Directors Report of Fusion Finance Ltd.

Mar 31, 2025

The Board of Directors are pleased to present the 31st Annual Report of your Company ("the Company" or âFusion")
along with the Audited Financial Statements, for the Financial Year ended March 31, 2025 (âFinancial Statements").

1. FINANCIAL SUMMARY/STATE OF AFFAIRS

The financial statements of the Company for the year ended March 31, 2025 have been prepared in accordance with
Indian Accounting Standards ("Ind AS") prescribed under section 133 of the Companies Act, 2013 (the âAct"), read
with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Schedule III to the Act, as amended
from time to time and applicable guidelines issued by Securities and Exchange Board of India (âSEBI").

The financial results of the Company for the current Financial Year ended March 31, 2025, as compared to the previous
Financial Year ended March 31, 2024, are as under:

(R in crores unless otherwise stated)

2. OPERATIONAL PERFORMANCE

Operational performance of the Company for the current Financial Year ended March 31, 2025 as compared to the
previous Financial Year ended March 31, 2024 is summarized below:

Particulars	FY March 31, 2025	FY March 31, 2024	Increase over %
Number of Branches	1,571	1,297	21.13%
Number of Active Loan Borrowers	32,08,248	38,61,892	-16.93%
Number of employees	15,274	13,807	10.63%
Number of States	22	22	-
Amount Disbursed (INR Crore)	6,971	10,294	-32.28%
Gross Loan Portfolio (INR Crore)	8,980	11,476	-21.75%

Particulars	For the year ended March 31, 2025	For the year ended March 31, 2024
Revenue from operations
Interest Income	2,134.22	2,091.90
Fees and commission Income	15.14	41.67
Net gain on fair value changes	81.26	52.86
Net gain on derecognition of financial instruments under amortized cost category	89.14	130.30
Total Revenue from operations	2,319.76	2,316.73
Other Income	49.13	95.69
Total Income	2368.89	2,412.42
Expenses
Finance Costs	843.85	790.83
Impairment on financial instruments	1869.49	364.86
Employee benefits expenses	573.24	431.22
Depreciation and amortization	11.67	9.01
Other expenses	203.65	153.24
Total Expenses	3501.90	1,749.16
Profit/ (Loss) before tax	(1,133.01)	663.26
Tax Expense:
Current Tax	-	172.30
Deferred Tax	91.53	(14.33)
Profit/ (Loss) after tax	(1224.54)	505.29
Other Comprehensive Income
Items that will not be reclassified subsequently to profit or Loss
Re-measurement gains/(loss) on defined benefit plans	1.28	1.64
Income tax effect	-	(0.41)
Total Other Comprehensive Income for the year	1.28	1.23
Total Comprehensive Income for the year	(1233.26)	506.52

During the Financial Year 2024-25, the Company''s total revenue grew marginally by 0.13% to INR 2,319.76 crore.
However, the Company reported a net loss of INR 1,224.54 crore for the year, in contrast to a net profit of INR 505.29
crore in the previous Financial Year 2023-24.

The Company reached out to 32,08,248 active loan
Borrowers as on March 31, 2025, which has decreased
from 38,61,892 as on March 31, 2024. The reduction in
active loan borrowers during the year was -16.93%.

The Company has 15,274 employees as on March 31,
2025, which was 13,807 as on March 31, 2024, through
1,571 Branches, across 22 states and 497 districts in
India. During the year under review, the Company
opened/split 274 new branches.

The Company already has borrowing arrangements
with a large number of lenders and has started
associations with a few more institutions to diversify
its sources of borrowing.

3. CASH FLOW STATEMENT

The Cash Flow Statement for the Financial Year ended
on March 31, 2025 prepared under the provisions of the
Act is attached as a part of the Financial Statements of
the Company.

4. ANNUAL RETURN

Pursuant to sub-section (3)(a) of Section 134 and
sub-section (3) of Section 92 of the Act, read with Rule 12
of the Companies (Management and Administration)
Rules, 2014, the copy of the Annual Return as at March
31, 2025 is available on the website of the company at
www.fusionfin.com

5. DEPOSITS

The Company is a non-deposit taking Non-Banking
Financial Company - Micro Finance Institution
(NBFC-MFI) and has not accepted any public
deposits within the ambit of Non-Banking Financial
Companies Acceptance of Public Deposits (Reserve
Bank) Directions, 1998 or Section 73 of the Act
read with Companies (Acceptance of Deposits)
Rules, 2014. Further the company continues to be a
non-deposit taking Non-Banking Financial Company
in conformity with the guidelines of the RBI.

6. TRANSFER TO RESERVES

During the Financial Year 2024-25, the Company has
not transferred any amount to the statutory reserve
pursuant to Section 45-IC of the Reserve Bank of India
Act, 1934, due to loss during the Year.

7. DIVIDEND DISTRIBUTION POLICY

Pursuant to the provisions of Regulation 43A of the
Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations,
2015 (the âSEBIListing Regulations''), the Company
had formulated a dividend distribution policy,
which sets out the parameters and circumstances
to be considered by the Board of Directors (âBoard'')
in determining the distribution of dividend to its
shareholders and/or retaining profit earned. The said
policy is also available on the website of the Company at
https://fusionfin.com/wp-content/uploads/2024/11/11.-
Dividend-Distribution-Policy-W.pdf

8. DIVIDEND

The Board of Directors is focused on driving
sustainable business growth and enhancing longÂ¬
term shareholder returns. In line with this objective,
and considering the substantial resources required to
support the Company''s long-term strategic initiatives
and losses during the financial year ended on March 31,
2025, the Board has not considered or recommended
distribution of any dividend for the year under review.

9. TRANSFER OF UNCLAIMED DIVIDEND AND SHARES
TO INVESTOR EDUCATION AND PROTECTION FUND

In terms of Section 125 of the Act, unclaimed dividends
are required to be transferred to the Investors
Education and Protection Fund. There has been no
dividend declared in the last Seven (7) years and year
under review and hence, there is no requirement of
transferring the same to the Investors Education and
Protection Fund for the year under review.

10. SCALE BASED REGULATIONS

With reference to the RBI circular dated October 22,
2021 on "Scale Based Regulation (SBR): A Revised
Regulatory Framework for NBFCs" (âSBR Framework''),
the NBFCs are categorised into four layers,
NBFC - Base Layer (NBFC-BL), NBFC - Middle Layer
(NBFC-ML), NBFC - Upper Layer (NBFC-UL) and
NBFC - Top Layer (NBFC-TL)based on their size,
activity, and perceived risk. Accordingly, the company
is categorised as an NBFC -Middle Layer (NBFC-ML)
and is in compliance with the applicable regulations.

11. NUMBER OF MEETINGS OF THE BOARD

During the Financial Year 2024-25, the Board
met 9(Nine) times and details related to the
board meetings of the Company are mentioned
in the Corporate Governance Report annexed as
âANNEXURE -1â, which forms part of this report. The
intervening gap between the Board Meetings was
within the period prescribed under the Act and SEBI
Listing Regulations.

12. CHANGE IN THE NATURE OF BUSINESS

There was no change in the nature of business of the
Company during the Financial Year ended March 31,
2025.

13. DIRECTORS AND KEY MANAGERIAL PERSONNEL
(KMP)

a. Changes in Directors and KMPs during the FY
2024-25

(i) The Shareholders in the Annual General Meeting
of the Company held on September 27, 2024
approved the re-appointment of Mr. Narendra
Ostawal (DIN: 06530414), retiring by rotation, as the
Nominee Director of the Company.

(ii) The tenure of Mr. Pankaj Vaish (DIN: 00367424),
Independent Director of the Company was
completed on September 21, 2024.

(iii) The Board, based on the recommendation of
the Nomination and Remuneration Committee
("NRC"), appointed Mr. Puneet Gupta (DIN:
02728604), as an Additional Director in the category
of an independent director w.e.f. October 5, 2024
to hold the office upto the date of AGM. Based on
the recommendations of the NRC and Board of
Directors, the shareholders in the Extra Ordinary
General meeting of the Company held on October
30, 2024, approved the appointment of Mr. Puneet
Gupta as an Independent Director, for a period of
three consecutive years, w.e.f. October 5, 2024.

The Board is of the opinion that Mr. Puneet
Gupta (DIN: 02728604) is a person of integrity,
expertise, and is having competent experience
and proficiency to serve the Company as an
independent director that can strengthen the
overall composition of the Board.

(iv) The Board has appointed Mr. Sanjay Garyali as the
Chief Executive Officer of the Company w.e.f. March
17, 2025.

(v) The designation of Mr. Devesh Sachdev (DIN:
02547111) has been changed from "Managing
Director & CEO" to "Managing Director" w.e.f. March
17, 2025.

b. Woman Director

In terms of the provisions of Section 149 of the
Companies Act, 2013, and Regulation 17(1)(a) of
the SEBI Listing Regulations read with secretarial
standard-2, the Company shall have at least one
Woman Director on the Board. Accordingly, the
Company has Ms. Namrata Kaul and Ms. Ratna
Dharashree Vishwanathan as Independent Woman
Directors on the Board.

c. Director retiring by rotation

Mr.Devesh Sachdev (DIN: 02547111) shall retire by
rotation as a director on the Board in terms of
provisions of the Companies Act, 2013 at the ensuing
Annual General Meeting of the Company and being
eligible offers himself for reappointment. The Board
recommends his reappointment as a director. As
stipulated under Reg 36 (3) of the SEBIListing
Regulations read with secretarial standard-2, a
brief resume of Mr. Devesh Sachdev proposed to be
reappointed is given in notice of the 31st AGM of the
Company.

d. Key Managerial Personnel (KMP)

As per the provisions of the Act, Mr. Devesh Sachdev,
Managing Director, Mr. Sanjay Garyali, Chief Executive
Officer,Mr. Gaurav Maheshwari, Chief Financial Officer
and Mr. Deepak Madaan, Company Secretary & Chief
Compliance Officer are the KMPs of the Company.

14. DECLARATION OF INDEPENDENCE

The Company has received necessary declarations
from each Independent Director as per the provisions
of Section 149(7) of the Act read with Regulation 25(8)
of SEBI Listing Regulations, that they meet the criteria
of Independence as laid down in Section 149(6) of
the Act and Regulation 16(1) (b) of the SEBI Listing
Regulations.

There has been no change in the circumstances
affecting their status as Independent Directors of the
Company or to qualify under the Act and the relevant
regulations.

In the opinion of the Board, all the Independent
Directors are person of integrity and possess requisite
qualification/ skill/ expertise required for their roles
and they are independent of the Management.

15. CREDIT RATING

Rating InÂ¬ strument	Rating Agency	Rating at the beginÂ¬ ning of the Year	Rating at the end of the Year	MoveÂ¬ ment
LongÂ¬ Term Debt (Bank Loan)	CRISIL	CRISIL A / (StaÂ¬ ble)	CRISIL A-/ (StaÂ¬ ble)	DownÂ¬ graded
LongÂ¬ Term Debt (Bank Loan)	CARE	CARE A / (StaÂ¬ ble)	CARE A (Rating Watch with Negative ImplicaÂ¬ tions)	DownÂ¬ graded
Non-ConÂ¬ vertible DebenÂ¬ ture	ICRA	ICRA A / (Stable)	ICRA A- (NegÂ¬ ative)	DownÂ¬ graded
SubordiÂ¬ nate Debt	ICRA	ICRA A / (Stable)	ICRA A- (NegÂ¬ ative)	DownÂ¬ graded
CommerÂ¬ cial Paper	CRISIL Ratings Ltd	NA	CRISIL A1	NA

Further, CARE Edge Analytics & Advisory has assigned
Grading of MFI 1(One).

16. CAPITAL ADEQUACY

The Capital Adequacy Ratio of the company was
22.42% as on March 31, 2025, as against the minimum
capital adequacy requirements of 15% by Reserve
Bank of India ("RBI").

17. FAIR PRACTICE CODE

The Company has in place a Fair Practice Code
(FPC) approved by the Board in compliance with the
guidelines issued by RBI, to ensure better service
and provide necessary information to customers to

take informed decisions. The FPC is available on the
website of the Company at www.fusionfin.com.

18. CUSTOMER GRIEVANCES

The Company has a dedicated Customer Grievance
team for receiving and handling customer
complaints/ grievances and ensuring that the
customers are treated fairly and without any bias at all
times. All issues raised by the customers are dealt with
courtesy and redressed expeditiously.

19. RESOURCE MOBILIZATION

a) Term Loan / Sub debt /Refinance

During the Financial Year ended March 31, 2025, the
Company diversified its sources of funds and raised a
sum of Rs. 4,030.13 Crore (Inclusive of Term Loan of Rs.
3,821.30 Crore, and ECB of Rs. 208.84 Crore).

b) Secured / Unsecured Non-convertible debentures

During the Financial Year ended March 31, 2025, the
Company has not raised funds from unsecured NonÂ¬
Convertible Debentures and secured Non-Convertible
Debenture.

c) Direct Assignment

During the Financial Year ended March 31, 2025, the
Company raised resources to the extent of Rs. 1,010.00
Crore through Direct Assignment.

20.SHARE CAPITAL AND EMPLOYEE STOCK OPTION
SCHEME

A. SHARE CAPITAL

The Authorized Share capital of the company was
increased from INR 1,05,00,00,000 (Indian Rupees
One Hundred and Five Crores only) divided into
10,50,00,000 (Ten Crore Fifty Lakh) equity shares of
face value of INR 10/- (Indian Rupees Ten only) each
to INR 2,00,00,00,000/- (Indian Rupees Two Hundred
Crores Only) divided into 20,00,00,000 (Twenty Crores)
equity shares of face value of INR 10/- (Indian Rupees
Ten Only) each, as approved by the shareholders of the
Company in the Extraordinary General Meeting held
on October 30, 2024.

The Issued and Paid-up Equity Share Capital of
the Company as on March 31, 2025, stood at INR
1,010,238,850 (Rupees One Hundred and One Crore
Two Lakh Thirty Eight Thousand Eight Hundred Fifty
only) consisting of 101,023,885 (Ten Crore Ten Lakh
Twenty Three Thousand Eight Hundred and Eighty
Five only) Equity Shares of INR 10/- each.

During the year the Board of Directors of the Company
in its meeting held on December 04, 2024, has

considered and approved the raising of funds by way
of issue of partly paid equity shares of the Company
of face value INR 10 each through Rights Issue for
an amount aggregating up to INR 800 crores to the
eligible equity shareholders of the Company.

Pursuant to the above, the Company has successfully
completed the Rights Issue and the Rights Issue
Committee on May 02, 2025 has approved an issuance
and allotment of 6,10,58,392 partly paid up equity
shares at INR 131/- (Indian Rupees One Hundred and
Thirty one only) per equity share (including face value of
INR 10/-(Indian Rupees Ten only) each and a premium
of INR 121/- (Indian Rupees One Hundred and Twenty
one only) per equity share); out of which an amount
of INR 65.50/- (Indian Rupees Sixty Five and fifty paisa
only) per equity share (including face value of INR 5/-
(Indian Rupees Five only each and a premium of INR
60.50/- per equity share), aggregating to an amount of
INR 399.93 crore has been paid by the eligible equity
shareholders of the Company. The remaining amount
may be called in one or more subsequent call(s), with
terms and conditions such as the number of calls
and the timing and quantum of each call as may be
decided by our Board/ Rights Issue Committee from
time to time to be completed on or prior to March 31,
2027, or such other extended timeline.

Consequently, with effect from May 02, 2025, the Issued
and Paid-up Equity Share Capital of the Company
stood at INR 1,31,55,30,810 (Rupees One Hundred and
Thirty One Crore Fifty Five Lakh Thirty Thousand Eight
Hundred and Ten only) consisting of 10,10,23,885 (Ten
Crore Ten Lakh Twenty Three Thousand Eight Hundred
and Eighty Five only) fully paid up Equity Shares of INR
10/- each and 6,10,58,392(Six Crore Ten Lakh Fifty Eight
Thousand Three Hundred and Ninety Two only) partly
paid-up Equity Shares of INR 5/- each.

Further, the Company has not bought back any of its
securities during the year under review.

B. EMPLOYEE STOCK OPTION SCHEME

In order to motivate, incentivize and reward employees,
your Company instituted Fusion Employee Stock Plan,
2016 ("ESOP 2016) and Fusion Employee Stock Option
Plan, 2023 ("ESOP 2023")

The NRC monitors the implementation of ESOP 2016
and ESOP 2023, which are in compliance with the
Securities and Exchange Board of India (Share Based
Employee Benefits and Sweat Equity) Regulations,
2021 ("SEBI SBEB Regulations").

