We have audited the accompanying standalone Ind AS financial statements of ARNOLD
HOLDINGS LIMITED ("the Company"), which comprise the Balance Sheet as at March 31,
2026, 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 a summary of significant accounting policies and other explanatory information.
Opinion
In our opinion and to the best of our information and according to the explanations given to
us, the standalone Ind AS financial statements give the information required by 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 March 31,
2026, 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 Financial Statements in accordance with the Standards on
Auditing specified under section 143(10) of the Act. Our responsibilities under those
Standards are further described in the Auditor's Responsibility for the Audit of the 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 financial statements under the
provision of the Act and Rules made there under, 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 financial statements.
Key Audit matters.
1. Expected Credit Loss (ECL) on Loan Portfolio (Refer Notes 6, 38 & 40)
As disclosed in Note 6 to the standalone financial statements, as at 31 March 2026, the Company
has Gross Loans of ?9,338.21 lakh (Previous Year: ?8,270.92 lakh) against which an impairment
allowance (Expected Credit Loss) of ?192.73 lakh (Previous Year: ?243.79 lakh) has been
recognised, resulting in Net Loans of ?9,145.48 lakh (Previous Year: ?8,027.13 lakh). The loan
portfolio represents the Company's principal financial asset and comprises a significant proportion
of unsecured lending. The determination of impairment under Ind AS 109 requires significant
management judgement relating to borrower creditworthiness, staging of financial assets,
expected future cash flows, probability of default, loss given default, collateral valuation and
identification of significant increase in credit risk. Considering the significance of the loan portfolio
and the judgement involved in estimating Expected Credit Loss, this matter was considered to be
a Key Audit Matter.
Our audit procedures included, among others: Obtained an understanding of the Company's
Expected Credit Loss methodology and evaluated its compliance with Ind AS 109 and applicable
RBI Directions. Evaluated the design, implementation and operating effectiveness of key controls
relating to credit appraisal, loan monitoring, asset classification and impairment assessment.
Tested the completeness and accuracy of borrower ageing reports, Days Past Due (DPD) reports
and staging of loan accounts. Evaluated management's assessment of significant increase in credit
risk and recoverability for selected borrowers. Examined loan agreements, security documents,
repayment history and subsequent recoveries for selected loan accounts. Recomputed Expected
Credit Loss for selected loan accounts and assessed the reasonableness of assumptions applied
by management. Evaluated the adequacy and appropriateness of disclosures relating to
impairment of financial assets in the standalone financial statements.
2. Assessment of Asset Quality and Movement in Non-Performing Assets (NPAs)
As disclosed in Notes 39 and 40 to the standalone financial statements, the Company reported
gross NPA additions of ?153.51 lakh during the year, representing loan accounts that moved from
standard to NPA during the year. These NPAs were subsequently reduced or regularised, and the
Company recognised a net write-off of ?90.69 lakh in the Statement of Profit and Loss for FY
2025-26. The movement in NPAs and the resulting asset quality at year-end required significant
audit attention.We considered this matter to be a Key Audit Matter as the assessment of NPA
classification and subsequent regularisation involved reviewing the ageing and repayment status
of individual loan accounts, compliance with applicable RBI prudential requirements and the
Company's approved loan write-off policy, and the supporting evidence for reductions in NPAs.
Our audit procedures included, among others: Obtaining account-wise details of the ?153.51
lakh NPA additions and subsequent reductions during the year and reconciling these details with
the underlying loan records. We examined selected loan accounts with reference to their ageing,
repayment history and relevant supporting documents and assessed whether the NPA
classification was appropriate.We also examined the basis for the subsequent reduction or
regularisation of selected NPA accounts and verified the supporting evidence, including cash
recoveries, wherever applicable. The net write-off of ?90.69 lakh recognised in the Statement of
Profit and Loss for FY 2025-26 was verified with reference to the underlying loan accounts,
supporting records and the Company's approved loan write-off policy.Further, we assessed the
Company's compliance with applicable RBI requirements and its accounting policies and reviewed
the adequacy of the related disclosures in the standalone financial statements.
3. Related Party Loan Transactions and Outstanding Balances (Refer Note 33)
As disclosed in Note 33 to the standalone financial statements, the Company entered into lending
transactions with related parties during the year in the ordinary course of its business, comprising
loan disbursements, repayments and recognition of interest income. During the year, the
Company disbursed a loan of ?500.00 lakh to Allwin Securities Limited, which was fully repaid
during the same year, along with the corresponding recognition and receipt of interest. As at 31
March 2026, loans outstanding to related parties aggregated to ?195.05 lakh, excluding accrued
interest, comprising ?190.05 lakh due from Mr. Pawan Kumar Mallawat and ?5.00 lakh due from
Mr. Sandeep Mallawat. These outstanding balances relate to loans carried forward from the
preceding year.
