you are here:

Bajaj Finserv Ltd.

BSE: 532978 | NSE: BAJAJFINSV |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE918I01018 | SECTOR: Finance - Investments

BSE Live

Nov 26, 15:54
16679.95 -674.15 (-3.88%)
Volume
AVERAGE VOLUME
5-Day
11,786
10-Day
9,895
30-Day
12,547
13,337
  • Prev. Close

    17354.10

  • Open Price

    17235.00

  • Bid Price (Qty.)

    16603.00 (1)

  • Offer Price (Qty.)

    16664.00 (1)

NSE Live

Nov 26, 15:56
16682.55 -686.30 (-3.95%)
Volume
AVERAGE VOLUME
5-Day
280,029
10-Day
241,802
30-Day
263,502
342,486
  • Prev. Close

    17368.85

  • Open Price

    17200.00

  • Bid Price (Qty.)

    0.00 (0)

  • Offer Price (Qty.)

    16682.55 (320)

Annual Report

For Year :
2021 2019 2018 2017 2016 2015 2014 2013 2012

Auditor's Report

Independent Auditors'' Report on the Standalone Financial Statements

To the Members of Bajaj Finance Ltd.

Opinion

We have audited the accompanying standalone financial statements of Bajaj Finance Ltd. (''the Company''), which comprise the Balance Sheet as at 31 March 2021, the Statement of Profit and Loss, including the Statement of Other Comprehensive Income, the 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 significant accounting policies and other explanatory information.

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, as amended (''the Act'') in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2021, its profit including 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 of the standalone financial statements in accordance with the Standards on Auditing (SAs), as 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 together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Emphasis of matter

We draw attention to note 2.1 to the standalone financial statements, which describes the uncertainty caused by the continuing COVID-19 pandemic and the related probable events which could impact the Company''s estimates of impairment of loans to customers. Our opinion is not modified in respect of this matter.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the standalone financial statements for the financial year ended 31 March 2021. 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. For each matter below, our description of how our audit addressed the matter is provided in that context.

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.

Key audit matters

How our audit addressed the key audit matter

(a) Impairment of financial assets as at balance sheet date (expected credit losses)

(as described in note 9 of the standalone financial statements)

Ind AS 109 requires the Company to provide for impairment of

Read and assessed the Company''s accounting policies for

its loan receivables (designated at amortised cost and fair value through other comprehensive income) using the expected credit loss (ECL) approach. ECL involves an estimation of probability weighted loss on financial instruments over their life, considering reasonable and supportable information about past events, current conditions, and forecasts of future economic conditions which could impact the credit quality of the Company''s loans and advances.

impairment of financial assets and their compliance with Ind AS 109 and the governance framework approved by the Board of Directors pursuant to Reserve Bank of India guidelines issued on 13 March 2020.

Read and assessed the Company''s policy with respect to one-time restructuring offered to customers pursuant to the ''Resolution Framework for COVID-19-related Stress'' issued by

In the process, a significant degree of judgement has been applied

RBI on 6 August 2020 and tested the implementation of such

by the Management for:

policy on a sample basis.

• Staging of loans [i.e. classification in ''significant increase in

credit risk'' (''SICR'') and ''default'' categories];

Evaluated the reasonableness of the Management estimates by understanding the process of ECL estimation and related assumptions and tested the controls around data extraction and

Grouping of borrowers based on homogeneity by using

validation.

appropriate statistical techniques;

• Estimation of behavioral life;

Determining macro-economic factors impacting credit quality of receivables;

• Estimation of losses for loan products with no/ minimal

historical defaults.

Assessed the criteria for staging of loans based on their past-due status to check compliance with requirement of Ind AS 109. Tested a sample of performing (stage 1) loans to assess whether any SICR or loss indicators were present requiring them to be classified under higher stages.

Assessed the additional considerations applied by the

Additional considerations on account of COVID-19

Management for staging of loans as SICR or default categories in view of Company''s policy on one-time restructuring.

Considering the evolving nature of the COVID-19 pandemic, which has continued to impact the Company''s business operations,

Tested the ECL model, including assumptions and underlying

resulting in higher loan losses, the Company has maintained a

computation. Assessed the floor/ minimum rates of

Management overlay of '' 672 crore as part of its ECL, to reflect among other things the increased risk of deterioration in macro-

provisioning applied by the Company for loan products with inadequate historical defaults.

economic factors. Given the unique nature of the pandemic

Tested assumptions used by the Management in determining

and the extent of its economic impact which depends on future

the overlay for macro-economic factors (including COVID-19

developments including governmental and regulatory measures

pandemic).

and the Company''s responses thereto, the actual credit loss can be

Assessed disclosures included in the standalone financial

different than that being estimated.

statements in respect of expected credit losses including

In view of such high degree of Management''s judgement involved

the specific disclosures made with regards to the impact of

in estimation of ECL, accentuated by the COVID-19 pandemic and related events, it is a key audit matter.