Relevant disclosures pursuant to SEBISBEB
Regulations, as on March 31, 2025, are available on
the website of the Company at https://fusionfin.com/
employee-benefit-scheme-docs/.

During the year under review, the Board of Directors,
based on the recommendation of NRC,in its meetings
held on March 14, 2025 approved the increase of
ESOP pool from 10,00,000 stock options to 60,00,000
stock options in ESOP 2023 scheme and some other
amendements, which was further approved by the
shareholders on April 23, 2025 vide postal ballot. The
company has also received in-principle approval for
the additional pool of 50,00,000 options from BSE
vide letter No. DCS/IPO/AK/ESOP-IP/3649/2025-26 and
NSE vide letter no. NSE/LIST/48565, both dated June
04, 2025.

21. NON CONVERTIBLE DEBENTURES

During the financial year ended March 31, 2025, the
Company has not raised any funds by issuance of
unsecured Non-Convertible Debenture and secured
Non-Convertible Debenture respectively. The total
fully redeemed NCDs in FY25 is INR 56.67 Crores. The
outstanding NCDs including subordinated liabilities
in form of NCDs as on March 31, 2025, was Rs. 198.78
Crores.

22. COMMITTEES DETAILS

As on March 31, 2025, the Company has 10 committees
which govern and oversee different areas of the Company''s
operations ensuring regular guidance and monitoring.

For further details, please refer to Corporate Governance
Report, which forms part of Directors'' Report as
âAnnexure - 1â.

23. RELATED PARTY TRANSACTIONS

During the Financial Year 2024-25, there were no
material related party transactions entered by the
Company that were required to be disclosed in form
AOC-2. The details of the related party transactions are
provided in the notes to the Financial Statements.

The policy on Related Party Transactions, as approved
by the Board, is displayed on the website of the
Company i.e. www.fusionfin.com.

24. AUDITOR''S AND AUDITORS'' REPORT
STATUTORY AUDITOR

were appointed as Statutory Auditors of the Company
to hold office for a period of three years from the
conclusion of the 28th Annual General Meeting till
the conclusion of the 31st Annual General Meeting of
the Company to be held in the Financial Year 2025Â¬
26. The tenure of office of M/s. Deloitte Haskins and
Sells, Chartered Accountants (Firm Registration No.
015125N), as Statutory Auditors of the Company will
expire with the conclusion of 31st AGM of the Company.
The Board places on record its sincere appreciation
for the services rendered by M/s. Deloitte Haskins and
Sells, during their tenure as Statutory Auditors of the
Company.

In order to ensure smooth transition and handover
and In terms of Section 139 of the Act read with rules
made thereunder and guidelines issued by RBI on
April 27, 2021, the Audit Committee of the Board, after
assessing the qualifications and experience of M/s. B.K.
Khare & Co., Chartered Accountants (Firm Registration
No. 105102W), recommended their appointment as
the Statutory Auditors of the Company for a period of
3 (three) consecutive years from the conclusion of the
ensuing 31st AGM till the conclusion of the 34th AGM
of the Company. The Board of Directors at its meeting
held on June 10, 2025, based on the recommendations
of the Audit Committee and subject to approval of
the members at the ensuing 31st AGM, approved
the appointment of M/s. B.K. Khare & Co., Chartered
Accountants (Firm Registration No. 105102W), as
the Statutory Auditors of the Company for a period
of 3 (three) consecutive years from the conclusion
of the ensuing 31st AGM till the conclusion of the
34th AGM of the Company. Appropriate resolution
seeking approval of the members for appointment
and remuneration of M/s. B.K. Khare & Co, Chartered
Accountants, is appearing in the Notice convening the
31st AGM of the Company.

The Company has received written consent(s)
and certificate(s) of eligibility and other relevant
documents in accordance with Sections 139, 141 of
the Act read with Guidelines issued by RBI on April
27, 2021, and other applicable provisions Rules made
thereunder (including any statutory modification(s) or
re-enactment(s) for the time being in force), from M/s.
B.K. Khare & Co., Chartered Accountants.

Statutory Audit Report

M/s. Deloitte Haskins & Sells LLP, Statutory Auditors
of the Company have, in their report(s) on the
audited financial statements of the Company for

the financial year ended March 31, 2025 submitted
following observations:

Qualified Opinion on Financial Statements:

In our opinion and to the best of our information and
according to the explanations given to us, except
for the possible effects of the matter described in
the Basis for Qualified Opinion section below, the
aforesaid 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, ("Ind AS")
and other accounting principles generally accepted
in India, of the state of affairs of the Company as at
31st March 2025, and its loss, total comprehensive loss,
its cash flows and the changes in equity for the year
ended on that date.

Basis for Qualified Opinion on Financial Statements:

As stated in Note 60 to the financial statements,
the Company has not evaluated whether any of
the expected credit allowances recognised in the
year ended March 31, 2025 should be retrospectively
adjusted to the previously reported amounts in the
prior year presented because of impracticability as
described in Ind AS 8, Accounting Policies, Changes
in Accounting Estimates and Errors. In the absence of
sufficient and appropriate evidence, we are unable to
comment on the Company''s basis of impracticability
to evaluate and determine whether any retrospective
adjustment should have been made to previously
reported amounts in the prior year presented."

Qualified Opinion on Internal Financial Controls:

In our opinion, to the best of our information and
according to the explanations given to us, except for
the possible effects of the material weakness described
in the Basis for Qualified Opinion paragraph above on
the achievement of the objectives of the control criteria,
the Company has maintained, in all material respects,
an adequate internal financial controls with reference
to the financial statements and such internal financial
controls with reference to the financial statements were
operating effectively as at March 31, 2025, based on
the criteria for internal financial control with reference
to financial statements established by the Company
considering the essential components of internal
control stated in the Guidance Note on Audit of Internal
Financial Controls Over Financial Reporting issued by
the Institute of Chartered Accountants of India.

Basis for Qualified Opinion on Internal Financial
Controls:

According to the information and explanations given
to us and based on our audit, the following material
weakness has been identified in the Company''s
internal financial controls with reference to the
financial statements as at March 31, 2025.

The Company has concluded that it was impracticable
to evaluate and determine any amounts for
retrospective recognition and measurement in those
prior periods on account of expected credit loss
allowance as explained in note 60 of the financial
statements of the Company. As a result, we are unable
to determine whether any adjustments were required
for prior period(s) relating to the impairment charge
recorded for the year ended March 31, 2025.

Because of the deficiency in financial closing and
reporting process, in respect of information as
aforesaid, we are unable to assess whether or not the
current year''s figures are comparable to those of the
previous year.

A âmaterial weakness'' is a deficiency, or a combination
of deficiencies, in internal financial control with
reference to the financial statements, such that
there is a reasonable possibility that a material
misstatement of the company''s annual or interim
financial statements will not be prevented or detected
on a timely basis.

Directors'' responseto QualifiedOpiniononFinancial
Statements and Internal Financial Controls: With
respect to Auditor''s Qualified Opinion on Financial
Statements and Internal Financial Controls and in
reference to the explanation given in Note 60 to the
Financial Statements, the Board has taken note of
the statutory auditor''s remarks and wishes to clarify
that the microfinance sector experienced significant
dislocation during FY25, which resulted in sharp
deterioration in borrower credit quality. The Company
has evaluated whether any of the expected credit loss
(ECL) allowances recognized during FY25 should have
been attributed to prior periods. However, consistent
with the principles set out in Ind AS 8 (Accounting
Policies, Changes in Accounting Estimates and
Errors), and given the limitations in objectively
determining information relating to assumptions
and circumstances as it existed in those prior periods,
the Company concluded that it was impracticable to
evaluate and determine any amounts for retrospective
recognition and measurement in those prior periods.
This is because significant judgments had been

applied in determining the staging of the loan assets
and related impairment allowance for events and
conditions existing as at the earlier reporting dates.
The Company believes it would not be appropriate to
apply those judgments retrospectively without the
benefit of hindsight.

With respect to the statutory auditor''s observation
regarding controls over historical ECL provisioning,
it is important to highlight that targeted remedial
actions have since been undertaken, following the
commissioning of multiple independent external
reviews. These include: (a) investments in technology
upgrades, (b) revision of underwriting policies, and
(c) enhancements to the ECL methodology based on
recommendations from external review, among others.

Auditors'' Remark on Material uncertainty related
to Going Concern:

"We draw attention to Note 61 to the financial statements
which describes the material uncertainty in relation to
the going concern assumption used in the preparation
of the financial statements. This condition and other
matters stated in the Note indicate the existence of
material uncertainty that may cast significant doubt on
the Company''s ability to continue as a going concern.
However, the financial statements of the Company
have been prepared on a going concern basis for the
reasons stated in the said Note."

Our Opinion is not modified in respect of this matter."

Directors'' response to Auditors'' Remark on Material
uncertainty related to Going Concern:

With respect to remark on material uncertainty on
going concern and in reference to the explanation
given in Note 61 to the Financial Statements, the
Board confirms that the financial statements have
been appropriately prepared on a going concern
basis. As at March 31, 2025, the Company had breached
various financial covenants (in respect of borrowings
amounting to I NR 4,762.62 crore as at March 31, 2025),
resulting in these borrowings technically becoming
repayable on demand. However, the Company has
obtained extension, of less than 12 months and equal
to or more than 12 months from testing date for said
breaches from lenders whose borrowings as of March
31, 2025 aggregate INR 3,748.90 crore and INR 331.02
crore respectively. This aggregates to a total waived
amount of INR 4,079.92 crore (~86% of the breached
amount). The Company is in discussion with the
remaining lenders to obtain similar extensions. It
is further clarified that no demand for accelerated
repayment of borrowed funds has been received from

any lender as on date, and the lenders have continued to
extend their support to the Company. Additionally, the
Company holds Cash and Cash equivalents and liquid
assets aggregating to INR 798.36 crore as at March 31,
2025, and INR 877.73 crore as at May 31, 2025. To further
strengthen liquidity and balance sheet resilience, the
Company successfully completed a rights issue of partly
paid-up equity shares of INR 799.86 crores which was
subscribed 1.5x, with the Share Application Money of INR
399.93 Crores completed in May 2025, and the remaining
INR 399.93 Crores callable at the Company''s discretion.

The Company has demonstrated continued support
from its lending partners through all quarters in FY25,
and the Board believes that with the corrective actions
taken and strengthening of the balance sheet, Fusion is
well positioned to continue to operate as a going concern.

Further, during the year, no incidence of fraud as
defined under Section 143(12) of the Companies Act,
2013, which is required to be disclosed under Section
134(3) (ca) of the Companies Act, 2013, has been
reported by the Auditors to the Board of directors of
the Company.

SECRETARIAL AUDITOR

The Board of Directors at its meeting held on June
10, 2025, based on the recommendations of the Audit
Committee and subject to approval of members at the
ensuing 31st AGM, approved the appointment of M/s.
Navneet K Arora & Co LLP, Company Secretary (Firm
Registration No. P2009DE061500), for a first term of 5
(five) consecutive years beginning from Financial Year
2025-26 i.e. from the 31st AGM till the conclusion of the
36th AGM.

Secretarial Audit Report

As required under Section 204 of the Act and the Rules
made thereunder, M/s. Harish Popli & Associates was
appointed as the Secretarial Auditor of the Company
to conduct Secretarial Audit in Form No. MR-3 of the
Company for the period under review.

The Secretarial Audit Report for Financial Year ended
on March 31, 2025 does not contain any qualification,
reservation, adverse remark or disclaimer, except as
contained therein, and forms part of Board Report as
"ANNEXURE - 2". The management response to the
same is given as follows:

Sr. no.	Secretarial Auditors remark	Management response
1	The Company has defaulted the provisions of Regulation 17 of the Listing Regulations, due to expiry of the term of Mr. Pankaj Vaish, Independent Director w.e.f. September 21, 2024, the number of independent directors fell below the one half of the total strength of Board and total strength of the Board was less than Six Directors. Subsequently, Mr. Puneet Gupta, was appointed as Independent Director on the Board of the Company w.e.f. October 5, 2024.	The Company acknowledges the temporary nonÂ¬ compliance with the provisions of Regulation 17 and Regulation 18 of the SEBI LODR Regulations, due to the completion of tenure of Mr. Pankaj Vaish, Independent Director, on September 21, 2024. As a result of his cessation, the composition of the Board of Directors fell below the minimum requirement of six directors and the requisite proportion of Independent Directors, as mandated under Regulation 17 of SEBI LODR Regulation. Similarly, the composition of the Audit Committee did not meet the criteria under Regulation 18 SEBI LODR Regulations and Section 177 of the Act, wherein the number of members fell below the minimum of three directors, and the proportion of Independent Directors fell below the required two-thirds. To ensure the compliance of the same, Mr. Puneet Gupta was appointed as an Independent Director and a member of the Audit Committee on October 5, 2024. Consequently, the Board and Audit Committee compositions were brought into compliance with the applicable regulatory requirements. Further, a penalty of Rs. 74,340/- and Rs. 33,040/- (both inclusive of GST) was imposed each by the National Stock Exchange of India Limited and BSE Limited for the period of non-compliance. The said penalty has been duly paid by the Company. The Company remains committed to adhering to all applicable regulatory requirements and maintaining robust corporate governance practices.
2	The Company has defaulted the provisions of Regulation 18 of the Listing Regulations, due to expiry of the term of Mr. Pankaj Vaish, Independent Director w.e.f. September 21, 2024, who was also the member of the Audit Committee, the number of the independent director members of the Audit Committee fell below the two/third of the strength of the audit Committee and minimum three directors. Subsequently, Mr. Puneet Gupta, was appointed as member of the Audit Committee w.e.f. October 5, 2024.
3	The Company has defaulted the provisions of Section 177 of the Companies Act, 2013 read with rules made thereunder, due to expiry of the term of Mr. Pankaj Vaish, Independent Director w.e.f. September 21, 2024, who was also the member of the Audit Committee, the number of the independent director members of the Audit Committee were not in majority and number of the members of the Audit Committee fell below minimum three Directors. Subsequently, Mr. Puneet Gupta, was appointed as member of the Audit Committee w.e.f. October 5, 2024.

4	The Company has defaulted the provisions of Section 135 of the Companies Act, 2013 read with rules made thereunder, due to expiry of the term of Mr. Pankaj Vaish, Independent Director w.e.f. September 21, 2024, who was also the member of the Corporate Social Responsibility Committee, the number of the members of the Corporate Social Responsibility Committee fell below minimum three Directors. Subsequently, Mr. Puneet Gupta, was appointed as member of the Corporate Social Responsibility Committee w.e.f. October 5, 2024.	The Company acknowledges the temporary nonÂ¬ compliance with the provisions of Section 135 of the Companies Act, 2013, and the rules made thereunder, due to the completion of tenure of Mr. Pankaj Vaish, Independent Director, on September 21, 2024. Mr. Vaish was also a member of the Corporate Social Responsibility (CSR) Committee, and his cessation from the Board led to the number of CSR Committee members falling below the statutory minimum of three directors. To ensure the compliance of the same, Mr. Puneet Gupta was appointed as an Independent Director and a member of the CSR Committee on October 5, 2024. This appointment restored the Committee''s composition in line with the requirements prescribed under Section 135 of the Act. The Company remains committed to adhering to all applicable regulatory requirements and maintaining robust corporate governance practices.
5	The Company has defaulted the provisions of Regulation 23 of Listing Regulations, as the Company has not taken the approval of Audit Committee for the payment of remuneration to Mr. Devesh Sachdev, Managing Director, and promoter of the company	The Company acknowledges the non-compliance with the provisions of Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, in respect of the remuneration paid to Mr. Devesh Sachdev, Managing Director and Promoter of the Company. Upon identification of this lapse, the Company took corrective measures by placing the matter before the Audit Committee for its approval and obtained the requisite approval.
6	The remuneration paid to Mr. Devesh Sachdev, exceeded the limit specified provided under Section 197 of the Companies Act, 2013 read with Schedule V to the Act. Further, the Company has also defaulted the provisions of Regulations 17(6)(e) of the Listing Regulations as the remuneration paid to Mr. Devesh Sachdev, Managing Director, exceeds the 5 crore or 2.5 per cent of net profits of listed entity, whichever is higher, and the remuneration of Mr. Devesh Sachdev was approved by way of an Ordinary Resolution.	The Company acknowledges the non-compliance with Section 197 of the Companies Act, 2013 read with Schedule V, as the remuneration paid to Mr. Devesh Sachdev, Managing Director, exceeded the prescribed limits. The Nomination & Remuneration Committee and the Board have approved the remuneration, and the matter will be placed before the shareholders for approval by Special Resolution at the ensuing 31st Annual General Meeting.
7	The Company has defaulted the provisions of Regulation 33 of the Listing Regulations, as the Company submitted the quarterly financial results for the quarter ended September 30, 2024 with a delay of one day as on November 15, 2024.	The Company acknowledges the non-compliance with Regulation 33 of the SEBI LODR Regulations due to a one-day delay in submitting the financial results for the quarter ended September 30, 2024, which were filed on November 15, 2024. The delay occurred due to the adjournment of the Board meeting from November 14, 2024 to November 15, 2024. The Company regrets the delay and has taken steps to ensure adherence to timelines in future filings.