Our audit procedures included, among others: Obtained an understanding of the Company's
process for identification, approval, recording and monitoring of related party relationships and
transactions. Reviewed the register of related parties, declarations provided by Directors and Key
Managerial Personnel and reconciled the related party list with statutory records, Board minutes
and Audit Committee minutes. Evaluated the design and operating effectiveness of key controls
over the approval, recording and monitoring of related party transactions. Verified Board, Audit
Committee and shareholder approvals, wherever applicable, in accordance with the Companies
Act, 2013 and applicable SEBI (LODR) Regulations. Selected significant related party loan
accounts, including Allwin Securities Limited, Mr. Pawan Kumar Mallawat and Mr. Sandeep
Mallawat, and tested loan disbursements, repayments, interest accruals and TDS adjustments
with reference to loan agreements, bank statements, ledger accounts and supporting documents.
Examined the loan agreements and evaluated whether the interest income was recognised in
accordance with the agreed contractual terms. Recomputed interest income on a sample basis
and verified TDS credits with supporting records. Verified the year-end outstanding balances with
the general ledger and assessed recoverability by examining repayment history, subsequent
recoveries and management's assessment of the outstanding balances. Assessed compliance with
the applicable provisions of Sections 177, 185, 186 and 188 of the Companies Act, 2013, wherever
applicable, and the applicable requirements of SEBI (LODR) Regulations. Evaluated the adequacy,
completeness and appropriateness of disclosures relating to related party transactions and
outstanding balances in Note 33 in accordance with Ind AS 24 - Related Party Disclosures.
4. Recognition of Revenue from Digital Lending Operations
As disclosed in the Statement of Profit and Loss, the Company has recognised Revenue from
Operations of ?16,689.35 lakhs, comprising Fees & Commission Income of ?10,267.77 lakh s,
Interest Income of ?1,032.44 lakhs, Dividend Income of ?46.38 lakhs, and Income from Sale of
Securities of ?5,342.75 lakhs. The Company's digital lending business is primarily carried out
through its proprietary online platform, Tradofina, through which customers are onboarded and
micro-loans are originated, processed and serviced. Fees & Commission Income, which primarily
comprises micro-loan processing fees, commission income, MDR processing fees and related
charges, constitutes the largest component of the Company's operating revenue. Revenue
recognition requires management judgement regarding the nature of services provided, timing of
recognition, contractual terms with customers and borrowers, and appropriate accounting under
Ind AS 115 - Revenue from Contracts with Customers and Ind AS 109 - Financial Instruments.
Considering the significance of revenue from operations and the judgement involved in its
recognition, this matter was considered to be a Key Audit Matter.
Our audit procedures included, among others: Obtained an understanding of the Company's
revenue recognition policies and evaluated their compliance with the applicable requirements of
Ind AS 115 and Ind AS 109. Obtained an understanding of the revenue processes and key internal
controls relating to transactions originating through the Tradofina platform. Evaluated the design
and operating effectiveness of key controls over recognition of revenue from processing fees,
commission income, interest income and sale of securities. Tested, on a sample basis, customer
agreements, loan files, transaction records and supporting documentation for revenue recognised
during the year. Verified the computation of processing fees, commission income and interest
income in accordance with the underlying contractual terms and applicable accounting policies.
Performed substantive analytical procedures over significant revenue streams and investigated
unusual fluctuations and trends. Tested revenue transactions recorded near the year end to
evaluate the appropriateness of cut-off and period-end recognition. Evaluated the adequacy,
completeness and appropriateness of revenue-related disclosures in the standalone financial
statements.
5. Assessment of Direct and Indirect Tax Litigations
As disclosed in the standalone financial statements, the Company is involved in certain litigations
relating to Income Tax and Goods and Services Tax (GST), including proceedings before the
Bombay High Court relating to Assessment Year 2013-14 and GST proceedings before the
Appellate Authority. The assessment of these matters requires significant judgement in evaluating
the likelihood of outflow of economic resources, determination of whether provisions or contingent
liabilities are required, and the adequacy of disclosures in accordance with Ind AS 37 - Provisions,
Contingent Liabilities and Contingent Assets. Accordingly, this matter was considered to be a Key
Audit Matter.
