Notes to Accounts of IIFL Finance Ltd.

Mar 31, 2025

by an independent registered valuer registered under Rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017. The fair values are based on market values, being the estimated amount for which a property could be exchanged in an arm''s length transaction. These properties are not depreciated as they have not been ready to use.

Note 12.2: In respect of residential flats located in Mumbai, the Maharashtra Real Estate Regulatory Authority (MAHARERA) has passed an order directing the developer to hand over the possession of the flats along with compensation for the delay. The developer has preferred an appeal against this Order and the matter is pending before the Maharashtra Real Estate Regulatory Appellate Tribunal (MAHAREAT).

Note 12.3: Investment property under construction represent rights acquired by the Company in properties which are under construction. These rights are in respect of constructed area in the properties located in prime areas in Mumbai and are part of the projects of recognized real estate developers and not by the Company. Accordingly, disclosures in terms of paragraph WB(vi) of general instructions for preparation of Balance Sheet prescribed in Division III of Schedule III to the Companies Act, 2013 are not made. The Company and the concerned parties are in the process of registering the documents by which the Company has acquired the title over the Investment properties under construction. The acquisitions of these rights in the properties were in the normal course of the business and none of the promoters, directors or their relatives are associated with these transactions in any manner.

a) The aforementioned is based on the responses received by the Company to its inquiries with suppliers with regard to applicability under the MSMED Act.

b) Dues to micro and small enterprises which have not been discharged beyond the specified date under the MSMED Act, as such enterprises have not provided proof of payment of Goods and Services tax to the Company or dues have been held back under the defect / retention clause of the agreement are not reported in the above table as such dues are not considered as due for payment. In addition, no provision for interest is made on such dues.

(a) The Non Convertible Debentures are secured by way of first pari-passu charge on immovable property, current assets, book debts, loans and advances including receivables other than those specifically charged.

(b) Non Convertible Debentures - Includes redeemable non-convertible debenture which carries call and put option of ''600 Crores (from December 04, 2025).

(c) During the year, the Company has borrowed '' 2,809.91 Crores (equivalent to US$ 325 million) under Global Medium Term Note Programme. These are secured by way of all rights, titles, interest, benefits, claims and demands, whatsoever of the Company in, to and in respect of, all present and future, receivables/assets, including Company''s accounts, operating cash flows, current assets, book debts, stock in trade, loans and advances and receivables, both present and future to the extent of complying with the Security Coverage Ratio, but excluding the Ineligible Assets.

(d) During the year, the Company has borrowed '' 870.15 Crores (equivalent to US$ 100 million) under Global Medium Term Note Programme. These are secured by way of all rights, titles, interest, benefits, claims and demands, whatsoever of the Company in, to and in respect of, all present and future, receivables/assets, including Company''s accounts, operating cash flows, current assets, book debts, stock in trade, loans and advances and receivables, both present and future to the extent of complying with the Security Coverage Ratio, but excluding the Ineligible Assets.

(a) These loans are secured by way of a first pari-passu charge over the current assets in the form of receivables, book debts, bills, outstanding monies receivables including future movable assets, other than those specifically/ exclusively charged.

(b) During the previous year, the Company borrowed '' 614.48 Crores (equivalent to US$ 75 Million) under External commercial borrowing. These are secured by way of a first ranking pari passu charge by way of hypothecation on all the borrower''s charged asset in favour of the security holder in accordance with the Deed of Hypothecation.

(c) During the previous year, the Company borrowed '' 410.25 Crores (equivalent to US$ 50 Million) under External commercial borrowing. These are secured by way of first ranking pari passu against all receivables/current assets of the borrower including book debts/ receivables with both present and future but excluding book debt/receivables pertaining to capital market exposure and securitised asset .

(d) During the previous year, the Company borrowed '' 410.11 Crores (equivalent to US$ 50 Million) under External commercial borrowing. These are secured by way of first ranking pari passu charge over all receivables/current assets of the borrower including book debts/ receivables both present and future and which are "standard assets" but excluding book debt/receivables pertaining to capital market exposure and securitised assets.

(e) During the previous year, the Company borrowed '' 416.68 Crores denominated in Japanese Yen (equivalent to US$ 50 Million) under External commercial borrowing. These are secured by way of first ranking pari passu charge on all present and future standard loan receivables (excluding the receivables given on exclusive charge, if any), book debts, loan and advances and current assets of the borrower.

(iii) Rights attached to equity shares

The Company has issued only one class of equity shares having a par value of '' 2.00/- per share. Each holder of the equity share is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. During the year ended March 31,2025, equity shareholders were paid dividend of '' Nil per share (previous year '' 4.00/- per share).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company after distribution of all preferential amounts. However, no such preferential amount exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

** The change in percentage is due to dilution of share capital due to allotment under ESOP scheme(s).

(vi) During the period of five years immediately preceding the balance sheet date, the Company has not issued any shares without payment being received in cash or by way of bonus shares or shares bought back.

(vii) Shares reserved for issue under options and contracts/ commitments for sale of shares/ disinvestments, including the terms and amount: Refer note 40 for details of shares reserved for issue under employee stock option plan of the Company.

(viii) Pursuant to the Board of Directors approval dated March 13, 2024, for issue of equity shares up to by way of rights issue (''Rights Issue") for an amount not exceeding '' 1,500.00 Crores, the Company had filed Letter of Offer on April 17, 2024. The issue opened for subscription on April 30, 2024, and closed on May 14, 2024. The SIC Committee on May 17, 2024, approved the allotment of 4,23,94,270 fully paid-up equity shares at a price of '' 300.00/- per equity share (including premium of '' 298.00/- per equity share) aggregating to '' 1,271.83 Crores to the eligible shareholders and the same was allotted on May 17, 2024.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same method as applied in calculating the projected benefit obligation as recognized in the balance sheet.

There is no change in the methods and assumptions used in preparing the sensitivity analysis from previous years.

Actuarial gains/losses are recognized in the period of occurrence under Other Comprehensive Income (OCI). All above reported figures of OCI are gross of taxation.

Salary escalation & attrition rate are in line with the industry practice considering promotion and demand and supply of the employees.

Maturity analysis of benefit payments is undiscounted cashflows considering future salary, attrition & death in respective year for members as mentioned above.

Average Expected Future Service represents Estimated Term of Post - Employment Benefit Obligation.

Expected Rate of Return taken same as discount rate as described in Indian Accounting Standard 19.

Expected Contribution in the next year is considered as the sum of net liability/assets at the end of the current year and current service cost for next year, subject to maximum allowable contribution to the Plan Assets over the next year as per the Income Tax Rules.

Value of asset is considered as fair value of plan asset for the period of reporting.

Qualitative disclosures Characteristics of defined benefit plan

During the year, there were no plan amendments, curtailments and settlements.

The entity has a defined benefit gratuity plan in India (funded). The entityâs defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund. The fund is managed by a trust which is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy.

A separate trust fund is created to manage the Gratuity plan and the contributions towards the trust fund is done as guided by rule 103 of Income Tax Rules, 1962.

Risks associated with defined benefit plan

Gratuity is a defined benefit plan and company is exposed to the following risks:

Interest rate risk: A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.

Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the planâs liability.

Investment risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.

Asset liability matching risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.

Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.

Concentration Risk: Plan is having a concentration risk as all the assets are invested with the insurance entity and a default will wipe out all the assets. Although probability of this is very less as insurance companies have to follow regulatory guidelines.

** During the year the Company has paid '' 1.33 Crores (previous year '' 0.27 Crores) to the auditors towards certification required for Public Issue of Non Convertible Debentures & Secured Global Medium Term Notes Programme and the same has been amortized over the tenure of the borrowings.

NOTE 35. EXCEPTIONAL ITEMS

The Company had certain AIF investments that were due to mature in June 2024. In March 2024, the Company requested the AIF to do in-specie distribution of assets (i.e.: debentures of underlying SPV companies) in lieu of its investment in the AIF. Subsequently, these debentures were assigned to an ARC, and the book value of the resulting Security Receipts (SRs), based on the same underlying assets as of September 30, 2024, was '' 586.50 Crores. The RBI Circular dated December 19, 2023, on "Investments in Alternative Investment Funds (AIFs)" required a 100% provision of AIF investments if they were not liquidated within 30 days of the circular being applicable. To comply with the spirit of this circular, the management has decided to make a provision equivalent to 100% of the book value of these SRs, accordingly the same has been disclosed under exceptional items for year.

Financial Statements

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NOTES FORMING PART OF THE STANDALONE FINANCIAL STATEMENTS

AS AT AND FOR THE YEAR ENDED MARCH 31,2025

('' in Crores)

Amounts recognized in other	FY 2024-25			FY 2023-24
Amounts recognized in other	Amount	Tax expense	Net of tax	Amount	Tax expense	Net of tax
comprehensive income	Amount	Tax expense	Net of tax	Amount	Tax expense	Net of tax
Remeasurements of defined benefit liability/ (asset)	(2.51)	0.63	(1.88)	(3.25)	0.82	(2.43)
Cash flow hedge reserve	(1.58)	0.40	(1.18)	(7.36)	1.85	(5.51)
	(4.09)	1.03	(3.06)	(10.61)	2.67	(7.94)

('' in Crores)

Reconciliation of income tax expense of the year to accounting year	FY 2024-25	FY 2023-24
Profit before tax	(550.77)	729.98
Tax using the Company''s domestic tax rate (25.17%)	(138.62)	183.72
Tax effect of:
Non-deductible expenses	4.01	2.86
Tax-exempt income- Others (includes deduction under section 80JJAA)	(5.57)	(5.81)
Tax exempt income - dividend	(0.55)	(33.23)
Income taxed at different rates	(3.44)	(0.30)
Adjustments for current tax for prior periods	-	(2.26)
De-recognition of previously recognized deductible temporary differences	2.97	0.22
Total income tax expense	(141.20)	145.20
Effective tax rate	25.64%	19.89%

NOTE 37. EARNINGS PER SHARE

Basic and diluted Earnings per share ("EPS") computed in accordance with Ind AS 33 âEarnings per share"

Particulars		FY 2024-25	FY 2023-24
Face value of equity shares (in '') fully paid up		2.00	2.00
Basic
Profit after tax as per statement of Profit and Loss ('' in Crores) for calculating basic EPS		(409.57)	584.78
Profit after tax attributable to equity share holders ('' in Crores)	A	(409.57)	584.78
Weighted average number of equity shares outstanding	B	41,77,86,475	38,10,07,838
Basic EPS (in '')	A/B	(9.80)	15.35
Diluted
Profit after tax attributable to equity share holders ('' in Crores) for calculating diluted EPS	C	(409.57)	584.78
Weighted average number of equity shares for computation of basic EPS		41,77,86,475	38,10,07,838
Add: Potential equity shares on account conversion of Employees Stock Options		1,59,45,282	48,24,533
Weighted average number of equity shares for computation of diluted EPS	D	43,37,31,756	38,58,32,371
Diluted EPS (in '')*	C/D	(9.80)	15.16

* Due to anti-dilutive effect, basic and diluted EPS are same for the year ended March 31,2025.

347

IIFL FINANCE LIMITED

NOTE 38. RISK MANAGEMENT

The Companyâs activities expose it to market risk, liquidity risk and credit risk.

Additionally, it is also ensured that appropriate focus is on managing risk proactively by ensuring business operations are in accordance with laid-down risk. A strong risk management team and an effective credit operations structure ensures that risks are properly identified and timely addressed, to ensure minimal impact on the Companyâs growth and performance.

Risk Management Structure

The Company has established multi-level risk governance for monitoring and control of product and entity level risks. The Board of Directors are responsible for the overall risk management approach and for approving the risk management strategies and principles. The Board has constituted the Risk Management Committee (""RMC"") which is responsible for monitoring the overall risk process within the Company. The RMC is empowered to develop an independent risk strategy comprising of principles, frameworks, policies and limits and ensuring its effective implementation. Independent function of Risk management is in place headed by the Chief Risk Officer (""CRO"") who reports to the Managing Director and independently to RMC of the Board. The Risk department primarily operationalises risk management framework approved by RMC.

The Company has a well defined risk framework constituting various lines of defence - the first line of defence, consisting of Business Functions who own and manage risk. They ensures adequate managerial and supervisory controls to ensure compliance and highlight inadequate processes and unexpected events. The Company has well-defined internal control measures in every process.

Independent risk and policy team, Compliance and other control functions constitutes second line of defence which is responsible for identification and assessment of entity-wide risks. Post its identification, it aims to mitigate risks either through portfolio trigger and caps (Credit risk) or through ongoing risk control and self assessment (Operational risk).

Internal Audit function is the third line of defence that independently reviews activities of the first two lines of defence and reports to the Audit Committee of the Board.

Risk Management Practices

The Company has developed the necessary competency to identify early stress signals and has also defined processes, including corrective and remedial actions as regards people and processes, for mitigation to ensure minimum damage. A stress testing mechanism is put in place to carry out the event based sensitivity analysis and identify the accounts under stress due to expected market movement. In event of susceptibility to external triggers, appropriate risk mitigation would be undertaken and thereby minimize the losses to the Company.

The Companyâs policy is to measure and monitor the overall risk-bearing capacity in relation to the aggregate risk exposure across all risk types and activities. Information pertaining to different type of risks are identified, analysed and tested on timely basis. The same is presented to RMC at periodic intervals.

In order to minimise any adverse effects on the financial performance of the Company, derivative financial instruments, such as cross currency interest rate swaps are entered to hedge certain foreign currency risk exposures and variable interest rate exposures.

specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and nonderivative financial instruments and investment of excess liquidity. The Companyâs Treasury is responsible for managing its assets and liabilities and the overall financial structure. It is also primarily responsible for the funding and liquidity risks of the Company.

NOTE: 38A.1. CREDIT RISK

Credit risk refers to risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company.

Credit risk arises primarily from financial assets such as loans, trade receivables, investments, derivative financial instruments, and other receivables.

Credit Quality Analysis

The following tables sets out information about the credit quality of financial assets measured at amortized cost. Unless specifically indicated, for financial assets, the amounts in the table represent gross carrying amounts.

Financial assets measured using simplified approach

The Company follows ''simplified approachâ for recognition of impairment loss allowance on cash and cash equivalents, bank balances, trade receivables, other receivables and other financial assets. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

38A.2. COLLATERAL HELD

The Company holds collateral and other credit enhancements against certain of its credit exposures. The loans are collateralised against equitable mortgage of property, pledge of shares, hypothecation of assets, company personal guarantees, physical gold, undertaking to create security.

38A.3. LOSS ALLOWANCE AND EXPOSURE AT DEFAULT

The following table shows movement of the loss allowance on loans and advances:

Contractual amount outstanding on financial assets that were written off (net of recovery) during the reporting period is ''604.34 Crores (previous year '' 279.32 Crores)

38A.5. MODIFIED FINANCIAL INSTRUMENTS

For financial assets, such as a loan to a customer, when the terms and conditions have been renegotiated to the extent that the modification does not result in cash flows that are substantially different (thereby not resulting into derecognition), the Company has disclosed carrying amount of modification gain/ loss based on discounted cash flow basis in the below table:

38A.6. CREDIT RISK GRADING OF LOANS

Credit risk is the risk that the Company will incur a loss because its customers or counterparties fail to discharge their contractual obligations. The Company manages and controls credit risk by setting limits on the amount of risk it is willing to accept for individual counterparties.

The Company ensures effective monitoring of credit facilities through a portfolio quality review framework. As per this process, an asset is reviewed at a frequency determined based on the risk it carries at the review date. For effective risk management, the Company monitors its portfolio, based on product, underlying security and credit risk characteristics.