8	The Company has defaulted the provisions of Rule 9(6) of the Foreign Exchange Management (NonÂ¬ Debt Instruments) Rules, 2019	The Company acknowledges the non-compliance with Rule 9(6) of the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019.
		The non-compliance of delayed filing of "FC- TRS tranche 2" was on account of late receipt of final payment invoices related to offer expenses, leading to delayed remittance to foreign investors (beyond regulatory timeline of 18 months), which consequently contributed to the delayed filing of FC-TRS. Internal compliance procedures are being strengthened to ensure timely adherence to applicable FEMA regulations going forward.
9	There were instances of minor delays in reporting under regulation 30 of the Listing Regulations, for intimations of events related to intimation of schedule of Investor meet/earning call/show cause notices received from GST authorities and regulation 32 of the Listing Regulations for submission of monitoring agency report for the quarter ended September 30, 2024.	The Company acknowledges delays in submissions under Regulation 30 of the SEBI Listing Regulations relating to the disclosure of certain events, and the Company regrets the delay and has taken steps to ensure adherence to timelines in future filings.
10	The Company has defaulted the para 45.1.2 and 45.1.3, of Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023, related to MSME business	The Company is in the process of taking corrective measures to align with the prescribed regulatory requirements.
11	There were Instances of delayed submission of reports/returns to RBI and non-filing of form MGT-14 with Registrar of Companies	The Company has filed eform MGT-14 subsequently. Further, the Company regrets the delay and has taken steps to ensure adherence to timelines in future filings.

Annual Secretarial Compliance Report

A Secretarial Compliance Report for the Financial Year
ended March 31, 2025 on compliance of all applicable
Acts and SEBI Regulations and circulars/ guidelines
issued thereunder, was obtained from M/s. Harish
Popli & Associates, Company Secretaries, Secretarial
Auditor of the Company. The same was submitted to
the stock exchanges in due course.

25. PARTCULARS OF LOANS, GUARANTEES OR
INVESTMENTS

During the year under review, in terms of the provisions
of Section 186(1) of the Act, the Company did not make
any investment through more than two layers of
investment companies.

Since, the Company is Non-Banking Financial
Company, the disclosures regarding particulars of
the loan or guarantee given and security provided is
exempt under the provisions of Section 186(11) of the
Act read with rules made thereunder, as amended.
Further, the details of investments made by the
Company are given in the Notes to the Financial
Statements.

26. COMPENSATION AND REMUNERATION POLICY

Pursuant to the provisions of Section 178 of the Act
read with applicable rules thereunder, and Regulation

19 of SEBI(Listing Obligations and Disclosure
Requirements) Regulations, 2015 and in accordance
with the RBI Guidelines, the Board of directors has
approved the Compensation and Remuneration
Policy.

This Policy is directed towards a structure that
provides adequate rewards and compensation
to the employees, as specified therein. This policy
formulates the criteria for determining qualifications,
competencies, positive attributes, and independence
for the appointment of a director (executive/non-
executive) and also the criteria for determining
the remuneration of the directors, key managerial
personnel (KMPs) and other employees.

This Policy is available on our website at www.fusionfin.
com.

27. MATERIAL CHANGES AND COMMITMENTS
AFFECTING FINANCIAL POSITION BETWEEN THE
END OF THE FINANCIAL YEAR AND DATE OF THE
REPORT
Rights Issue

During the year the Board of Directors of the
Company in its meeting held on December 04,
2024, has considered and approved the raising of
funds by way of issue of partly paid equity shares

of the Company of face value INR 10 each through
Rights Issue for an amount aggregating up to
INR 800 crores to the eligible equity shareholders
of the Company.

Pursuant to the above, the Company has successfully
completed the Rights Issue and the Rights Issue
Committee on May 02, 2025 has approved an issuance
and allotment of 6,10,58,392 partly paid up equity
shares at INR 131/- per share (including face value of
INR 10/- each and a premium of INR 121/- per share);
out of which an amount of INR 65.50/- per share
(including face value of INR 5 each and a premiumof
INR 60.50 per share), aggregating to an amount of
INR 399.93 crore has been paid by the eligible equity
shareholders of the Company. The remaining amount
may be called in one or more subsequent call(s), with
terms and conditions such as the number of calls
and the timing and quantum of each call as may be
decided by our Board/ Rights Issue Committee from
time to time to be completed on or prior to March 31,
2027, or such other extended timeline.

Employee Stock Options Plan

During the year, the Board vide its meetings dated
March 14, 2025 approved the increase of ESOP pool
from 10,00,000 stock options to 60,00,000 stock
options in ESOP 2023 scheme, which was further
approved by the shareholders on April 23, 2025
vide postal ballot. The company has also received
in-principle approval for the additional pool of
50,00,000 options from BSE vide letter No. DCS/IPO/
AK/ESOP-IP/3649/2025-26 and NSE vide letter no.
NSE/LIST/48565, both dated June 04, 2025.

28. AMENDMENT IN THE MEMORANDUM OF

ASSOCIATION (âMOAâ) AND ARTICLES OF

ASSOCIATION (AOA)

During the Financial Year ended March 31, 2025, the
Company''s MOA and AOA were amended , pursuant
to the change in the name of the company from
"Fusion Micro Finance Limited" to "Fusion Finance
Limited".

Further, the Board of directors in its meeting held on
June 10, 2025 approved the amendment in Articles of
Associations of the Company, subject to the approval of
the members, in order to enable the Board of directors
to make call on partly paid up shares up to one half
or 50% of the nominal value and premium amount
of the share. The Company is seeking approval of the
members in the ensuing AGM of the Company.

29. CONSERVATION OF ENERGY & TECHNOLOGY
ABSORPTION AND FOREIGN EXCHANGE EARNINGS
AND OUTGO

a. Information Relating to Conservation of Energy,
Technology Absorption

The operations of our Company are not
energy-intensive. The Company has, however, used
information technology extensively in its operations
and continuously invests in energy-efficient office
equipment at all office locations.

b. Foreign Exchange Earnings and Outgo

There has an foreign exchange inflow of INR 208.84
crores on account of external commercial borrowings
while outgo during the year under review is INR 101.96
crores towards Interest Payment on ECB, professional
fees against ECB and Rights Issue & other operating
expenses.

30. RISK MANAGEMENT

Our Enterprise Risk Management (ERM) framework
encompasses practices relating to the identification,
analysis, evaluation, treatment, mitigation,
and monitoring of the Credit, Market, liquidity,
Operational, compliance risks to achieving our key
business objectives. ERM at Fusion seeks to minimize
the adverse impact of these risks, thus enabling the
Company to leverage market opportunities effectively
and enhance its long-term competitive advantage.

The Board of Directors of the Company has formed
a Board Risk Management Committee ("BRMC") to
frame, implement, and monitor the enterprise risk
management plan for the Company.

Pursuant to Section 134(3)(n) of the Companies
Act, 2013, the BRMC is responsible for reviewing
the enterprise risk management plan, ensuring its
effectiveness, and verifying adherence to various
risk parameters. The Company''s Enterprise Risk
Management strategy is based on clear understanding
of various risks, disciplined Enterprise risk assessment
and continuous monitoring. The BRMC reviews
various risks with which the organization is exposed
including Credit Risk, Interest Rate Risk, Liquidity
Risk and Operational Risk. The development and
implementation of risk management policy has been
covered in the Management Discussion and Analysis
Report attached as âANNEXURE 3â.

31. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company strives to meet its commitment towards
the community by committing its resources and
energies to social development. The CSR Committee
of the Company has formulated a CSR Policy
which describes the multiple lines around which
the CSR activities of the Company are positioned
being education and skills development, social and

economic welfare, environmental sustainability and
such other activities included in Schedule VII of the
Act as may be identified by the CSR Committee from
time to time.

The Policy is available on the website of the company
at www.fusionfin.com.

Further, the composition of the CSR Committee,
terms of reference of the committee and the details of
meetings attended by the Committee members are
provided in Corporate Governance Report attached as
âANNEXURE 1â.

The Annual Report on the CSR activities for the
Financial Year 2024-25 containing salient features of
CSR Policy and other relevant details is attached as
âANNEXURE 4â to this Report.

32. BUSINESS RESPONSIBILITY & SUSTAINABILITY
REPORT

A detailed Business Responsibility & Sustainability
Report (BRSR) has been prepared and is made
available on the website of the company at
https://fusionfin.com/brsr/

33. PERFORMANCE EVALUATION OF THE BOARD, ITS
COMMITTEES AND INDIVIDUAL DIRECTORS

In compliance with the Companies Act, 2013, and SEBI
Listing Regulations, the Company has a structured
assessment process for evaluation of performance of
the Board, its committees and individual performance
of each Director including the Chairperson. The
evaluations are carried out in a confidential
manner and the Directors provide their feedback
by categorising them in Good, Average, and Below
Average categories, and after evaluation, the same is
compiled by Nomination & Remuneration Committee
(NRC) Chairperson. Further,the Company has also
appointed an independent third party for carrying out
the evaluation process in fair manner.

The Independent Directors at their separate meeting
reviewed the performance of Non-Independent
Directors and the Board as a whole. The Chairman of
the Company after taking into account the views of
other Non-Executive Directors, the quality, quantity
and timeliness of flow of information between
the Company management and the Board that is
necessary for the Board to effectively and reasonably
perform their duties.

The overall performance evaluation exercise was
completed to the satisfaction of the Board. The
outcome of the evaluation was presented to the Board

of Directors of the Company.

34. VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Vigil Mechanism system/Whistle Blower Policy
has been established with a view to provide a tool for
directors and employees of the Company to report
to the management genuine concerns including
unethical behavior, actual or suspected fraud. The
Policy ensures adequate safeguards to protect
directors and employees from any form of retaliation or
victimization for raising such concerns. The Company
has not received any complaints under the said policy
during the year.

The Company has formulated a codified Vigil
Mechanism System/Whistle-Blower Policy
incorporating the provisions relating to Vigil
Mechanism in terms of Section 177 of the Companies
Act, 2013 and Regulation 22 of SEBIListing
Regulations, in order to encourage Directors and
Employees of the Company to escalate to the level of
the Audit Committee any issue or concerns impacting
and compromising with the interest of the Company
and its stakeholders in any way. The Company is
committed to adhere to highest possible standards
of ethical, moral and legal business conduct and
to open communication and to provide necessary
safeguards for protection of employees from reprisals
or victimisation, for whistle blowing in good faith. The
Company has not received any complaints under the
said policy during the year.

The said Policy is available on the Company''s website
at www.fusionfin.com.

35. AUDIT COMMITTEE

The Company has an Audit Committee constituted in
accordance with the provisions of Section 177 of the
Companies Act, 2013, RBI Guidelines and Regulation
18 of SEBI(Listing Obligations and Disclosure
Requirements) Regulations, 2015, as amended. The
composition of the Audit Committee and the details
of meetings attended by the Committee members are
provided in Corporate Governance Report attached as
âANNEXURE 1â.

36. CODE OF CONDUCT FOR INSIDER TRADING

Trading Policy with respect to their shareholding
in the Company, both direct and indirect. The
Code of Conduct for Prohibition of Insider Trading
is available on the website of the Company at
www.fusionfin.com.

37. RBI OMBUDSMAN

The company has a dedicated team which deals
with the concerns or complaints raised by the
customers. Further, in accordance with the RBI
Circular dated November 15, 2021 on "Appointment
of Internal Ombudsman by Non-Banking Financial
Companies(NBFCs)" the Company has an Internal
Ombudsman (IO) being the apex of the grievance
redressal mechanism of the Company. The IO deals
with the complaints of its customers which are partly
or wholly rejected by the Company.

In addition, the Company has a system of periodic
reporting of the information to RBI as per the
prescribed guidelines.

38.SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE
COMPANIES

The Company has no subsidiary/joint venture/
associate company and hence consolidation and the
provisions relating to the same under the Companies
Act, 2013 and rules made thereunder are not applicable
to the Company.

39.SIGNIFICANT AND MATERIAL ORDERS PASSED
BY THE REGULATORS OR COURTS OR TRIBUNALS
IMPACTING THE GOING CONCERN STATUS AND
COMPANY''S OPERATIONS IN FUTURE

During the Financial Year 2024-25, there are no such
orders passed by the regulators/courts/tribunals
impacting the going concern status and the
Company''s operations in future.

40. INTERNAL FINANCIAL CONTROLS

As per Section 134(5)(e) of the Companies Act, 2013, the
Directors have an overall responsibility for ensuring
that the Company has implemented a robust system
and framework of Internal Financial Controls. This
provides the Directors with reasonable assurance
regarding the adequacy and operating effectiveness
of controls with regards to reporting, operational
and compliance risks. The Company has devised
appropriate systems and framework including proper
delegation of authority, policies and procedures,
effective IT systems aligned to business requirements,
risk based internal audits as per RBI guidelines on Risk
Based Internal Audit, risk management framework
and whistle blower mechanism. The Company had

already developed and implemented a framework for
ensuring internal controls over financial reporting.

The Internal Audit team monitors and evaluates the
efficacy and adequacy of internal control systems in
the Company, its compliance with operating systems,
accounting procedures and policies at all locations
of the Company. Based on the report of internal
audit function, process owners undertake corrective
action(s) in their respective area(s) and thereby
strengthen the controls. Significant audit observations
and corrective action(s) thereon are presented to the
Audit Committee.

The Audit Committee reviews the reports submitted
by the Internal Auditors in each of its meeting. Also,
the Audit Committee at frequent intervals has
independent sessions with the management to
discuss the adequacy and effectiveness of internal
financial controls.

41. PREVENTION OF SEXUAL HARASSMENT AT
WORKPLACE

As per requirements of Sexual Harassment of Women
at Workplace (Prevention, Prohibition & Redressal)
Act, 2013, the Company has a policy and framework
for employees to report sexual harassment cases
at workplace and our process ensures complete
anonymity and confidentiality of information.
Adequate workshops and awareness programmes
against sexual harassment are conducted across the
organization.

Further, the Company has the Internal Complaint
Committee in place as per the requirement of Sexual
Harassment of Women at Workplace (Prevention,
Prohibition & Redressal) Act, 2013 to address the
sexual harassment cases. The Annual Report of ICC
Committee for the period commencing from January
01, 2024, till December 31, 2024, was submitted to the
office of District Collector, Gurugram on February 21,
2025. The details pertaining to complaints received on
matters pertaining to sexual harassment during the
Financial Year 2024-25, are as below:

(a) number of complaints of sexual harassment
received in the year: None

(b) number of complaints disposed off during the
year: None

(b) number of complaints pending for more than
ninety days: NA

Further, the Company has complied with the
provisions relating to the Maternity Benefit Act, 1961.

42. CORPORATE GOVERNANCE

Corporate governance is the system of rules, practices
and processes by which a company is directed and
controlled. Corporate governance essentially involves
balancing the interests of a company''s stakeholders
and the community at large. Sound governance
practices and responsible corporate behavior
contribute to superior long-term performance
of organisations. Corporate Governance requires
everyone to raise their level of competency and
capability to meet the expectations in managing the
enterprise and its resources optimally with prudent
ethical standards.

The Company''s corporate governance framework
ensures that it is aligned to good corporate governance
philosophy and that timely disclosures are made and
accurate information regarding the financials and
performance is shared, as well as the leadership and
governance of the Company. The Company has an
adequate system of control in place to ensure that the
executive decisions taken should result in optimum
growth and development which benefits all the
stakeholders.

A detailed report on the Company''s commitment at
adopting good Corporate Governance Practices is
enclosed as âANNEXURE 1â.

