To
The Members of
Piramal Enterprises Limited
Report on the audit of the Standalone Financial Statements
OPINION
We have audited the accompanying standalone financial statements of Piramal Enterprises Limited ("the Company”), which comprises of Standalone Balance Sheet as at March 31, 2025, the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Standalone Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of material accounting policies and other explanatory information (hereinafter referred to as "the Standalone Financial Statements”).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Financial Statements give the information required by the Companies Act, 2013 ("the Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2025, its profit, total other comprehensive income, its cash flows and the changes in equity for the year ended on that 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 those Standards are further described in the Auditor’s
Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the 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 the Standalone Financial Statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics.
We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the Standalone Financial Statements.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements of the current year. These matters were addressed in the context of our audit of the Standalone Financial Statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the Standalone Financial Statements section of our report, including in relation to these matters.
Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying Standalone Financial Statements.
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Sr.
No.
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Key Audit Matters
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Auditors Response
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1.
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Expected Credit Loss allowance on financial assets and net loss on derecognition of financial instruments under amortised cost category.
Refer to accounting policy information in Note 2A (v) to the standalone financial statements and Notes 2B (i), (iv) and (vi), 6, 7, 20, 32, 33 and 49.3 to the standalone financial statements.
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In accordance with Ind AS 109 "Financial Instruments”, allowance for loan losses are determined using the expected credit loss (ECL) approach. ECL approach adopted by the Company involves significant management judgement and estimates. The key areas where we identified greater levels of management judgement and therefore increased levels of audit focus in the Company's ECL approach are:
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Principal audit procedures followed:
• Reviewed the Board / Sustainability and Risk Management Committee ("SRMC”) of Board approved loss allowance policy and verified the alignment of methodology adopted for computation of ECL provision as per the policies approved.
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Sr.
No.
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Key Audit Matters
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Auditors Response
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• The application of ECL model requires several data inputs, inherently judgements in nature, to calculate Probability of Default (“PDs”), Loss Given Default (“LGD”) and Exposure at Default (EAD).
• Estimating Management overlay (including additional overlay) for economic uncertainty, forward-looking information, macro-economic factors and impact of market risk for portfolio of real-estate loans
• Accuracy of the data from internal and external sources used in the Models. Qualitative and quantitative factors used in staging the loan assets.
Considering the significance of ECL to the overall Standalone Financial Statements and the degree of Management’s estimates and judgements involved in this matter that requires significant auditors’ attention. We have considered the expected credit loss allowance on financial assets to be a key audit matter.
The disclosures regarding the Company’s application of Ind AS 109 are key to explaining the key judgements and material inputs to ECL and net loss on derecognition of financial instruments under amortised category. Further, disclosures to be provided as per RBI circulars with regards to non-performing assets and provisions will also be an area of focus as these are related to an area of significant estimate.
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• Understood the process and tested the design and operating effectiveness of the key controls over the completeness and accuracy of data, inputs and assumptions into the ECL model.
• Evaluated whether the methodology applied by the Company is compliant with the requirements of the relevant accounting standards, Reserve Bank of India’s (‘RBI’) master directions relating to Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances and confirmed that the calculations are performed in accordance with the approved methodology and ECL amounts has been approved by the Management and the Audit committee.
• Tested on sample basis key inputs, data and assumptions impacting ECL calculations to assess the accuracy and relevance of data and reasonableness of economic forecasts and model assumptions applied.
• Review of note placed before the SRMC of Board for Management overlay / General provision.
• Tested the arithmetical accuracy of the computation of ECL provision performed by the Company in spreadsheets.
• Verified the adjustments to the output of the ECL model are consistent with the documented rationale and basis for such adjustments which has been approved by the SRMC and Audit Committee of the Board of Directors.
• Assessed whether the disclosures on keyjudgements, assumptions and quantitative data with respect to impairment loss allowance in standalone financial statements are appropriate and sufficient.
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2.
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Determination of fair value / recoverable value for the purpose of measurement of certain financial assets measured at fair value and for the purpose of impairment assessment of investments in subsidiary, joint venture or associate companies measured at cost, investment in Alternative Investment Fund (AIF) and investment property measured at cost less impairment: Refer to accounting policy information in Notes 2A (iii), (iv), (vi), (ix) and (x) and Notes 2B (ii), (iv), (v), (vi), 7, 11, 24,27,28, 35, 37, 43, 47 and 51.
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The Company’s investments in certain unquoted instruments (other than investment in subsidiaries, joint ventures and associates) are measured at fair value at each reporting date as per the requirements of Ind AS 109. These fair value measurements impact on the Company’s financial performance. Further, certain investments in AIF are subjected to RBI Regulations. The Company’s investments in subsidiaries, joint ventures and associates and investment property are measured at cost less provision for impairment, if any, as per the requirements of Ind AS 27 and Ind AS 40 respectively.
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Principal audit procedures followed:
• Understood the process, evaluated the design and testing the operating effectiveness of such controls in respect of valuation of investments / impairment assessment / estimation of recoverable amount by the Company’s Management.
• Evaluated Management’s controls over collation of relevant information used for determining estimates for valuation and recoverable amount and impairment testing of investments including investment property.
• Tested appropriateness of valuation methodology and impairment testing by the Company’s Management.
• Reconciled the financial information in the estimates relating to fair valuation, recoverable amount and impairment to underlying source details.
• Verified the independent valuation reports for unquoted investments and investment property obtained by the Company’s Management.
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Sr. Key Audit Matters No.
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Auditors Response
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The valuation for the purpose of measurement and impairment assessment requires significant judgement due to unavailability of quoted prices and limited liquidity.