The credit quality review process aims to allow the Company to assess the potential loss as a result of the risks to which it is exposed and take corrective actions. An independent risk and policy team reviews adherence to policies and processes on a periodic basis.

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions.

In order to avoid excessive concentrations of risk, the Companyâs policies and procedures include specific guidelines to focus on spreading its lending portfolio across various products/states/customer base with a cap on maximum limit of exposure for an individual/Group. Accordingly, the Company does not have concentration risk.

38B LIQUIDITY RISK

Liquidity risk refers to the risk that the Company may not be able to meet its short-term financial obligations. The Company manages liquidity risk by maintaining sufficient cash and marketable securities and by having access to funding through an adequate amount of credit lines. Further, the Company has well defined Asset Liability Management (ALM) framework with an appropriate organizational structure to regularly monitor and manage maturity profiles of financial assets and financial liabilities including debt financing plans, cash and cash equivalent instruments to ensure liquidity. The Company seeks to maintain flexibility in funding mix by way of sourcing the funds through money markets, debt markets and banks to meet its business and liquidity requirements.

(ii) The Company does not have any outstanding variable rate loans given and hence there is no impact on Profit & loss account due to any such change.

38C.2. EXPOSURE TO CURRENCY RISKS

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign currency rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the foreign currency borrowings taken from Financial Institutions, External Commercial Borrowings (ECB) and foreign bond markets.

(i) The Company has hedged its foreign currency exposure through Forwards/ Future and / or Cross Currency Interest Rate Swaps in such a manner that it has fixed determinate outflows in its functional currency and as such there would be no significant impact of movement in foreign currency rates on the Company''s profitability. However for the unhedged foreign currency exposure(s) there would be an impact on Company''s profitability.

* Holding all other variables constant,the sensitivity on profit and loss is due to the timing & cahflow differences between the hedged financial instrument and hedging financial instrument. On the date of maturity of the forward exchange contract & foreign currency borrowings, the sensitivity of profit and loss to changes in the exchange rates will be nil, hence for these contracts - impact is presented under other comprehensive income.

The following table analyses financial instruments measured at fair value at the reporting date, by the level in the fair value hierarchy into which the fair value measurement is categorized. The amounts are based on the values recognized in the statement of financial position.

38E.2. VALUATION METHODOLOGIES OF FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE

I Quoted equity/ debt instruments are measured based on the closing price in the recognised stock exchange and are classified as level 1.

I Quoted mutual funds are measured based on the published net asset value (NAV) by AMFI and are classified as level 1.

I Government Securities are valued based on the closing price in the recognized stock exchange and are classified as level 1.

I Unquoted debt securities are measured based on average of security level prices received from AMFI appointed/ designated agencies viz: CRISIL and ICRA and are classified as level 2.

I Fair value of forward foreign exchange contracts is determined by computing present value of payoff between contractual rate (strike) and forward exchange rates at the testing date and are classified as Level 2.

I Alternate investment funds and unquoted mutual funds are measured based on the latest NAV provided by the fund house and are classified as level 3.

I Equity instruments in non-listed entities are initially recognized at transaction price and re-measured (to the extent information is available) and valued by external independent valuer and classified as Level 3.

I Fair value of loans measured at FVOCI approximates its carrying value and are classified as level 3.

I Security Receipts (SR) are measured as Level 3 basis rating given by independent rating agencies to the asset reconstruction companies (ARC) on the NAV declared by the ARC of these security receipts or based on a fair value report of a registered valuer registered under Rule 2 of the Companies (Registered Valuers and Valuation) Rules, 2017.

Below are the methodologies and assumptions used to determine fair values for the above financial instruments which are not recorded and measured at fair value in the Companyâs financial statements. These fair values were calculated for disclosure purposes only.

Short-term financial assets and liabilities

For financial assets and financial liabilities that have a short-term nature, the carrying amounts, which are net of impairment, are a reasonable approximation of their fair value. Such instruments include: cash and bank balances, Trade receivables, other receivables, balances other than cash and cash equivalents, other financial assets and trade payables, other payables and other financial liabilities.

Loans, debts, borrowings and subordinated debts

The fair values of these instruments are estimated by determining the price of the instrument taking into consideration the origination date, maturity date, coupon rate, actual or approximation of frequency of interest payments and incorporating the actual or estimated/proxy yields of identitical or similar instruments through the discounting factor. For instruments, having contractual residual maturity or original maturity less than one year, the carrying value has been considered as fair value. Fair values of Loans and advances are presented net of provisions for impairment.

38G. TRANSFERRED FINANCIAL ASSETS THAT ARE RECOGNIZED IN THEIR ENTIRETY:

The Company uses securitization as a source of finance. Such transaction resulted in the transfer of contractual cash flows from portfolios of financial assets to holders of issued debt securities. Such deals resulted in continued recognition of the securitized assets since the Company retains substantial risks and rewards. The table below outlines the carrying amounts and fair values of all financial assets transferred that are not derecognized in their entirety and associated liabilities.

(a) The Company has filed appeal against the said demands raised by the Income Tax Department.

(b) Amount paid under protest with respect to income tax demand is '' 76.32 Crores (previous year '' 76.32 Crores).

(c) Amount paid under protest with respect to service tax demand '' 1.55 Crores (previous year '' 1.55 Crores) and with respect to GST demand '' 2.03 Crores (previous year '' 2.03 Crores).

(d) Amount paid under protest with respect to profession tax demand '' 0.05 Crores (previous year '' 0.05 Crores).

(e) Guarantees has been given on behalf of a subsidiary.

(f) The Company had received demand towards stamp duty on account of the Composite Scheme of Arrangement.The demand had been raised for a sum of '' 75.00 Crores. As per the scheme document any incidental expenses will be borne by the resulting companies i.e IIFL Finance Limited, IIFL Securities Limited and 360 ONE WAM Limited (formerly known as IIFL Wealth Management Limited) equally. The Company has appealed against the same and paid '' 8.34 Crores under protest towards its share of the liability and shown '' 16.66 Crores as Contingent.The matter is pending before the court.

(g) Apart from the above, Company is subject to legal proceedings and claims which have arisen in the ordinary course of the business. The Company''s management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have material and adverse effect on the Company''s financial position.

NOTE 40. EMPLOYEE STOCK OPTION

The Company has implemented Employee Stock Option Scheme 2008 (ESOP Schemes) and has outstanding options granted under the said Schemes. The options vest in graded manner and must be exercised within a specified period as per the terms of the grants made by the Nomination and Remuneration Committee and ESOP Schemes.

Stock price: The closing market price on NSE one day prior to the date of grant has been considered for the purpose of option valuation.

Volatility: The daily volatility of the stock prices on BSE, over a period prior to the date of grant, corresponding with the expected life of the Options has been considered to calculate the fair value.

Risk-free rate of return: The risk-free rate being considered for the calculation is the India Government Bond Generic Bid Yield with a maturity about equal to the expected life of the options.

Exercise price: Price of each specific grant has been considered.

Time to maturity: Time to Maturity / Expected Life of Options is the period for which the Company expects the Options to be live. The minimum life of a stock option is the minimum period before which the Options cannot be exercised and the maximum life is the period after which the Options cannot be exercised.

Expected dividend yield: Expected dividend yield has been calculated as an average of dividend yields for the three financial years preceding the date of the grant. The dividend yield for the year is derived by dividing the dividend per share by the average price per share of the respective period.

The Company has granted Employee Stock Options under IIFL Finance Employee Stock Option Plan 2020 - Merger Scheme pursuant to aforesaid Composite Scheme of Arrangement.

Fair value methodology:

The fair value of the shares are measured using Black scholes formulae. Measurement inputs include share price on measurement date, exercise date of the instrument, exercise price, expected life, risk free interest rate, dividend yield, expected volatility .

Stock price: The fair value of stock as on Appointed Date, i.e., April 1,2018 ("the Effective date" or the "Date of Modification") has been used to value the outstanding grants based on Merchant Banker''s Report.

Volatility: The daily volatility of the stock prices on BSE, based on post demerger traded prices, has been considered to calculate the fair value.

Risk-free rate of return: The risk-free rate being considered for the calculation is the India Government Bond Generic Bid Yield with a maturity about equal to the expected life of the options.

Exercise price: Price of each specific grant has been considered based on equity swap ratio of the Composite Scheme of Arrangement.

NOTE 41. ADDITIONAL DISLCOURES:

(ii) Registration of charges or satisfaction with registrar of companies (ROC)

There are no charges or satisfaction yet to be registered with ROC beyond the statutory period.

(iii) Compliance with number of layers of companies:

The clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017 is not applicable to the Company.

(iv) Utilization of borrowed funds and share premium

(A) The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall:

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(B) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:-

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(v) Undisclosed income

The Company has disclosed all its Income appropriately and in the ongoing Tax Assessments as well there has not been any such undisclosed income recognised by the relavant tax authorities.

(vi) Details of crypto currency or virtual currency

The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

(vii) Disclosure of benami property

The Company does not possess any benami property under the Benami Transactions (Prohibition) Act, 1985 and rules made thereunder.

(viii) Disclosure of borrowings

(a) The quarterly returns and statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts.

(b) The Company has utilized the borrowings from banks and financial institutions for the specific purpose for which it was taken as at March 31,2025.

(ix) Wilful defaulter

The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.

(x) Title deeds of immovable properties not held in name of the Company

Title deeds of immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) are held in the name of the Company.

(xi) Disclosure on loans and advances

The Company has not granted any loans or advances in the nature of loans either repayable on demand or without specifying any terms or period of repayment, to promoters, directors, KMPs and the related parties (as defined under the Companies Act, 2013), either severally or jointly with any other person.

NOTE 42: On March 04, 2024, the Reserve Bank of India (RBI), under Section 45L(1)(b) of the Reserve Bank of India Act, 1934, directed the Company to cease the sanctioning or disbursing of new gold loans and the assignment, securitization, or sale of existing gold loans with immediate effect.

As part of their process RBI initiated a Special Audit by an Independent Professional agency & concluded the same. The Company has taken necessary measures to address the identified concerns and prevent their recurrence. Subsequent to this RBI on September 19, 2024 after a careful examination of the submissions made and the remedial actions taken by the Company, conveyed its decision to lift the said restrictions with immediate effect. The Company has since then commenced its normal business operations.

NOTE 43: During January 2025, the Income Tax Department conducted a search under the provisions of the Income Tax Act, 1961, at the registered office and other premises of the Company. The Company has extended full cooperation to the authorities and continues to provide all information, documents, and clarifications as requested. As of the date of these financial statements, the Company has not received any communication from the Department regarding the outcome of the search. Accordingly, the potential financial impact, if any, arising from the search proceedings cannot be ascertained at this stage.

NOTE 44.3 During the year, the Company paid remuneration to the Managing Director in accordance with the terms duly approved by the Board of Directors and the Shareholders, subject to the limits prescribed under Schedule V to the Companies Act, 2013. The Company has inadequate profits for the FY 2024-2025. Consequently, the remuneration paid to the Managing Director exceeded the limits specified under Schedule V, by '' 9.88 crores. The Board of Directors has ratified the payment at its meeting and has proposed the matter for Shareholdersâ approval by way of a special resolution at the forthcoming Annual General Meeting. Pending such approvals, the remuneration paid has been accounted as expense for the year. In accordance with provision contained in section 197(9) of the Act, the excess remuneration is held by the Managing Director in trust for the Company pending such approval.

NOTE 45.1. REASON FOR SHORTFALL: The Company had contributed towards the ongoing projects to IIFL Foundation Limited and which remained unspent as on March 31,2025 and March 31,2024. The unspent amount has been transferred to a separate Bank account.

NOTE 45.2. In respect of other than ongoing projects, for the financial year 2023-24, the Company had transferred unspent amount of '' 0.01 Crore to the PM Cares Fund, a fund specified in Schedule VII to the Companies Act, on June 04, 2024 i.e. within a period of six months of the expiry of the financial year 2024.

NOTE 45.3. The Company contributes its CSR requirement to India Infoline Foundation Limited, a group Company.

(c) Disclosures on Risk Exposure in Derivatives:

(I) Qualitative disclosure:

The Companyâs activities expose it to the financial risks of changes in foreign exchange rates and interest rates. The Company uses derivative contracts such as foreign exchange forward, cross currency contracts, interest rate swaps, foreign currency futures, options and swaps to hedge its exposure to movements in foreign exchange and interest rates. The use of these derivative contracts reduces the risk or cost to the Company and the Company does not use those for trading or speculation purposes.

The Company uses hedging instruments that are governed by the policies of the Company which are approved by the Board of Directors, which provide written principles on the use of such financial derivatives consistent with the risk management strategy of the Company. The Finance Committee and Asset Liability Management Committee (ALCO) of the Board is entrusted with the management and monitoring of risks in derivatives.

To hedge its risks on the principal and/ or interest amount for foreign currency borrowings on its balance sheet, the Company has currently used cross currency derivatives, forwards and principal only swaps. Additionally, the Company has entered into Interest Rate Swaps (IRS) to hedge its interest rate risk on the floating rate foreign currency borrowings.

Derivative financial instruments are initially measured at fair value on the contract date and are subsequently re-measured to fair value at each reporting date. Derivatives are classified as assets when the fair value is positive (positive marked to market value) or as liabilities when the fair value is negative (negative marked to market value). Fair value of derivatives is ascertained from the mark to market and accrual values received from the counterparty banks. Changes in the fair value of future cash flows of these contracts that are designated and effective as hedges are recognized directly in "Cash Flow Hedge Reserve" under Other Equity and the ineffective portion is recognized immediately in the Statement of Profit and Loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, no longer qualifies for hedge accounting or the Company chooses to end the hedging relationship.

(a) The above excludes direct equity and debt investment in own subsidiary companies.

(viii) Pursuant to Regulation 30 and 51 of the Listing Regulations (as amended from time to time) read with Para A of Part A of Schedule III of the Listing Regulations,the Company paid a penalty of '' 0.01 Crores each to both the Stock Exchanges on which the Company is listed, i.e. BSE and NSE, regarding penal action for non-submission of the financial results for FY 2023-2024 within the stipulated timelines of sixty days from the year end prescribed under Listing Regulations.The Company due to operational issues had to delay the Board meeting and had well in advance intimated the same to stock exchanges for an extension. Apart from this no penalty has been imposed during the year by RBI or other regulators.

(x) No registration has been obtained from other financial regulators.

(xi) The disclosures as required by the Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation)

Directions, 2023 dated February 27, 2025 as may be amended from time to time and Disclosures in Financial statement-

Notes to Accounts as issued by RBI

a. No draw down from reserves have been done during the year.

b. The Company does not have any overseas assets.

c. The Company does not have any off balancesheet SPV sponsored .

d. The Company does not have any parent company hence details of Financing of parent company is not applicable.

e. No revenue recognition has been postponed.

f. Auditors have not expressed modified opinion on the audited financial statements.

g. The Company had certain AIF investments that were due to mature in June 2024. In March 2024, the Company requested the AIF to do in-specie distribution of assets (i.e.: debentures of underlying SPV companies) in lieu of its investment in the AIF. Subsequently, these debentures were assigned to an ARC, and the book value of the resulting Security Receipts (SRs), based on the same underlying assets as of September 30, 2024, was '' 586.50 Crores. The RBI Circular dated December 19, 2023, on "Investments in Alternative Investment Funds (AIFs)" required a 100% provision of AIF investments if they were not liquidated within 30 days of the circular being applicable. To comply with the spirit of this circular, the management has decided to make a provision equivalent to 100% of the book value of these SRs, accordingly the same has been disclosed under exceptional items for the year ended March 31,2025.

h. There has been no breach in terms of covenants in respect of loans availed by the Company or debt securities issued by the Company including incidence of default.

i. There is no divergence in asset classification and provisioning norms.

j. The Company has not financed any advances for which intangible securities such as charges over rights, Licences, authorities etc. has been taken.

k. The Company has not given loans to Entities associated with directors and their relatives and Senior Officers and their relatives, however Details of loan given to director and their relative is disclosed in Note no. 44 of the Financial statement.

l. There are no prior period items which are impacting companyâs current year profit and loss.