43. PARTICULARS OF EMPLOYEES AND RELATED
DISCLOSURES

In terms of the provisions of Section 197(12) of the Act
read with Rule 5 of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014,
including any statutory modification(s) thereof for the
time being in force, the details of remuneration etc.
of Directors, Key Managerial Personnel and employees
covered under the said Rules and other details is
attached as âANNEXURE 5â which forms part of this
report.

44. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Act the Directors of
the Company hereby state and confirm that:

a. In the preparation of the annual financial
statements for the year ended March 31, 2025,
the applicable accounting standards have been
followed along with proper explanations relating
to material departures, if any;

b. The directors had selected such accounting
policies and applied them consistently and made
judgments and estimates that are reasonable and

prudent so as to give a true and fair view of the
state of affairs of the Company as at March 31, 2025
and of the profits of the Company for year ended
on that date;

c. The Directors had taken proper and sufficient
care for the maintenance of adequate accounting
records in accordance with the provisions of this
Act for safeguarding the assets of the company
and for preventing and detecting fraud and
otherirregularities;

d. The Directors had prepared the annual accounts
on a going concern basis;

e. The directors had laid down internal financial
controls to be followed by the company, and that
such internal financial controls are adequate and
were operating effectively.

f. The Directors had devised proper systems to ensure
compliance with the provisions of all applicable
laws and that such systems were adequate and
operating effectively.

45. RBI GUIDELINES

The Company is registered with the Reserve Bank of
India as a NBFC within the provisions of the NBFC
(Reserve Bank of India) Directions, 1998. The Company
continues to comply with all the requirements
prescribed by the Reserve Bank of India as applicable
to it, from time to time.

46. DISCLOSURE IN ACCORDANCE WITH REGULATION
30A OF SEBI (LISTING OBLIGATIONS AND
DISCLOSURE REQUIREMENTS) REGULATIONS, 2015

No such agreements as specified under clause 5A
to para A of part A of schedule II, are required to be
disclosed in accordance with Regulation 30A of SEBI
Listing Regulations, in the Financial Year 2024-2025.

47. LISTING

The equity shares of the Company are listed on BSE
Limited ("BSE") and National Stock Exchange of India
Limited ("NSE"). The listing fees to BSE & NSE for the
Financial Year 2025-26 has been duly paid.

48. MAINTENANCE OF COST RECORDS

The provisions of Section 148 of the Companies Act,
2013, read with the Companies (Cost Records and Audit)
Rules, 2014 relating to Cost Audit and maintaining cost
audit records are not applicable to the Company.

49. EMPLOYEES STOCK OPTION SCHEME

The Company has two (2) stock option plans namely
Fusion Employee Stock Option Plan 2016 ("ESOP

2016") and Fusion Employee Stock Option Plan 2023
("ESOP 2023") and they are in compliance with SEBI
(Share Based Employee Benefits & Sweat Equity)
Regulations, 2021, as amended from time to time (the
âSBEB Regulation'').

The members vide postal ballot dated April 23, 2025,
approved the amendments in the ESOP 2023. The
amendments are aimed at enhancing employee
engagement, recognizing their contributions and
performance, and motivating them to actively support
the growth and profitability of the Company.

The disclosures required under Regulation 14, read with
Part F of the Securities and Exchange Board of India
(Share Based Employee Benefits and Sweat Equity)
Regulations, 2021, are available on the Company''s
website at https://fusionfin.com/employee-benefit-
scheme-docs/

50. SECRETARIAL STANDARDS

The Company has duly complied with the applicable
provisions of "Secretarial Standard -1" on meetings of
Board of Directors and "Secretarial Standard - 2" on
General Meetings issued by the Institute of Company
Secretaries of India ("ICSI").

51. INSOLVENCY PROCEEDINGS

There was no application made by the Company
initiating insolvency proceedings against any another
entity nor are any proceedings pending against the
Company under the Insolvency and Bankruptcy Code,
2016 (31 of 2016) during the year under review.

52. ONE-TIME SETTLEMENTS

The Company has not entered into a one-time
settlement with any of the banks or financial
institutions. Accordingly, there are no details regarding
difference between amount of the valuation done at
the time of one time settlement and the valuation
done while taking loan from the Banks or Financial
Institutions.

53. EQUITY SHARES IN THE DEMAT SUSPENSE
ACCOUNT

In accordance with the requirement of Regulation 34(3)
and Schedule V Part F of SEBI Listing Regulations, the
Company reports that as on March 31, 2025, there are
no equity shares lying in the demat suspense account
which were issued in dematerialized form pursuant to
the public issue of the Company.

54. SUSPENSION OF TRADING

The securities of the Company have not been
suspended from trading during the period under
review.

55. CAUTIONARY STATEMENT

Statements in the Board''s Report and the
Management Discussion & Analysis describing the
Company''s objectives, expectations or forecasts may
be forward looking within the meaning of applicable
Laws and Regulations. Actual results may differ
materially from those expressed in the statement.
Important factors that could influence the Company''s
operations include global and domestic demand
and supply conditions, changes in Government
Regulations, Tax Laws, Economic Developments
within the country and other factors such as litigation
and industrial relations.

56. ACKNOWLEDGEMENTS

The directors take this opportunity to express their
deep and sincere gratitude for the support and
co-operation from the Borrowers, Banks, Financial
Institutions, Investors, and Employees of the Company,
for their consistent support and encouragement
to the Company. The directors also place on record
theirsincere appreciation of the commitment and
hard work put in by the Management and the
employees of the Company and thank them for
yet another excellent year. Their dedication and
competence have ensured that the Company
continues to be a significant player in the Micro
finance industry.

For and on behalf of the Board of Directors

Of Fusion Finance Limited

(Formerly known as Fusion Micro Finance Limited)

Sd/- Sd/-

Devesh Sachdev Ratna Dharashree Vishwanathan

Place: Gurugram (Managing Director) (Director)

Dated:10.06.2025 DIN:02547111 DIN:07278291

88 | Fusion Finance Limited

Mar 31, 2024

During the current financial year, the Total Income from operations grew by 33.00% to C2,316.73 crore which is mainly due to an increase in the Asset Under Management (''AUM'') of the Company and the Profit before tax grew by 29.55% to C663.26 crore The improvement in the financial performance of the company is on account of business growth recorded during the year.

2. OPERATIONAL PERFORMANCE

Operational performance of the Company for the current financial year ended the March 31,2024 as compared to the previous financial year ended the March 31,2023 is summarized below:

The Board of Directors are pleased to present the 30^th Annual Report of the Company ("Fusion Finance Limited" or "Fusion") along with the Audited Financial Statements, for the Financial Year ended March 31,2024.

1. FINANCIAL SUMMARY/STATE OF AFFAIRS

The financial statements of the Company for the year ended March 31, 2024 have been prepared in accordance with Indian Accounting Standards ("Ind AS") prescribed under section 133 of the Companies Act, 2013 (the "Act"), read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Schedule III to the Act, as amended from time to time and applicable guidelines issued by SEBI.

The financial results of the Company for the current financial year ended the March 31,2024 as compared to the previous financial year ended the March 31,2023 are as under:

(? in crores unless otherwise stated)
Particulars	For the year ended March 31, 2024	For the year ended March 31, 2023
Revenue from operations
Interest Income	2,091.90	1,600.10
Fees and commission Income	41.67	19.58
Net gain on fair value changes	52.86	25.38
Net gain on derecognition of financial instruments under amortized cost category	130.30	96.86
Total Revenue from operations	2,316.73	1,741.92
Other Income	95.69	58.05
Total Income	2,412.42	1,799.97
Expenses
Finance Costs	790.83	642.78
Impairment on financial instruments	364.86	200.37
Employee benefits expenses	431.22	325.52
Depreciation and amortization	9.01	7.41
Other expenses	153.24	111.91
Total Expenses	1,749.16	1,287.99
Profit before tax	663.26	511.98
Tax Expense:
Current Tax	172.30	110.60
Deferred Tax	(14.33)	14.23
Profit for the year	505.29	387.15
Other Comprehensive Income
Items that will not be reclassified subsequently to profit or Loss
Re-measurement gains/(loss) on defined benefit plans	1.64	0.42
Income tax effect	(0.41)	(0.11)
Total Other Comprehensive Income for the year	1.23	0.31
Total Comprehensive Income for the year	506.52	387.46

Particulars	FY March 31, 2024	FY March 31, 2023	Increase %
Number of Branches	1,297	1,086	19.43%
Number of Members	38,61,892	35,28,107	9.46%
Number of Employees	13,807	10,363	33.23%
Number of States (including UTs)	22	20	10.00%
Amount Disbursed (C In Crore)	10,294	8,596	19.76%
Gross Loan Portfolio (C In Crore)	11,476	9,296	23.45%

The Company attained business performance by reaching out to 38,61,892 active loan Borrowers as on March 31,2024, which has grown from 35,28,107 as on March 31,2023. The growth in active loan borrowers during the year was 9.46%.

The above was possible with excellent efforts of 13,807 employees of the Company as on March 31, 2024, which was 10,363 as on March 31, 2023, through 1297 Branches, across 22 states and 453 districts in India. During the year under review, the Company opened 211 new branches.

The Company already has borrowing arrangements with a large number of lenders and has started associations with a few more institutions to diversify its sources of borrowing.

3. CASH FLOW STATEMENT

The Cash Flow Statement for the year ended on March 31, 2024 prepared under the provisions of the Companies Act, 2013 is attached as a part of the Financial Statements of the Company.

4. ANNUAL RETURN

Pursuant to sub-section (3)(a) of Section 134 and sub-section (3) of Section 92 of the Act, read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the copy of the Annual Return as at March 31, 2024 is available on the website of the company at www.fusionfin.com.

5. DEPOSITS

Act read with Companies (Acceptance of Deposits) Rules, 2014. Further, the company continues to be a non-deposit taking Non-Banking Financial Company in conformity with the guidelines of the RBI.

6. TRANSFER TO RESERVES

During the FY2023-24 the Company has transferred C 101.06 Crore to the statutory reserve pursuant to Section 45-IC of the Reserve Bank of India Act, 1934.

7. DIVIDEND

The Board of Directors aims to grow the business of the Company and enhance the rate of return on investments of the shareholders. With a view to financing the longterm growth plans of the Company that require substantial resources despite having sufficient distributable profits, the Board of Directors do not recommend any dividend for the year under review.

The Dividend Distribution Policy, in terms of Regulation 43A of the Listing Regulations is available on the website of the Company at https://fusionfin.com/wp-content/ uploads/2023/07/Dividend-distribution-policy1.pdf

8. TRANSFER OF UNCLAIMED DIVIDEND AND SHARES TO INVESTOR EDUCATION AND PROTECTION FUND

In terms of Section 125 of the Act, unclaimed dividends are required to be transferred to the Investors Education and Protection Fund. There has been no dividend declared in the last Seven (7) years and year under review and hence, there is no requirement of transferring the same to the Investors Education and Protection Fund for the year under the review.

9. SCALE BASED REGULATIONS

With reference to the RBI circular dated October 22, 2021 on "Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs" (''SBR Framework''), the NBFCs are categorised into four layers, NBFC - Base Layer (NBFC-BL), NBFC - Middle Layer (NBFC-ML), NBFC - Upper Layer (NBFC-UL) and NBFC - Top Layer (NBFC-TL) based on their size, activity, and perceived riskiness. Accordingly, the company is categorised as an NBFC - Middle Layer (NBFC-ML) and is in compliance with the applicable regulations.

10. NUMBER OF MEETINGS OF THE BOARD

During the FY 2023-24, the Board met 4 (Four) times and details related to the board meetings of the Company are mentioned in the Corporate Governance Report annexed as "ANNEXURE -1", which forms part of this report. The intervening gap between the Board Meetings was within the period prescribed under the Act and SEBI Listing Regulations.

11. CHANGE IN THE NATURE OF BUSINESS, IF ANY

There was no change in the nature of business during the financial year ended March 31,2024 .

12. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)

a. Changes in Directors and KMPs during the FY 2023 -24

During the financial year, the shareholders via postal ballot dated July 08, 2023 has approved the change the terms of appointment of Mr. Kenneth Dan Vander Weele (DIN: 02545813) and Mr. Narendra Ostawal (DIN: 06530414), nominee directors of the company, thereby, making their office liable to retire by rotation.

Further, Ms. Ratna Dharashree Vishwanathan (DIN: 07278291) was re-appointment as an Independent Director w.e.f. May 24, 2023 for a second term, for three consecutive years, which was approved by the shareholders in the Extra Ordinary General meeting of the Company held on February 16, 2023.

In addition, the shareholders in the Annual General Meeting of the Company held on September 29, 2023 approved the re-appointment of Mr. Kenneth Dan Vander Weele, retiring by rotation, as the Director of the Company.

Further, Mr. Deepak Madaan, Company Secretary of the company was redesignated as Company Secretary and Chief Compliance Officer by the board of directors in

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b. Reappointment of Managing Director

The shareholders via postal ballot dated July 08, 2023 had re-appointed Mr Devesh Sachdev as Managing Director of the Company for the period of 5 (five) consecutive years commencing from December 05, 2023 to December 04, 2028.

c. Woman Director

In terms of the provisions of Section 149 of the Companies Act, 2013, and Regulation 17(1 )(a) of the SEBI Listing Regulations, the Board of Directors of top 1000 listed entities shall have at least one independent women director. Accordingly, the Company has Ms. Namrata Kaul (DIN: 00994532) and Ms. Ratna Dharashree Vishwanathan (DIN: 07278291) as Independent Woman Directors on the Board.

d. Director retiring by rotation

Mr. Narendra Ostawal (DIN: 06530414) shall retire by rotation in terms of provisions of the Companies Act, 2013 at the ensuing Annual General Meeting of the Company and being eligible, offers himself for reappointment. The Board recommends his reappointment. As stipulated under Reg 36(3) of the SEBI (LODR) Regulations 2015, a brief resume of Mr. Narendra Ostawal proposed to be reappointed is given in notice of the 30^th AGM of the Company.

e. Key Managerial Personnel (KMP)

As per the provisions of the Act, Mr. Devesh Sachdev, Managing Director & Chief Executive Officer, Mr. Gaurav Maheshwari, Chief Financial Officer and Mr. Deepak Madaan, Company Secretary & Chief Compliance Officer are the KMPs of the Company.

13. DECLARATION OF INDEPENDENCE

The Company has received necessary declarations from each Independent Director as per the provisions of Section 149(7) of the Act read with Regulation 25(8) of SEBI Listing Regulations, that they meet the criteria of Independence as laid down in Section 149(6) of the Act and Regulation 16(1) (b) of the SEBI Listing Regulations.

There has been no change in the circumstances affecting their status as Independent Directors of the Company or to qualify under the Act and the relevant regulations.

In the opinion of the Board all the Independent Directors are person of integrity and possess requisite qualification/ skill/ expertise required for their roles and they are independent of the Management.

14. CREDIT RATING

CRISIL has assigned rating A , outlook stable for Long Term Bank Facilities (amounting to C8000 crore). CARE Rating Limited has also assigned rating of A , outlook stable for Long Term Bank Facilities (amounting C1500 crore) and for Non-Convertible Debentures. ICRA assigned rating of A , outlook stable on Non-Convertible Debentures including subordinate debt.

CARE Advisory Research and Training Ltd has assigned grading of "MFI 1".

15. CAPITAL ADEQUACY

The Capital Adequacy Ratio of the company was 27.53% as on March 31,2024, as against the minimum capital adequacy requirements of 15% by Reserve Bank of India ("RBI").

16. FAIR PRACTICE CODE

The Company has in place a Fair Practice Code (FPC) approved by the Board in compliance with the guidelines issued by RBI, to ensure better service and provide necessary information to customers to take informed decisions. The FPC is available on the website of the Company at www. fusionfin.com.

17. CUSTOMER GRIEVANCES

The Company has a dedicated Customer Grievance team for receiving and handling customer complaints/ grievances and ensuring that the customers are treated fairly and without any bias at all times. All issues raised by the customers are dealt with courtesy and redressed expeditiously.

18. RESOURCE MOBILIZATION

a) Term Loan / Sub debt /Refinance

During FY2023-24 , the Company diversified its sources of funds and raised a sum of C7,173.19 Crore (Inclusive of Term Loan of C7,023.19 Crore, and Refinance term loan of C150.00 Crore).

b) Secured / Unsecured Non-convertible debentures

During FY2023-24, the Company has not raised funds from unsecured Non-Convertible Debentures and secured Non-Convertible Debentures.

c) Direct Assignment

During FY2023-24, the Company has raised C1640.53 Crore through Direct Assignment.

