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 11:55 | 07 Jul 2.66 -0.14
(-5.00%)
OPEN

2.66

HIGH

2.66

LOW

2.66

NSE 11:49 | 07 Jul 2.50 -0.10
(-3.85%)
OPEN

2.50

HIGH

2.50

LOW

2.50

OPEN 2.66
PREVIOUS CLOSE 2.80
VOLUME 102817
52-Week high 14.40
52-Week low 0.71
P/E
Mkt Cap.(Rs cr) 129
Buy Price 2.94
Buy Qty 10.00
Sell Price 2.66
Sell Qty 4591430.00
OPEN 2.66
CLOSE 2.80
VOLUME 102817
52-Week high 14.40
52-Week low 0.71
P/E
Mkt Cap.(Rs cr) 129
Buy Price 2.94
Buy Qty 10.00
Sell Price 2.66
Sell Qty 4591430.00

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 Home FinanceLimited ("the Company") which comprise the Balance Sheet as at March 31 2020the Statement of Profit and Loss including the Statement of Other Comprehensive Incomethe Cash Flow Statement and the Statement of Changes in Equity for the year then endedand notes to the financial statements including a summary of significant accountingpolicies 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 2020its 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 atMarch 31 2020 aggregating to Rs 7965.24 crores (including Rs 216 crores sanctionedduring the financial year 2019-20) and secured by charge on current assets of borrowers.As stated in the said note majority of Company's borrowers have undertaken onward lendingtransactions and end use of the borrowings from the Company included borrowings by or forrepayment of financial obligation to some of the group companies. There have been overduesof Rs 7815.24 crores (including NPA of Rs 4778.13 crores) of these loans as on March 312020. In view of substantial overdues we are unable to substantiate the managementassertion on the recoverability of principal and interest including time frame of recoveryof aforesaid loans outstanding as on March 31 2020. The Company's exposure to theborrowers are secured against charge on current assets and is dependent on the recovery ofonward lending of the borrowers which depends on external factors not wholly withincontrol of the Company/borrower. Further we draw attention to Note 46 of the Ind ASfinancial statements on the material shift in primary business of the Company from HousingFinance to Non-Housing Finance which comprise more than 50% of total loan portfolioraising concern about Company continuing as a Housing Finance Company. We conducted ouraudit of the Ind AS financial statements in accordance with the Standards on Auditing(SAs) as specified under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the ‘Auditor's Responsibilities for the Audit ofthe Ind AS financial statements' section of our report. We are independent of the Companyin 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 financial statements under the provisions of the Act and the Rules thereunder andwe have fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate 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 assets.ICA has been executed on July 6 2019 with the majority of lenders and some oflenders/debenture holders have joined the ICA subsequently through deed of Accession. Bankof Baroda has been appointed as the lead lender for the resolution process and the lendershave made the appointment of professional viz resolution plan advisors forensic auditorlegal counsel cash flow monitoring agency and valuation agencies for the resolutionprocess. The timeline of 180 days as envisaged in the RBI Circular expired on January 32020. However as informed to us the lenders have agreed to extend the ICA till March 312020 and further extended to June 30 2020 and have communicated with RBI for the same.The Company expects implementation of its resolution plan within the said extended period.There is substantial reduction in the lending business during the year. The Company hasdefaulted in payment of borrowings obligations amounting to Rs 5446.92 crores as on March31 2020 and the asset cover has also fallen below hundred percent of outstandingdebentures amounting to Rs 5966.67 crores. The Company's ability to meet itsobligation dependent on material uncertain events including restructuring of loanportfolio implementation of Resolution Plan by Inter Creditor Agreement for theresolution of its debt as stated above and revival of housing finance business.

In view of steps taken by the company and the expected implementation of its resolutionplan in extended period the statement of Ind AS financial results of the Company havebeen prepared by the management on a going concern basis. Our opinion is not modified inrespect of this matter.

(ii) Impact of COVID-19 pandemic

We draw attention to Note 57 to the Ind AS Financial Statements which describes thatthe extent to which the COVID-19 pandemic will impact the Company's results will depend onfuture developments which are highly uncertain. Which further states that in accordancewith the RBI guidelines relating to COVID-19 Regulatory Package dated March 27 2020 andApril 17 2020 the Company would be granting a moratorium of three months on the paymentof all instalments and / or interest as applicable falling due between March 1 2020 andMay 31 2020 to all eligible borrowers classified as Standard even if overdue as onFebruary 29 2020. For all such accounts where the moratorium is granted the assetclassification has been remain stand still during the moratorium period (i.e. the numberof days past-due shall exclude the moratorium period for the purposes of assetclassification under the Income Recognition Asset Classification and Provisioning norms).