The disclosures regarding the Company’s fair value estimation and impairment are key to explaining the key estimation and judgements including material inputs to the estimated valuation / recoverable amount figures.
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• Tested the reasonableness of Management’s estimates considered in such assessment.
• Assessed the competence, capabilities and objectivity of the experts used by Management in the process of valuation models.
• Assessed the Company’s application of and compliance with specific regulatory requirements with respect to investment in AIFs.
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• Assessed the factual accuracy conclusion reached
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by the Management and appropriateness of the disclosures made in the standalone financial statements in respect of investments, investment property and impairment of non-financial assets.
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INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITORS' REPORT THEREON
The Company’s Management and Board of Directors are responsible for the other information. The other information comprises the information included in the Board Report including annexures to the Board report but does not include the Standalone Financial Statement and our auditors’ report thereon.
Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material 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 FOR THE STANDALONE FINANCIAL STATEMENTS
The Company’s Management and Board of Directors are responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these Standalone Financial Statements that give a true and fair view of the financial position, financial
performance (including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards (Ind AS) specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and other accounting principles generally accepted in India.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the Standalone Financial Statements, the Management and the Board of Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Management and the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company’s financial reporting process.
AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the Standalone Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the Standalone Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design 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 has adequate internal financial controls with reference to the Standalone Financial Statements in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management.
• Conclude on the appropriateness of Management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Standalone 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’s report. However, future events or conditions may cause the entity to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including the disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the Standalone Financial Statements that individually or in aggregate makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work and (ii) to evaluate the effect of identified misstatements in the standalone financial statements.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. Pursuant to the Companies (Auditor’s Report) Order, 2020 ("the Order”), issued by the Central Government of India in terms of Sub-Section (11) of Section 143 of the Act, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure "A” a statement on 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:
(a) We have sought and obtained all the information and explanations which to the best of 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 the Company so far as it appears from our examination of those books, except for the matters stated in the paragraph 2(i)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.
(c) The standalone Balance sheet, the standalone Statement of profit & Loss including other comprehensive income, the standalone Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid Standalone Financial Statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended.
(e) On the basis of the written representations received from the directors as on March 31, 2025 taken on record by the Board of Directors, none of the directors are disqualified as on March 31, 2025 from being appointed as a Directors in terms of Section 164(2) of the Act.
(f) The modifications relating to the maintenance of accounts and other matters connected therewith are as stated in paragraph 2(b) above on reporting under Section 143(3) of the Act and paragraph 2(i)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.
(g) With respect to the adequacy of the internal financial controls with reference to Standalone Financial Statements of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure "B”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls with reference to Standalone Financial Statements.
(h) With respect to the other matters to be included in the Auditor’s Report in accordance with the requirements of Section 197(16) of the Act, as amended, in our opinion and to the best of our information and explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.
(i) With respect to the other matters to be included in the Auditor’s report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements. (Refer note 41) to standalone financial statements)
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There have been no delays in transferring amounts required to be transferred to the Investor Education and Protection Fund by the Company. In one instance, transfer of unpaid dividend for financial year 2016-17 aggregating to H2.75 crores which was due on October 01, 2024, was paid on November 04, 2024. The Company informed us that the delay was on account of persistent technical issues on the MCA portal. (Refer note 53(xiii) to the standalone financial statements)
iv. (a) The Management has represented,
that to the best of their knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend to or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(b) The Management has represented, that to the best of their knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend to or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party
(“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representation under Sub Clause (i) and (ii) of Rule 11(e) of The Companies (Audit and Auditors) Rules, 2014, as provided under (a) and (b) above, contains any material misstatement. [Refer note 53 (ix) and 53 (x) to the standalone financial statements.]
v. As stated in note 23 to the Standalone Financial Statements, the Board of Directors of the Company has proposed dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared and paid during the year is in compliance with Section 123 of the Act.
vi. The reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 is as under:
Based on our examination which included test checks, except for the instances mentioned below, the Company has used accounting software for maintaining its books of accounts which has a feature of recording audit trail (edit log) facility and the same operated throughout the year for all relevant transactions recorded in respective software:
i The feature of recording audit trail (edit log) facility was not enabled at the database level for one accounting software to log any direct data changes for the accounting software used for maintaining the books of account.
i i The feature of recording audit trail (edit log) facility was not enabled at database level for one accounting software relating to Treasury Management for the period April 01, 2024 to February 24, 2025 and at the application layer of one accounting software relating to Retails - Loan against securities for the period April 01, 2024 to March 26, 2025.
iii The company, has used an accounting software for their travel management which is operated by a third party software service provider, for maintaining its books of account and in absence of SOC 1 Type 2 report, we are unable to comment
whether audit trail feature of the said software was enabled and operated throughout the year for all relevant transactions recorded in the software or whether there were any instances of the audit trail feature been tampered with.
Further, for the periods where the audit trail (edit log) facility was enabled and operated throughout the year for the respective accounting software, we did not come across any instance of audit trail feature being tampered with and the audit trail has been preserved by the Company as per statutory requirement for record retention.
For Suresh Surana & Associates LLP For Bagaria & Co LLP
Chartered Accountants Chartered Accountants
Firm’s Registration. No.: 121750W / W-100010 Firm’s Registration. No.: 113447W / W-100019
Santosh Mailer Rahul Bagaria
Partner Partner
Membership No.: 143824 Membership No.: 145377
UDIN: 25143824BMODOH8669 UDIN: 25145377BMOSYI2092
Place: Mumbai Place: Mumbai
Date: May 06, 2025 Date: May 06, 2025
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