19. SHARE CAPITAL

The Authorized Share Capital of the Company as March 31, 2024, stood at ? 1,05,00,00,000 (Rupees One Hundred and Five

Crore only) consisting of 10,50,00,000 (Ten Crore and Fifty Lacs only) Equity Shares of C10 (Rupees Ten only) each.

The Issued and Paid-up Share Capital of the Company as on March 31, 2024, stood at C1,01,02,38,850 (Rupees One Hundred and One Crore Two Lakh Thirty-Eight Thousand Eight Hundred Fifty only) consisting of 10,10,23,885 (Ten Crore Ten Lakh Twenty-Three Thousand Eight Hundred and Eighty Five only) Equity Shares C10 (Rupees Ten only) each.

There was no public issue, rights issue, bonus issue or preferential issue, etc. during the year. Further, the Company has not bought back any of its securities during the year under review.

During the year, 3,93,150 equity shares were issued and allotted to Fusion Employee Benefit Trust towards ESOP, which is included in the above said Paid-Up Equity Share Capital.

20. NON CONVERTIBLE DEBENTURES

During FY2023-24, the Company has not raised any funds by the way of issuance of secured and unsecured NonConvertible Debentures. Further, all the listed NCDs of the Company have been redeemed as on March 31, 2024. The fully redeemed NCDs during the year amounts to C437.79 Crores. The outstanding NCDs including subordinated liabilities in form of NCDs as on March 31, 2024 stood at C254.98 Crores.

21. COMMITTEES DETAILS

As on March 31, 2024 , the Company has 10 committees which govern and oversee different areas of the Company''s operations ensuring regular guidance and monitoring.

Further, the details pertaining to various Committees and the respective meetings are provided in Corporate Governance Report attached as "ANNEXURE 1".

22. RELATED PARTY TRANSACTIONS

During the FY2023-24, there were no material related party transactions entered by the Company that were required to disclosed in form AOC-2. The details of the related party transactions are provided in the notes to the Financial Statements.

The policy on Related Party Transactions, as approved by the Board, is displayed on the website of the Company i.e. www.fusionfin.com.

23. AUDITOR''S AND AUDITORS'' REPORT

STATUTORY AUDITOR

Pursuant to the provisions of Section 139 of the Companies Act, 2013 read with rules made thereunder and RBI

notification no. DoS.CO.ARG/SEC.01/08.91.001/2021-

22 dated April 27, 2021, M/s Deloitte Haskins and Sells, Chartered Accountants were appointed as Statutory Auditors of the Company to hold office for a period of three years from the conclusion of the Twenty - Eight Annual General Meeting till the conclusion of the Thirty First Annual General Meeting of the Company to be held in the financial year 2025-26.

The Auditors'' Reports for the Financial Year 2023-2024 is self-explanatory and does not carry any observation/ qualification/ adverse remarks etc. or infirmity in the Company''s affairs. The notes to Financial Statement referred to in the Auditors'' report are self explanatory and do not call for any further comments.

During the year, no incidence of fraud as defined under Section 143(12) of the Companies Act, 2013, which is required to be disclosed under Section 134(3) (ca) of the Companies Act, 2013, has been reported by the Auditors to the Board of directors of the Company.

SECRETARIAL AUDITOR

As required under Section 204 of the Act and the Rules made thereunder, M/s. Harish Popli & Associates was appointed as the Secretarial Auditor of the Company to conduct Secretarial Audit of the Company for the Financial Year ended March 31, 2024.

The Secretarial Audit Report for Financial Year ended on March 31, 2024 does not contain any qualification, reservation, adverse remark or disclaimer, except as contained therein, and form the part of Board Report as "Annexure - 2â. The same is self-explanatory in nature.

24. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

During the year under review, in terms of the provisions of Section 186(1) of the Act, the Company did not make any investment through more than two layers of investment companies.

Since, the Company is Non-Banking Financial Company, the disclosures regarding particulars of the loan or guarantee given and security provided is exempt under the provisions of Section 186(11) of the Act read with rules made thereunder, as amended. Further, the details of investments made by the Company are given in the Notes to the Financial Statements.

25. NOMINATION AND REMUNERATION POLICY

Pursuant to the provisions of Section 178 of the Act read with applicable rules thereunder, and Regulation 19 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and in accordance with the RBI master circulars, the Company has in place Nomination and Remuneration Policy ("NRC Policy").

The NRC Policy formulates the criteria for determining qualifications, competencies, positive attributes, and independence for the appointment of a director (executive/ non-executive) and also the criteria for determining the remuneration of the directors, key managerial personnel (KMPs) and senior management personnel.

The NRC Policy of the Company is available on our website at www.fusionfin.com.

26. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF THE REPORT

Change of name of the Company from "FUSION MICRO FINANCE LIMITED" to "FUSION FINANCE LIMITED".

With the expanding needs of its customers, the company plans to provide a more diverse range of financial products to the existing and adjacent clientele. The inclusion of the word ''Microfinance'' in the company''s name presented a restrictive view of the proposed product offerings and inhibit the company from acquiring new customers in other segments. Therefore, it was believed that removing ''Micro'' from the company''s name will not impact the current customer segment or impact the core business. Therefore, the board of directors in their meeting held on November 06, 2023 approved the change in the name of the company from ''Fusion Micro Finance Limited'' to ''Fusion Finance Limited'' which was further approved by the shareholders via Postal Ballot resolution dated June 09, 2024. Notably, there was no change in the main objects of the company pursuant to the change in the name of the company.

Accordingly, the name of the Company has been changed from "FUSION MICRO FINANCE LIMITEDâ to "FUSION FINANCE LIMITED" w.e.f. July 09, 2024 and a fresh "Certificate of Incorporation" issued by Registrar of Companies (ROC - NCT of Delhi and Haryana), has been received by the Company.

No other material changes and commitments have occurred after the closure of the FY 2023-24 till the date of this Report, which would affect the financial position of the Company.

27. AMENDMENT IN THE ARTICLES OF ASSOCIATION (AOA)

During the Financial Year ended March 31, 2024, the Company''s Articles of Association (AOA) was amended two times with the consent of the Board as well as the members of the company, by adopting the amended and restated Articles of Association pursuant to special resolution passed by the members via Postal ballot resolution dated July 08, 2023 and in the Annual General Meeting of the company held on September 29, 2023.

28. CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

a. Information Relating to Conservation of Energy, Technology Absorption

The operations of our Company are not energyintensive. The Company has, however, used information technology extensively in its operations and continuously invests in energy-efficient office equipment at all office locations.

b. Foreign Exchange Earnings and Outgo

There have not been any foreign exchange inflow while outgo during the year under review is C6.54 crores towards Interest Payment on ECB & other operating expenses.

29. RISK MANAGEMENT

Our Enterprise Risk Management (ERM) framework encompasses practices relating to the identification, analysis, evaluation, treatment, mitigation, and monitoring of the Credit, Market, liquidity, Operational, compliance risks to achieving our key business objectives. ERM at Fusion seeks to minimize the adverse impact of these risks, thus enabling the Company to leverage market opportunities effectively and enhance its long-term competitive advantage.

The Company has in place a Board Risk Management Committee ("BRMC") to frame, implement, and monitor the enterprise risk management plan for the Company.

Pursuant to Section 134(3)(n) of the Companies Act, 2013, the BRMC is responsible for reviewing the enterprise risk management plan, ensuring its effectiveness, and verifying adherence to various risk parameters. The Company''s Enterprise Risk Management strategy is based on clear understanding of various risks, disciplined Enterprise risk assessment and continuous monitoring. The BRMC reviews various risks with which the organization is exposed including Credit Risk, Interest Rate Risk, Liquidity Risk and Operational Risk. The development and implementation of risk management policy has been covered in the Management Discussion and Analysis Report attached as "ANNEXURE 3â.

30. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company strives to meet its commitment towards the community by committing its resources and energies to social development. The CSR Committee of the Company has formulated a CSR Policy which describes the multiple lines around which the CSR activities of the Company are positioned being education and skills development, social

and economic welfare, environmental sustainability and such other activities included in Schedule VII of the Act as may be identified by the CSR Committee from time to time.

The Policy is available on the website of the company at www.fusionfin.com.

Further, the composition of the CSR Committee, terms of reference of the committee and the details of meetings attended by the Committee members are provided in Corporate Governance Report attached as "ANNEXURE 1â.

The Annual Report on the CSR activities for the FY 2023 -24 containing salient features of CSR Policy and other relevant details is attached as "ANNEXURE 4â to this Report.

31. BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT

A detailed Business Responsibility & Sustainability Report (BRSR) has been prepared and is made available on the website of the company at https://fusionfin.com/wp-content/uploads/2024/09/FFL-BRSR-2023-24.pdf.

32. PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

In compliance with the Companies Act, 2013, and SEBI Listing Regulations, 2015, the Company has a structured assessment process for evaluation of performance of the Board, its Committees and individual performance of each Director including the Chairperson. The evaluations are carried out in a confidential manner and the Directors provide their feedback by categorising them in Good, Average, and Below Average categories.

The Independent Directors at their separate meeting reviewed the performance of Non-Independent Directors and the Board as a whole. The Chairman of the Company after taking into account the views of other Non Executive Directors, the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

The overall performance evaluation exercise was completed to the satisfaction of the Board. The outcome of the evaluation was presented to the Board of Directors of the Company.

33. VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Vigil Mechanism system/Whistle Blower Policy has been implemented with a view to provide a tool to directors and employees of the Company to report to the management genuine concerns including unethical behavior, actual or

In addition, the Company has a system of periodic reporting of the information to RBI as per the prescribed guidelines.

37. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The Company has no subsidiary/joint venture/ associate company and hence consolidation and the provisions relating to the same under the Companies Act, 2013 and rules made thereunder are not applicable to the Company.

38. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE

During the FY2023-24, there are no such orders passed by the regulators/courts/ tribunals impacting the going concern status and the Company''s operations in future.

39. INTERNAL FINANCIAL CONTROLS

As per Section 134(5)(e) of the Companies Act, 2013, the Directors have an overall responsibility for ensuring that the Company has implemented a robust system and framework of Internal Financial Controls. This provides the Directors with reasonable assurance regarding the adequacy and operating effectiveness of controls with regards to reporting, operational and compliance risks. The Company has devised appropriate systems and framework including proper delegation of authority, policies and procedures, effective IT systems aligned to business requirements, risk based internal audits, risk management framework and whistle blower mechanism. The Company had already developed and implemented a framework for ensuring internal controls over financial reporting. During the year, controls were tested and no reportable material weakness in design and effectiveness was observed.

The Internal Audit team monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action(s) in their respective area(s) and thereby strengthen the controls. Significant audit observations and corrective action(s) thereon are presented to the Audit Committee.

The Audit Committee reviews the reports submitted by the Internal Auditors in each of its meeting. Also, the Audit Committee at frequent intervals has independent sessions with the management to discuss the adequacy and effectiveness of internal financial controls.

suspected fraud. The Policy provides adequate safeguards against victimization of director(s)/employee(s) who avail of the mechanism. The Company has not received any reference under the said policy during the year.

The Company has formulated a codified Vigil Mechanism System/Whistle-Blower Policy incorporating the provisions relating to Vigil Mechanism in terms of Section 177 of the Companies Act, 2013 and Regulation 22 of SEBI Listing Regulations, 2015, in order to encourage Directors and Employees of the Company to escalate to the level of the Audit Committee any issue or concerns impacting and compromising with the interest of the Company and its stakeholders in any way. The Company is committed to adhere to highest possible standards of ethical, moral and legal business conduct and to open communication and to provide necessary safeguards for protection of employees from reprisals or victimisation, for whistle blowing in good faith.

The Procedure for raising concern and the said Policy is available on the Company''s website at www.fusionfin.com.

34. AUDIT COMMITTEE

The Company has an Audit Committee constituted in accordance with the provisions of Section 177 of the Companies Act, 2013, RBI Guidelines and Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended. The composition of the Audit Committee and the details of meetings attended by the Committee members are provided in Corporate Governance Report attached as "ANNEXURE 1".

35. CODE OF CONDUCT FOR INSIDER TRADING

The Company has duly formulated and adopted the Code of Conduct for Prohibition of Insider Trading in accordance with SEBI (Prohibition of Insider Trading) Regulations, 2015. The objective of this Code is to prescribe the procedure for trading in securities of the Company and the disclosures to be made by the designated persons covered under the Insider Trading Policy with respect to their shareholding in the Company, both direct and indirect. The Code of Conduct for Prohibition of Insider Trading is available on the website of the Company at www.fusionfin.com.

36. RBI OMBUDSMAN

The company has a dedicated team which deals with the concerns or complaints raised by the customers. Further, in accordance with the RBI Circular dated November 15, 2021 on "Appointment of Internal Ombudsman by NonBanking Financial Companies (NBFCs)" the Company has an Internal Ombudsman (IO) being the apex of the grievance redressal mechanism of the Company. The IO deals with the complaints of its customers which are partly or wholly rejected by the Company.

40. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

As per requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013, the Company has a policy and framework for employees to report sexual harassment cases at workplace and our process ensures complete anonymity and confidentiality of information. Adequate workshops and awareness programmes against sexual harassment are conducted across the organization.

Further, the Company has the Internal Complaint Committee in place as per the requirement of Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 to address the sexual harassment cases. However, during the financial year ended 31^st March 2024, the Company has received two complaints on sexual harassment, the said complaints were investigated and resolved as per the provisions of the POSH and as on 31^stMarch 2024, no complaint was pending for investigation and resolution.

41. CORPORATE GOVERNANCE

Corporate governance is the system of rules, practices and processes by which a company is directed and controlled. Corporate governance essentially involves balancing the interests of a company''s stakeholders and the community at large. Sound governance practices and responsible corporate behavior contribute to superior long-term performance of organisations. Corporate Governance requires everyone to raise their level of competency and capability to meet the expectations in managing the enterprise and its resources optimally with prudent ethical standards.

The Company''s corporate governance framework ensures that it is aligned to good corporate governance philosophy and that timely disclosures are made and accurate information regarding the financials and performance is shared, as well as the leadership and governance of the Company. The Company has an adequate system of control in place to ensure that the executive decisions taken should result in optimum growth and development which benefits all the stakeholders. The Certificate from M/s Harish Popli & Associates, Practicing Company Secretary, confirming the compliance of Corporate Governance norms is attached thereto.

A detailed report on the Company''s commitment at adopting good Corporate Governance Practices is enclosed as "ANNEXURE 1".

42. MANAGERIAL REMUNERATION

In terms of the provisions of Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and

Remuneration of Managerial Personnel) Rules, 2014, including any statutory modification(s) thereof for the time being in force, the details of remuneration etc. of Directors, Key Managerial Personnel and employees covered under the said Rules is attached as "ANNEXURE 5" which forms part of this report.

43. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Act the Directors of the Company hereby state and confirm that:

a. In the preparation of the annual financial statements for the Financial Year ended March 31,2024, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

b. The directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2024 and of the profits of the Company for year ended on that date;

c. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d. The Directors had prepared the annual accounts on a going concern basis;

e. The directors had laid down internal financial controls to be followed by the company, and that such internal financial controls are adequate and were operating effectively.

f. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

44. EMPLOYEES STOCK OPTION SCHEME

The Company has two (2) stock option plans namely Fusion Employee Stock Option Plan 2016 ("ESOP 2016") and Fusion Employee Stock Option Plan 2023 ("ESOP 2023") and they are in compliance with SEBI (Share Based Employee Benefits & Sweat Equity) Regulations, 2021, as amended from time to time (the ''SBEB Regulation'').

Further, there is no other material change in the ESOP schemes of the Company. The Company has not provided any financial assistance to its employees for purchase or subscription of shares in the Company or in its holding

company and the Company has not issued any sweat Equity Shares or Equity Shares with differential rights during the year.

45. RBI GUIDELINES

The Company is registered with the Reserve Bank of India as a NBFC within the provisions of the NBFC (Reserve Bank of India) Directions, 1998. The Company continues to comply with all the requirements prescribed by the Reserve Bank of India as applicable to it, from time to time.

46. DISCLOSURE IN ACCORDANCE WITH REGULATION 30A OF SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015

No such agreements as specified under clause 5A to para A of part A of schedule II, are required to be disclosed in accordance with Regulation 30A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, in the FY 2023-24.

47. LISTING

All the NCDs listed on the BSE Limited ("BSE") have been delisted during the Financial Year ended March 31, 2024, accordingly, there are no listed NCDs as on March 31,2024. Further, the equity shares of the Company are also listed on BSE & National Stock Exchange of India Limited ("NSE"). The listing fees to BSE & NSE for the financial year 2024-25 has been duly paid.

