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Shriram City Union Finance Ltd.

BSE: 532498 Sector: Financials
NSE: SHRIRAMCIT ISIN Code: INE722A01011
BSE 10:48 | 08 Aug 1987.40 31.70
(1.62%)
OPEN

1956.70

HIGH

1987.40

LOW

1950.40

NSE 10:34 | 08 Aug 1978.80 22.50
(1.15%)
OPEN

1956.30

HIGH

1978.95

LOW

1948.85

OPEN 1956.70
PREVIOUS CLOSE 1955.70
VOLUME 549
52-Week high 2600.00
52-Week low 1402.00
P/E 11.04
Mkt Cap.(Rs cr) 13,268
Buy Price 1983.65
Buy Qty 6.00
Sell Price 1987.10
Sell Qty 6.00
OPEN 1956.70
CLOSE 1955.70
VOLUME 549
52-Week high 2600.00
52-Week low 1402.00
P/E 11.04
Mkt Cap.(Rs cr) 13,268
Buy Price 1983.65
Buy Qty 6.00
Sell Price 1987.10
Sell Qty 6.00

Shriram City Union Finance Ltd. (SHRIRAMCIT) - Auditors Report

Company auditors report

To the Members of Shriram City Union Finance Limited

REPORT ON THE AUDIT OF STANDALONE FINANCIAL

STATEMENTS

OPINION

1. We have audited the accompanying Standalone Financial Statements ofShriram City Union Finance Limited ("the Company") which comprise the BalanceSheet as at March 31 2022 and the Statement of Profit and Loss (including OtherComprehensive Income) Statement of Changes in Equity and the Statement of Cash Flows forthe year then ended and Notes to the Financial Statements including a summary of theSignificant Accounting Policies and other explanatory information hereinafter referred toas Financial Statements

2. In our opinion and to the best of our information and according tothe explanations given to us the aforesaid Standalone Financial Statements give theinformation required by the Companies Act 2013 ("Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2022the Profit (Including Other Comprehensive Income) the Statement of changes in Equity andits cash flows for the year ended on that date.

BASIS FOR OPINION

3. We conducted our audit of the financial statements in accordancewith the Standards on Auditing (SAs) specified under section 143 (10) of the Act.Ourresponsibilities under those Standards are further described in the Auditors'Responsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India (ICAI) together with the ethical requirements that arerelevant to our audit of the financial statements under the provisions of the CompaniesAct 2013 and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the Financial statements.

EMPHASIS OF MATTER

4. Attention is drawn to Note No 68.8 to the Financial statements whichdescribe the fact that the additional ECL provision on account of COVID-19 is made basedon the Company's historical experience collection efficiencies till date internalassessment on the impacted segments and other emerging forward-looking factors on accountof the pandemic. However the actual impact may vary due to prevailing uncertainty causedby the pandemic. The Company's management is continuously monitoring the situation and theeconomic factors affecting the operations of the Company. Further the extent to which theCOVID-19 pandemic will impact the Company's Financial Performance is dependent on futuredevelopments which are highly uncertain

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

KEY AUDIT MATTERS

5. Key audit matters are those matters that in our professionaljudgement were of most significance in our audit of the Financial Statements of the yearunder report. These matters were addressed in the context of our audit of the StandaloneFinancial Statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

We have determined the matters described below to be the key auditmatters to be communicated in our report.