(xii) The Company during the year ended has not exceeded single borrower limit (SGL)/ group borrower limit (GBL) while

performing its lending operations.

49. UNHEDGED FOREIGN CURRENCY EXPOSURE:

The unhedged foreign currency exposure as on March 31,2025 is '' 2.66 Crores (previous year '' 1.87 Crores).

50. GOLD LOAN PORTFOLIO

As on March 31,2025 the gold loan portfolio comprises 43.60 % (previous year 34.92 %) of the total assets of the Company.

51. SEGMENT REPORTING

The Companyâs primary business segments are reflected based on the principal business carried out, i.e. financing. All other activities of the Company revolve around the main business. The risk and returns of the business of the Company is not associated with geographical segmentation, hence there is no secondary segment reporting based on geographical segment. As such, there are no separate reportable segments as per the IND AS 108 on ''Segment Reportingâ.

52.SHARED SERVICES

The Company operates from and uses the premises, infrastructure and other facilities and services as provided to it by its group companies, which are termed as ''Shared Servicesâ. Hitherto, such shared services consisting of administrative and other revenue expenses paid for by the Company were identified and recovered/recoverable from them based on reasonable m

Mar 31, 2024

6.1 Hedging activities and derivatives

The Group is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments are interest rate and currency risk.

6.1.1 Derivatives designated as hedging instruments

The foreign currency and interest rate risk on borrowings have been actively hedged through a combination of forward contracts and cross currency interest rate swaps.

The Group is exposed to interest rate risk arising from its foreign currency borrowings. Interest on the borrowing is payable at a floating rate linked to the Benchmark Plus Margin. The Group economically hedged the interest rate risk arising from the debt with a ''receive floating pay fixedâ cross currency interest rate swap and also with Derivative Forward Contract.

The Group uses Cross Currency Interest Rate Swaps (IRS) Contracts (Floating to Fixed) and Forward Exchange Contracts to hedge its risks associated with interest rate and currency fluctuations relating interest rate and currency risk arising from foreign currency loans / external commercial borrowings. The Group designates such contracts in a cash flow hedging relationship by applying the hedge accounting principles as per IND AS standards. These contracts are stated at fair value of the Spot element of the forward exchange contracts at each reporting date. Changes in the fair value of these contracts that are designated and effective as hedges of future cash flows are recognized directly in "Cash Flow Hedge Reserve" under Other Equity and the ineffective portion is recognized immediately in the Statement of Profit and Loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting.

There is an economic relationship between the hedged item and the hedging instrument as the terms of the Forward contracts/ Cross Currency Interest Rate Swaps match that of the foreign currency borrowings (notional amount, interest payment dates, principal repayment date, etc.). The Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the Forward contracts/Cross currency interest rate swaps are identical to the hedged risk components.

1. No trade or other receivables are due from directors or other officer of the Group either severally or jointly, with any other person nor from any firms including limited liability partnerships, private companies in which any director is a partner or a director or a member.

2. The Group had adopted simplified approach for impairment allowance on trade receivables. Expected credit loss ("ECL") has been recognized on credit impaired receivables.

3. Trade receivables are non-interest bearing.

8.1 Secured loans are secured by way of equitable mortgage of property, pledge of shares, hypothecation of assets, physical gold, undertaking to create security.Loans secured by Government Guarantee are credit facilities provided under the Emergency Credit Line Guarantee Scheme backed by an unconditional and irrevocable guarantee provided by Government of India.

8.2 Secured loans include loans aggregating to '' 71.01 Crore (P.Y. '' 218.77 Crore) in respect of which the creation of security is under process.

8.3 The Group has not classified any financial asset from its gold loan portfolio under FVTOCI category as of March 31,2024 (refer note no 48 and 49).

NOTE 12.1: The management of the parent Company has acquired possession of these properties in satisfaction of the debts and intends to dispose them in due course, subject to conducive market conditions. These properties have been valued taking into consideration various factors such as location, facilities & amenities, quality of construction, percentage of completion of construction (as for some properties the construction is currently on hold), residual life of building, business potential, supply & demand, local nearby enquiry, market feedback of investigation and ready reckoner published by government. These valuations has been performed by an independent registered valuer registered under rule 2 of Companies (Registered Valuers and Valuation) Rules,2017. The fair values are based on market values, being the estimated amount for which a property could be exchanged in an armâs length transaction. These properties are not depreciated as they have not been ready to use.

(a) These Non Convertible Debentures are secured by way of first pari-passu charge on immovable property, current assets, book debts, investment property, loans and advances including receivables other than those specifically charged.

(b) Non Convertible Debentures - Secured includes redeemable non convertible debenture which carries call option and contains a repayment clause by way of reduction in face value '' 15.00 Crore (from March 20, 2024) {As at March 31, 2023''15.00 Crore (from December 20, 2023) and '' 15.00 Crore (from March 20, 2024)} and NCDs carrying call and put option of '' 280.00 Crore (from April 02, 2025) {As at March 31,2023''280.00 Crore (from April 02, 2025)}.

(b) During the year FY 2023-24 the Group had borrowed '' 614.48 Crore (equivalent to US$ 75 Million) under External commercial borrowing. These are secured by way of a first ranking pari passu charge by way of hypothecation on all the borrower''s charged asset in favor of the security holder in accordance with the Deed of Hypothecation.

(c) During the year, Group borrowed '' 410.25 Crore (equivalent to US$ 50 Million) under External commercial borrowing. These are secured by way of first ranking pari passu against all receivables/current assets of the borrower including book debts/receivables with both present and future but excluding book debt/receivables pertaining to capital market exposure and securitized asset .

(d) During the year, Group borrowed '' 410.11 Crore (equivalent to US$ 50 Million) under External commercial borrowing. These are secured by way of first ranking pari passu charge over all receivables/current assets of the borrower including book debts/receivables both present and future and which are "standard assets" but excluding book debt/receivables pertaining to capital market exposure and securitized assets.

(e) During the year, the Group borrowed '' 416.68 Crore denominated in Japanese Yen (equivalent to US$ 50 Million) under External commercial borrowing. These are secured by way of first ranking pari passu charge on all present and future standard loan receivables (excluding the receivables given on exclusive charge, if any), book debts, loan and advances and current assets of the borrower.

(f) During the previous year, the Group borrowed 395.28 Crore (equivalent to US$ 50 Million) under External commercial borrowing. These are secured by way of first ranking pari passu charge by way of hypothecation on all borrower''s charged asset in favor of the security trustee and specity exclusive charge.

(g) During the previous year, the Group borrowed 822.00 Crore (equivalent to US$ 100 Million) under External commercial borrowing. These are secured by way of first ranking pari passu against all reivables/current assets of the borrower including book debts/receivables with both present and future but excluding book debt/recevables pertaining to capital market exposure and securitized asset.

(h) Out of the total borrowing from Banks, borrowings amounting to '' 20.00 Crore (As at March 31,2023''20.00 Crore) and Refinance Facility from NHB amounting to '' 390.32 Crore (As at March 31,2023''564.94 Crore) are also guaranteed by Holding Company i.e. IIFL Finance Limited.

(i) The term loans from banks, Financial Institution and NHB and cash credits from banks are secured by way of first pari passu charge by way of hypothecation on receivables of the Group, both present and future, book debts, loans & advances, except those receivables present and/or future specifically and exclusively charged in favor of certain existing charge holders. Further, borrowings from Financial Institution amounting to '' 413.10 Crore {before interest accrued but not due, exchange fluctuation and EIR adjustments} (As at March 31, 2023 Nil) are secured by way of first priority exclusive charge on the identified receivables of the Group.

(j) Borrowings from NHB includes '' 4,401.16 Crore (As at March 31,2023''2,520.49 Crore) secured by way of first exclusive charge on unencumbered individual housing loan portfolio in Favor of NHB.

(a) Non Convertible Debentures - Includes redeemable non convertible debenture which carries call option and contain a repayment clause by way of reduction in face value '' 50.00 Crore (from May 28, 2024), '' 30.77 Crore (from August 07, 2024), '' 15.45 Crore (from August 07, 2024), '' 10.00 Crore. (from February 28, 2024), '' 126.52 Crore (from May 14, 2024), '' 40.00 Crore (from June 18, 2025) and '' 30.00 Crore. (from July 14, 2025){ As at March 31,2023''50.00 Crore (from May 28, 2024), '' 30.77 Crore (from August 07, 2024), '' 15.45 Crore (from August 07, 2024), '' 10.00 Crore. (from February 28, 2024), '' 126.52 Crore. (from May 14, 2024), '' 40.00 Crore. (from June 18, 2025) and '' 30.00 Crore. (from July 14, 2025)}

(b) Unsecured Non convertible Debentures - Sub Debt includes debentures amounting to '' 11 Crore (P.Y. ''11 Crore) in respect of which the company was having a call option which got matured in Julyâ 23.

(iii) Rights attached to equity shares

The Company has issued only one class of equity shares having a par value of '' 2/- per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. During the year ended March 31,2024, equity shareholders were paid an interim dividend of '' 4.00/- (PY '' 4.00/-) per share.

(vi) During the period of five years immediately preceding the Balance Sheet date, the Company has not issued any shares without payment being received in cash or by way of bonus shares or shares bought back except for 58,654,556 equity shares alloted on account of merger during the year ended March 31,2020.

(viii) Pursuant to the Board of Directors approval dated March 13, 2024, for issue of equity shares up to by way of rights issue (''Rights Issue") for an amount not exceeding '' 1,500.00 Crore, the parent Company had filed Letter of Offer on April 17, 2024. The issue opened for subscription on April 30, 2024, and closed on May 14, 2024. The SIC Committee on May 17, 2024, approved the allotment of 4,23,94,270 fully paid-up equity shares at a price of '' 300.00/- per equity share (Including premium of '' 298.00/- per equity share) aggregating to '' 1,271.83 Crore to the eligible shareholders and the same has been allotted on May 17, 2024.

The sensitivity analysis have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The sensitivity analysis presented above may not be representative of the actual change in the projected benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the projected benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same method as applied in calculating the projected benefit obligation as recognised in the balance sheet. There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

Notes

Actuarial gains/losses are recognized in the period of occurrence under Other Comprehensive Income (OCI). All above reported figures of OCI are gross of taxation. Salary escalation & attrition rate are in line with the industry practice considering promotion and demand and supply of the employees. Maturity analysis of benefit payments is undiscounted cashflows considering future salary, attrition & death in respective year for members as mentioned above. Average Expected Future Service represents Estimated Term of Post - Employment Benefit Obligation. Value of asset is considered as fair value of plan asset for the period of reporting. Expected Rate of Return taken same as discount rate as described in Indian Accounting Standard 19. Expected Contribution in the Next Year is the amount as expected by Entity to be contributed to the Plan Assets over the next year.

Qualitative disclosures

Characteristics of defined benefit plan The Company has a defined benefit gratuity plan in India (funded). The companyâs defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund. During the year, there were no plan amendments, curtailments and settlements. The fund is managed by a trust which is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy.

Risks associated with defined benefit plan Gratuity is a defined benefit plan and company is exposed to the following risks: Interest rate risk: A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.

Asset liability matching risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.

Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.

A separate trust fund is created to manage the Gratuity plan.

NOTE 38. RISK MANAGEMENT

The Groupâs activities expose it to market risk, liquidity risk and credit risk.

Risk management is integral to the Groupâs strategy. An enterprise wide risk management framework is in place to govern the Groupâs risk management processes. A strong risk management team and an effective credit operations structure ensures that risks are properly identified and timely addressed to ensure minimal impact on the Groupâs growth and performance. The Group has developed the necessary competency to identify early stress signals and has also defined processes, including corrective and remedial actions as regards people and processes, for mitigation to ensure minimum damage.

A stress testing mechanism is put in place to carry out the event based sensitivity analysis and identify the accounts under stress due to expected market movement.

The comprehensive understanding of risk management throughout the various levels of an organization aids in driving key decisions related to risk-return balance, capital allocation and product pricing. The Group operates under the guidance of the Board approved risk appetite statement that covers business composition, guidance around gross non-performing assets and net non-performing assets, leverage, funding and liquidity, etc.

Risk Management Structure

The Group has established multi-level risk governance for monitoring & control of product and entity level risks. The Board of Directors are responsible for the overall risk management approach and for approving the risk management strategies and principles. The Board has constituted the Risk Management Committee ("RMC") which is responsible for monitoring the overall risk process within the Group. The RMC is empowered to develop an independent risk strategy comprising of principles, frameworks, policies and limits and ensuring its effective implementation. Independent function of Risk management is in place headed by the Chief Risk Officer ("CRO") who reports to the Chief Executive Officer ("CEO") with oversight of RMC of the Board reports to the Chairman and independently to RMC of the Board. The Risk department primarily operationalises risk management framework approved by RMC.

The group has a well -defined risk framework constituting various lines of defence - the first line of defence, consisting of management, is responsible for seamless integration of risk principles across all businesses. Additionally, it ensures adequate managerial and supervisory controls to ensure compliance and highlight inadequate processes and unexpected events. The Group has well-defined internal control measures in every process.

Independent risk and policy team constitutes second line of defence which is responsible for identification and assessment of entity-wide risks. Post its identification, it aims to mitigate risks either through portfolio trigger and caps (Credit risk) or through ongoing risk control and self assessment (Operational risk)

Internal Audit function is the third line of defence that independently reviews activities of the first two lines of defence and reports to the Audit Committee of the Board.

Risk Management Practices

The Group has developed the necessary competency to identify early stress signals and has also defined processes, including corrective and remedial actions as regards people and processes, for mitigation to ensure minimum damage. A stress testing mechanism is put in place to carry out the event based sensitivity analysis and identify the accounts under stress due to expected market movement. In event of susceptibility to external triggers, appropriate risk mitigation would be undertaken and thereby minimize the losses to the Group.

The Group has initiated a detailed portfolio quality review mechanism which enables analysis of portfolio along various behavioral, demographic and financial parameters. Additionally, through tie-ups with external bureaus, an analysis of collection performance coupled with continuous credit assessment for various key segments is undertaken. The practices aid in proactive course correction thereby modifying credit or sourcing mechanisms, if required. Additionally, application scorecard has been developed enabling the Group to standardize credit underwriting & improve sourcing quality in the long run.

The Groupâs policy is to measure and monitor the overall risk-bearing capacity in relation to the aggregate risk exposure across all risk types and activities. Information pertaining to different type of risks are identified, analyzed and tested on timely basis. The same is presented to Risk Management Committee at periodic intervals.

In order to minimize any adverse effects on the financial performance of the Group, derivative financial instruments, such as cross currency interest rate swaps are entered to hedge certain foreign currency risk exposures and variable interest rate exposures.

The Groupâs central treasury department identifies, evaluates and hedges financial risks in close co- operation with the Groupâs operating units. The Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments and investment of excess liquidity. The Groupâs Treasury is responsible for managing its assets and liabilities and the overall financial structure. It is also primarily responsible for the funding and liquidity risks of the Group.

38A.1. Credit Risk

Credit risk refers to risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. Credit risk arises primarily from financial assets such as trade receivables, investments, derivative financial instruments, other balances with banks, loans and other receivables.