48. MAINTENANCE OF COST RECORDS

The provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 relating to Cost Audit and maintaining cost audit records is not applicable to the Company.

49. SECRETARIAL STANDARDS

The Company has duly complied with the applicable provisions of Secretarial Standard - 1 on meetings of Board of Directors and Secretarial Standard-2 on General Meetings issued by the Institute of Company Secretaries of India ("ICSI").

50. INSOLVENCY PROCEEDINGS

There was no application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016.

51. ONE-TIME SETTLEMENTS

The Company has not entered into a one-time settlement with any of the banks or financial institutions.

52. EQUITY SHARES IN THE DEMAT SUSPENSE ACCOUNT

In accordance with the requirement of Regulation 34(3) and Schedule V Part F of SEBI Listing Regulations, the Company reports that as on March 31,2024, there are no equity shares lying in the demat suspense account which were issued in dematerialized form pursuant to the public issue of the Company.

53. CAUTIONARY STATEMENT

Statements in the Board''s Report and the Management Discussion & Analysis describing the Company''s objectives, expectations or forecasts may be forward looking within the meaning of applicable Laws and Regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company''s operations include global and domestic demand and supply conditions, changes in Government Regulations, Tax Laws, Economic Developments within the country and other factors such as litigation and industrial relations.

54. ACKNOWLEDGEMENTS

The Directors take this opportunity to express their deep and sincere gratitude for the support and co-operation from the Borrowers, Banks, Financial Institutions, Investors, and Employees of the Company, for their consistent support and encouragement to the Company. The Directors also place on record their sincere appreciation of the commitment and hard work put in by the Management and the employees of the Company and thank them for yet another excellent year. Their dedication and competence have ensured that the Company continues to be a significant player in the Micro finance industry.

For and on behalf of the Board of Directors

Sd/- Sd/-

Devesh Sachdev Ratna Dharashree Vishwanathan

(MD & CEO) (Director)

DIN:02547111 DIN: 07278291

Place: Gurugram Dated: August 06, 2024

Mar 31, 2023

The Board of Directors are pleased to present the 29^th Annual Report of your Company ("the Company" or "Fusion") along with the Audited Financial Statements, for the Financial Year ended March 31,2023 ("Financial Statements").

1. FINANCIAL SUMMARY/STATE OF AFFAIRS

The financial statements of the Company for the year ended March 31,2023 have been prepared in accordance with Indian Accounting Standards ("Ind AS") prescribed under section 133 of the Companies Act, 2013 (the "Act"), read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Schedule III to the Act, as amended from time to time and applicable guidelines issued by SEBI. The financial results of the Company for the financial year ended March 31,2023 is summarized below

(Rs. in Millions unless otherwise stated)
Particulars	For the year ended March 31, 2023	For the year ended March 31, 2022
Revenue from operations
Interest Income	16,001.03	10643.19
Fees and commission Income	195.81	13.86
Net gain on fair value changes	253.81	247.65
Net gain on derecognition of financial instruments under amortized cost category	968.58	607.95
Total Revenue from operations	17,419.23	11512.65
Other Income	580.47	500.84
Total Income	17,999.70	12013.49
Expenses
Finance Costs	6,427.77	4959.64
Impairment on financial instruments	2,003.69	3686.93
Employee benefits expenses	3,255.24	2330.66
Depreciation and amortization	74.05	53.71
Other expenses	1,119.11	738.29
Total Expenses	12,879.86	11769.23
Profit before tax	5,119.84	244.26
Tax Expense:
Current Tax	1,106.06	129.77
Deferred Tax	142.33	(103.06)
Profit for the year	3,871.45	217.55
Other Comprehensive Income
Items that will not be reclassified subsequently to profit or Loss
Re-measurement gains/(loss) on defined benefit plans	4.19	2.96
Income tax effect	(1.06)	(0.74)
Total Other Comprehensive Income for the year	3.13	2.22
Total Comprehensive Income for the year	3,874.58	219.77

During the current financial year, the Total Income from operations grew by 51.3% to C 1741.92 Cr which is mainly due to an increase in the Asset Under Management (''AUM'') of your Company and the Profit before tax grew by 20 times to C 511.98 Cr. The improvement in the financial performance of your company is on account of business growth recorded during the year.

2. OPERATIONAL PERFORMANCE

Operational performance of the Company for the financial year ended March 31,2023 is summarized below:

Particulars	FY March 31, 2023	FY March 31, 2022	Increase over % FY -2022-23
Number of Branches	1,086	934	16.27%
Number of Members	35,28,107	27,23,449	29.55%
Number of employees	10,363	8,716	18.90%
Number of States	20	18	11.11%
Amount Disbursed (C In Crore)	8,596	6,180	39.10%
Gross Loan Portfolio (C In Crore)	9,296	6,786	36.99%

The Company attained business performance by reaching out to 35,28,107 active loan clients as on March 31, 2023 which has grown from 27,23,449 as on March 31, 2022. The growth in active loan clients during the year was 29.55%.

The above was possible with excellent efforts of 10,363 employees of the Company as on March 31, 2023 which was 8,716 as on March 31, 2022, through 1086 Branches, across 20 states and 398 districts in India. During the year under review, the Company opened 154 new branches.

The Company already has borrowing arrangement with large number of lenders and has started association with a few more institutions to diversify its sources of borrowing.

3. LISTING OF EQUITY SHARES OF THE COMPANY ON STOCK EXCHANGE(S).

The Company made its Initial Public Offer ("IPO") of 29,999,813 Equity Shares of face value of C10 each ("Equity Shares") of the Company for cash at a Price of C368 per Equity Share (Including a Share Premium of C358 per Equity Share) aggregating to C 11,039.93 million ("Offer"), comprising a fresh issue of 16,304,347

Equity Shares aggregating to C6,000.00 million ("Fresh Issue") and an offer for sale of 13,695,466 Equity Shares aggregating to C5039.93 million ("Offer for Sale"). The IPO oversubscribed by 2.95 times (excluding Anchor Portion), even in volatile and difficult market conditions.

Consequently, the paid-up share capital of the Company increased from 84,326,388 equity shares of C10/- each to 100,630,735 equity shares of C10/- each.

The Equity Shares of your Company were successfully listed on both BSE and NSE with effect from November 15, 2022.

During the year under review, the IPO proceeds were utilised as per the objects stated in the prospectus of the Company and pursuant to Regulation 32 of the SEBI Listing Regulations there were no instances of deviation(s) or variation(s) in the utilization of proceeds as mentioned in the objects stated in the Prospectus dated November 7, 2022, in respect of the Initial Public Offering of the Company. The Company has obtained Monitoring Agency Reports from CARE Ratings Limited ("Monitoring Agency") in terms of Regulation 41 of the Securities & Exchange Board of

India (Issue of Capital & Disclosure Requirements) Regulations, 2018, as amended from time to time, for the quarter ended December 31,2022 and March 31,2023, to monitor the utilisation of IPO proceeds.

The Company has submitted the statement(s) and report as required under Regulation 32 of the SEBI Listing Regulations to both the exchanges where the shares of the Company are listed, namely, National Stock Exchange of India Limited ("NSE") and BSE Limited ("BSE") on timely basis.

The Directors wish to place on record their gratitude for the trust, faith, and confidence reposed by the public, institutions, borrowers, and business partners in the Company even during the challenging environment; thus making the IPO successful. The Directors also place on record their deep appreciation for the significant contribution and sincere efforts made in the IPO process by the Book Running Lead Managers, all legal counsels to the offer, Statutory Auditors of the Company, Registrar to the Offer, Advertising Agency, Syndicate Members, Monitoring Agency, Bankers to the Offer, Reserve Bank of India (RBI), Registrar of Companies-New Delhi, Stock Exchanges, Management Team and Employees of the Company.

4. CASH FLOW STATEMENT

The Cash Flow Statement for the year ended on March 31, 2023 prepared under the provisions of the Companies Act, 2013 ("the Act") is attached as a part of the Financial Statements of the Company.

5. ANNUAL RETURN

Pursuant to sub-section (3)(a) of Section 134 and sub-section (3) of Section 92 of the Act, read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the copy of the Annual Return as at March 31, 2023 is available on the website of the company at www.fusionmicrofinance.com.

6. DEPOSITS

The Company is a non-deposit taking Non-Banking Financial Company - Micro Finance Institution (NBFC-MFI) and has not accepted any public deposits within the ambit of Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998 or Section 73 of the Act read with Companies (Acceptance of Deposits) Rules, 2014 further the company continues to be a non-deposit taking Non-Banking Financial Company in conformity with the guidelines of the RBI.

7. TRANSFER TO RESERVES

During the FY'' 23, your Company has transferred C774.29 Million to the statutory reserve pursuant to Section 45-IC of the Reserve Bank of India Act, 1934.

8. DIVIDEND

The Board of Directors aims to grow the business of the Company and enhance the rate of return on investments of the shareholders. With a view to financing the long-term growth plans of the Company that require substantial resources despite having sufficient distributable profits, the Board of Directors do not recommend any dividend for the year under review.

The Dividend Distribution Policy is available on the website of the Company at www.fusionmicrofinance.com

9. TRANSFER OF UNCLAIMED DIVIDEND AND SHARES TO INVESTOR EDUCATION AND PROTECTION FUND

In terms of Section 125 of the Act, unclaimed dividends are required to be transferred to the Investors Education and Protection Fund. There was no dividend declared in the last Seven (7) years and year under review and hence, there is no requirement of transferring the same to the Investors Education and Protection Fund for the year under the review.

10. SCALE BASED REGULATIONS

11. NUMBER OF MEETINGS OF THE BOARD

During the Financial Year 2022-23, the Board met 9 (Nine) times and details related to the board meetings of the Company are mentioned in the Corporate Governance Report annexed as "ANNEXURE -1", which forms part of this report. The intervening gap between the Board Meetings was within the period prescribed under the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations").

12. CHANGE IN THE NATURE OF BUSINESS, IF ANY

There was no change in the nature of business during the financial year ended March 31, 2023.

13. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)

a. Changes in Directors and KMPs during the FY 2022-23

There were no changes in the Directors and KMP(s) of the Company during the year under review.

b. Reappointment of Independent Directors

The shareholders in the Extra Ordinary General Meeting ("EGM") of the Company held on February 16, 2023 had re-appointed Ms. Namrata Kaul & Ms. Ratna Dharashree Vishwanathan as Independent Directors of the Company w.e.f. February 18, 2023 for a period of five (5) years and May 24, 2023 for a period of three (3) years, respectively.

c. Woman Director

In terms of the provisions of Section 149 of the Companies Act, 2013, and Regulation 17(1)(a) of the SEBI (LODR) Regulations 2015, the Company shall have at least one Woman Director on the Board. Accordingly, the Company has Ms. Namrata Kaul & Ms. Ratna Dharashree Vishwanathan as Independent Woman Directors on the Board.

d. Director retiring by rotation

Mr. Kenneth Dan Vander Weele (DIN: 02545813) shall retire by rotation in terms of provisions of the Companies Act, 2013 at the ensuing Annual General Meeting of the Company and being eligible offers himself for reappointment. The Board recommends his reappointment. As stipulated under Reg 36 (3) of the SEBI (LODR) Regulations 2015, a brief resume of Mr. Kenneth Dan Vander Weele proposed to be reappointed is given in notice of the 29^th AGM of the Company.

e. Key Managerial Personnel (KMP)

14. DECLARATION OF INDEPENDENCE

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Act and provisions of SEBI Listing Regulations and based on the declarations received from the Independent directors, the Board of directors are of the opinion that the directors have the requisite integrity, expertise and experience including the proficiency to be the independent directors of the Company.

15. CREDIT RATING

CARE Advisory Research and Training Ltd has assigned Grading of "MFI 1"; CARE Rating Limited has assigned Rating of ''A'' Outlook Stable on the Long- Term Bank Facilities (amounting to C1,500.00 Cr) and on Non-Convertible Debentures. The Company has also been assigned rating as ''A'' Outlook Stable by CRISIL on the LongTerm Bank Facilities (amounting to C5,000.00 Cr) and rating of ''A'' Outlook Stable by ICRA on Non-Convertible Debentures.

16. CAPITAL ADEQUACY

The Capital Adequacy Ratio of the company was 27.94% as on March 31, 2023, as against the minimum capital adequacy requirements of 15% by Reserve Bank of India ("RBI").

17. FAIR PRACTICE CODE

18. CUSTOMER GRIEVANCES

The Company has a dedicated Customer Grievance team for receiving and handling customer complaints/ grievances and ensuring that the customers are treated fairly and without any bias at all times. All issues raised by the customers are dealt with courtesy and redressed expeditiously.

19. RESOURCE MOBILIZATION

a) Term Loan / Sub debt /Refinance

During FY''23, the Company diversified its sources of funds and raised a sum of C5,015.00 Crore (Inclusive of Term Loan of C4,915.00 Crore, and Refinance term loan of C100.00 Crore).

b) Secured / Unsecured Non-convertible debentures

During FY''23, the Company raised the amount of C180.00 Crore by way of issuance of unsecured Non-Convertible Debentures and secured Non-Convertible Debentures.

c) Direct Assignment

During FY''23, your Company raised resources to the extent of C1226.44 Crore through Direct Assignment.

20. SHARE CAPITAL

The Issued and paid-up Equity Share Capital of the Company as on March 31, 2023, stood at C1,006,307,350 (Rupees One Hundred Crore Sixty Three Lakh Seven Thousand Three Hundred Fifty only) consisting of 100,630,735 (Ten Crore Six Lakh Thirty Thousand Seven Hundred Thirty Five) Equity Shares of C10/- each as compared to C843,263,880 (Rupees Eighty Four Crores Thirty Two Lakh Sixty Three Thousand Eight Hundred and Eighty only) consisting of 84,326,388 (Eight Crore Forty Three Lakh Twenty Six Thousand Three Hundred Eighty Eight) Equity Shares of C10/-each in the previous year ended March 31,2022.

The Issued and Paid-up Equity Share Capital of the Company has been increased in the FY ended March 31, 2023, on account of

fresh issue and allotment of 16,304,347 Equity Shares of C10/-each by way of Initial Public Offer (IPO).

21. NON CONVERTIBLE DEBENTURES

During FY'' 23, the Company has raised the amount of C35.00 Crore and C145.00 Crore by way of issuance of unsecured NonConvertible Debenture and secured Non-Convertible Debenture respectively. The total fully redeemed amount of NCDs C340.10 Crores. The outstanding NCDs including subordinated liabilities in form of NCDs as on March 31,2023 was C711.79 Crores.

22. EMPLOYEE STOCK OPTION SCHEME

To reward the employees for their association and performance as well as to motivate them to contribute to the growth and profitability of the Company, the Company has two (2) stock option plans namely Fusion Employee Stock Option Plan 2016 ("ESOP 2016") and Fusion Employee Stock Option Plan 2023 ("ESOP 2023") as on March 31,2023.

In terms of Regulation 12(1) of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, as amended ("SEBI (SBEB & SE) Regulations"), no company shall make any fresh grant which involves allotment of shares to its employees under any Plans/ Plans formulated prior to its Initial Public Offering ("IPO") and prior to the listing of its equity shares (''Pre-IPO Plan/ Plan'') unless: (i) such Pre-IPO Plan/ Plan is in conformity with the SEBI (SBEB & SE) Regulations; and (ii) Such Pre-IPO Plan/ Plan is ratified by its shareholders subsequent to the IPO.

Therefore, in accordance with the above provisions of the SEBI (SBEB & SE) Regulations, the members of the company approved the ratification of Fusion Employee Stock Option Plan 2016 ("ESOP 2016") by way of special resolution passed through Postal Ballot, only by remote e-voting process on March 26, 2023 in order to align the same with SEBI (SBEB & SE) Regulations.

In addition, the members approved the following:

(a) Institution of Fusion Employee Stock Option Plan 2023 ("ESOP 2023").

(b) Winding up of Fusion Micro Finance Limited Employee Stock Option Plan 2014, after transfer of remaining shares under ESOP PAN 2014, if any, to ESOP PLAN 2023

Both the schemes i.e. ESOP 2016 and ESOP 2023 are in compliance with SEBI (SBEB & SE) Regulations.

Further, a statement giving complete details, as at 31 March 2023, under regulation 14 of the SEBI (SBEB & SE) Regulations, is available on the website of the Company at www.fusionmicrofinance.com.