Sr. Key Audit Matter No. Auditor's Response
i Impairment and Write-offs Our key audit procedures included:
The Recognition and Measurement of Impairment and Write-off of Loans and Advances involves estimates management judgements and appropriate processing of information from the IT systems because of which the same has been identified as a key audit matter. • We test checked the computation of the Probable default (PD) which denotes the statistical pattern of occurrence of defaults in individual accounts over a period of past five years.
• We also test checked the computation of the ratio of Loss Given Default (LGD) which denotes the non-recoveries (after considering the collections) till the date of Balance Sheet.
• We reviewed the changes made by the management in estimating the PD and the LGD on the background of COVID 19 outbreak and additional ECL provisions made on the basis of above revisions.
• We examined the computation of Impairment Losses by application of PD and LGD and ensured that the entire pool of Loans and advances has been considered for the same.
• We reviewed the Internal financial controls over data extraction and data validation from the ERP system for computation of PD and LGD with the participation of our internal IT expert.
• We performed analytical procedures for ascertaining of reasonableness of Impairment provisions.
• We carried out a combination of procedures involving enquiry and observation re-performance on a test basis and inspection of evidence in respect of computation of provisions including considering the situations where additional impairment was required for individual accounts and review of procedures and practices justification notes and approvals in case of Bad Debts written off.
• Our audit procedures did not reveal any significant inconsistencies with respect to provisions for impairment and write-offs.
ii Assessment of Provisions and Contingent liabilities in respect of certain litigations including Direct and Indirect Taxes various claims led by other parties not acknowledged as debt
(Note No. 41 to the financial statements): Our audit approach involved:
There is high level of judgement required in estimating the level of provisioning. The company's assessment is supported by the facts of matter their own judgment past experience and advice from legal and independent tax consultants wherever considered necessary. Accordingly unexpected adverse outcomes may significantly impact the Company's reported profit and state of affairs presented in the Balance Sheet. Obtaining an understanding of internal controls relevant to the audit in order to design our audit procedures that are appropriate in the circumstances;
We determined the above area as a Key Audit Matter in view of associated uncertainty relating to the outcome of these matters which requires application of judgment in interpretation of law. Accordingly our audit was focused on analysing the facts of subject matter under consideration and judgments/ interpretation of law involved a. Understanding the current status of the litigations/ tax assessments;
b. Examining recent orders and/or communication received from various tax authorities/ judicial forums and follow up action thereon;
c. Evaluating the merit of the subject matter under consideration with reference to the grounds presented therein and available independent legal / tax advice
d. Review and analysis of evaluation of the contentions of the Company through discussions collection of details of the subject matter under consideration the likely outcome and consequent potential outflows on those issues; and verification of disclosures related to significant litigations and taxation matters.

INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS ANDAUDITOR'S REPORT THEREON

6. The Company's Board of Directors is responsible for the otherinformation. The other information included in the Company's annual report likeManagement Discussion and Analysis Director's Report and Corporate GovernanceReport but does not include the Standalone Financial Statements and our auditors'report thereon which we obtained prior to the date of this auditor's report andAnnual Report which is expected to be made available to us after that date.

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

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated.

If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact.

We have nothing to report in this regard.

RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FORTHE STANDALONE FINANCIAL STATEMENTS

7. The Company's Board of Directors is responsible for the mattersstated in Section 134 (5) of the Act with respect to the preparation of these StandaloneFinancial Statements that give a true and fair view of the Financial Position FinancialPerformance (including Other Comprehensive Income) Changes in Equity and Cash Flows ofthe Company in accordance with the accounting principles generally accepted in Indiaincluding the Accounting Standards specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015. 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 design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Financial Statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

In preparing the 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 the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing theCompany's financial reporting process.

AUDITORS' RESPONSIBILITIES FOR THE AUDIT OF THE

FINANCIAL STATEMENTS

8. Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditors' report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements

can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these Financial Statements. As part ofan audit in accordance with SAs we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of theFinancial Statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal controls relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Companies Act 2013 we are also responsible for expressing ouropinion on whether the Company has adequate Internal Financial Controls system in placeand the operating effectiveness of such controls.

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

• Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditors' report to therelated disclosures in the Standalone Financial Statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditors' report. However future events or conditions maycause the Company to cease to continue as a going concern.

Evaluate the overall presentation structure and content of theFinancial Statements including the disclosures and whether the Financial Statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation. Materiality is the magnitude of misstatements in the Standalone FinancialStatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the Financial Statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the Financial Statements. Wecommunicate with those charged with governance regarding among other matters the plannedscope and timing of the audit and significant audit findings including any significantdeficiencies in Internal Control that we identify during our audit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards. From the matterscommunicated with those charged with governance we determine those matters that were ofmost significance in the audit of the financial statements of the current year and aretherefore the key audit matters. We describe these matters in our auditor's report unlesslaw or regulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.

OTHER MATTER

9. The comparative financial Statements of the Company for the yearended March 312021 included in Standalone Financial Statements were audited by the thenStatutory Auditors "G.D. Apte & Co. Chartered Accountants" for the yearended March 31 2021 whose reports dated April 30 2021 expressed an unmodified opinion onthose financial statements. Our opinion is not modified in respect of this matter.

REPORT ON OTHER LEGAL AND REGULATORY

REQUIREMENTS

10. As required by the Companies (Auditors' Report) Order 2020("the Order") issued by the Central Government of India in terms of Section 143(11) of the Companies Act 2013 we give in "Annexure A" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.