Credit quality analysis

The Group follows ''simplified approachâ for recognition of impairment loss allowance on Cash and Cash Equivalents, Bank Balances, Trade Receivables, other receivables and Other Financial Assets. The application of simplified approach does not require the Group to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

38A.2. Collateral Held

The Group holds collateral and other credit enhancements against certain of its credit exposures. The loans are collateralized against equitable mortgage of property, pledge of shares, hypothecation of assets, physical gold, undertaking to create security.

38A.3.Loss allowance and Exposure at default

The following tables show reconciliations from the opening to the closing balance of the loss allowance by class of financial instrument.

Contractual amount outstanding on financial assets that were written off during the reporting period is '' 911.14 Crore (PY '' 934.98 Crore)

38A.5. Modified Financial Instruments

For financial assets, such as a loan to a customer, when the terms and conditions have been renegotiated to the extent that the modification does not result in cash flows that are substantially different (thereby not resulting into derecognition), the Group has recorded a modification gain or loss based on the change in cash flows discounted at the original EIR (Effective Interest Rate).

Credit Risk Grading is an important tool for credit risk management as it helps in understanding and evaluating risks for different credit transactions.

The Group has established overall credit limits at the level of individual borrowers and counterparties, and groups of connected counterparties. It manages and controls credit risk by confining the amount of risk it is willing to accept for individual counterparties, for geographical concentrations, and by closely monitoring such exposures.

The Group has a Credit Risk Policy which is board approved and shared with all credit approving authorities. All customers will be evaluated on a set of pre-defined parameters as detailed below and accordingly classified into any of the following categories:

1. Low Risk

2. Medium Risk

3. High Risk

The high risk category of customers will not be actively sourced by the Group. Any customer, identified as High Risk, can be funded by the Group basis exceptional comfort and availability of justifying mitigates. The extent and nature of due diligence will be the highest for this category.

The assessment of a customer being classified into high, medium or low is based on various parameters at the time of on-boarding which are captured in the Credit Approval Memorandum by the credit manager and validated by the relevant approving authority. The parameters are as follows:

1. Customer Profile

2. Financial health

3. Business vintage

4. Credit history

5. Industry feedback

6. Other qualitative/ quantitative factors as mentioned in the policy

Every customer once being stamped into a risk category on a periodic basis would further be subjected to change of his risk profile depending on the repayment history and DPDs through an independent credit quality review process. This process aims to allow the Group to assess the potential loss as a result of the risks to which it is exposed and take corrective actions.

38A.7. Concentration of Credit Risk

In order to avoid excessive concentrations of risk, the Groupâs policies and procedures include specific guidelines to focus on spreading its lending portfolio across various products/states/customer base with a cap on maximum limit of exposure for an individual/Group. Accordingly, the Group does not have concentration risk.

38B LIQUIDITY RISK

Liquidity risk refers to the risk that the Group may not be able to meet its short-term financial obligations. The Group manages liquidity risk by maintaining sufficient cash and marketable securities and by having access to funding through an adequate amount of credit lines. Further, the Group has well defined Asset Liability Management (ALM) framework with an appropriate organizational structure to regularly monitor and manage maturity profiles of financial assets and financial liabilities including debt financing plans, cash and cash equivalent instruments to ensure liquidity. The Group seeks to maintain flexibility in funding mix by way of sourcing the funds through money markets, debt markets and banks to meet its business and liquidity requirements.

38C Market Risk

Market Risk is the risk that the value of on and off-balance sheet positions of a financial institution will be adversely affected by movements in market rates or prices such as interest rates, foreign exchange rates, equity prices, credit spreads and/or commodity prices resulting in a loss to earnings and capital.

Financial institutions may be exposed to Market Risk in variety of ways. Market risk exposure may be explicit in portfolios of securities / equities and instruments that are actively traded. Conversely it may be implicit such as interest rate risk due to mismatch of loans and deposits. Besides, market risk may also arise from activities categorized as off-balance sheet item. Therefore market risk is potential for loss resulting from adverse movement in market risk factors such as interest rates, forex rates, equity and commodity prices.

The Groupâs exposure to market risk is primarily on account of interest rate risk and Foreign exchange risk.

38C.2. Exposure to currency risks

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign currency rates. The Groupâs exposure to the risk of changes in foreign exchange rates relates primary to the foreign currency borrowings taken from banks and External Commercial Borrowings (ECB).

The Group follows a conservative policy of hedging its foreign currency exposure through Forwards and / or Cross Currency Interest Rate Swaps (CCRIS) in such a manner that it has fixed determinate outflows in its functional currency and as such there would be no significant impact of movement in foreign currency rates on the Groupâs profit before tax (PBT) and equity. However for the unhedged foreign currency exposure(s) there would be an impact on Groupâs profitability.

The sensitivity on profit and loss is due to the timing difference of the maturity of the Cross currency interest rate swap. On the date of maturity of the Cross currency interest rate swap, the sensitivity of profit and loss to changes in the exchange rates will be Nil.

38D.Capital Management

For the purpose of the Groupâs capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Group. The primary objective of the Groupâs capital management is to maximize the shareholder value. The Group monitors capital in accordance with the capital adequacy ratio prescribed by the Reserve Bank of India ("RBI")/ National Housing Bank ("NHB") as applicable.

38E. Fair values of financial instruments

Fair value is the price that would be received to sell an asset or paid to transfer an liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions, regardless of whether that price is directly observable or estimated using a valuation technique. In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques.

The following table analyzes financial instruments measured at fair value at the reporting date, by the level in the fair value

hierarchy into which the fair value measurement is categorized. The amounts are based on the values recognized in the

statement of financial position.

38E.2. Valuation methodologies of financial instruments measured at fair value

(i) Quoted equity/instruments are measured based on the last traded price in the exchange and are classified as level 1.

(ii) Mutual Funds are measured based on the published net asset value (NAV) by AMFI and are classified as level 1.

(iii) Alternate Investment Funds are measured based on the latest NAV provided by the fund house and are classified as level 3.

(iv) Equity instruments in non-listed entities are initially recognised at transaction price and re-measured (to the extent information is available) and valued by external independent valuer and classified as Level 3.

(v) Preference shares (unquoted) are classified as Level 2, based on the fair valuation conducted by an external independent valuer.

(vi) Government Securities are valued based on the closing price published by CCIL/ FIMMDA and are classified as level 2.

(vii) Unquoted debt securities are measured based on average of security level prices received from AMFI appointed/ designated agencies viz: CRISIL and ICRA and are classified as level 2.

(viii) The fair value of interest rate swaps is calculated as the present value of the net of Pay and Receive side estimated future cash flows based on observable appropriate yield curve inputs.

(ix) Fair value of loans measured at FVOCI approximates its carrying value and are classified as level 3.

(x) Fair value of forward foreign exchange contracts is determined by computing present value of payoff between contractual rate (Strike) and forward exchange rates at the testing date and are classified as Level 2.

(xi) The fair value principal swap is calculated as the present value of the net of Pay and Receive side estimated future cash flows based on observable appropriate yield curve inputs and spot exchange rate as of the testing date and are classified as Level 2.

Below are the methodologies and assumptions used to determine fair values for the above financial instruments which are not recorded and measured at fair value in the Groupâs financial statements. These fair values were calculated for disclosure purposes only.

Short-term financial assets and liabilities

Loans, Debts, Borrowings and Subordinated Debts

The fair values of these instruments are estimated by determining the price of the instrument taking into consideration the origination date, maturity date, coupon rate, actual or approximation of frequency of interest payments and incorporating the actual or estimated/proxy yields of identitical or similar instruments through the discounting factor. For instruments, having contractual residual maturity less than one year, the carrying value has been considered as fair value. Loans and advances are presented net of provisions for impairment.

38 F. Transferred financial assets that are derecognized in their entirety

The Group has sold some loans and advances measured at FVTOCI as per assignment deals, as a source of finance. As per the terms of deal, since the derecognition criteria as per IND AS 109, including transfer of substantially all the risks and rewards relating to assets being transferred to the buyer being met, the assets have been derecognised. The management has evaluated the impact of the assignment transactions done during the year for its business model. Based on the future business plans, the Groupâs business model remains to hold the assets for collecting contractual cash flows.

38 G. Transferred financial assets that are recognized in their entirety:

The Group uses securitizations as a source of finance. Such transaction resulted in the transfer of contractual cash flows from portfolios of financial assets to holders of issued debt securities. Such deals resulted in continued recognition of the securitized assets since the Group retains substantial risks and rewards. The table below outlines the carrying amounts and fair values of all financial assets transferred that are not derecognised in their entirety and associated liabilities.

(a) The Group has filed appeal against the said demands raised by the Income Tax Department.

(b) Amount paid under protest with respect to income tax demand is 76.32 Crore (PY '' 68.89 Crore).

(d) Amount paid under protest with respect to profession tax demand '' 0.05 Crore (P.Y '' 0.05 Crore).

(e) The Group had received demand towards stamp duty on account of the Composite Scheme of Arrangement.The demand had been raised for a sum of '' 75.00 Crore. As per the scheme document any incidental expenses will be borne by the resulting companies i.e IIFL Finance Limited, IIFL Securities Limited and 360 ONE WAM Limited (Formerly known as IIFL Wealth Management Limited) equally. The Group has appealed against the same and paid '' 8.34 Crore under protest towards its share of the liability and shown '' 16.66 Crore as Contingent.The matter is pending before the court.

(f) Guarantee has been given on behalf of subsidiary.

(g) Apart from the above, group is subject to legal proceedings and claims which have arisen in the ordinary course of the business. The Groupâs management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have material and adverse effect on the Groupâs financial position.

40.1 Stock option schemes of the Parent Company (IIFL Finance Limited)

The Company has implemented various Employee Stock Option Schemes (ESOP Schemes) and has outstanding options granted under the said Schemes. The options vest in graded manner and must be exercised within a specified period as per the terms of the grants made by the Nomination and Remuneration Committee and ESOP Schemes.

Stock Price: The closing market price on NSE one day prior to the date of grant has been considered for the purpose of Option valuation.

Risk-free rate of return: The risk-free rate being considered for the calculation is the India Government Bond Generic Bid Yield with a maturity about equal to the expected life of the options.

Exercise Price: Price of each specific grant has been considered.

Time to Maturity: Time to Maturity / Expected Life of Options is the period for which the Company expects the Options to be live. The minimum life of a stock option is the minimum period before which the Options cannot be exercised and the maximum life is the period after which the Options cannot be exercised.

Stock Price: The fair value of stock as on Appointed Date, i.e., April 01,2018 ("the Effective date" or the "Date of Modification") has been used to value the outstanding grants based on Mercahnt Bankerâs Report.

Volatility: The daily volatility of the stock prices on BSE, based on post demerger traded prices, has been considered to calculate the fair value.

Risk-free rate of return: The risk-free rate being considered for the calculation is the India Government Bond Generic Bid Yield with a maturity about equal to the expected life of the options.

Exercise Price: Price of each specific grant has been considered based on equity swap ratio of the Composite Scheme of Arrangement.

40.2 Stock option schemes of the Subsidiary Companies:a. IIFL Home Finance Limited

The Company has IIFL HFL ESOP PLAN-2022, under which options have been granted to eligible employees to be vested from time to time. The plan is established as per the approval granted by the shareholders by a special resolution on August 04, 2022. The Plan is amended vide Board resolution dated June 17, 2023 and approved by shareholders vide resolution dated June 29, 2023.

ESOP will vest to eligible employees as per vesting schedule and vesting ratio. All options will vest with minimum vesting period of 1year and maximum vesting period of 4 years having Graded vesting @ 25%p.a.(vesting ratio of 25:25:25:25). As per ESOP Plan, the Vested Options can be exercised by the Option Grantees only in connection with or upon the happening of a Liquidity Event and within such period as prescribed by the Board in this regard.

Fair Value Methodology:

The fair value of the employee share options has been measured using Black-Scholes Option pricing model.

The fair value of the options and the inputs used in the measurement of the grant-date fair values of the equity-settled share based payment options granted during the year.

b. IIFL Samasta Finance Limited

The Companyâs Employee Stock Option Plan - 2023 ("ESOP Plan") provide for the grant of stock options to eligible employees. The ESOPs are administered through Direct route by the company. The company transfers share to the eligible employees upon exercise of the options by such employees.

The Company had an ESOP scheme called ESOP Plan 2023. The ESOP plan 2023 came into force on March 24, 2023.

During the financial year 2022-23, the Company has introduced a new stock option scheme namely "ESOS 2023" effective from March 24, 2023. The grant price shall be as decided by the Nomination and Remuneration Committee (''N&RCâ) of the Company. The number of options and terms could vary at the discretion of the N&RC.

The total number of Employee Stock Options to be granted, which shall not exceed 5% of the Paid up share Capital of the Company, as expanded from time to time, comprising 3,34,21,867 (Three Crore Thirty Four Lakhs Twenty One Thousand Eight Hundred and Sixty Seven) Options which shall be convertible into equal number of Shares

The Company has established share option plans that entitle the employees of the Company to purchase the shares of the Company. Under these plans, holders of the vested options are entitled to purchase shares at the exercise price of the shares determined at the respective date of grant of options. The details are ESOP scheme are as follows.

Measurement of fair values

The fair value of the employee share options has been measured using Black-Scholes Option pricing model.

The fair value of the options and the inputs used in the measurement of the grant-date fair values of the equity-settled share based payment options granted during the year are as follows:

(ii) Registration of charges or satisfaction with Registrar of Companies (ROC)

There are no charges or satisfaction yet to be registered with ROC beyond the statutory period.

(iii) Compliance with number of layers of companies

The clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017 is not applicable to the Group.

(iv) Utilization of Borrowed funds and share premium

(A) The Group has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall:

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Group (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(B) The Group has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Group shall:-

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(v) Undisclosed income

The Group has disclosed all its Income appropriately and in the ongoing Tax Assessments as well there has not been any such undisclosed income recognised by the relavant tax authorities.

(vi) Details of Crypto Currency or Virtual Currency

The Group has not traded or invested in Crypto currency or Virtual Currency during the financial year.

(vii) Disclosure of Benami Property

The Group does not possess any benami property under the Benami Transactions (Prohibition) Act, 1985 and rules made thereunder.

(viii) Disclosure of Borrowings

(a) The quarterly returns and statements of current assets filed by the Group with banks or financial institutions are in agreement with the books of accounts.

(b) The Group has utilised the borrowings from banks and financial institutions for the specific purpose for which it was taken as at March 31,2024.

(ix) Wilful Defaulter

The Group has not been declared as Wilful Defaulter by any Bank or Financial Institution or other Lender.

(x) Title Deeds Of Immovable Properties Not Held In Name Of The Group

Except the details as disclosed below all the title deeds of immovable properties (other than properties where the Group is the lessee and the lease agreements are duly executed in favor of the lessee) are held in the name of the Group.

During the financial year 2023-24, the Group has spent '' 27.87 Crore (P.Y. '' 21.35 Crore) towards corporate social responsibility. There is a shortfall of '' 8.51 Crore (P.Y. '' 6.05 Crore), most of which pertains to the ongoing projects.

The unspent amount towards the ongoing projects have been transferred to separate bank accounts as per the regulation. In respect of other than ongoing projects, the Group has transferred unspent amount of '' 0.01 Crore to the PM Cares Fund, a fund specified in Schedule VII to the Companies Act.

The Groupâs primary business segments are reflected based on the principal business carried out, i.e. financing. All other activities of the Group revolve around the main business. The risk and returns of the business of the Group is not associated with geographical segmentation, hence there is no secondary segment reporting based on geographical segment. As such, there are no separate reportable segments as per the Indian Accounting Standard 108 on ''Segment Reportingâ.