COVID-19 on ECL estimation.

(b) IT systems and controls

Financial accounting and reporting processes, especially in the

We tested the design and operating effectiveness of the

financial services sector, are fundamentally reliant on IT systems

Company''s IT access controls over the information systems

and IT controls to process significant transaction volumes, hence

that are important to financial reporting and various interfaces,

we identified IT systems and controls over financial reporting as a

configuration and other identified application controls.

key audit matter for the Company.

We tested IT general controls (logical access, changes

Automated accounting procedures and IT environment controls,

management and aspects of IT operational controls). This

which include IT governance, general IT controls over program

included testing requests for access to systems were reviewed

development and changes, access to programs and data and IT

and authorized.

operations, are required to be designed and to operate effectively

We tested the Company''s periodic review of access rights. We

to ensure reliable financial reporting.

also tested requests of changes to systems for approval and authorization.

In addition to the above, we tested the design and operating effectiveness of certain automated controls that were considered as key internal controls over financial reporting.

Other information

The other information comprises the information included in the Annual report but does not include the standalone financial statements and our auditor''s report thereon. The Company''s Board of Directors is responsible for the other information.

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 such other information is materially inconsistent with the financial statements or our knowledge obtained in the 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 Board of Directors is 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 Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements and estimates that are reasonable and prudent; and the 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, Management is 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 Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are also responsible for overseeing the Company''s financial reporting process.

Auditor''s 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 auditor''s 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 the 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 judgement 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 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 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 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 Company 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.

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 for the financial year ended 31 March 2021 and are therefore the key audit matters. We describe these matters in our auditor''s 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) As required by the Companies (Auditor''s Report) Order, 2016 (''the Order''), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the ''Annexure 1'' a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

(a) We have sought and obtained all the information and explanations which to the 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;

(c) The Balance Sheet, the Statement of Profit and Loss including the Statement of Other Comprehensive Income, the 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 31 March 2021 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2021 from being appointed as a director in terms of Section 164(2) of the Act;

(f) With respect to the adequacy of the internal financial controls with reference to these standalone financial statements and the operating effectiveness of such controls, refer to our separate Report in ''Annexure 2'' to this report;

(g) In our opinion, the managerial remuneration for the year ended 31 March 2021 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;

(h) 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 42 to the standalone financial statements;

(ii) The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer note 7 to the standalone financial statements;

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

For S R B C & CO LLP

Chartered Accountants

ICAI Firm registration number: 324982E/E300003

per Vaibhav Kumar Gupta

Partner

Membership number: 213935

UDIN: 21213935AAAABX9196

Pune: 27 April 2021

Annexure 1 referred to in paragraph (1) under the heading ''Report on other legal and regulatory requirements'' of our report of even date

(1) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation

of fixed assets.

(b) Fixed assets have been physically verified by the Management during the year and no material discrepancies were identified on such verification.

(c) According to the information and explanations given by the Management, the title deeds of immovable properties included in property, plant and equipment/ fixed assets are held in the name of the Company.

(2) The Company''s business does not involve inventories and, accordingly, the requirements under clause 3(ii) of the Order are not applicable to the Company and hence not commented upon.

(3) (a) The Company has granted loans to parties covered in the register maintained under section 189 of the Act. In oi

opinion and according to the information and explanations given to us, the terms and conditions of the grant of such loans are not prejudicial to the Company''s interest.

(b) The Company has granted loans to parties covered in the register maintained under section 189 of the Act. The schedule of repayment of principal and payment of interest has been stipulated for the loans granted and the repayment/receipts are regular.

(c) There are no amounts of loans granted to companies, firms or other parties listed in the register maintained under section 189 of the Act which are overdue for more than ninety days.

(4) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees, and securities granted in respect of which provisions of section 185 and 186 of the Act are applicable anc hence not commented upon.

(5) In our opinion and according to the information and explanations given to us, the Company being a non-banking

financial company registered with the Reserve Bank of India, the provisions of sections 73 to 76 or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 2014, as amended, with regard to the deposits accepted are not applicable to the Company. We are informed by the Management that no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company in respect of the aforesaid deposits.

