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Sundaram Finance Holdings Ltd.

BSE: 535060 Sector: Financials
NSE: SUNDARMHLD ISIN Code: INE202Z01029
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Sundaram Finance Holdings Ltd. (SUNDARMHLD) - Auditors Report

Company auditors report

Report on the Audit of the Standalone Financial Statements

To the Members of

Sundaram Finance Holdings Limited

Opinion

We have audited the accompanying standalone financial statements ofSundaram Finance Holdings Limited ("the Company") which comprise the BalanceSheet as at 31st March 2021 the Statement of Profit and Loss (including OtherComprehensive Income) Statement of Changes in Equity and Statement of Cash Flows for theyear then ended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone 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 Indian Accounting Standardsprescribed under Section 133 of the Act (Ind AS) and other accounting principles generallyaccepted in India of the state of affairs of the Company as at March 31 2021 and profitand total comprehensive income changes in equity and its cash flows for the year ended onthat date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thosestandards are further described in the Auditor`s Responsibilities for the Audit of thefinancial statements section of our report. We are independent of the Company inaccordance with Code of Ethics issued by the Institute of Chartered Accountants of India(ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our ethical responsibilities in accordance with these requirements and theICAI's Code of Ethics. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion on the standalone financialstatements.

Emphasis of matter

We draw your attention to Note 31i of the standalone financialstatements wherein the Company has disclosed impact assessment due to COVID-19 pandemic.As stated in the said note the adverse impact on the business operations of thecompany's associates including their subsidiaries had consequently affected thefinancial results of the Company for the year ended 31st March 2021. The management hasfurther stated that the second wave of the pandemic from March 2021 in India andconsequent impact of the same on the Company's future income flow and results woulddepend on ongoing as well as future developments which are currently highly uncertain.The management has also disclosed that it would continue to closely monitor the situationand any material changes to future economic conditions from time to time in order to takeappropriate risk mitigation measures. Considering the uncertainties prevailing in theeconomic conditions in India such impact assessment by the Management of the Company ishighly dependent on the circumstances as they evolve in subsequent periods.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. We have determined the matters described below to be the key audit matterto be communicated in our report.

Key Audit Matter Our audit procedures with regards to key audit matter
Refer Note 2.2 "Fair value measurement" and Note 2.4 "Financial Assets" for relevant accounting policies and significant accounting estimates used by the Company. (i) Reviewed the Accounting Policies used by the Company for accounting and disclosing Investments for compliance with the accounting framework.
The investment portfolio is valued at ` 1518.47 crores which represents almost 99% of the total assets where unquoted equity investments fair valued through OCI amounts to `443.41 crores ("Investment") covering about 29% of investment value as at 31st March'21.
(ii) Evaluating valuation methodology recommended by Valuation Expert.
(iii) Verified the correctness of market inputs used and mathematical accuracy of the valuation analysis.
As the above investment are not traded in the active market fair value of these investments involved significant management judgments and estimate and were valued based on valuation recommendation provided by a Valuation Expert in the Group
(iv) Assessed the adequacy of internal controls evaluated the design and tested the operating effectiveness of such controls for initial recognition subsequent measurement and disclosure of investments as on the reporting date as per applicable regulations.
Determination of Fair Value includes the market approach according to which the earnings and book value-based market multiples of listed peer companies in the same sector have been considered after adjusting for illiquidity discount if any. This also includes determination of Fair value based on agreements to buy/ sell an asset between the market participants.
(v) Our team was supported by our in-house valuation specialist especially in determining whether such valuation methodology is consistent with the market practice.
The above valuations are categorized as Level 2 or Level 3 type of valuation as the case may be in accordance of Ind AS 113 Fair Value Measurement based on the available observable/unobservable inputs. (vi) We also assessed whether the disclosures in relation to investments are compliant with the relevant Indian accounting requirements and appropriately present the sensitivities in the valuations based on alternative outcome.
Accordingly the valuation of unquoted investment was considered to be a Key Audit Matter due to significant judgments associated with determining the fair value of investment and its materiality in the financial statements.