11. As required by Section 143(3) of the Act we report that:

a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss (including OtherComprehensive Income) the Statement of Changes in Equity and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.

d) In our opinion the aforesaid standalone financial statements complywith the Ind AS prescribed under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended;

e) On the basis of the written representations received from theDirectors as on March 312022 and taken on record by the Board of Directors none of theDirectors is disqualified as on March 312022 from being appointed as a Director in termsof Section 164(2) of the Act.

f) With respect to the adequacy of the Internal Financial Controls overfinancial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

g) With respect to the other matters to be included in theAuditors' Report in accordance with the requirements of Section 197(16) of the Actas amended:

In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of Section 197 of the Act.

h) With respect to the other matters to be included in theAuditors' Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its financial statements. Refer note 41 to the Financial Statement

ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts. The Company does not have derivative contracts.

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

iv. (a) The management has represented that

to the best of the knowledge and belief no funds have been advanced orloaned or invested (either from borrowed funds or share premium or any other sources orkind of funds) by the Company to or in any other persons or entities including foreignentities ("Intermediaries") with the understanding whether recorded in writingor otherwise that the intermediary shall whether directly or indirectly lend or investin other persons or entities Identified in any manner whatsoever by or on behalf of thecompany ("Ultimate Beneficiaries") or provide any guarantee security or thelike on behalf of the Ultimate Beneficiaries.

(b) The management has represented that to the best of its knowledgeand belief no funds have been received by the Company from any persons or entitiesincluding foreign entities ("funding Parties") with the understanding whetherrecorded in writing or otherwise that the Company shall whether directly or indirectlylend or invest in other persons or entities identified in any manner whatsoever by or onbehalf of the Funding Party ("Ultimate Beneficiaries") or provide any guaranteesecurity or the like on behalf of the Ultimate Beneficiaries ; and

(c) Based on such audit procedures we have considered reasonable andappropriate in the circumstances nothing has come to the notice that has caused us tobelieve that the representations under sub-clause 11(h)(iv)(a) and (b) contain anymaterial misstatement.

v. As stated in Note 24 to the standalone financial statements :

(a) The final dividend proposed in the previous year declared and paidby the Company during the year is in accordance with Section 123 of the Act asapplicable.

(b) The interim dividend declared and paid by the Company during theyear and until the date of this report is in compliance with Section 123 of the Act.

(c) The Board of Directors of the Company have not proposed any finaldividend for the year.

Annexure "A" to the Independent Auditors' Report

OF EVEN DATE ON THE STANDALONE IND AS FINANCIALSTATEMENTS OF SHRIRAMCITY UNION FINANCE LIMITED

THE ANNEXURE REFERRED TO IN PARAGRAPH 10 UNDER

THE HEADING REPORT ON OTHER LEGAL AND REGULATORY

REQUIREMENTS' OF OUR REPORT OF EVEN DATE:

(i) (a) (!) The Company is maintaining proper records showing fullparticulars including quantitative details and situation of Property Plant and Equipment(PPE);

(2) The company is maintaining proper records showing full particularsof intangible assets;

(b) The Company has a regular programme of physical verification of itsPPE by which all PPE are verified in a phased manner. In our opinion this periodicity ofphysical verification is reasonable having regard to the size of the Company and thenature of its assets. In our opinion and according to the information and explanationsgiven to us no material discrepancies were noticed on such verification.

(c) The title deeds of all the immovable properties (other thanproperties where the company is the lessee and the lease agreements are duly executed infavour of the lessee) disclosed in the financial statements are held in the name of theCompany

(d) The company has not revalued its Property Plant and Equipment(including Right of Use assets) or intangible assets or both during the year.

(e) Based on our examination of the Books of Accounts and other Recordsof the company and based on the information and explanation provided by the management noproceedings has been initiated or pending against the company for holding any benamiproperty under Benami Transactions (Prohibition) Act 1988..

(ii) (a) The Company is in the business of providing loans and does nothave any physical inventories. Accordingly the provision of clause 3(ii)(a) of the Orderis not applicable to it.

(b) The company has been sanctioned working capital limits in excess of' Five crores (Both fund and non - fund based) by banks on the basis of security ofCurrent Assets. The quarterly returns or statements filed by the company with the banks orfinancial institutions are in agreement with the books of account of the Company.

(iii) (a) Since the Company's principal business is to give loans.Accordingly the provision of clause 3(iii)(a) of the Order is not applicable to it.