(6) To the best of our knowledge and as explained, the Central Government has not specified the maintenance of cost records under section 148(1) of the Act, for the services of the Company.

(7) (a) Undisputed statutory dues including provident fund, employees'' state insurance, income tax, goods and service

tax, duty of custom, duty of excise, value added tax, cess and other statutory dues applicable to the Company have generally been regularly deposited with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of

provident fund, employees'' state insurance, income tax, goods and service tax, duty of custom, duty of excise, value added tax, cess and other statutory dues applicable to the Company were outstanding, at the year end, fo a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues of income tax, sales tax, service tax, duty of custom, duty of excise, value added tax, goods and services tax and cess which have not been deposited on account of any dispute, are as follows:

Name of the statute

Nature of disputed dues

Amount

under

dispute

Amount

paid*

Period to which the amount relates

('' In Crore)

Forum where dispute is pending

Employees State Insurance Act, 1948

ESIC

contribution

4.46

Nil

FY 1999-2000 to FY 2006-07

Employees State Insurance Court

Employees State Insurance Act, 1948

ESIC

contribution

0.68

Nil

FY 1991-92 to FY 2002-03

Deputy Director Employee State Insurance Corporation

Income Tax Act, 1961

Income Tax

22.84

Nil

FY 2015-16

Commissioner of Income Tax (Appeals)

Income Tax Act, 1961

Income Tax

7.81

Nil

FY 1996-97 to FY 2002-03, FY 2005-06, FY 2011-12 and FY 2012-13, FY 2013-14

Income Tax Appellate Tribunal (Pune)

Income Tax Act, 1961

Income Tax

15.49

Nil

FY 1995-96 to FY 2010-11

Mumbai High Court

Finance Act, 1994

Service Tax

1,905.44

10.00

FY 2010-11 to September 2016

Customs, Excise and Service Tax Appellate Tribunal

Finance Act, 1994

Service Tax

237.25“

7.06

July 2012 to June 2016

Customs, Excise and Service Tax Appellate Tribunal

Finance Act, 1994

Service Tax

2.53

0.18

FY 2007-08 to September 2016

Customs, Excise and Service Tax Appellate Tribunal

Finance Act, 1994

Service Tax

3.46

0.10

July 2012 to June 2016

Additional Commissioner

Finance Act, 1994

Service Tax

188.37

Nil

October 2014 to June 2017

Commissioner of Central Excise and CGST Pune

Goods and Service Tax Act 2017

Goods and Service Tax

0.13

Nil

July 2017

Assis. Commissioner of Central GST, Pune

Goods and Service Tax Act 2017

Goods and Service Tax

0.30

Nil

July 2017

Joint Commissioner (Appeals), GST Commissionerate, Pune

West Bengal Value Added Tax Act, 2003

Value Added Tax

0.86

Nil

FY 2005-06 to FY 2008-09

Additional Commissioner, Sales Tax

Rajasthan Value Added Tax Act, 2003

Value Added Tax

3.28

1.29

FY 2008-09 to July 2014

Supreme Court of India

Rajasthan Value Added Tax Act, 2003

Value Added Tax

0.15

0.06

July 2014 to March 2017

VAT Appellate Tribunal

* paid under protest ** Includes interest and penalty

(8) In our opinion and according to the information and explanations given by the Management, the Company has not defaulted in repayment of loans or borrowings to a financial institution or bank or dues to debenture holders.

(9) According to the information and explanations given by the Management, the Company has not raised any money by way of initial public offer or further public offer.

Further, monies raised by the Company by way of term loans were applied for the purpose for which those were raised, though idle/surplus funds which were not required for immediate utilization were gainfully invested in liquid assets payable on demand.

(10) Based upon the audit procedures performed for the purpose of reporting on the true and fair view of the financial statements and according to the information and explanations given by the Management, we report that no fraud by the Company or no material fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.

(11) According to the information and explanations given by the Management, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

(12) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company and hence not commented upon.

(13) According to the information and explanations given by the Management, transactions with the related parties are in compliance with section 177 and 188 of the Act where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

(14) According to the information and explanations given to us and on an overall examination of the Balance Sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the Company and, not commented upon.

(15) According to the information and explanations given by the Management, the Company has not entered into any noncash transactions with directors or persons connected with him as referred to in section 192 of the Act.

(16) According to the information and explanations given to us, we report that the Company has registered as required, under section 45-IA of the Reserve Bank of India Act, 1934.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm registration number: 324982E/E300003

per Vaibhav Kumar Gupta

Partner

Membership number: 213935

UDIN: 21213935AAAABX9196

Pune: 27 April 2021