no. 04.0074.09dated April 27 2009 in the name of Reliance Home Finance Private Limited and furtherpursuant to name change the same has been reissued with COR no. 07.0101.12 dated July 162012 in the name of Reliance Home Finance Limited by the NHB New Delhi under section 29Aof the NHB Act.

8.2 The Company is not meeting the required Net Owned Fund requirement as prescribedunder Section 29A of the NHB Act due to accumulated losses.

8.3 For the F.Y 2020-21 the company is not liable to transfer any amount as specifiedin Section 29C of the National Housing Bank Act 1987 as the company has incurred lossesduring the year.

8.4 The Board of Directors of the Company has passed a resolution in its Board meetingheld on May 08 2020 for non-acceptance of public deposits; 8.5 The Company has notaccepted any public deposits during the year ended March 31 2021; 8.6 The totalborrowings of the Company as on 31st March 2021 is exceeding the limits prescribed underparagraph 3(2) of the NHB Directions due to negative net owned funds as on 31st March2021;

8.7 The Company has adopted Ind AS accounting framework as notified Under Section 133of the Companies Act 2013 ("The Act") by the Ministry of Corporate Affairs(MCA) w.e.f. April 1 2018. The Financial Statements for the year ended March 31 2021 hasbeen prepared by the management considering accounting methodology and principlesmentioned in applicable Ind AS. The Company presents its Balance Sheet in order ofliquidity in compliance with the Division III of Schedule III to the Act. The Company hascomplied with the requirement mentioned under respective Ind AS on income recognitionprovisioning and asset classification in preparing financial statements.

NHB's Policy Circular No. NHB(ND)/DRS/Policy Circular No. 89/2017-18 dated June 142018 requires Housing Finance Companies to continue to follow the extant provisions ofNational Housing Bank Act 1987 and Housing Finance Companies (NHB) Directions 2010 requirevarious disclosure on income recognition provisioning and asset classification and toprovide adequate disclosures in the notes to accounts. Accordingly the Company hasprovided disclosure in the notes to accounts in accordance with the aforesaid guidelinesand as per Accounting Standard prescribed under Section 133 of the Act read with theCompanies (Accounting Standards) Rules 2006 as amended (Indian GAAP).

The Company has complied with loan to value ratio (LTV ratio) requirement as mentionedin prudential norms except for the following case:

Agreement No. Loan Type Sanctioned Date Sanctioned Amount Final Appraisal (Security value) Loan to value (LTV) Ratio
LTV on Sanctioned Date LTV as on 31/03/21 As per NHB norms
RLHLAHM000133367 Non Housing 31/07/2009 10572894 11502000 91.92 89.93 75
RHHLPUN000010187 Housing 31/08/2011 8049303 10562800 76.20 78.34 75
RHLFKRT000070566 Non Housing 15/05/2018 17881818 12600000 141.92 75.97 75
RHHLHYD000057659 Housing 14/08/2017 4740000 5893000 80.43 84.16 80

The Company has complied with the prudential norms on disclosure in balance sheetinvestment in real estate exposure to capital market and engagement of broker andconcentration of credit / investments as at March 31 2021 as specified in NHB Directions.

(Also refer Para 8.13 and 8.14 below)

8.8 The Company has correctly arrived at and disclosed the capital to risk assets ratio(CRAR) in the Schedule II to the return submitted to the NHB for the year ended March 312021 However such ratio is not in compliance with the minimum CRAR prescribed in NHBDirections due to negative Net Owned Fund.

8.9 The Schedule II return for the year ended March 31 2021 has been furnished to theNHB as specified in the NHB Directions. There was a delay in submission of Schedule II(Half Yearly Return) for the half year ended September 2020 due to some technical error inORMIS portal the company had informed the NHB ORMIS team via email dated Dec 1 2020 andsubmitted the return on the same date through mail. The half yearly return of March 2021has been filed within the stipulated time period as specified in the NHB Directions.

8.10 The Company has filed Schedule III - Return on Statutory Liquid Assets for theyear ended March 31 2021 as specified in the NHB Directions. Schedule III return of theJune quarter was filed within the stipulated time the return of September quarter wasfiled on 14th October 2020 based on provisional financials statements which was revisedon 7th January 2021.There was a delay in submission of schedule III return for the quarterended December 2020 due to some technical error in ORMIS portal. 8.11 The Company has notopened any new branches/offices and has closed 1 branch/office during the year;

8.12 The Company has not granted any loan against its own shares and for purchase ofgold in any form and hence it is in compliance with provisions contained in paragraph 38and 38A of the NHB Directions; and 8.13 As per para 32(1) of the Master Circular- TheHousing Finance Companies (NHB) Directions 2010 issued by the National Housing Bank (NHB)vide its notification no. NHB (ND)/DRS/REG/MC-01/2018 dated July 02 2018 no HousingFinance Company shall lend to any single group of borrowers exceeding 25 percent of itsowned funds. The loans sanctioned in earlier year were sanctioned in compliance with thedirections as prescribed by NHB regulations. However owning to the huge losses on accountof ECL (Expected Credit Loss) provisioning in F.Y 2020-21 the NOF (Net Owned Funds) ofthe Company has turned negative. Hence the regulatory lending exposure norm for single andgroup borrowers has breached.

8.14 There had been a material shift in primary business of the Company during earlieryears from Housing Finance to Non-Housing Finance which comprises more than 50% of totalloan portfolio raising concern about Company continuing as a Housing Finance CompanyWhich is yet to be corrected.

The Company is under a debt resolution process and post successful completion ofresolution the management is hopeful of meeting the Principal Business Criteria (PBC).

Restrictions on Use

9. Our obligations in respect of this report are entirely separate from and ourresponsibility and liability is in no way changed by any other role we may have (or mayhave had) as auditors of the Company or otherwise. Nothing in this report nor anythingsaid or done in the course of or in connection with the services that are the subject ofthis report will extend any duty of care we may have in our capacity as auditors of theCompany.

10. This report is issued pursuant to our obligations under Directions to submit areport on additional matters as stated in the above Directions to the Board of Directorsof the Company and should not be used for any other purpose. Dhiraj & DheerajChartered Accountants neither accepts nor assumes any duty or liability for any otherpurpose or to any other party to whom our report is shown or into whose hands it may comewithout our prior consent in writing.

For Dhiraj & Dheeraj

Firm Reg No.: 102454W

CA Shailendra Dadhich

Partner

Membership Number: 425098

Place : Mumbai

Date : May 07 2021

UDIN: 21425098AAAADJ4047

.