PQR Private Limited is not a subsidiary or holding company of a public company and is not covered by

PQR Private Limited is not a subsidiary or holding company of a public company and is not covered by any of the other specific exclusions under CARO 2020.

The following information is available:

Paid-up share capital as at 31 March 2027: ₹3.80 crore
Turnover during the immediately preceding financial year: ₹38 crore
Turnover during the current financial year: ₹9.20 crore
Total borrowings from banks and financial institutions at all times during the current financial year: ₹1.40 crore
Total liabilities during the current financial year: ₹11 crore

The CFO argues that CARO 2020 is not applicable to the company, and the statutory auditor agrees with the CFO.

Which ONE of the following is correct?

A. CARO 2020 is applicable because borrowings from banks and financial institutions exceeded ₹1 crore during the financial year, irrespective of the company’s other particulars.

B. CARO 2020 is not applicable because the company satisfies the prescribed conditions for being a small company, and a small company is outside the scope of CARO 2020.

C. CARO 2020 is applicable because the ₹1 crore borrowing threshold applicable to certain private companies has been exceeded, even though the company satisfies the prescribed paid-up capital and turnover limits for a small company.

D. CARO 2020 is not applicable only if the company satisfies both the small-company conditions and the separate borrowing condition applicable to private companies.