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

The Company's Board of Directors is responsible for thepreparation of the other information. The other information comprises the informationincluded in Management Discussion and Analysis; Board's Report including Annexure andCorporate Governance Report but does not include the financial statements and ourauditor's report thereon.

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

In connection with our audit of the financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained during the course of our audit or otherwise appears to be materiallymisstated.

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. Wehave nothing to report in this regard.

Management's Responsibility for the Standalone FinancialStatements

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 financialstatements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with the Ind AS and other accounting principles generally accepted in India.Their responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statement that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or had no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company`sfinancial reporting process.

Auditor's Responsibilities for the Audit of the FinancialStatements

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 auditor's 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 if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.

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

Identify and assess the risks of material misstatement of the 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) ofthe 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 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 theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause theCompany to cease to continue as a going concern.

Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.

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

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

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese 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 ("theOrder") issued by the Central Government of India in terms of Sub section (11) ofSection 143 of the Companies Act 2013 we give in the ANNEXURE "A" a statementon the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

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

i) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit;

ii) In our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books.

iii) The Balance Sheet the Statement of Profit and Loss Account (including OtherComprehensive Income) Statement of Changes in Equity and the Statement of Cash Flow dealtwith in this report are in agreement with the books of account.

iv) In our opinion the financial statements comply with the Ind AS specified undersection 133 of the Act.

v) On the basis of the written representations received from the directors as on 1stApril 2021 taken on records by the Board of Directors none of the directors isdisqualified from being appointed as a director under sub-section (2) of section 164 ofthe Act.

vi) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourSeparate report in ANNEXURE "B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controlsover financial reporting.

vii) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended: In our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withprovisions of Section 197 of the Act.

viii) With respect to other matters to be included in the auditor`s report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rule 2014 in our opinionand to the best of our information and according to the explanations gives to us

i. The Company has disclosed the pending litigations which would impact its financialposition Refer Note 31(c)(ii) ;

ii. The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses;

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

For R.G.N. Price & Co.
Chartered Accountants
FR No. 002785S
K. Venkatakrishnan
Partner
Place: Chennai Membership No.208591
Date: 24th May 2021 UDIN:21208591AAAADX5116

Annexure - "A" referred to in paragraph 1 under ‘Reporton Other Legal and Regulatory Requirements' section of our audit report of even dateto the members of Sundaram Finance Holdings Limited ("the Company") on thefinancial statements of the Company for the year ended 31st March 2021

I a. The Company has maintained proper records for its property plant and equipmentshowing full particulars including quantitative details and situation of those assets.

b. The Company has conducted physical verification of property plant and equipmentduring the year and no material discrepancies were observed during such verification.

c. The title deeds of immovable properties are held in the name of the Company.

II Considering the nature of business of the Company Clause 3(ii) of the Orderrelating to inventories is not applicable.

III According to information and explanations given to us the Company has not grantedany loan secured or unsecured to companies firms or other parties covered in theRegister maintained under Section 189 of the Act.

IV The Company has complied with the provisions of Sections 185 and 186 of the Act inrespect of investments made during the year. According to information and explanationsgiven to us the Company has not granted any loans or guarantees or securities during theyear as envisaged under Section 185 and 186 of the Act.

V The Company has not accepted any deposits; Hence the provisions of Section 73 to 76or any other relevant provisions of the Act and the rules framed there under are notapplicable to the Company. VI The Central Government has not prescribed maintenance ofcost records under Section 148(1) of the Act.