Our opinion is 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 2020. 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
1. Impact of COVID-19 pandemic on the future financial performance and position of the Company Our audit procedures considered the guidance laid down by the ‘ICAI Accounting & Auditing Advisory March 2020 – Impact of Corona virus on Financial Reporting and the Auditors Consideration' highlighting few important areas which require particular attention in respect of the audit of the financial statements for the year 2019-20 including:
(as described in Note 57 of the Ind AS Financial Statements)
The extent to which the COVID-19 pandemic will impact the Company's financial performance and position will depend on future developments which are highly uncertain.
• Impairment of Non-financial Assets
• Impairment Losses (ECL Bad-debts etc.)
• Revenue
• Borrowing Costs
• Provisions Contingent Liabilities and Contingent Assets
• Modifications or termination of Contracts or Arrangements
• Going Concern Assessment
• Post Balance Sheet Events
• Presentation of Financial Statements
• Changes in Internal Controls
• External Confirmations
• Audit evidences through electronic mode
We considered the above guidance and appropriately applied to our response to modification of our audit procedures to obtain sufficient appropriate audit evidence on the significant audit areas and reached appropriate conclusions thereon.
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.
2. Recognition and measurement of impairment relating to loans and advances to customers involves significant management judgement.
As per Ind AS 109 credit loss assessment is now based on Expected Credit Loss (ECL) model and applicable to the Company. • 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;
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. • 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 most significant areas involving significant management estimates are:
• Loan staging criteria • Evaluated appropriateness of the impairment principles based on the requirements of Ind AS 109 considering our business understanding and industry practice;
• 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.
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. • We engaged our specialists to test the working of the ECL model and reasonableness of assumptions used;
• 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;
3. Valuation of Market Linked Debentures:
(as described in Note 16 and Note 37(c) of the Ind AS Financial Statements) 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.
The Company has issued Market Linked Debentures (MLD) during previous years. The outstanding balance of MLD as on March 31 2020 is Rs 232.27 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.
We compared resulted valuations against independent sources and externally available market valuation data for sample cases.
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.
4. Impairment of Goodwill: 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 described in Note 1(k) and Note 12 of the Ind AS Financial Statements)
Company has recognised goodwill of Rs 209.96 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. • Future growth and long-term life of housing finance industry.
• Long term benefits to the Company from the use of existing assets.
• Government focus on housing finance sector.
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. 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.
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. 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 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 todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

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

• Conclude on the appropriateness of management's use of the going concern basisof accounting 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 FinancialStatements including the disclosures and whether the Financial Statements represent theunderlying transactions and events in a manner that achieves 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 2020 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 our opinion proper books of account as required by law have been kept by theCompany so far as 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 opinion the aforesaid Ind AS financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended;

(e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164 (2) of theAct;

(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 provided to us themanagerial remuneration for the year ended March 31 2020 has been paid/provided by theCompany to its directors in accordance with the provisions of section 197 read withSchedule V to the Act;

(h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations as at March 31 2020 onits financial position in its financial statements. Refer Note 49.

ii. The Company has made provision as at March 31 2020 wherever required under theapplicable law or accounting standards for material foreseeable losses on long-termcontracts including derivative contracts. Refer Note 56.

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

For Dhiraj & Dheeraj

Chartered Accountants

Firm's Registration Number: 102454W

Pritesh Shah

Partner

Membership Number: 109573

Place : Mumbai

Date : May 08 2020

UDIN: 20109573AAAAAB6963

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 Limitedof even date)

i. In respect of the Company's fixed assets:

(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 consequently does nothold any physical inventory. Accordingly the requirements under paragraph 3(ii) of theOrder are not applicable to the Company.

iii. According to the information and explanation given to us and based upon auditprocedure performed during the year the Company has not granted any loan secured orunsecured to companies firms limited liability partnerships or other parties covered inthe register maintained under section 189 of the Companies Act 2013. Accordinglyprovisions of clause 3(iii) (a) (b) and (c) of the order are not applicable to theCompany.

iv. In our opinion and according to the information and explanations given to us by themanagement the Company has not granted any loan or provided any guarantee or security inconnection with any loan taken by parties covered under section 185 of the act. TheCompany is registered as a Housing Finance Company with the National Housing Bank.Therefore the provisions of Section 186 except sub section (1) of Section 186 of theAct are not applicable to the Company. Further the Company has not made any investments tothe parties covered under Section 186. Therefore the provisions of Clause 3(iv) of theorder in respect of section 186 (1) are not applicable to the Company.

v. The Company has not accepted any deposits from public within the meaning of Sections73 to 76 of the Act and the rules framed there under to the extent notified.

vi. The Central Government of India has not specified the maintenance of Cost recordsunder section 148 (1) of Act for any of the products of the Company. vii. According tothe information and explanations given to us and records examined by us in respect ofstatutory dues:

(a) The Company is generally being regular in deposit of undisputed statutory duesincluding Income Tax Provident Fund Goods and Service Tax and any other materialstatutory dues applicable to the Company. As explained to us the Company does not have anydues on account of Sales Tax Wealth Tax duty of Custom and duty 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 2020 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 Period to which the amount relates Forum where dispute is pending
(` In Crs)
Income Tax Act 1961 Income Tax 0.48* Assessment Year 2018-19 CIT(Appeals)

*The Company has deposited Rs 0.10 crore against the disputed amount. viii. The Companyhas defaulted in repayment of loans and borrowings (including accrued interest ondefaulted amount) to banks financial institutions and dues to debenture holders duringthe year. The details of default as on the Balance Sheet date in repayment of borrowingsare as follows:

Nature of Borrowings Name of Lender Amount of default as at 31st March 2020 Period of default
(` in crores)
Term Loan Andhra Bank 135.37 Jun 2019 - Mar 2020
WCDL & Cash Credit Axis Bank 40.96 Aug 2019 - Mar 2020
Term Loan & Cash Credit Bank of Baroda 220.57 Jul 2019 - Mar 2020
Term Loan Bank of India 111.49 Jun 2019 - Mar 2020
Term Loan Bank of Bahrain and Kuwait 7.92 Oct 2019 - Mar 2020
Term Loan WCDL & Cash Credit Canara Bank 190.42 Oct 2019 - Mar 2020
Term Loan Dena Bank 138.38 Jun 2019 - Mar 2020
Term Loan HDFC Bank Ltd 48.80 Sep 2019 - Mar 2020
Term Loan ICICI Bank 3.56 Oct 2019 - Mar 2020
Term Loan Indian Bank 35.96 Oct 2019 - Mar 2020
Term Loan Karnataka Bank 11.15 Sep 2019 - Mar 2020
Term Loan & Cash Credit Punjab & Sind Bank 168.48 Sep 2019 - Mar 2020
Term Loan Punjab National Bank 45.73 Nov 2019 - Mar 2020
Term Loan State Bank of India 68.73 Sep 2019 - Mar 2020
Term Loan Syndicate Bank 15.17 Oct 2019 - Mar 2020
Term Loan The Federal Bank Limited 75.08 Aug 2019 - Mar 2020
Term Loan & Cash Credit The Jammu & Kashmir Bank 85.60 Oct 2019 - Mar 2020
Cash Credit The Lakshmi Vilas Bank 53.63 May 2019 - Mar 2020
Term Loan UCO Bank 58.47 May 2019 - Mar 2020
Term Loan United Bank of India 182.99 Jun 2019 - Mar 2020
Term Loan Vijaya Bank 54.83 Oct 2019 - Mar 2020
Commercial Paper YES Bank 377.92 Sep 2019 - Mar 2020
Commercial Paper Axis Bank 81.47 Dec 2019 - Mar 2020
NCDs Non-Convertible 3018.87 Aug 2019 - Mar 2020
Debentures
Total 5231.52

ix. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year. According to the informationand explanation provided to us the Company did not raise any money by way of term loansduring the year.

x. During the course of our examination of the books and records of Company carried outin accordance 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 the management andbased upon the audit procedure performed the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provision ofsection 197 read with Schedule V of the act.

xii. In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly the requirements under paragraph 3(xii) ofthe Order are not applicable.

xiii. According to the information and explanations given to us and records examined byus transactions with the related parties are in compliance with sections 177 and 188 ofthe Act where applicable and details of such transactions have been disclosed in the IndAS financial statements as required by the applicable accounting standards. Also referNote 5(2) of Ind AS Financial Statements.

xiv. According to the information and explanations give to us and records examined byus the Company has not made any preferential allotment or private placement of shares orfully or partly convertible debentures during the year. Accordingly the requirementsunder paragraph 3(xiv) of the Order are not applicable to the Company.

xv. According to the information and explanations given to us and records examined byus the Company has not entered into non-cash transactions with directors or personsconnected with him. Accordingly the requirements under paragraph 3(xv) of the Order arenot applicable to the Company. xvi. The Company is not required to be registered undersection 45-IA of the Reserve Bank of India Act 1934.

For Dhiraj & Dheeraj

Chartered Accountants

Firm's Registration Number: 102454W

Pritesh Shah

Partner

Membership Number: 109573

Place : Mumbai Date : May 08 2020

UDIN: 20109573AAAAAB6963

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 2020 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 year 2019-20: a. The Company's internal financialcontrol over financial reporting is not operating effectively in respect of"General-Purpose Corporate Loan product" and needs to be strengthened for creditevaluation risk assessment and documentation for disbursement of loan to mitigate therisk of the Company recognizing revenue without establishing reasonable certainty forultimate collection. The Company needs to substantially strengthen its existing creditpolicy for these loan products and make it more broad based well defined 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 2020 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 2020 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

Pritesh Shah

Partner

Membership Number: 109573 Place : Mumbai Date : May 08 2020

UDIN: 20109573AAAAAB6963