(b) The company being a Non-Banking Financial

Company ('NBFC') registered under provisions of RBI Act 1934in ouropinion and according to the information and explanations given to us the investmentsmade guarantees provided security given and the terms and conditions of the grant of allloans and advances in the nature of loans and guarantees provided during the year areprima facie not prejudicial to the Company's interest.

(c) The company being a Non-Banking Financial

Company ('NBFC') registered under provisions of RBI Act 1934 andrules made thereunder in pursuance of its compliance with provisions of the saidAct/Rules particularly the Income Recognition Asset Classification and ProvisioningNorms monitors repayments of principal and payment of interest by its customers asstipulated. In our opinion and according to the information and explanations given to usin respect of loans and advances in the nature of loans the schedule of repayment ofprincipal and payment of interest has been stipulated and in cases where repayment ofprincipal and payment of interest is not received as stipulated the cognizance thereof istaken by the Company in course of its periodic regulatory reporting.

(d) The company being a Non-Banking Financial Company ('NBFC')registered under provisions of RBI Act 1934 and rules made thereunder in pursuance ofits compliance with provisions of the said Act/Rules particularly the IncomeRecognition Asset Classification and Provisioning Norms monitors and report total amountoverdue including principal and / or payment of interest by its customers for more than 90days. In cases where repayment of principal and payment of interest is not received asstipulated the cognizance thereof is taken by the Company in course of its periodicregulatory reporting. Refer note 10 to the Standalone Financial Statements for summariseddetails of such loans / advances which are not repaid by borrowers as per stipulations asalso details of reasonable steps taken by the Company for recovery thereof.

(e) Since the Company's principal business is to give loans theprovision of clause 3(iii)(e) of the Order is not applicable to it.

(f) Based on our audit procedures according to the information andexplanation made available to us the Company has not granted any loans or advances in thenature of loans either repayable on demand or without specifying any terms or period ofrepayment during the year except for the dealer advances which constitute 0.29% (aggregateamount of dealer advance Rs 9709.95/- lakhs) of the total advances as at March 31 2022.No such loans have been granted to Promoters and Related Parties as defined under Clause76 of Section 2 of the Act.

(iv) According to the information and explanation given to us theCompany has not granted any loans made investments or provided guarantees incontravention of provisions of Section 185 of the Act. The Company has complied with theprovisions of Section 186(1) of the Act; the other provisions of Section 186 of the Actare not applicable to the Company.

(v) In respect of deposits accepted in our opinion and according tothe information and explanations given to us directives issued by the Reserve Bank ofIndia and the provisions of section 73 to 76 and other relevant provisions of the Act andthe rules framed there under to the extent applicable have been complied with. We wereinformed by the management that no order has been passed by the Company Law BoardNational Company

Law Tribunal or Reserve Bank of India or any Court or any otherTribunal.

(vi) The Central Government has not prescribed the maintenance of costrecords under sub-section (1) section 148 of the Act for the business activities carriedout by the Company. Accordingly the provision of clause 3(vi) of the Order is notapplicable to the Company.

(vii) According to the information and explanations given to us inrespect of Statutory dues

(a) The Company is regular in depositing undisputed Statutory duesincluding Goods and Service Tax Provident Fund Employees' State Insurance IncomeTax Sales Tax Duty of Customs Cess and any other Statutory Dues to the appropriateauthorities and there were no undisputed amounts payable which were in arrears as at 31stMarch 2022 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and onthe basis of examination of books of account and records of the company we report thatthere are no dues in respect of Income tax Sales tax Service tax Customs Duty ExciseDuty Value added tax Goods and services tax or cess which have not been deposited onaccount of any dispute except for following cases:

Name of Statute Nature of dues Amount Period to which the amount relates Forum where dispute is pending
(Rs. In Lakhs)
Finance Act 1994 Service Tax Demands 7687.17 April 2008 to September 2014 Customs Excise and Service Tax Appellate Tribunal Chennai
Kerala Value Added Tax 2003 Value added Tax 4.65 AY 2007-08 Dy. Commissioner (Appeals) Ernakulum Kerala
Income Tax Act 1961 Income Tax 24248.76 * AY 2014-15 National Faceless Appeal Centre Delhi
Income Tax Act 1961 Income Tax 15.71 AY 2014-15 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income Tax 625.22 AY 2015-16 National Faceless Appeal Centre Delhi
Income Tax Act 1961 Income Tax 398.8 AY 2018-19 Commissioner of Income Tax (Appeals)

*Due to technical error in Income Tax Portal the entire taxes paid bythe Company including prepaid taxes were not considered by Department in the order u/s.147read with section 144B of the Income Tax Act dated 24/03/2022 for the A.Y.2014-15. Thedepartment has incorrectly determined the tax demand payable at Rs 24248.76 lakhs. TheCompany has filed Rectification Petition u/s.154 before Jurisdictional Assessing Officerto rectify the mistakes made in the Assessment Order.