NOTE 47. SHARED SERVICES

The Group operates from and uses the premises, infrastructure and other facilities and services as provided to it by its group companies, which are termed as ''Shared Servicesâ. Hitherto, such shared services consisting of administrative and other revenue expenses paid for by the Group were identified and recovered/recoverable from them based on reasonable management estimates, which are constantly refined in the light of additional knowledge gained relevant to such estimation. These expenses are recovered on an actual basis and the estimates are used only where actual were difficult to determine.

NOTE 48. ACTION BY THE RESERVE BANK OF INDIA (RBI) AGAINST THE PARENT COMPANY

On March 04, 2024, the Reserve Bank of India (RBI), under Section 45L(1)(b) of the Reserve Bank of India Act, 1934, imposed supervisory restrictions on the parent Company. This followed an RBI inspection of the parent Companyâs financial position as of March 31,2023, which identified significant concerns in our gold loan portfolio. These include:

â¢ Disbursals and collections of loan amounts in cash exceeding statutory limits.

â¢ Non-compliance with the standard auction process.

â¢ Deviations in assaying and certifying the purity and net weight of gold at both the time of loan sanction and auction upon default.

â¢ Breaches in the Loan-to-Value ratio.

â¢ Lack of transparency in charges levied on customer accounts.

Consequently, the RBI directed the parent Company to cease the sanctioning or disbursing of new gold loans and the assignment, securitization, or sale of existing gold loans with immediate effect. However, the parent Company is permitted to continue servicing its existing gold loan portfolio, including loan collections and recoveries, and to maintain its other business operations as usual.

The RBI has initiated a special audit by an independent professional agency, which commenced on April 23, 2024, and has since concluded. The parent Company has taken necessary measures to address the identified concerns and prevent their recurrence. The Board has thoroughly reviewed these deviations and non-compliances, forming a team to implement corrective actions and revise policies and procedures as needed. Management is confident that these actions will resolve all issues raised by the RBI. The Group remains committed to adhering to the highest standards of compliance with RBI regulations, in both letter and spirit.

NOTE 49 IMPACT OF RBI''S ACTION ON THE PARENT COMPANY''S OPERATIONS

The RBIâs order, effective March 05, 2024, placed an embargo on the parent Companyâs gold loan business. While the Gold Loan Business is a major segment of the standalone Company, its consolidated operations benefit significantly from other businesses operating in the standalone company and its subsidiaries. To mitigate any risks to the parent Companyâs status as a going concern, the following steps have been taken:

1. Capital infusion: Raised '' 1,271.83 Crore through an equity rights issue in May 2024.

2. Funding: Secured '' 500.00 Crore via Non-Convertible Debentures from long-term investors.

3. Cost control: Implemented cost control measures, including the reduction of major discretionary expenditures.

These actions ensure that the parent Companyâs projected cash flows over the next three years will meet its financial obligations, maintaining robust capital adequacy. Management is confident in resolving all issues raised by the RBI and has prepared the financial statements on a going concern basis.

a. Social security means the measures of protection afforded to employees, inclusive of unorganized workers, gig workers and platform workers to ensure access to health care and to provide income security, particularly in cases of old age, unemployment, sickness, invalidity, work injury, maternity or loss of a breadwinner by means of rights conferred on them and schemes framed, under the Code on Social Security, 2020 ("Code").

b. The Code subsumes nine central labour legislations.ie., The Employeesâ Compensation Act, 1923, The Employeesâ State Insurance Act, 1948, The Employeesâ Provident Funds and Miscellaneous Provisions Act, 1952, The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959, The Maternity Benefit Act, 1961, The Payment of Gratuity Act, 1972, The Cine Workers Welfare Fund Act, 1981, The Building and Other Construction Workers Welfare Cess Act, 1996 and the Unorganised Workersâ Social Security Act 2008.

c. The objective of the Code is to amend and consolidate the existing labour laws relating to social security with the wider goal of extending social security benefits to all employees and workers irrespective of belonging to the organised or unorganised sector. The Code brings, within itself the self-employed workers, home workers, wage workers, migrant workers, the workers in the unorganised sector, gig workers and platform workers for the purpose of social security schemes, including life insurance and disability insurance, health and maternity benefits, provident fund.

NOTE 51. Previous yearâs figures are regrouped, reclassified and rearranged wherever considered necessary to confirm to

current yearâs presentation.

Mar 31, 2023

6.1 Hedging activities and derivatives

The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments are interest rate and currency risk.

6.1.1 Derivatives designated as hedging instruments

The foreign currency and interest rate risk on borrowings have been actively hedged through a combination of forward contracts and interest rate swaps.

The Company is exposed to interest rate risk arising from its foreign currency borrowings. Interest on the borrowing is payable at a floating rate linked to the Benchmark plus Margin. The Company has hedged the interest rate risk arising from the debt with a ''receive floating pay fixedâ interest rate swap.

The Company uses Cross Currency Swap Contracts and Forward Exchange Contracts to hedge its risks associated with interest rate and currency risk arising from the foreign currency loans. The Company designates such contracts in a cash flow hedging relationship by applying the hedge accounting principles as per Ind AS. These contracts are stated at fair value of the spot element of the forward exchange contracts at each reporting date. Changes in the fair value of these contracts that are designated as effective hedge of future cash flows are recognized directly in the "Cash Flow Hedge Reserve" under Other Comprehensive Income and the ineffective portion is recognized immediately in the Statement of Profit and Loss. Hedge accounting is discontinued when the hedged instrument expires or is sold, terminated, or exercized, or no longer qualifies for hedge accounting.

Note 12.1: Management had acquired possession of these properties in satisfaction of the debts and intends to dispose them in due course, subject to conducive market conditions. These properties have been valued taking into consideration various factors such as location, facilities & amenities, quality of construction, percentage of completion of construction (as for some properties the construction is currently on hold), residual life of building, business potential, supply & demand, local nearby enquiry, market feedback of investigation and ready recknor published by government. These valuations have been performed by an independent registered valuer registered under Rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017. The fair values are based on market values, being the estimated amount for which a property could be exchanged in an armâs length transaction. These properties are not depreciated as they have not been put to use.

(b) During the year FY 2022-23 the Company had borrowed '' 395.28 Crores (equivalent to US$ 50 Million) under External commercial borrowing. These are secured by way of first ranking pari passu charge by way of hypothecation on all borrower''s charged asset in favour of the security trustee and specity exclusive chaerge.

(c) During the year FY 2022-23 the Company had also borrowed '' 822.00 crore (equivalent to USD 100 million) under External commercial borrowing. These are secured by way of first ranking pari passu against all reivables/current assets of the borrower including book debts/receivables with both present and future but excluding book debt/recevables pertaining to capital market exposure and securitised asset.

(d) During the year ended March 31,2022, the Company borrowed '' 379.25 crore (equivalent to USD 50 million) through the External Commercial Borrowings towards refinancing of existing outstanding Medium Term Notes. These are secured by way of all rights, titles, interest, benefits, claims and demands, whatsoever of the Company in, to and in respect of, all present and future, receivables/assets, including Companyâs accounts, operating cash flows, current assets, book debts, stock in trade, loans and advances and receivables, both present and future to the extent of complying with the Security Coverage Ratio.

(iii) Rights attached to equity shares

The Company has issued only one class of equity shares having a par value of '' 2/- per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. During the year ended March 31,2023, equity shareholders were paid an interim dividend of '' 4.00/- (PY '' 3.50/-) per share.

(vii) Shares reserved for issue under options and contracts/ commitments for sale of shares/ disinvestments, including the terms and amount: Refer note 39 for details of shares reserved for issue under Employee Stock Option Plan of the Company.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

Notes

Actuarial gains/losses are recognized in the period of occurrence under Other Comprehensive Income (OCI). All above reported figures of OCI are gross of taxation.

Salary escalation & attrition rate are in line with the industry practice considering promotion and demand and supply of the employees.

Maturity analysis of benefit payments is undiscounted cashflows considering future salary, attrition & death in respective year for members as mentioned above.

Average Expected Future Service represents Estimated Term of Post - Employment Benefit Obligation.

Value of asset is considered as fair value of plan asset for the period of reporting.

Qualitative disclosures

Characteristics of defined benefit plan

The Company has a defined benefit gratuity plan in India (funded). The Companyâs defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund.

The fund is managed by a trust which is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy.

Risks associated with defined benefit plan

Gratuity is a defined benefit plan and Company is exposed to the following risks:

Asset liability matching risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.

Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.

Characteristics of defined benefit plans

During the year, there were no plan amendments, curtailments and settlements.

A separate trust fund is created to manage the Gratuity plan.

NOTE 37. RISK MANAGEMENT

The Companyâs activities expose it to market risk, liquidity risk and credit risk.

Risk management is integral to Company''s strategy. The comprehensive understanding of risk management throughout the various levels of an organization aids in driving key decisions related to risk-return balance, capital allocation and product pricing. The Company operates under the guidance of the Board approved risk appetite statement that covers business composition, guidance around gross stage 3 assets and net stage 3 assets, leverage, funding and liquidity, etc. Additionally, it is also ensured that appropriate focus is on managing risk proactively by ensuring business operations are in accordance with laid-down risk. A strong risk management team and an effective credit operations structure ensures that risks are properly identified and timely addressed, to ensure minimal impact on the Companyâs growth and performance.

Risk Management Structure

The Company has established multi-level risk governance for monitoring and control of product and entity level risks. The Board of Directors are responsible for the overall risk management approach and for approving the risk management strategies and principles. The Board has constituted the Risk Management Committee (""RMC"") which is responsible for monitoring the overall risk process within the Company. The RMC is empowered to develop an independent risk strategy comprising of principles, frameworks, policies and limits and ensuring its effective implementation. Independent function of Risk management is in place headed by the Chief Risk Officer (""CRO"") who reports to the Chairman and independently to RMC of the Board. The Risk department primarily operationalizes risk management framework approved by RMC.

The Company has a well defined risk framework constituting various lines of defence - the first line of defence, consisting of management, is responsible for seamless integration of risk principles across all businesses. Additionally, it ensures adequate managerial and supervisory controls to ensure compliance and highlight inadequate processes and unexpected events. The Company has well-defined internal control measures in every process.

Internal Audit function is the third line of defence that independently reviews activities of the first two lines of defence and reports to the Audit Committee of the Board.

Risk Management Practices

It has initiated a detailed portfolio quality review mechanism which enables analysis of portfolio along various behavioural, demographic and financial parameters. Additionally, through tie-ups with external bureaus, an analysis of collection performance coupled with continuous credit assessment for various key segments is undertaken. The practices aid in proactive course correction thereby modifying credit or sourcing mechanisms, if required. Additionally, application scorecard has been developed enabling the Company to standardize credit underwriting and improve sourcing quality in the long run. The Companyâs policy is to measure and monitor the overall risk-bearing capacity in relation to the aggregate risk exposure across all risk types and activities. Information pertaining to different type of risks are identified, analysed and tested on timely basis. The same is presented to RMC at periodic intervals.

In order to minimize any adverse effects on the financial performance of the Company, derivative financial instruments, such as cross currency interest rate swaps are entered to hedge certain foreign currency risk exposures and variable interest rate exposures.

The Companyâs central Treasury department identifies, evaluates and hedges financial risks in close co-operation with the Companyâs operating units. The Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments and investment of excess liquidity. The Companyâs Treasury is responsible for managing its assets and liabilities and the overall financial structure. It is also primarily responsible for the funding and liquidity risks of the Company.

Financial Assets Measured Using Simplified Approach

The Company follows ''simplified approachâ for recognition of impairment loss allowance on cash and cash equivalents, bank balances, trade receivables, other receivables and other financial assets. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

37A.2. Collateral Held

The Company holds collateral and other credit enhancements against certain of its credit exposures. The loans are collateralized against equitable mortgage of property, pledge of shares, hypothecation of assets, company personal guarantees, physical gold, undertaking to create security.

For effective risk management, the Company monitors its portfolio, based on product, underlying security and credit risk characteristics.

37A.7. Concentration of Credit Risk

37B. Liquidity Risk

37C.2. Exposure to Currency Risks

The following table analyses financial instruments measured at fair value at the reporting date, by the level in the fair value

hierarchy into which the fair value measurement is categorized. The amounts are based on the values recognized in the

statement of financial position.

37E.2. Valuation Methodologies Of Financial Instruments Measured At Fair Value

â¢ Quoted equity/ debt instruments are measured based on the last traded price in the recognized stock exchange and are classified as level 1.

â¢ Quoted Mutual Funds are measured based on the published net asset value (NAV) by AMFI and are classified as level 1.

â¢ Alternate Investment Funds and unquoted Mutual Funds are measured based on the latest NAV provided by the fund house and are classified as level 3.

â¢ Equity instruments in non-listed entities are initially recognized at transaction price and re-measured (to the extent information is available) and valued by external independent valuer and classified as Level 3.

â¢ Government Securities are valued based on the closing price published by FBIL and are classified as level 2.

â¢ Unquoted debt securities are measured based on average of security level prices received from AMFI appointed/ designated agencies viz: CRISIL and ICRA and are classified as level 2.

â¢ Fair value of loans measured at FVOCI approximates its carrying value and are classified as level 3.

â¢ Fair value of forward foreign exchange contracts is determined by computing present value of payoff between contractual rate (Strike) and forward exchange rates at the testing date and are classified as Level 2.

â¢ Security receipts are measured as Level 3 basis rating given by independent Rating agencies to the Asset Reconstruction Companies on these secuity receipts.

Short-Term Financial Assets And Liabilities

For financial assets and financial liabilities that have a short-term nature, the carrying amounts, which are net of impairment, are a reasonable approximation of their fair value. Such instruments include: cash and bank balances, Trade receivables, other receivables, balances other than cash and cash equivalents,other financial assets and other financial liabilities and trade payables.

Loans, Debts, Borrowings And Subordinated Debts

Contingent Liabilities:		('' in Crores)
Particulars	As at March 31, 2023	As at March 31, 2022
In respect of Income tax demands (refer note (a) and (b))	72.23	66.31
In respect of GST/Service tax demands (including interest accrued and refer note (c))	65.65	83.17
In respect of Profession tax demands (refer note (d))	0.16	0.16
In respect of Bank guarantees given (refer note (e))	584.94	845.50
In respect of Stamp Duty (refer note (f))	16.66	16.66
In respect of Legal cases	0.98	-

(a) The Company has filed appeal against the said demands raised by the Income Tax Department.

(b) Amount paid under protest with respect to income tax demand is '' 64.06 Crores ( PY '' 41.77 Crores).

(c) Amount paid under protest with respect to service tax demand '' 1.89 Crores (P.Y '' 1.89 Crores) and with respect to GST demand '' 0.12 Crores (PY '' 0.02 Crores).

(d) Amount paid under protest with respect to profession tax demand '' 0.05 Crores (PY '' 0.05 Crores).

(e) Guarantee has been given on behalf of subsidiary.

(f) The Company had received demand towards stamp duty on account of the Composite Scheme of Arrangement.The demand had been raised for a sum of '' 75.00 crores. As per the scheme document any incidental expenses will be borne by the resulting companies i.e IIFL Finance Limited, IIFL Securities Limited and 360 ONE WAM Limited (Formerly known as IIFL Wealth Management Limited) equally. The Company has appealed against the same and paid '' 8.34 crores under protest towards its share of the liability and shown '' 16.66 crores as Contingent.The matter is pending before the court.

(g) Apart from the above, Company is subject to legal proceedings and claims which have arisen in the ordinary course of the business. The Companyâs management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have material and adverse effect on the Companyâs financial position.