VII a. According to the information and explanations given to us and records of theCompany examined by us in our opinion the Company is regular in depositing theundisputed statutory dues including Provident Fund Employees' State InsuranceIncome Tax Goods and Service Tax Cess and any other statutory dues applicable to it withappropriate authorities. There are no arrears of undisputed statutory dues outstanding asat 31st March 2021 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 records of theCompany examined by us in our opinion there are no dues of Income Tax Service TaxGoods and Service Tax or Cess pending on account of any dispute as at 31st March 2021except the following:

Name of the Statue Nature of Dues Amount Financial Forum where the dispute is pending
(Rs. in Lakhs) Year
Income Tax Act 1961 Income Tax 557.33 2016-17 Commissioner of Income-tax (Appeals)
Income Tax Act 1961 Income Tax 418.90 2017-18 Commissioner of Income-tax (Appeals)

VIII The Company has not obtained any loans or borrowings from financial institutionsbanks Government nor has issued any debentures during the year. Accordingly Clause3(viii) of the Order is not applicable.

IX The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) or term loans during the year.

X During the course of our examination of books and records of the Company carried outin accordance with the generally accepted auditing practices in India and according to theinformation and explanations given to us we have neither observed any instances of fraudby the Company or any fraud on the Company by its officers or employees nor have we beeninformed of such case by the Management during the year.

XI The managerial remuneration has been paid in accordance with the requisite approvalsmandated by the provisions of Section 197 read with Schedule V to the Companies Act.

XII The Company is not a Nidhi Company and hence Clause 3(xii) of the Order is notapplicable.

XIII In our opinion and according to information and explanations given to us alltransactions with related parties are in compliance with Sections 177 and 188 of the Actand the details have been disclosed in the Standalone Financial Statements as required bythe applicable Accounting Standards.

XIV The Company has not made any preferential allotment or private placement of sharesor fully convertible or partly convertible debentures during the year under review.

XV According to the information and explanations given to us and based on ourexamination of records the Company has not entered into any non- cash transactions withthe directors or persons connected with them contravening Section 192 of the Act.

XVI During the year Company had applied to RBI for Non Banking Financial Companies(NBFC) Registration which we were informed that the RBI has not accepted stating that theGroup already has NBFCs. Therefore as represented to us the Company is in the process ofgetting more clarification from RBI on their status based on which Company may take stepsto register if applicable under Section 45 - IA of the Reserve Bank of India Act 1934.

For R.G.N. Price & Co.
Chartered Accountants
FR No. 002785S
K. Venkatakrishnan
Partner
Place: Chennai Membership No.208591
Date: 24th May 2021 UDIN:21208591AAAADX5116

Annexure - "B" referred to in paragraph 2 Clause (vi) under‘Report on Other Legal and Regulatory Requirements' section of our audit reportof even date to the members of Sundaram Finance Holdings Limited ("the Company")on the financial statements of the Company for the year ended 31st March 2021

We have audited the internal financial controls over the financialreporting of Sundaram Finance Holdings Limited ("the Company") as on March 312021 in conjunction with our audit of the financial statements of the Company for the yearended on that date.

Management's Responsibility for Internal Financial Controls

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 issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to Company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013

Auditor's Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit.

We conducted our audit in accordance with the Guidance Note and theStandards on Auditing prescribed under sections 143(10) of the Act to the extentapplicable to an audit of internal financial controls. The Guidance Note and thosestandards require that we comply with ethical requirements and plan and perform the auditto obtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness.

Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk whether material weakness exists and testing and evaluatingthe design and operating effectiveness of internal controls based on the assessed risk.The procedures selected depend on the auditor's judgment including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Company's internal financial controls over financial reportingis a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles. A Company's internalfinancial control over financial reporting includes those policies and procedures that:

1. Pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of theCompany;

2. 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 arebeing made only in accordance with authorizations of management and Directors of theCompany; and

3. Provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the Company's assetsthat could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to theexplanations given to us the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 312021 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls over Financial reporting issued by ICAI.

For R.G.N. Price & Co.
Chartered Accountants
FR No. 002785S
K. Venkatakrishnan
Partner
Place: Chennai Membership No.208591
Date: 24th May 2021 UDIN:21208591AAAADX5116

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