(viii) There are no transactions relating to previously unrecordedincome in the books of account that have been surrendered or disclosed as income duringthe year in the tax assessments under the Income Tax Act 1961 (43 of 1961).

(ix) (a) The Company has not defaulted in repayment of loans or otherborrowing or in the payment of interest thereon to any lender;

(b) The Company is not declared as a wilful defaulter by any bank orfinancial institution or other lender;

(c) The term loans were applied for the purpose for which the loanswere obtained;

(d) The funds raised on short term basis have not been utilised forlong term purposes;

(e) The Company has not taken any funds from any entity or person onaccount of or to meet the obligations of its subsidiaries associates or joint ventures;

(f) The company has not raised loans during the year on the pledge ofsecurities held in its subsidiaries joint ventures or associate companies;

(x) (a) The Company has not raised any moneys by way of initial publicoffer or further public offer (including debt instruments) during the year.

(b) The company has not made any preferential allotment or privateplacement of shares or convertible debentures (fully partially or optionally convertible)during the year and hence the requirements of section 42 and section 62 of the CompaniesAct 2013 is not applicable;

(xi) (a) During the course of our examination of the books and recordsof the Company carried out in accordance with the generally accepted auditing practicesin India and according to the information and explanations given to us no material fraudby the Company or on the Company has been noticed or reported during the course of ouraudit other than the instances of fraud noticed and reported by the management in termsof the regulatory provisions applicable to the Company amounting to Rs 0.70 Lakhscomprising of one instance.

(b) There is no report under sub-section (12) of section 143 of theCompanies Act has been filed by the auditors in Form ADT-4 as prescribed under rule 13 ofCompanies (Audit and Auditors) Rules 2014 with the Central Government;

(c) There are no complaints received during the year underwhistle-blower Mechanism;

(xii) The Company is not a Nidhi Company and hence complying with theprovisions of the Nidhi Rules 2014 does not arise.

(xiii) All transactions with the related parties are in compliance withSections 177 and 188 of the Companies Act 2013 where applicable and the details havebeen disclosed in the Financial Statements etc. as required by the applicable AccountingStandards.

(xiv) (a) The Company has an internal audit system commensurate withthe size and nature of its business.

(b) We have considered during the course of our audit the reports ofthe Internal Auditor(s) for the period under audit issued to the company during the yeartill date in determining the nature timing and extent of our audit procedures inaccordance with the guidance provided in SA 610 "Using the work of InternalAuditors"

(xv) The Company has not entered into any non-cash transactions withDirectors or any persons connected with him.

(xvi) (a) The Company is required to be registered under

Section 45-IA of the Reserve Bank of India Act 1934 and the Companyhas obtained the required registration.

(b) According to the information and explanations given to us theCompany has not conducted any Non-Banking Financial or Housing Finance activities withoutobtaining a valid CoR from the Reserve Bank of India as per the Reserve Bank of India Act1934.

(c) According to the information and explanations given to us theCompany is not a Core Investment Company ('CIC') as defined under the Regulations by theReserve Bank of India.

(d) As per the information provided to us during the course of ouraudit the group to which the Company belongs has 3 CIC's as defined in the CoreInvestment Companies (Reserve Bank) Directions 2016.

(xvii) The company has not incurred cash losses in the financial yearand in the immediately preceding financial year.

(xviii) During the current year the previous statutory auditors of thecompany have resigned due to the revised guidelines issued by Reserve bank of India videnotification No. DOS.CO.ARG/SEC.01/08/91/001/2021-22 dated 27th April 2021 regulatingappointment of Statutory auditors of the Company. According to the information andexplanations given to us there have been no issues objections or concerns raised by thesaid outgoing statutory auditors of the company.