Commitments Not Provided For:		('' in Crores)
Particulars	As at March 31, 2023	As at March 31, 2022
Commitments related to loans sanctioned but undrawn	40.66	793.55
Estimated amount of contracts remaining to be executed on capital account	18.36	18.75
Commitments related to Alternate Investment Funds	9.77	20.59

NOTE 39. EMPLOYEE STOCK OPTION

Stock Price: The closing market price on NSE one day prior to the date of grant has been considered for the purpose of Option valuation.

Risk-free rate of return: The risk-free rate being considered for the calculation is the India Government Bond Generic Bid Yield with a maturity about equal to the expected life of the options.

Exercise Price: Price of each specific grant has been considered.

The Company has granted Employee Stock Options under IIFL Finance Employee Stock Option Plan 2020 - Merger Scheme pursuant to aforesaid Composite Scheme of Arrangement.

Volatility: The daily volatility of the stock prices on BSE, based on post demerger traded prices, has been considered to calculate the fair value.

Risk-free rate of return: The risk-free rate being considered for the calculation is the India Government Bond Generic Bid Yield with a maturity about equal to the expected life of the options.

Exercise Price: Price of each specific grant has been considered based on equity swap ratio of the Composite Scheme of Arrangement.

NOTE 40. ADDITIONAL DISLCOURE REQUIREMENTS

(i) Relationship With Struck off Companies

The Company has not entererd into any transactions with strike off companies.

(ii) Registration of Charges or Satisfaction With Registrar of Companies (ROC)

There are no charges or satisfaction yet to be registered with ROC beyond the statutory period.

(iii) Compliance With Number of Layers of Companies:

The clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017 is not applicable to the Company.

(iv) Utilization of Borrowed Funds and Share Premium

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(v) Undisclosed Income

The Company has disclosed all its Income appropriately and in the ongoing Tax Assessments as well there has not been any such undisclosed income recognized by the relavant tax authorities.

(vi) Details of Crypto Currency or Virtual Currency

The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

(vii) Disclosure of Benami Property

The Company does not possess any benami property under the Benami Transactions (Prohibition) Act, 1985 and rules made thereunder.

(viii) Disclosure of Borrowings

(a) The quarterly returns and statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts.

(b) The Company has utilized the borrowings from banks and financial institutions for the specific purpose for which it was taken as at March 31,2023.

(ix) Wilful Defaulter

The Company has not been declared as Wilful Defaulter by any Bank or Financial Institution or other Lender.

(x) Title Deeds Of Immovable Properties Not Held In Name Of The Company

Title deeds of immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) are held in the name of the Company.

(xi) Disclosure on Loans and Advances

Reason for shortfall during previous year: The Company during the previous year had contributed towards the ongoing projects to IIFL Foundation Limited and which remained unspent as on March 31, 2022 resulting in shortfall.The unspent amount has been transferred to a separate Bank account and will be spent during the FY 2022-23.

The Company contributes its CSR requirement to India Infoline Foundation Limited, a group Company.

(I) Qualitative disclosure:

a) Structure and organization for management of risk in derivatives trading:

The Board of Directors, the Asset Liability Management Committee (ALCO) and the Risk Management Committee (RMC) are entrusted with the management of risks in derivatives.

The philosophy and framework for the derivative business is laid out in the Board approved policies including limits. It also reviews the market risk exposures of derivatives against the limits. The Risk Management Committee reviews all risks on a consolidated basis and also reviews stress testing.

The monitoring and measurement of risk in derivatives is carried out by the Risk Department. The Risk Department is independent of the Treasury Front office, back office and directly reports into the Chief Risk Officer.

b) Scope and nature of risk measurement, risk reporting and risk monitoring systems:

All significant risks of the derivative portfolio are monitored and measured daily. The Risk Department measures and reports Market Risk metrics like VaR, PV01, Option Greeks like Delta, Gamma, Vega, Theta, Rho, etc. The Credit Risk from the derivatives portfolio is also measured daily.

The Risk Department monitors these exposures against the set limits and also reviews profitability on a daily basis. MIS is sent to relevant teams on a periodic basis. Exception reports are also sent so that emerging risks are reviewed and managed on a timely basis. Stress testing is also performed on the Derivative portfolio.

c) Policies for hedging and / or mitigating risk and strategies and processes for monitoring the continuing effectiveness of hedges/mitigants:

The Board Approved ''Hedging Policyâ details the hedging strategies, hedging processes, accounting treatment, documentation requirements and effectiveness testing for hedges.

Hedges are monitored for effectiveness periodically, in accordance with the Board Approved Policy.

d) Accounting policy for recording hedge and non-hedge transactions; recognition of income, premiums and discounts; valuation of outstanding contracts; provisioning, collateral and credit risk mitigation:

Initial and additional margin paid over and above initial margin for entering into contracts for Equity Index/ Stock Futures/Currency Futures/Interest Rate Futures and/or Equity Index/Stock Options/ Currency Options as the case may be ("Derivatives Portfolio") which are released on final settlement/squaring-up of underlying contracts are disclosed under the head "Other Current Assets".

"Equity Index/Stock Option/Currency Option Premium Account" represents premium paid or received for buying or selling the Options, respectively which is amortized over the period of contract.

On final settlement or squaring up of contracts for Derivatives Portfolio, the realized profit or loss after adjusting the unrealized loss already accounted, if any, is recognized in the Statement of Profit and Loss. On settlement or squaring up of Derivatives Portfolio before expiry, the premium,prevailing in "Equity Index/Stock Option/ Currency Option Premium Account" on that date is recognized in the Statement of Profit and Loss.

As at the Balance Sheet date, the Mark to Market/Unrealized Profit/(Loss) on all outstanding Derivative portfolio comprising of Securities and Equity/Currency Derivatives positions is determined on scrip basis with net unrealized losses on scrip basis being recognized in the Other Comprehensive Income.

a. ECL provisioning for Stage 1,2 & SICR of '' 392.62 Crores (PY '' 404.42 Crores) consists of interest accrued but not due and Interest overdue of '' 42.99 Crores (P.Y '' 46.16 Crores).

b. Asset classification is as per Reserve Bank of India guidelines and provision is as per Expected Credit Loss methodology as per Ind AS which is higher than the minimum required as per prudential norms.

c. As the ECL provisions is higher than provision required under IRACP (Income Recognition, Assets Classification & Provisioning, there is no requirement to create Impairement allowance.

d. Figures in bracket represent previous yearâs figures.

(xx) Particulars as per RBI Directions as required in terms of paragraph 19 of Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 dated September 01, 2016:

1. Loans and advances availed by the NBFCs inclusive of interest accrued there on but not paid:NOTE 45. UNHEDGED FOREIGN CURRENCY EXPOSURE:

The unhedged foreign currency exposure as on March 31,2023 is Nil (PY Nil).

NOTE 46. GOLD LOAN PORTFOLIO

As on March 31,2023 the gold loan portfolio comprises 34.59 % (P.Y. 32.61 %) of the total assets of the Company.

NOTE 47. SEGMENT REPORTING

NOTE 48. SHARED SERVICES

The Company operates from and uses the premises, infrastructure and other facilities and services as provided to it by its Holding Company/group companies, which are termed as ''Shared Servicesâ. Hitherto, such shared services consisting of administrative and other revenue expenses paid for by the Company were identified and recovered/recoverable from them based on reasonable management estimates, which are constantly refined in the light of additional knowledge gained relevant to such estimation. These expenses are recovered on an actual basis and the estimates are used only where actual were difficult to determine.

NOTE 49. FRAUD

During the year under review, the Company had come across frauds totaling to '' 4.24 Crores (PY. '' 11.88 Crores) in respect of its lending operations. Out of the above, frauds amounting to '' 0.27 Crores (P.Y. '' 1.39 Crores) has already been recovered. Suitable action has been taken by the Company to recover the balance amounts.

(vi) Institutional set-up for Liquidity Risk Management

The Board of Directors of the Company has an overall responsibility and oversight for the management of all the risks, including liquidity risk, to which the Company is exposed to in the course of conducting its business. The Board approves the governance structure, policies, strategy and the risk limits for the management of liquidity risk. The Board of Directors approves the constitution of the Risk Management Committee (RMC) for the effective supervision, evaluation, monitoring and review of various aspects and types of risks, including liquidity risk, faced by the Company. Further, the Board of Directors also approves constitution of Asset Liability Committee (ALCO), which functions as the strategic decision-making body for the asset-liability management of the Company from risk return perspective and within the risk appetite and guard-rails approved by the Board.

The main objective of ALCO is to assist the Board and RMC in effective discharge of the responsibilities of asset-liability management, market risk management, liquidity and interest rate risk management and also to ensure adherence to risk tolerance/limits set up by the Board. ALCO provides guidance and directions in terms of interest rate, liquidity, funding sources, and investment of surplus funds. ALCO meetings are held once in a month or more frequently as warranted from time to time.

Note: Figures in bracket represent previous yearâs figures.

Qualitative Disclosure

Liquidity Coverage Ratio (LCR) aims to ensure that NBFCâs maintains an adequate level of unencumbered High Quality Liquidity Asset (HQLAs) that can be converted into cash to meet liquidity needs for a 30 calendar day time horizon under a significantly severe liquidity stress scenario.

The Company has robust liquidity risk management framework in place that ensures sufficient liquidity including a cushion of unencumbered, high quality liquid assets, to withstand a range of stress events,including those involving the loss or impairment of both unsecured and secured funding sources. The Company has implemented the LCR framework and has maintained LCR well above the regulatory threshold.

HQLA comprises of unencumbered Bank Balances and Fixed Deposit,Cash in Hand, Liquid Investments after appropriate haircut. The Company maintains sufficient balance of Cash and Bank Balance and liquid Investments which can be easily liquidated in times of stress.

Liquidity Coverage Ratio results drive by inflow of next 30 days receivable on loans and advances and corresponding outflow over the next 30 days towards borrowings and other liabilities.

NOTE 59. Disclosure required under Part B of Section I of RBI circular RBI/2022-23/26 - DOR.ACC.REC.No.20/21.04.018/2022-23 dated April 19, 2022 - "Related Party Disclosure" is covered under note no. 42, 42.1 and 42.2 of the notes to financial statements.

NOTE 60. Wherever amount is less than '' 0.01 Crores, shown as '' 0.00.

NOTE 61. Previous yearâs figures are regrouped, reclassified and rearranged wherever considered necessary to confirm to current yearâs presentation.

Mar 31, 2022

6.1 Hedging activities and derivatives

The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments are interest rate and currency risk.

6.1.1 Derivatives designated as hedging instruments

The foreign currency and interest rate risk on borrowings have been actively hedged through a combination of forward contracts and interest rate swaps.

The Company uses Cross Currency Swap Contracts and Forward Exchange Contracts to hedge its risks associated with interest rate and currency risk arising from the foreign currency loans. The Company designates such contracts in a cash flow hedging relationship by applying the hedge accounting principles as per IND AS standards. These contracts are stated at fair value of the spot element of the forward exchange contracts at each reporting date. Changes in the fair value of these contracts that are designated as effective hedge of future cash flows are recognised directly in the "Cash Flow Hedge Reserve" under Other Comprehensive Income and the ineffective portion is recognised immediately in the Statement of Profit and Loss. Hedge accounting is discontinued when the hedged instrument expires or is sold, terminated, or exercised, or no longer Qualifies for hedge accounting.

There is an economic relationship between the hedged item and the hedging instrument as the terms of the Forward contracts/ Interest Rate Swaps match that of the foreign currency borrowings (notional amount, interest payment dates, principal repayment date, etc.). The Company has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the Forward contracts/interest rate swaps are identical to the hedged risk components.

1. No trade or other receivables are due from directors or other officer of the company either severally or jointly, with any other person. No trade or other receivables are due from firms including limited liability partnerships, private companies in which any director is a partner or a director or a member.

2. The Company has adopted simplified approach for impairment allowance on trade receivables. Expected credit loss ("ECL") has been recognized on credit impaired receivables.

3. Trade receivables are non-interest bearing.

8.1 Secured loans are secured by way of equitable mortgage of property, pledge of shares, hypothecation of assets, company personal guarantees, physical gold, undertaking to create security.

8.2 Secured loans include loans aggregating to '' 2,003.15 Million (PY '' 2,664.76 Million) in respect of which the creation of security is under process.

8.3 The Company''s assessment of Impairment loss allowance on Its loans and other assets Is subject to a number o'' management judgements and estimates. In relation to COVID-19, judgements and assumptions Included the extent and duration of the pandemic, the impacts of actions of governments and other authorities, and the responses of businesses and consumers in different industries, along with the associated impact on the global economy. Given the dynamic nature of pandemic situation, the Companyâs impairment loss allowance estimates are inherently uncertain due tc severity and duration of the pandemic and, as a result, actual results may differ from these estimates as on the date o approval of these Standalone Financial Statements.

Note 12.1: Management had acquired possession of these properties in satisfaction of the debts and intends to dispose them in due course, subject to conducive market conditions. These properties have been valued taking into consideration various factors such as location, facilities & amenities, quality of construction, percentage of completion of construction (as for some properties the construction is currently on hold), residual life of building, business potential, supply & demand, local nearby enquiry, market feedback of investigation and ready recknor published by government. These valuations has been performed by an independent registered valuer registered under Rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017. The fair values are based on market values, being the estimated amount for which a property could be exchanged in an armâs length transaction. These properties are not depreciated as they have not been put to use.

(b) During the year ended March 31,2022, the Company had borrowed '' 3,792.50 Million (equivalent to US$ 50 Million) under the External Commercial Borrowings towards refinancing of existing outstanding Medium Term Notes. These are secured by way of all rights, titles, interest, benefits, claims and demands, whatsoever of the Company in, to and in respect of, all present and future, receivables/assets, including Company''s accounts, operating cash flows, current assets, book debts, stock in trade, loans and advances and receivables, both present and future to the extent of complying with the Security Coverage Ratio.

(c) These loans are secured by way of first paripassu charge by way of hypothecation on the standard receivables of the company with asset cover of 1.20 times of the sanction amount.

(iii) Rights attached to equity shares

The Company has issued only one class of equity shares having a par value of '' 2/- per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. During the year ended March 31,2022, equity shareholders were paid an interim dividend of '' 3.50/- (PY '' 3.00/-) per share.

The sensitivity analysis presented above may not be representative of the actual change in the projected benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the projected benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same method as applied in calculating the projected benefit obligation as recognized in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

Notes

Actuarial gains/losses are recognized in the period of occurrence under Other Comprehensive Income (OCI). All above reported figures of OCI are gross of taxation.

Salary escalation & attrition rate are in line with the industry practice considering promotion and demand and supply of the employees.

Maturity analysis of benefit payments is undiscounted cashflows considering future salary, attrition & death in respective year for members as mentioned above.

Average Expected Future Service represents Estimated Term of Post - Employment Benefit Obligation. Value of asset is considered as fair value of plan asset for the period of reporting.

Qualitative disclosures

Characteristics of defined benefit plan

The Company has a defined benefit gratuity plan in India (funded). The company''s defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund.

Risks associated with defined benefit plan

Gratuity is a defined benefit plan and company is exposed to the following risks:

Asset liability matching risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 103 of Income Tax Rules, 1962, this generally reduces ALM risk.

Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.

Characteristics of defined benefit plans

During the year, there were no plan amendments, curtailments and settlements.

A separate trust fund is created to manage the Gratuity plan.

During the previous year ended March 31,2021, the Company had transferred 66,061,285 number of fully paid equity shares of '' 10/- each constituting of 25% equity shares held by the Company in IIFL Samasta Finance Limited (Formerly Samsata Microfinance Limited), a subsidiary Company, to IIFL Home Finance Limited, a Wholly-owned subsidiary Company, at fair value of '' 20 per share. The Profit on sale aggregating to '' 530.50 Million had been disclosed as an exceptional item.

The Companyâs activities expose it to market risk, liquidity risk and credit risk.