23. COMMITTEES DETAILS

As on March 31, 2023, the Company has 10 committees which govern and oversee different areas of the Company''s operations ensuring regular guidance and monitoring.

For further details, please refer to Corporate Governance Report, which forms part of Directors'' Report.

24. RELATED PARTY TRANSACTIONS

During the FY''23, there were no material related party transactions entered by the Company that were required to disclosed in form AOC-2. The details of the related party transactions are provided in the notes to the Financial Statements.

The policy on Related Party Transactions, as approved by the Board, is displayed on the website of the Company i.e. www.fusionmicrofinance.com.

25. AUDITOR''S AND AUDITORS'' REPORT

STATUTORY AUDITOR

Pursuant to the provisions of Section 139 of the Companies Act, 2013 read with rules made thereunder and RBI notification no. DoS.CO.ARG/SEC.01/08.91.001/2021-22 dated April 27, 2021, M/s Deloitte Haskins and Sells, Chartered Accountants were appointed as Statutory Auditors of the Company to hold office for a period of three years from the conclusion of the Twenty -Eight Annual General Meeting till the conclusion of the Thirty First Annual General Meeting of the Company to be held in the financial year 2025-26.

The Auditors'' Reports for the financial year 2022-23 do not contain any qualification or reservation or adverse remark. The Notes on the Financial Statement referred to in the Auditors'' Report are selfexplanatory and do not call for any further comments.

SECRETARIAL AUDITOR

As required under Section 204 of the Act and the Rules made thereunder, M/s. Harish Popli & Associates was appointed as the Secretarial Auditor of the Company to conduct Secretarial Audit of the Company for the Financial Year ended March 31,2023.

The Secretarial Audit Report for Financial Year ended on March 31, 2023 does not contain any qualification, reservation, adverse remark or disclaimer and forming the part of Board Report as "Annexure - 2".

26. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company, being an NBFC registered with the RBI and engaged in the business of giving loans in ordinary course of its business, is exempt from complying with the provisions of section 186 of the Act with respect to loans, guarantees and investments.

27. NOMINATION AND REMUNERATION POLICY

Pursuant to the provisions of Section 178 of the Act read with applicable rules thereunder, and Regulation 19 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and in accordance with the RBI master circulars, the Board of directors has approved the Nomination and Remuneration Policy ("NRC Policy") of the company.

The NRC Policy is directed towards a structure that provides adequate rewards and compensation to the employees at all level. This policy formulates the criteria for determining qualifications, competencies, positive attributes and independence for the appointment of a director (executive/non-executive) and also the criteria for determining the remuneration of the directors, key managerial personnel (KMPs) and other employees.

The NRC Policy of the Company is available on our website at www.fusionmicrofinance.com.

28. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF THE REPORT

Between the end of the financial year and date of the report, the company have allotted 3,93,150 equity shares to the Fusion Employees Benefit Trust, which resulted into increase of paid-up capital of the company from 10,06,30,735 fully paid equity shares having face value of C10/- each, to 10,10,23,885 fully paid equity shares having face value of C10/- each.

29. CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

a. Information Relating to Conservation of Energy, Technology Absorption

The operations of our Company are not energy-intensive. The Company has, however, used information technology extensively in its operations and continuously invests in energy-efficient office equipment at all office locations.

b. Foreign Exchange Earnings and Outgo

There have not been any foreign exchange inflow Million) while outgo during the year under review is C118.23 Million

towards Interest Payment on ECB, IPO related Expenses & other operating expenses.

30. RISK MANAGEMENT

Our Enterprise Risk Management (ERM) framework encompasses practices relating to the identification, analysis, evaluation, treatment, mitigation, and monitoring of the Credit, Market, liquidity, Operational, compliance risks to achieving our key business objectives. ERM at Fusion seeks to minimize the adverse impact of these risks, thus enabling the Company to leverage market opportunities effectively and enhance its long-term competitive advantage.

The Board of Directors of the Company has formed a Board Risk Management Committee ("BRMC") to frame, implement, and monitor the enterprise risk management plan for the Company.

The BRMC is responsible for reviewing the enterprise risk management plan, ensuring its effectiveness, and verifying adherence to various risk parameters. The Company''s Enterprise Risk Management strategy is based on clear understanding of various risks, disciplined Enterprise risk assessment and continuous monitoring. The BRMC reviews various risks with which the organization is exposed including Credit Risk, Interest Rate Risk, Liquidity Risk and Operational Risk. The development and implementation of risk management policy has been covered in the Management Discussion and Analysis Report attached as "ANNEXURE 3".

31. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company strives to meet its commitment towards the community by committing its resources and energies to social development. The CSR Committee of your Company has formulated a CSR Policy which describes the multiple lines around which the CSR activities of the Company are positioned being education and skills development, social and economic welfare, environmental sustainability and such other activities included in Schedule VII of the Act as may be identified by the CSR Committee from time to time.

The Policy is available on the website of the company at www.fusionmicrofinance.com.

Further, the composition of the CSR Committee, terms of reference of the committee and the details of meetings attended by the Committee members are provided in Corporate Governance Report attached as "ANNEXURE 1".

The Annual Report on the CSR activities for the financial year 202223 containing salient features of CSR Policy and other relevant details is attached as "ANNEXURE 4" to this Report.

32. BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT

The Business Responsibility & Sustainability Report for the year under review has been annexed as "ANNEXURE 5" to this Report.

33. PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

In compliance with the Companies Act, 2013, and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements, Regulations, 2015, an annual performance evaluation for the FY 2022-23 has been carried out to assess the performance of the Board as a whole, Committees of the Board, the Individual Directors both Executive and Non-Executive including the Independent Directors. The evaluation was done using individual questionnaires. As part of the evaluation process, the performance evaluation of Board as a whole was done by the Directors of the Board. The performance evaluation of the Promoter Director, Nominee Directors and Non-Independent directors was done by every other Director. The performance evaluation of the Independent Directors was done by the Board excluding the Director being evaluated. The Directors expressed satisfaction with the evaluation process.

34. VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Vigil Mechanism system/Whistle Blower Policy has been established with a view to provide a tool to directors and employees of the Company to report to the management genuine concerns including unethical behavior, actual or suspected fraud. The Policy provides adequate safeguards against victimization of director(s)/employee(s) who avail of the mechanism. The Company has not received any reference under the said policy during the year.

The Company has formulated a codified Vigil Mechanism System/ Whistle-Blower Policy incorporating the provisions relating to Vigil Mechanism in terms of Section 177 of the Companies Act, 2013 and Regulation 22 of SEBI Listing Regulations, 2015, in order to encourage Directors and Employees of the Company to escalate to the level of the Audit Committee any issue or concerns impacting and compromising with the interest of your Company and its stakeholders in any way. The Company is committed to adhere to highest possible standards of ethical, moral and legal business conduct and to open communication and to provide necessary safeguards for protection of employees from reprisals or victimisation, for whistle blowing in good faith. The Company has not received any reference under the said policy during the year.

The said Policy is available on the Company''s website at www.fusionmicrofinance.com.

35. AUDIT COMMITTEE

The Company has an Audit Committee constituted in accordance with the provisions of Section 177 of the Companies Act, 2013, RBI Guidelines and Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended. The composition of the Audit Committee and the details of meetings attended by the Committee members are provided in Corporate Governance Report attached as "ANNEXURE 1".

36. CODE OF CONDUCT FOR INSIDER TRADING

The Company has duly formulated and adopted the Code of Conduct for Prohibition of Insider Trading in accordance with SEBI (Prohibition of Insider Trading) Regulations, 2015. The objective of this Code is to regulate, monitor and report the trading in the Company''s shares by the designated persons of the Company. The Code of Conduct for Prohibition of Insider Trading is available on the website of the Company at www.fusionmicrofinance.com.

37. RBI OMBUDSMAN

The company has a dedicated team which deals with the concerns or complaints raised by the customers. Further, in accordance with the RBI Circular dated November 15, 2021 on "Appointment of Internal Ombudsman by Non-Banking Financial Companies (NBFCs)" the Company has an Internal Ombudsman (IO) being the apex of the grievance redressal mechanism of the Company. The IO deals with the complaints of its customers which are partly or wholly rejected by the Company.

In addition, the Company has a system of periodic reporting of the information to RBI as per the prescribed guidelines.

38. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The Company has no subsidiary/joint venture/ associate company and hence consolidation and the provisions relating to the same under the Companies Act, 2013 and rules made thereunder are not applicable to the Company.

39. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE

During the FY'' 23, there are no such orders passed by the regulators/courts/ tribunals impacting the going concern status and the Company''s operations in future.

40. INTERNAL FINANCIAL CONTROLS

As per Section 134(5)(e) of the Companies Act, 2013, the Directors have an overall responsibility for ensuring that the Company has

implemented a robust system and framework of Internal Financial Controls. This provides the Directors with reasonable assurance regarding the adequacy and operating effectiveness of controls with regards to reporting, operational and compliance risks. The Company has devised appropriate systems and framework including proper delegation of authority, policies and procedures, effective IT systems aligned to business requirements, risk based internal audits, risk management framework and whistle blower mechanism. The Company had already developed and implemented a framework for ensuring internal controls over financial reporting. During the year, controls were tested and no reportable material weakness in design and effectiveness was observed.

The Internal Audit team monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action(s) in their respective area(s) and thereby strengthen the controls. Significant audit observations and corrective action(s) thereon are presented to the Audit Committee.

The Audit Committee reviews the reports submitted by the Internal Auditors in each of its meeting. Also, the Audit Committee at frequent intervals has independent sessions with the management to discuss the adequacy and effectiveness of internal financial controls.

41. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

As per requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013, your Company has a policy and framework for employees to report sexual harassment cases at workplace and our process ensures complete anonymity and confidentiality of information. Adequate workshops and awareness programmes against sexual harassment are conducted across the organization.

42. CORPORATE GOVERNANCE

contribute to superior long-term performance of organisations. Corporate Governance requires everyone to raise their level of competency and capability to meet the expectations in managing the enterprise and its resources optimally with prudent ethical standards.

The Company''s corporate governance framework ensures that it is aligned to good corporate governance philosophy and that timely disclosures are made and accurate information regarding the financials and performance is shared, as well as the leadership and governance of the Company. The Company has an adequate system of control in place to ensure that the executive decisions taken should result in optimum growth and development which benefits all the stakeholders.

A detailed report on the Company''s commitment at adopting good Corporate Governance Practices is enclosed as "ANNEXURE 1".

43. MANAGERIAL REMUNERATION

In terms of the provisions of Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, including any statutory modification(s) thereof for the time being in force, the details of remuneration etc. of Directors, Key Managerial Personnel and employees covered under the said Rules is attached as "ANNEXURE 6" which forms part of this report.

44. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Act the Directors of the Company hereby state and confirm that:

a. In the preparation of the annual financial statements for the year ended March 31, 2023, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

b. The directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2023 and of the profits of the Company for year ended on that date;

c. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d. The Directors had prepared the annual accounts on a going concern basis;

e. The directors had laid down internal financial controls to be followed by the company, and that such internal financial controls are adequate and were operating effectively.

f. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

45. RBI GUIDELINES

The Company is registered with the Reserve Bank of India as a NBFC within the provisions of the NBFC (Reserve Bank of India) Directions, 1998. The Company continues to comply with all the requirements prescribed by the Reserve Bank of India as applicable to it, from time to time.

46. DISCLOSURE IN ACCORDANCE WITH REGULATION 30A OF SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015

47. Additional Disclosure in term of RBI Circular RBI/2022-23/26 DOR.ACC.REC.No.20/21.04.018/2022-23 dated April 19, 2022

A) Exposure

1) Exposure to real estate sector

The Company does not have any exposure to real estate sector as on March 31,2023 (March 31,2022 : Nil)

2) Exposure to capital market

The Company does not have any exposure to capital market as on March 31,2023 (March 31,2022 : Nil)

D) Breach of Covenant

There was no breach of covenant of loans availed or debt securities issued by the company as on March 31,2023. (March 31,2022 : Nil)

E) Divergence in Asset Classification and Provisioning

There was no instances of divergence in Assets Classification and Provisioning norms identified by RBI for the year ended March 31, 2023. (March 31,2022 : Nil)

48. LISTING

Some series of NCD''s issued by the Company are listed on BSE Limited ("BSE"). Further, the equity shares of the Company are also listed on BSE & NSE. The listing fees to BSE & NSE for the financial year 2023-24 has been duly paid.

49. MAINTENANCE OF COST RECORDS

50. SECRETARIAL STANDARDS

51. INSOLVENCY PROCEEDINGS

There was no application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016.

52. The Company has not entered into one time settlement with any of the banks or financial institutions.

53. CAUTIONARY STATEMENT

Statements in the Board''s Report and the Management Discussion & Analysis describing the Company''s objectives, expectations or forecasts may be forward looking within the meaning of applicable Laws and Regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company''s operations include global and domestic demand and supply conditions, changes in Government Regulations, Tax Laws, Economic Developments within the country and other factors such as litigation and industrial relations.

54. ACKNOWLEDGEMENTS

Your Directors take this opportunity to express their deep and sincere gratitude for the support and co-operation from the Borrowers, Banks, Financial Institutions, Investors, and Employees of the Company, for their consistent support and encouragement to the Company. Your Directors also place on record their sincere appreciation of the commitment and hard work put in by the Management and the employees of the Company and thank them for yet another excellent year. Their dedication and competence have ensured that the Company continues to be a significant player in the Micro finance industry.

For and on behalf of the Board of Directors

Sd/- Sd/-

Devesh Sachdev Ratna Dharashree Vishwanathan

(MD & CEO) (Director)

DIN: 02547111 DIN: 07278291

Place: Gurugram Dated: August 02, 2023

Mar 31, 2022

The Board of Directors are pleased to present the 28^th Annual Report of your Company ("the Company" or "Fusion") along with the audited annual financial statements, for the financial year ended March 31, 2022 ("financial statements").

1. FINANCIAL RESULTS

The financial results of the Company for the financial year ended March 31, 2022 is summarized below:

2. OPERATIONAL PERFORMANCE

Operational performance of the Company for the financial year ended March 31,2022 is summarized below:

Particulars	FY March 31, 2022	FY March 31, 2021	Increase over% FY 2021 - 22
Number of Branches	934	725	28.83%
Number of Members	27,23,449	2,121,873	28.35%
Number of employees	8,716	6,406	36.06%
Number of States	18	18	0.00%
Amount Disbursed (H In Crore)	6,180	3,710	66.57%
Gross Loan Portfolio (H In Crore)	6,786	4,638	46.31%

(All amounts are in Rupees millions)
Particulars	For the year ended March 31, 2022	For the year ended March 31, 2021
Revenue from operations
Interest Income	10643.19	8275.64
Fees and commission Income	13.86	7.19
Net gain on fair value changes	247.65	167.45
Net gain on derecognition of financial instruments under amortized cost category	607.95	107.84
Total Revenue from operations	11512.65	8558.12
Other Income	500.84	172.76
Total Income	12013.49	8730.88
Expenses
Finance Costs	4959.64	3751.04
Impairment on financial instruments	3686.93	2207.80
Employee benefits expenses	2330.66	1686.40
Depreciation and amortization	53.71	38.94
Other expenses	738.29	478.79
Total Expenses	11769.23	8162.97
Profit before tax	244.26	567.91
Tax Expense:
Current Tax	129.77	588.71
Deferred Tax	(103.06)	(460.24)
Profit for the year	217.55	439.44
Other Comprehensive Income
Items that will not be reclassified subsequently to profit or Loss
Re-measurement gains/(loss) on defined benefit plans	2.96	0.04
Income tax effect	(0.74)	(0.01)
	2.22	0.03
Total Comprehensive Income for the year	219.77	439.47

The Company attained business performance by reaching out to 2,7,23,449 active loan clients as on March 31,2022 which has grown from 2,121,873 as on March 31, 2021. The growth in active loan clients during the year was 28.35%.

The above was possible with excellent efforts of 8716 employees of the Company as on March 31, 2022 which was of 6,406 as on March 31, 2021, through 934 Branches, across 18 states and 368 districts in India. During the year under review, the Company opened 209 new branches.

The Company already has borrowing arrangement with large number of lenders and has started association with a few more institutions to diversify its sources of borrowing.

3. CONVERSION OF THE COMPANY INTO PUBLIC COMPANY

During the FY''22, the status of the Company changed to Public Limited w.e.f. July 20, 2021. Ministry of Corporate Affairs has issued fresh Certificate of Incorporation and Reserve Bank of India has issued Certificate of Registration to giving effect of the same.