(xix) On the basis of the financial ratios ageing and expected datesof realisation of financial assets and payment of financial liabilities other informationaccompanying the financial statements and our knowledge of the Board of Directors andManagement plans and based on our examination of the evidence supporting the assumptionsnothing has come to our attention which causes us to believe that any materialuncertainty exists as on the date of the audit report indicating that Company is notcapable of meeting its liabilities existing at the date of balance sheet as and when theyfall due within a period of one year from the balance sheet date. We however state thatthis is not an assurance as to the future viability of the Company. We further state thatour reporting is based on the facts up to the date of the audit report and we neither giveany guarantee nor any assurance that all liabilities falling due within a period of oneyear from the balance sheet date will get discharged by the Company as and when they falldue.

(xx) (a) According to the information and explanations given to us andbased on our examination of the records of the Company it is not required to transfer anyunspent amount as at the end of the previous financial year pertaining to the year underreport to a Fund specified in Schedule VII to the Companies Act in compliance with secondproviso to sub section 5 of section 135 of the said Act.

(b) According to the information and explanations given to us and basedon our examination of the records of the Company there is no amount which is remainingunspent for the current year under sub section 5 of section 135 of the Act. Hencereporting under this clause is not applicable.

(xxi) There have been no qualifications or adverse remarks by therespective auditors in the Companies (Auditor's Report) Order (CARO) reports of thecompanies included in the consolidated financial statements.

Annexure "B" to the Independent Auditors' Report

OF EVEN DATE ON THE STANDALONE IND AS FINANCIAL STATEMENTS OF SHRIRAMCITY UNION FINANCE LIMITED (REFERRED TO IN PARAGRAPH 11(F) UNDER REPORT ON OTHER LEGAL ANDREGULATORY REQUIREMENTS' SECTION OF OUR REPORT OF EVEN DATE)

REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OFSUB-SECTION 3 OF SECTION 143 OF THE COMPANIES ACT 2013 ("THE ACT").

We have audited the Internal Financial Controls with reference to thefinancial statements of Shriram City Union Finance Limited ("the Company") as ofMarch 312022 in conjunction with our audit of the Standalone Financial Statements of theCompany for the year ended on that date.

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

1. The Company's Management is responsible for establishing andmaintaining Internal Financial Controls based on the Internal Control over FinancialReporting criteria established by the Company considering the essential components ofInternal Control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India (ICAI). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

AUDITORS' RESPONSIBILITY

2. Our responsibility is to express an opinion on the Company'sInternal Financial Controls with reference to the financial statements based on our audit.We conducted our audit in accordance with the Guidance Note and the Standards on Auditingissued by ICAI and deemed to be prescribed under Section 143(10) of the Act to the extentapplicable to an audit of Internal Financial Controls both applicable to an audit ofInternal Financial Controls and both issued by ICAI. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate Internal Financial Controls over FinancialReporting was established and maintained and if such controls operated effectively in allmaterial respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the Internal Financial Controls with reference to the financial statementsof the Company and their operating effectiveness. Our audit of Internal Financial Controlswith reference to the financial statements of the Company included obtaining anunderstanding of Internal Financial Controls over Financial Reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the Auditors' judgement including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's Internal FinancialControls System over Financial Reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER

FINANCIAL REPORTING

3. A Company's Internal Financial Controls with reference to thefinancial statements of the Company 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 includes thosepolicies and procedures that:

(i) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

(ii) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the Company are beingmade only in accordance with authorisations of Management and Directors of the Company;and

(iii) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the Company's assets thatcould have a material effect on the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TOTHE FINANCIAL STATEMENTS

4. Because of the inherent limitations of Internal Financial Controlswith reference to the financial statements of the Company including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of theInternal Financial Controls with reference to the financial statements of the Company tofuture periods are subject to the risk that the Internal Financial Controls with referenceto the financial statements of the Company may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.

OPINION

In our opinion the Company has in all material respects an adequateInternal Financial Controls with reference to the financial statements of the Company andsuch Internal Financial Controls with reference to the financial statements of the Companywere operating effectively as at March 31 2022 based on the Internal Control overFinancial Reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by ICAI.

For R. Subramanian and Company LLP For Abarna & Ananthan
Chartered Accountants Chartered Accountants
FRN:004137S/S200041 FRN-000003S
CA K. Jayasankar CA (Mrs) Lalitha Rameswaran
Partner Partner
M No 014156 M No 207867
UDIN: 22014156AICEAR6843 UDIN: 22207867AIZNCU9979
Place: Chennai
Date: April 29 2022

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