Risk management is integral to Companyâs strategy. The comprehensive understanding of risk management throughout the various levels of an organization aids in driving key decisions related to risk-return balance, capital allocation and product pricing. The Company operates under the guidance of the Board approved risk appetite statement that covers business composition, guidance around gross stage 3 assets and net stage 3 assets, leverage, funding and liquidity, etc. Additionally, it is also ensured that appropriate focus is on managing risk proactively by ensuring business operations are in accordance with laid-down risk. A strong risk management team and an effective credit operations structure ensures that risks are properly identified and timely addressed, to ensure minimal impact on the Companyâs growth and performance Risk Management Structure

strategies and principles. The Board has constituted the Risk Management Committee ("RMC") which is responsible for monitoring the overall risk process within the Company. The RMC is empowered to develop an independent risk strategy comprising of principles, frameworks, policies and limits and ensuring its effective implementation. Independent function of Risk management is in place headed by the Chief Risk Officer ("CRO") who reports to the Chairman with oversight of RMC of the Board. The Risk department primarily operationalizes risk management framework approved by RMC.

Internal Audit function is the third line of defence that independently reviews activities of the first two lines of defence and reports to the Audit Committee of the Board.

Risk Management Practices

It has initiated a detailed portfolio quality review mechanism which enables analysis of portfolio along various behavioural, demographic and financial parameters. Additionally, through tie-ups with external bureaus, an analysis of collection performance coupled with continuous credit assessment for various key segments is undertaken. The practices aid in proactive course correction thereby modifying credit or sourcing mechanisms, if required. Additionally, application scorecard has been developed enabling the Company to standardize credit underwriting and improve sourcing quality in the long run. The Companyâs policy is to measure and monitor the overall risk-bearing capacity in relation to the aggregate risk exposure across all risk types and activities. Information pertaining to different type of risks are identified, analyzed and tested on timely basis. The same is presented to RMC at periodic intervals.

Note: 38A.1. Credit Risk

Credit risk refers to risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises primarily from financial assets such as loans, trade receivables, investments, derivative financial instruments, and other receivables.

Financial Assets Measured Using Simplified Approach

The Company follows ''simplified approach'' for recognition of Impairment loss allowance on cash and cash equivalents, bank balances, trade receivables, other receivables and other financial assets. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

For effective risk management, the company monitors its portfolio,based on product, underlying security and credit risk characteristics.

38A.7. Concentration of Credit Risk

In order to avoid excessive concentrations of risk, the Company''s policies and procedures include specific guidelines to focus on spreading its lending portfolio across various products/states/customer base with a cap on maximum limit of exposure for an individual/Group. Accordingly, the Company does not have concentration risk.

38B Liquidity Risk

The following table analyzes financial Instruments measured at fair value at the reporting date, by the level In the fair value

hierarchy into which the fair value measurement is categorized. The amounts are based on the values recognized in the

statement of financial position.

38E.2. Valuation Methodologies Of Financial Instruments Measured At Fair Value

â¢ Quoted equity/ debt instruments are measured based on the last traded price in the recognized stock exchange and are classified as level 1.

â¢ Quoted Mutual Funds are measured based on the published net asset value (NAV) by AMFI and are classified as level 1.

â¢ Alternate Investment Funds and unquoted Mutual Funds are measured based on the latest NAV provided by the fund house and are classified as level 3.

â¢ Government Securities are valued based on the closing price published by FBIL and are classified as level 2.

â¢ Unquoted debt securities are measured based on average of security level prices received from AMFI appointed/ designated agencies viz: CRISIL and ICRA and are classified as level 2.

â¢ Fair value of loans measured at FVOCI approximates its carrying value and are classified as level 3.

Below are the methodologies and assumptions used to determine fair values for the above financial Instruments which are not recorded and measured at fair value in the Company''s financial statements. These fair values were calculated for disclosure purposes only.

Short-Term Financial Assets And Liabilities

For financial assets and financial liabilities that have a short-term nature, the carrying amounts, which are net of impairment, are a reasonable approximation of their fair value. Such instruments include: cash and bank balances, Trade receivables, other receivables, balances other than cash and cash equivalents,other financial assets and other financial liabilities and trade payables.

Loans, Debts, Borrowings And Subordinated Debts

(a) The Company has filed appeal against the said demands raised by the Income Tax Department.

(b) Amount paid under protest with respect to income tax demand is '' 417.70 Million ( PY '' 233.89 Million).

(c) Amount paid under protest with respect to service tax demand '' 18.92 Million (P.Y '' 18.92 Million) and with respect to GST demand '' 0.18 Million (PY Nil).

(d) Amount paid under protest with respect to profession tax demand '' 0.47 Million (PY '' 0.47 Million).

(e) The above guarantee has been given on behalf of subsidiaries/group companies.

(f) The Company has received demand towards stamp duty on account of the Composite Scheme of Arrangement.The demand has been raised for a sum of '' 750.00 Million. As per the scheme document any incidental expenses will be borne by the resulting companies i.e IIFL Finance Limited, IIFL Securities Limited and IIFL Wealth Management Limited equally. The Company has appealed against the same and paid '' 83.40 Million under protest towards its share of the liability and shown '' 166.60 Million as Contingent.

Risk-free rate of return: The risk-free rate being considered for the calculation is the India Government Bond Generic Bid Yield with a maturity about equal to the expected life of the options.

Exercise Price: Price of each specific grant has been considered.

The Company has granted Employee Stock Options under IIFL Finance Employee Stock Option Plan 2020 - Merger Scheme pursuant to aforesaid Composite Scheme of Arrangement.

Stock Price: The fair value of stock as on Appointed Date, i.e., April 1,2018 ("the Effective date" or the "Date of Modification") has been used to value the outstanding grants based on Merchant Bankerâs Report.

Volatility: The daily volatility of the stock prices on BSE, based on post demerger traded prices, has been considered to calculate the fair value.

Risk-free rate of return: The risk-free rate being considered for the calculation is the India Government Bond Generic Bid Yield with a maturity about equal to the expected life of the options.

Exercise Price: Price of each specific grant has been considered based on equity swap ratio of the Composite Scheme of Arrangement.

NOTE 41. ADDITIONAL DISCLOSURE REQUIREMENTS

(i) Relationship With Struck off Companies

The Company has not entererd into any transactions with strike off companies.

(ii) Registration of Charges or Satisfaction With Registrar of Companies (ROC)

There are no charges or satisfaction yet to be registered with ROC beyond the statutory period.

(iii) Compliance With Number of Layers of Companies:

The clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017 is not applicable to the Company.

(iv) Utilization of Borrowed Funds and Share Premium

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(v) Undisclosed Income

The Company has disclosed all its Income appropriately and in the ongoing Tax Assessments as well there has not been any such undisclosed income recognised by the relavant tax authorities.

(vi) Details of Crypto Currency or Virtual Currency

The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

(vii) Disclosure of Benami Property

The Company does not possess any benami property under the Benami Transactions (Prohibition) Act, 1985 and rules made thereunder.

(viii) Disclosure of Borrowings

(a) The Quarterly returns and statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts.

(b) The Company has utilised the borrowings from banks and financial institutions for the specific purpose for which it was taken as at March 31,2022.

(ix) Wilful Defaulter

The Company has not been declared as Wilful Defaulter by any Bank or Financial Institution or other Lender.

(x) Title Deeds Of Immovable Properties Not Held In Name Of The Company

Title deeds of immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) are held in the name of the company.

(xi) Disclosure on Loans and Advances

(I) Qualitative disclosure:

a) Structure and organization for management of risk in derivatives trading:

The Board of Directors, the Asset Liability Management Committee (ALCO) and the Risk Management Committee (RMC) are entrusted with the management of risks in derivatives.

b) Scope and nature of risk measurement, risk reporting and risk monitoring systems:

c) Policies for hedging and / or mitigating risk and strategies and processes for monitoring the continuing effectiveness of hedges/mitigants:

The Board Approved ''Hedging Policyâ details the hedging strategies, hedging processes, accounting treatment, documentation requirements and effectiveness testing for hedges.

Hedges are monitored for effectiveness periodically, in accordance with the Board Approved Policy.

Initial and additional margin paid over and above initial margin for entering into contracts for Equity Index/ Stock Futures/Currency Futures/Interest Rate Futures and/or Equity Index/Stock Options/ Currency Options as the case may be ("Derivatives Portfolio") which are released on final settlement/sguaring-up of underlying contracts are disclosed under the head "Other Current Assets".

"Eguity Index/Stock Option/Currency Option Premium Account" represents premium paid or received for buying or selling the Options, respectively which is amortized over the period of contract.

On final settlement or sguaring up of contracts for Derivatives Portfolio, the realized profit or loss after adjusting the unrealized loss already accounted, if any, is recognized in the Statement of Profit and Loss. On settlement or sguaring up of Derivatives Portfolio before expiry, the premium, prevailing in "Eguity Index/Stock Option/ Currency Option Premium Account" on that date is recognized in the Statement of Profit and Loss.

a. ECL provisioning for Stage 1,2 & SICR of '' 4,044.15 Million (PY '' 5,718.16 Million) consists of interest accrued but not due and Interest overdue of '' 461.55 Million (P.Y '' 660.60 Million).

b. Asset classification is as per Reserve Bank of India guidelines and provision is as per Expected Credit Loss methodology as per IND AS which is higher than the minimum required as per prudential norms.

c. As the ECL provisions is higher than provision required under IRACP (Income Recognition, Assets Classification & Provisioning) there is no requirement to create Impairement allowance.

d. Figures in bracket represent previous yearâs figures.

(xx) Particulars as per RBI Directions as required in terms of paragraph 18 of Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 dated September 01, 2016:

46. UNHEDGED FOREIGN CURRENCY EXPOSURE:

The unhedged foreign currency exposure as on March 31,2022 is Nil (PY Nil).

47. GOLD LOAN PORTFOLIO

As on March 31,2022 the gold loan portfolio comprises 32.61% (P.Y. 39.16%) of the total assets of the Company.

48. SEGMENT REPORTING

The Company''s primary business segments are reflected based on the principal business carried out, i.e. financing. All other activities of the Company revolve around the main business. The risk and returns of the business of the Company is not associated with geographical segmentation, hence there is no secondary segment reporting based on geographical segment. As such, there are no separate reportable segments as per the IND AS 108 on ''Segment Reporting''.

49. SHARED SERVICES

The Company operates from and uses the premises, infrastructure and other facilities and services as provided to it by its Holding Company/group companies, which are termed as ''Shared Services''. Hitherto, such shared services consisting of administrative and other revenue expenses paid for by the Company were identified and recovered/recoverable from them based on reasonable management estimates, which are constantly refined in the light of additional knowledge gained relevant to such estimation. These expenses are recovered on an actual basis and the estimates are used only where actual were difficult to determine.

50. FRAUD

During the year under review, the Company had come across frauds totalling to '' 118.78 Million (PY '' 138.87 Million) in respect of its lending operations. Out of the above, frauds amounting to '' 13.91 Million (PY '' 12.30 Million) has already been recovered. Suitable action has been taken by the Company to recover the balance amounts.

(vi) Institutional set-up for Liquidity Risk Management

The Board approves the governance structure, policies, strategy and the risk limits for the management of liquidity risk. The Board of Directors approves the constitution of the Risk Management Committee (RMC) for the effective supervision,

evaluation, monitoring and review of various aspects and types of risks, including liquidity risk, faced by the Company. Further, the Board of Directors also approves constitution of Asset Liability Committee (ALCO), which functions as the strategic decision-making body for the asset-liability management of the Company from risk return perspective and within the risk appetite and guard-rails approved by the Board.

ALCO provides guidance and directions in terms of interest rate, liquidity, funding sources, and investment of surplus funds. ALCO meetings are held once in a month or more frequently as warranted from time to time.

Note: Figures in bracket represent previous yearâs figures.

Qualitative Disclosure

Liquidity Coverage Ratio results drive by inflow of next 30 days receivable on loans and advances and corresponding outflow over the next 30 days towards borrowings and other liabilities.

59. Previous year''s figures are regrouped, reclassified and rearranged wherever considered necessary to confirm to current yearâs presentation.

Mar 31, 2018

NOTE 1. CORPORATE INFORMATION:

IIFL Holdings Limited was incorporated on October 18, 1995 and is engaged in Merchant Banking and Investment Advisory services besides holding investments in subsidiaries. The Groupâs business consists of finance, financial services, capital market services, distribution of financial products and wealth management services which are carried out by separate subsidiaries of IIFL Holdings Limited.

(a) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. During the year ended March 31, 2018, the amount of per share dividend recognised as distribution to equity shareholders was Rs.5.00 (Previous Year Rs.4.50).

(b) During the period of five years immediately preceding the Balance sheet date, the Company has not issued any shares without payment being received in cash or by way of bonus shares or shares bought back.

(c) Shares reserved for issue under options and contracts/commitments for sale of shares/disinvestments, including the terms and amount, Refer note no 28 for details of shares reserved for issue under Employee Stock Option Plan of the Company.

2.1. Capital Reserve was created in respect of share warrants lapsed in previous years.

2.2. Capital Redemption Reserve was created on buy back of equity shares and on amalgamation with India Infoline Marketing Services Limited in previous years.

2.3. The Company has received NCLT approval for demerger of 5paisa Capital Limited w.e.f October 01, 2016, on September 30, 2017. All expenses incurred for 5paisa digital undertaking from October 01, 2016 were reimbursed by 5paisa Capital Limited on the demerger order being effective. Expenses incurred from to October 01, 2016 to March 31, 2017 aggregating to Rs.12.45 million have been credited to surplus in the Statement of Profit and Loss.

2.4. Pursuant to Section 71 of the Companies Act, 2013 read with Rule 18 of the Companies (Share Capital and Debentures) Rules, 2014, the Company is required to create Debenture Redemption Reserve of a value equivalent to 25% of the debentures offered through Private issue and Public issue. Accordingly, an amount of Rs.31.22 million (Previous year Rs.41.90 million) has been transferred to Debenture Redemption Reserve Account. During the year an amount of Rs.115.70 million (Previous year Rs. NIL) has been transferred from Debenture Redemption Reserve account to General Reserve on account of redemption of Debentures.

3.1 The Company has received Rs.4.16 million (Previous Year Rs.1.46 million) towards share application money on account of exercise of 23,645 (Previous Year 8,070) ESOP options which has resulted into allotment of 23,645 (Previous Year 8,070) equity shares, having face value of Rs.2 each, allotted on April 17, 2018 (Previous Year April 13, 2017). Out of total proceeds, Rs.4.11 million (Previous Year Rs.1.44 million) was received towards Securities Premium.

* IIFL Holdings Limited (IIFLHL) was holding 50% paid-up share capital of IIFL Asset Reconstruction Limited (IIFL ARC) till May 08, 2017, there after IIFLHL has acquired balance 50% share of IIFL ARC from its shareholders during May 09, 2017 to May 24, 2017 and thereafter it became wholly own subsidiary of IIFLHL.

The Scheme of Arrangement between IIFL Facilities Services Limited and IIFL Management Services Limited was approved by National Company Law Tribunal, Mumbai Bench(âNCLTâ) vide its order dated on September 08, 2017. The certified true copy of the order was duly filed with Registrar of Companies, Mumbai and the Scheme was effective from September 29, 2017. Pursuant to order of NCLT, Mumbai Bench, the Real Estate Advisory Services Undertaking (the undertaking) on going concern basis was vested from IIFL Facilities Services Limited to IIFL Management Services Limited w.e.f. the appointed date i.e. April 01, 2017. Real Estate Advisory Services Undertaking includes the entire real estate advisory services rendered by IIFL Facilities Services Limited relating to providing broking and advisory services with respect to real estate business along with all related assets, liabilities and employees.