4. CASH FLOW STATEMENT

The Cash Flow Statement for the year ended on March 31, 2022 prepared under the provisions of the Companies Act, 2013 ("the Act") is attached as a part of the Annual Financial Statements of the Company.

5. ANNUAL RETURN

In accordance with Section 92 and 134(3)(a) of the Act, a copy of the annual return in the prescribed format, for the financial year ended on March 31, 2022 is uploaded on the website of the Company and the same may be accessed at www.fusionmicrofinance.com.

6. DEPOSITS

The Company has not accepted/received any public deposits during the year under the report falling within the ambit of Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998 or Section 73 of the Act read with Companies (Acceptance of Deposits) Rules, 2014.

7. TRANSFER TO RESERVES

During the FY'' 22, your Company has transferred H43.51 million to the statutory reserve pursuant to Section 45-IC of the Reserve Bank of India Act, 1934.

8. DIVIDEND

Your Board of Directors of the Company believes that it is prudent to plough back the profits for future growth of the Company. Hence do not recommend any dividend for the financial year ended March 31, 2022.

9. TRANSFER OF UNCLAIMED DIVIDEND AND SHARES TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of the Investors Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 notified by the Ministry of Corporate Affairs ("MCA") as amended from time to time, there was no dividend, shares or other amounts were liable to be transferred to the Investors Education and Protection Fund established by the Central Government.

10. NUMBER OF MEETINGS OF THE BOARD

During the FY'' 22, the Board met 10 (Ten) times and details related to the board meetings of the Company are mentioned in the Corporate Governance Report annexed as "ANNEXURE -1''; which forms part of this report.

11. CHANGE IN THE NATURE OF BUSINESS, IF ANY

During the FY'' 22, there was no change in the nature of business.

12. DIRECTORS AND KEY MANAGERIAL PERSONNEL DIRECTORS

During the FY'' 22, Mr. Shobinder Duggal, Independent Director of the Company resigned from the Board w.e.f. September 22, 2021.

Further, on the recommendation of Nomination and Remuneration Committee, Mr. Pankaj Vaish (DIN: 00367424) was appointed as an Additional Director of the Company in the category of independent director of the Company w.e.f. September 22, 2021 by the Board. He was subsequently appointed as Non-executive Director in the category of Independent Director of the Company in the Extra Ordinary General Meeting of the Company held on December 18, 2021 for a period of 3 years.

In accordance with the provisions of Section 152 of the Act and in terms of the Articles of Association of the Company, Mr. Devesh Sachdev, Managing Director & CEO of the

Company is retiring by rotation at the ensuing Annual General Meeting ("AGM") and is eligible for re-appointment.

Your Board recommends the re-appointment of Mr. Devesh Sachdev, Managing Director & CEO of the Company. The particulars in respect of Mr. Devesh Sachdev, Managing Director & CEO as required under SS-2, are mentioned in the Notice of AGM.

KEY MANAGERIAL PERSONNEL

As per the provisions of the Act, Mr. Devesh Sachdev, Managing Director & Chief Executive Officer, Mr. Gaurav Maheshwari, Chief Financial Officer and Mr. Deepak Madaan, Company Secretary & Compliance Officer are the Key Managerial Personnel of the Company.

13. DECLARATION OF INDEPENDENCE

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Act and provisions of Securities and Exchange Board of India (Listing Obligations and disclosure requirements) Regulations, 2015 ("Listing Regulations")and based on the declarations received from the Independent directors, the Board of directors are of the opinion that the directors have the requisite integrity, expertise and experience including the proficiency to be the independent directors of the Company.

14. CREDIT RATING

CARE Advisory Research and Training Ltd. has assigned Grading of "MFI 1"; CARE Rating Limited has assigned Rating of ''A-'' Outlook Stable on the Long- Term Bank Facilities (amounting to D1,500 Cr) and on Non-Convertible Debentures. The Company has also been assigned rating as ''A-'' Outlook Stable by CRISIL on the Long- Term Bank Facilities (amounting to H2000 Cr) and rating of ''A-'' Outlook Stable by ICRA on Non-Convertible Debentures.

15. CAPITAL ADEQUACY

The Capital Adequacy Ratio of the company was 21.94% as on March 31, 2022 as against the minimum capital adequacy requirements of 15% by Reserve Bank of India ("RBI").

16. RESOURCE MOBILIZATIONa) Term Loan / Sub debt /Refinance

During FY'' 22, the Company has diversified its sources of funds and raised a sum of H4070.25 Crore (Inclusive of Term Loan of H3745.25 Crore, Refinancing of H270 Crore and Sub Debt of H55 Crore).

b) Secured / Unsecured Non-convertible debentures

During FY'' 22, the Company raised an amount of H45 Crore by way of issuance of unsecured Non-Convertible Debentures..

c) Asset Securitization

During FY'' 22, your Company raised resources to the extent of H693.45 Crore through Direct Assignment.

d) External Commercial Borrowings (ECB)

The Company has raised funds by way of External Commercial Borrowings to the extent to EUR 10,000,000 (Euros Ten Million) in the FY'' 22.

17. SHARE CAPITAL

During FY''22, the Authorized Share Capital of the Company has been reclassified and increased from H950,000,000 (Rupees Ninety-Five Crores only) divided into 90,000,000 (Nine crore) equity shares of H10/- (Rupees Ten only) each

and 5,000,000 (Fifty lakh) preference shares of H10/- (Rupees Ten only) each to H1,050,000,000 (Rupees One Hundred and Five Crores only) divided into 105,000,000 (Ten Crore Fifty lakh) equity shares of H10/- (Rupees Ten only) each.

Further, the paid-up equity share capital of the Company has increased from H807,779,832 (Rupees Eight Crores Seventy Seven Lakh Seventy Nine Thousand Eight Hundred and Thirty Two only) to H843,263,880/- (Rupees Eighty Four Crores Thirty Two Lakh Sixty Three Thousand Eight Hundred and Eighty only) on account of conversion of partly paid-up equity shares to fully paid up.

18. NON CONVERTIBLE DEBENTURES

During FY'' 22, the Company raised an amount of H45 Crore by way of issuance of unsecured Non-Convertible Debenture and H55 Crore inform of Sub Debt. The total fully redeemed amount of NCDs H197 Crores. The outstanding NCDs including subordinated liabilities in form of NCDs as on March 31, 2022 was H916.34 Crores.

19. EMPLOYEE STOCK OPTION SCHEME

To reward the employees for their association and performance as well as to motivate them to contribute to the growth and profitability of the Company, the Company has a stock option plan namely ESOP Scheme 2014 and ESOP Scheme 2016.

As on March 31, 2022, the following stock option grants were in operation:

PARTICULARS	Details
Number of options granted during the year	5,18,500
Number of options vested during the year	4,85,183
Number of options exercised during the year	1,74,641
Total number of shares arising out as a result of exercise of option during the year	1,74,641
Options lapsed during the year	56,900
Exercise price	27.08/37.99/64.08/110/154.04/290.48
Variation in terms of options	-
Money realized by exercise of options	1,55,92,404.47
Total number of options in force	23,49,107
The options shall vest on graded basis as follows.
On completion of 1 year	25%
On completion of 2 years	25%
On completion of 3 years	25%
On completion of 4 years	25%

20. COMMITTEES DETAILS

As on March 31, 2022, the Company has 10 committees which govern and oversee different areas of the Company''s operations ensuring regular guidance and monitoring.

For further details please refer to Corporate Governance Report, which form the part of Directors'' Report.

21. RELATED PARTY TRANSACTIONS

During the FY'' 22, there were no material related party transactions entered by the Company that were required to disclosed in form AOC-2. The details of the related party transactions is provided in the notes to the Annual Financial Statements.

The policy on Related Party Transactions, as approved by the Board, is displayed on the website of the Company i.e.www.fusionmicrofinance.com.

22. AUDITOR''S AND AUDITORS'' REPORT STATUTORY AUDITOR

Pursuant to the provisions of Section 139 of the Act read with rules made thereunder, M/s. S. R. Batliboi & Associates LLP, Chartered Accountants were appointed as Statutory Auditors of the Company to hold the office for a period of five (5) years from the conclusion of the Twenty-Fifth Annual General Meeting ("AGM") till the conclusion of the Thirtieth AGM of the Company.

However, the Reserve Bank ofl ndia vide its recent Notification DoS.CO.ARG/SEC.01 /08.91.001 /2021 -22 dated April 27, 2021, require every NBFC to appoint the Statutory Auditors for a continuous period of three (3) years. Accordingly, the tenure of M/s. S. R. Batliboi & Associates LLP, Chartered Accountants will come to an end on the conclusion of the Twenty-Eighth AGM ("the ensuing AGM") of the Company.

Therefore, the Board of Directors, on the recommendations of the Audit Committee and subject to the approval of the shareholders of the Company, approved the appointment of Deloitte Haskins & Sells, Firm Registration no. 015125N, as the statutory auditors of the Company for a period of three (3) consecutive years from the conclusion of the ensuing AGM till the conclusion of the Thirty - First AGM of the Company to be held in FY 2025-26.

The Auditors'' Reports for the financial year ended on March 31, 2022 submitted by M/s. S. R. Batliboi & Associates LLP, Chartered Accountants do not contain any qualification or reservation or adverse remark or disclaimer.

The Notes on Financial Statement referred to in the Auditors'' Report are self-explanatory and do not call for any further comments.

There are no instances of any fraud reported by M/s. S. R. Batliboi & Associates LLP, Chartered Accountants, to the Audit Committee or the Board pursuant to the provisions of Section 143(12) of the Act.

SECRETARIAL AUDITOR

As required under Section 204 of the Act and the Rules made thereunder, M/s. Navneet K Arora & Co., LLP was appointed as the Secretarial Auditor of the Company to conduct Secretarial Audit of the Company for the Financial Year ended March 31, 2022.

The Secretarial Audit Report for Financial Year ended on March 31, 2022 does not contain any qualification, reservation, adverse remark or disclaimer and forming the part of Board Report as "Annexure - 2"

23. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

During FY''22, the Company has not given any loan or provide guarantee or security or made any investment falling within the purview of Section 186 of the Act.

24. NOMINATION AND REMUNERATION POLICY

Pursuant to the provisions of Section 178 of the Act read with the rules made thereunder, the Company has framed a Nomination and Remuneration Policy ("NRC Policy") which is duly approved by the Board of Directors. The NRC Policy is directed towards a structure that provides adequate rewards and compensation to the employees at all level.

The NRC Policy of the Company is available on our website at www.fusionmicrofinance.com.

25. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF THE REPORT

There was no material changes and commitments affecting financial position between the end of the financial year and date of the report.

26. CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Since the Company does not own any manufacturing facility, there is no information to be provided with respect to conservation of energy and technology absorption.There have not been any foreign exchange earnings other than inflow of External Commercial Borrowing (ECB) of H890.41 Million (Euro 10 Million) while outgo during the year under review is D72.23 million towards interest payments on ECB and Initial Public Offering related expenses.

27. RISK MANAGEMENT

Our Enterprise Risk Management (ERM) framework encompasses practices relating to the identification, analysis, evaluation, treatment, mitigation, and monitoring of the Credit, Market, liquidity, Operational, compliance risks to achieving our key business objectives. ERM at Fusion seeks to minimize the adverse impact of these risks, thus enabling the Company to leverage market opportunities effectively and enhance its long-term competitive advantage.

The Board of Directors of the Company has formed a Board Risk Management Committee ("BRMC") to frame, implement, and monitor the enterprise risk management plan for the Company.

28. CORPORATE SOCIAL RESPONSIBILITY

The Company is at the forefront of Corporate Social Responsibility ("CSR") and sustainability initiatives and practices. It believes in making lasting impact towards creating a just, equitable, humane and sustainable society. The Company has been involved with social initiatives in various activities in the field of education, primary healthcare and communities, environment, etc.

The Annual Report on the CSR activities for the financial year 2021-22 is attached herewith as "ANNEXURE 4" to this Report.

Further, the Contents of the CSR policy are also available on the Company''s website at www.fusionmicrofinance.com

29. PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

A formal evaluation of the performance of the Board, the Chairman and the individual Directors as well as various Committees of the Board was carried out for the FY''22. The evaluation was done using individual questionnaires. As part of the evaluation process, the performance evaluation

of Board as a whole was done by the Directors of the Board. The performance evaluation of the Promoter Director, Nominee Directors and Non-Independent directors was done by every other Director. The performance evaluation of the Independent Directors was done by the Board excluding the Director being evaluated. The Directors expressed satisfaction with the evaluation process.

30. VIGIL MECHANISM/WHISTLE BLOWER POLICY

31. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The Company does not have any subsidiary, associate or joint venture Companies.

32. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE

During FY'' 22, no significant and material orders were passed by any regulator or court or tribunal impacting the going concern status and Company''s operations in future.

33. INTERNAL FINANCIAL CONTROLS

Pursuant to the Section 134(5) (e) of the Act, the Company has adequate internal controls and processes in place with respect to its operations, which provide reasonable assurance regarding the reliability of the preparation of financial statements and financial reporting as also functioning of other operations. The Company is following an effective internal control system commensurate with its size and operations. These controls and processes are driven through various policies and procedures. In addition to this the work process is designed in such a way that process of internal check is ensured at all levels.

It also ensures the adoption of all policies & procedures for orderly and efficient conduct of its business, including adherence to the Company''s Policy, the safeguarding of its assets, prevention and detection of fraud & error, the accuracy & completeness of the accounting records and the timely preparation of reliable financial information.

34. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

35. CORPORATE GOVERNANCE

Your Company governance framework is driven by the objective of enhancing long term stakeholder value without compromising on ethical standards and corporate social responsibilities. Efficient corporate governance requires a clear understanding of the respective roles of the Board of Directors and of senior management and their relationships with others in the corporate structure. Sincerity, fairness, good citizenship and commitment to compliance are key characteristics that drive relationships of the Board and senior management with other stakeholders.

Your Company believes in adopting best & transparent practices of corporate governance. Corporate governance principles are enshrined in the Spirit of Fusion, which form the core values of the Company. These guiding principles are also articulated through the Company''s code of business conduct, Corporate Governance guidelines & charter of various sub-committees.

A detailed report on the Company''s commitment at adopting good Corporate Governance Practices is enclosed as "ANNEXURE 1".

36. MANAGERIAL REMUNERATION

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules and the disclosures relating to remuneration and other details required under the provisions of Section 197(12) of the

Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as "ANNEXURE 5" which forms part of this report.

37. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Act, the Directors of the Company hereby state and confirm that:

a. I n the preparation of the annual financial statements for the year ended March 31, 2022, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

b. The directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2022 and of the profits of the Company for year ended on that date;

c. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d. The Directors had prepared the annual accounts on a going concern basis;

e. The directors had laid down internal financial controls to be followed by the company, and that such internal financial controls are adequate and were operating effectively.

f. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

38. RBI GUIDELINES

The Company is registered with the Reserve Bank of India as a NBFC within the provisions of the NBFC (Reserve Bank of India) Directions, 1998. The Company continues to comply with all the requirements prescribed by the Reserve Bank of India as applicable to it, from time to time.

39. LISTING

Some series of NCD''s issued by the Company are listed on BSE Limited. The listing fees to the BSE Limited for the financial year 2022-23 has been duly paid.

40. MAINTENANCE OF COST RECORDS

The Company is not required to maintain cost records in terms of the provisions of Section 148 (1) of the Act read with Companies (Cost Records and Audit) Rules, 2014.

41. SECRETARIAL STANDARDS

42. INSOLVENCY PROCEEDINGS

There was no application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016.

43. The Company has not entered into one time settlement with any of the banks or financial institutions.

44. CAUTIONARY STATEMENT

the Company''s operations include global and domestic demand and supply conditions, changes in Government Regulations, Tax Laws, Economic Developments within the country and other factors such as litigation and industrial relations.

45. ACKNOWLEDGEMENTS

Your Directors takes this opportunity to express its deep and sincere gratitude for the support and co-operation from the Borrowers, Banks, Financial Institutions, Investors, and Employees of the Company, for their consistent support and encouragement to the Company. Your Directors also places on record its sincere appreciation of the commitment and hard work put in by the Management and the employees of the Company and thanks them for yet another excellent year. Their dedication and competence have ensured that the Company continues to be a significant player in the Micro finance industry.

For and on behalf of the Board of Directors

Sd/- Sd/-

Devesh Sachdev Ratna Dharashree Vishwanathan

(MD & CEO) (Director)

DIN: 02547111 DIN: 07278291

Place: Gurugram Dated: May 6, 2022

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