Our audit procedures included, among others: Obtained details of pending direct and indirect
tax litigations from management and reconciled them with the litigation register maintained by
the Company. Examined notices, assessment orders, appeal memoranda, legal opinions and other
relevant correspondence relating to significant litigations. Discussed the status of significant tax
matters with management and, where considered necessary, evaluated external legal opinions
obtained by the Company. Assessed management's evaluation regarding the probability of outflow
of economic resources and the appropriateness of recognition of provisions or disclosure of
contingent liabilities in accordance with Ind AS 37. Evaluated the adequacy, completeness and
appropriateness of disclosures relating to tax litigations in the standalone financial statements.
6. Classification and Valuation of Shares and Securities Held for Trading (Refer Note 8)
As disclosed in Note 8 to the standalone financial statements, the Company has recognised Shares
and Securities amounting to ?3,591.48 lakhs as inventory held for trading, arising from its activity
of purchase and sale of securities on a delivery basis. The classification and valuation of such
securities involve management judgement and consideration of the applicable requirements of
the Indian Accounting Standards. Considering the significance of the amount involved and the
audit attention required in assessing the classification and valuation of these securities, this matter
was considered to be a Key Audit Matter.
Our audit procedures included, among others: Obtaining an understanding of the Company's
business model and accounting practices relating to purchase and sale of shares and securities;
evaluating the basis adopted by management for their classification and valuation; verifying the
existence of securities through Demat statements, depository participant statements, contract
notes and other relevant supporting records; assessing the basis of valuation and related
supporting documentation; and evaluating the presentation and disclosures relating to shares and
securities in the standalone financial statements.
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the other information.
The other information comprises the information included in the Management Discussion and
Analysis, Board's Report including Annexure to Board's Report, Business Responsibility Report,
Corporate Governance and Shareholder's Information, but does not include the Financial
Statements and our auditor's report thereon.
Our opinion on the 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 financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the 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.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by 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, we give
in the Annexure 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 purpose 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, 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 Ind AS 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 written representations received from the directors as on March 31,
2026 and taken on record by the Board of Directors, none of the directors is
disqualified as on March 31, 2026, 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 over financial reporting
of the Company with reference to these standalone Ind AS financial statements and
the operating effectiveness of such controls, refer to our separate Report in
"Annexure B" to this report;
g) 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 according to the 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.
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, 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 Ind AS 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 has been no delay in transferring amounts, required to be transferred, to
the Investor Education and Protection Fund by the Company
i) Based on our examination, which included test checks, the Company has used
accounting software for maintaining its books of account for the financial year ended
March 31, 2026 which has a feature of recording audit trail (edit log) facility and the
same has operated throughout the year for all relevant transactions recorded in the
software. Further, during the course of our audit we did not come across any instance
of the audit trail feature being tampered with.
As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 1,
2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on
preservatioof audit trail as per the statutory requirements for record retention is not
applicable for the financial year ended March 31, 2026
Management's Responsibility for the Standalone Ind AS Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of
the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone Ind
AS 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 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 judgments 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 Ind AS financial
statements that give a true and fair view and are free from material misstatement, whether
due to fraud or error.
In preparing the financial statement, 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.
The Board of Directors are responsible for overseeing the Company's financial reporting
process.
Auditor's Responsibility for the Audit of the Standalone Financial Statement
Our responsibility is to express an opinion on these standalone Ind AS financial statements
based on our audit.
We have taken into account the provisions of the Act, the accounting and auditing standards
and matters which are required to be included in the audit report under the provisions of the
Act and the Rules made thereunder.
We conducted our audit of the standalone Ind AS financial statements in accordance with the
Standards on Auditing, issued by the Institute of Chartered Accountants of India, as specified
under Section 143(10) of the Act. Those Standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the standalone
Ind AS financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal financial controls relevant to the Company's preparation of the
standalone Ind AS financial statements that give a true and fair view in order to design audit
procedures that are appropriate in the circumstances. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of the accounting
estimates made by the Company's Directors, as well as evaluating the overall presentation
of the standalone Ind AS financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinion on the standalone Ind AS financial statements.
As part of an audit in accordance with Standards on Auditing SA's, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the 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 financial controls 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 system 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 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 financial statements,
including the disclosures, and whether the financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
• Materiality is the magnitude of misstatements in the financial statements that,
individually or in aggregate, makes it probable that the economic decisions of a
reasonably knowledgeable user of the 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
any identified misstatements in the 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 financial statements
of the current period 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.
For & on behalf of,
M/S AMIT RAY & COMPANY
Chartered Accountants
Firm Reg. No. 000483C
Sd/-
FCA Nag Bhushan Rao
Senior Partner
Membership No: 073144
UDIN: 26073144XNWBRC5755
Place: Mumbai
Date: 27.05.2026
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