In accordance with the said Scheme of Arrangement whole of the Real Estate Advisory Services Undertaking including all assets and liabilities of the undertaking were transferred to and vested by IIFL Facilities Services Limited to IIFL Management Services Limited at respective book values from April 01, 2017 and in consideration 0.1% Redeemable Non-Convertible Non-Cumulative preference shares were issued by IIFL Management Services Limited to IIFL Holdings Limited.

In compliance with Accounting Standard 22 on âAccounting for Taxes on Incomeâ as notified under the Companies (Accounting Standard) Rules, 2014, the Company has taken a charge of Rs.26.22 million (Previous Year Rs.13.93 million) in the Statement of Profit and Loss towards deferred tax asset on account of timing differences.

NOTE 4. CAPITAL AND OTHER COMMITMENTS AS AT BALANCE SHEET DATE_

There were outstanding commitments for others to the tune of Rs. NIL/- (previous year for investments Rs.10.45/- million) of the total contractual obligations entered during the year.

NOTE 5. The Company has provided Corporate Guarantee on behalf of the following subsidiaries for their business purposes.

NOTE 6. DISCLOSURE OF LOANS/ADVANCES TO SUBSIDIARIES AND ASSOCIATES ETC. AS REQUIRED UNDER SCHEDULE V READ WITH REGULATION 34(3) AND 53(F) OF SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATION, 2015.

a) Rs. NIL (Previous year Rs. NIL) due from India Infoline Finance Limited (maximum amount outstanding during the year Rs.1,150.00 million, Previous Year : Rs.430.00 million)

b) Rs. NIL (Previous year Rs. NIL) due from IIFL Wealth Management Limited (maximum amount outstanding during the year Rs. NIL, Previous Year : Rs.330.00 million)

c) Rs. NIL (Previous year Rs. NIL) due from IIFL Securities Limited (Formerly Known as India Infoline Limited) (maximum amount outstanding during the year Rs.1,100.00 million, Previous Year : Rs. NIL)

d) Rs. NIL (Previous year Rs. NIL) due from IIFL Insurance Broker Limited (Formerly known as India Infoline Insurance Broker Limited) (maximum amount outstanding during the year Rs. NIL, Previous Year : Rs.316.50 million)

e) Rs. NIL (Previous year Rs. NIL) due from IIFL Management Services Limited (Formerly Known as India Infoline Insurance Services Limited) (maximum amount outstanding during the year Rs.183.00 million, Previous Year: Rs.2.50 million)

f) Rs. NIL (Previous year Rs. NIL) due from 5paisa Capital Limited (maximum amount outstanding during the year Rs.250.00 million, Previous Year : Rs.36.50 million)

g) Rs. NIL (Previous year Rs. NIL) due from IIFL Facilities Services Limited. (Formerly Known as IIFL Real Estate Limited) (maximum amount outstanding during the year Rs. NIL, Previous Year : Rs.200.00 million)

h) Rs. NIL (Previous year Rs. NIL) due from India Infoline Media and Research Services Limited (maximum amount outstanding during the year Rs.165.00 million, Previous Year : Rs.513.00 million)

i) Rs. NIL (Previous year Rs. NIL) due from IIFL Assets Reconstruction Limited (maximum amount outstanding during the year Rs. NIL, Previous Year : Rs.0.50 million)

NOTE 7.The Company has implemented Employee Stock Option Scheme 2008 (ESOP Schemes) and has outstanding options granted under the said Schemes. The options vest in graded manner and must be exercised within a specified period as per the terms of the grants made by the Nomination and Remuneration Committee and ESOP Schemes.

* The aforesaid variables are based on grant dated April 29, 2017 before considering effect of demerger of 5paisa digital undertaking from IIFL Holdings Limited in terms of Scheme of Arrangement approved by NCLT vide its order dated September 06, 2017. Post demerger, the revised exercise price got reduced by 2.36% to Rs.468.67 and fair value of option stand revised to Rs.201.65, as approved by Nomination and Remuneration Committee of the Board of Directors of the Company.

Stock Price: The closing market price on NSE one day prior to the date of grant has been considered for the purpose of Option valuation.

Volatility: The daily volatility of the stock prices on BSE, over a period prior to the date of grant, corresponding with the expected life of the Options has been considered to calculate the fair value.

Risk-free rate of return: The risk-free rate being considered for the calculation is the India Government Bond Generic Bid Yield with a maturity about equal to the expected life of the options.

Exercise Price: Price of each specific grant has been considered.

Time to Maturity: Time to Maturity / Expected Life of Options is the period for which the Company expects the Options to be live. The minimum life of a stock option is the minimum period before which the Options cannot be exercised and the maximum life is the period after which the Options cannot be exercised.

Expected dividend yield: Expected dividend yield has been calculated as an average of dividend yields for the three financial years preceding the date of the grant. The dividend yield for the year is derived by dividing the dividend per share

NOTE 8. In the opinion of the management, there is only one reportable business segment as envisaged by AS 17 âSegment Reportingâ. Accordingly, no separate disclosure for segment reporting is required to be made in the financial statements of the Company.

Secondary segmentation based on geography has not been presented as the Company operates primarily in India and the Company perceives that there is no significant difference in its risk and returns in operating from different geographic areas within India.

NOTE 9. CORPORATE SOCIAL RESPONSIBILITY

During the financial year 2017-18, the Company has spent Rs.7.18 million (Previous year Rs.5.02 million) out of the total amount of Rs.7.18 million (Previous year Rs.5.02 million) required to be spent as per section 135 of the Companies Act 2013 in respect of Corporate Social Responsibility (CSR). The aforementioned amount has been contributed to India Infoline Foundation.

NOTE 10. DEMERGED OPERATIONS_

During the year, the Company has received the approval of NCLT for the Scheme of Arrangement under Section 230-232 of the Companies Act, 1956 (âthe Schemeâ) between IIFL Holdings Limited and 5paisa Capital Limited (5PCL) and their respective shareholders to demerge 5paisa digital undertaking of the Company into 5PCL. The said order has been filed with MCA on September 30, 2017 and Demerger is effected w.e.f. the Appointed Date i.e. October 01, 2016 in the books of accounts of the Company. Accordingly, the financial statement have been presented after giving effect to the Scheme. As per the Scheme, the shareholders of the Company as on the record date i.e. October 18, 2017, has been allotted 1 equity share of Rs.10/- each fully paid up of 5PCL for every 25 equity shares of Rs.2/- each held in the Company. In view of above, 5PCL ceased to be a subsidiary of the Company.

In accordance with the accounting treatment, as provided under the Scheme of Arrangement;

(I) Following Assets and Liabilities where transferred to 5PCL.

(II) The Excess of the Book Value of asset transferred (net of diminution/depreciation, if any) over the book value of liability has been debited to Capital Reserve Rs.597.70 million, General Reserve of Rs.400.73 million and Rs.0.43 million was settled by cheque.

(III) All expenses incurred for 5paisa digital undertaking from October 01, 2016 were reimbursed by 5paisa Capital Limited after demerger order being effective. Expenses incurred from to October 01, 2016 to March 31, 2017 aggregating to Rs.12.45 million have been credited to surplus in the Statement of Profit and Loss and expenses incurred from April 01, 2017 to September 30, 2017 amounting to Rs.14.30 million have been recovered in bank account.

The Board of Directors of the Company at its meeting held on January 31, 2018, has approved the Composite Scheme of Arrangement amongst the Company, India Infoline Media and Research Services Limited (âIIFL M&Râ), IIFL Securities Limited (âIIFL Securitiesâ), IIFL Wealth Management Limited (âIIFL Wealthâ), India Infoline Finance Limited (âIIFL Financeâ), IIFL Distribution Services Limited (âIIFL Distributionâ), and their respective shareholders, under Sections 230 - 232 and other applicable provisions of the Companies Act, 2013 (âSchemeâ) which inter-alia, envisages the following:

i) amalgamation of IIFL M&R with the Company;

ii) demerger of the Securities Business Undertaking (as defined in the Scheme) of the Company into IIFL Securities;

iii) demerger of the Wealth Business Undertaking (as defined in the Scheme) of the Company into IIFL Wealth;

iv) amalgamation of IIFL Finance with the Company; and

v) transfer of the Broking and Depository Participant Business Undertaking (as defined in the Scheme) of IIFL Wealth to its wholly owned subsidiary i.e., IIFL Distribution, on a going-concern basis.

The Appointed Date for the amalgamation of IIFL M&R with the Company is opening hours of April 1, 2017 and for all the other steps, the Appointed Date is opening hours of April 1, 2018. The Scheme will be given effect to upon receipt of requisite approvals of NCLT and other authorities.

The operating activities of the Companyâs discontinuing operations are summarised below:

a. The revenue and expenses in respect of the ordinary activities attributable to the discontinuing operations.

b. The carrying amounts of the total assets and liabilities in respect of discontinuing operations to be transferred are as follows

NOTE 11. DETAILS OF INTER CORPORATE DEPOSITS_

During the year, the Company has placed and received back Inter Corporate Deposits details of which are mentioned in Note No. 34 and in table below.

The period of ICDâs is generally up to 1 year renewable thereafter, placed on armâs length basis at prevailing market interest rates (ranging from 9.25% to 9.50% p.a.), for the purpose of meeting working capital and business requirements.

(Figure in bracket represents previous year figures)

NOTE 12. The comparative financial information for the year ended March 31, 2017 were audited by the previous auditors of the Company.

NOTE 13. Previous year figures have been regrouped, reclassified & rearranged, wherever considered necessary to confirm to current yearâs presentation.

Mar 31, 2017

NOTE 1. CORPORATE INFORMATION:

IIFL Holdings Limited was incorporated on October 18, 1995 and is engaged in Merchant Banking and Investment Advisory services besides holding investments in subsidiaries. The Group business consist of finance, financial services, capital market services, distribution of financial products and wealth management services which are carried out by separate subsidiaries of IIFL Holdings Limited.

NOTE 2. DEFERRED TAX ASSETS

The Company recognized deferred tax assets for the year ended on March 31, 2017, since the management is reasonably / virtually certain of its profitable operations in future. As per Accounting Standard 22 âAccounting for Taxes on Incomeâ, the timing differences mainly relates to following items and result in a net deferred tax asset.

NOTE 3. CONTINGENT LIABILITIES

As of March 31, 2017, the Company had certain contingent liabilities not provided for, including the following:

NOTE 4. There is no pending litigation by and on the Company as on the balance sheet date.

NOTE 5. CAPITAL AND OTHER COMMITMENTS AT BALANCE SHEET DATE

There were outstanding commitments for others to the tune of Rs.10.45 million (previous year for investments Rs.0.24 million) of the total contractual obligation entered during the year.

NOTE 6. THE COMPANY HAS PROVIDED CORPORATE GUARANTEE ON BEHALF OF THE FOLLOWING SUBSIDIARIES FOR THEIR BUSINESS PURPOSES

NOTE: 7. Disclosure of loans/advances to subsidiaries and associates etc. as required under schedule V read with Regulation 34(3) and 53(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015

a) Rs.NIL (Previous year Rs.NIL) due from India Infoline Finance Limited (maximum amount outstanding during the year Rs.430.00 million, Previous Year : Rs.515.00 million)

b) Rs.NIL (Previous year Rs.NIL) due from IIFL wealth Management Limited (maximum amount outstanding during the year Rs.330.00 million, Previous Year : Rs.NIL)

c) Rs.NIL (Previous year Rs.NIL) due from IIFL Alternate Asset Advisors Limited (maximum amount outstanding during the year Rs.NIL, Previous Year : Rs.366.80 million)

d) Rs.NIL (Previous year Rs.316.50 million) due from India Infoline Insurance Broker Limited (maximum amount outstanding during the year Rs.316.50 million, Previous Year : Rs.331.50 million)

e) Rs.NIL (Previous year Rs.2.50 million) due from India Infoline Insurance Services Limited (maximum amount outstanding during the year Rs.2.50 million, Previous Year : Rs.2.50 million)

f) Rs.NIL (Previous year Rs.23.10 millions) due from 5Paisa Capital Limited (formerly know as IIFL capital Limited) (maximum amount outstanding during the year Rs.36.50 million, Previous Year : Rs.165.00 million)

g) Rs.NIL (Previous year Rs.NIL) due from India Infoline Commodities Limited (maximum amount outstanding during the year Rs.NIL , Previous Year : Rs.315.50 million)

h) Rs.NIL (Previous year Rs.NIL) due from IIFL Real Estate Limited(Formerly known as IIFL Facilities Limited and IIFL Realty Limited) (maximum amount outstanding during the year Rs.200.00 million, Previous Year : Rs.4.50 million)

i) Rs.NIL (Previous year Rs.NIL) due from India Infoline Housing Finance Limited (maximum amount outstanding during the year Rs.NIL, Previous Year : Rs.420.00 million)

j) Rs.NIL (Previous year Rs.363.80 million) due from India Infoline Media and Research Services Limited (maximum amount outstanding during the year Rs.513.00 million, Previous Year : Rs.400.00 million)

k) Rs.NIL (Previous year Rs.NIL) due from IIFL Asset Reconstruction Limited (maximum amount outstanding during the year Rs.0.50 million, Previous Year : Rs.NIL)

l) Rs.NIL (Previous year Rs.NIL) due from India Infoline Commodities DMCC Dubai (maximum amount outstanding during the year Rs.NIL Previous Year : Rs.. 2.18 million )

NOTE: 8. The Company has implemented Employee Stock Option Scheme 2007, 2008 (ESOP Schemes) and has outstanding options granted under the said Schemes. The options vest in graded manner and must be exercised within a specified period as per the terms of the grants made by the Nomination and Remuneration Committee and ESOP Schemes.

NOTE 9. In the opinion of the management, there is only one reportable business segment as envisaged by AS 17 âSegment Reporting. Accordingly, no separate disclosure for segment reporting is required to be made in the financial statements of the Company.

NOTE 10. CORPORATE SOCIAL RESPONSIBILITY

During the financial year 2016-17, the Company spend Rs.5.02 millions (P.Y. Rs.2.25 millions) out of the total amount of Rs.5.02 millions (P.Y. Rs.2.34 millions) required to be spent as per section 135 of the Companies Act 2013 in respect of Corporate Social Responsibility (CSR). The Company was focused on implementing the projects identified by the CSR Committee and had successfully completed most of the projects.

NOTE 11. DISCONTINUING OPERATIONS

On September 30, 2016, the Board of Directors of the Company and 5paisa Capital Limited, a wholly owned subsidiary of the Company, have approved a draft Scheme of Arrangement under Section 391-394 of the Companies Act, 1956 (âthe Schemeâ) between IIFL Holdings Limited [âIIFLHâ] and 5paisa Capital Limited [â5PCLâ] and their respective shareholders to demerge 5paisa digital undertaking of the Company into 5PCL. As per the proposed Scheme, the consideration for the proposed demerger is through issue and allotment of 1 (One) equity share of Rs.10/- each fully paid up of 5PCL for every 25 (Twenty Five) equity shares of IIFLH held by the shareholders of IIFLH. The appointed date for the proposed demerger Scheme is October 01, 2016. The draft of the scheme is available on the website of the Company i.e. https://www.iifl.com/investor-relations/corporate-announcements and on NSE & BSE website. The Scheme would be effective upon receipt of all requisite regulatory approvals and filing of the certified copies of the final order of National Company Law Tribunal (âNCLTâ) with the Registrar of Companies. The Company has since received âNo Objectionâ from SEBI, BSE and NSE on the draft Scheme of Arrangement and has filed the same with NCLT. As per the directions of NCLT, the Company has sent Notice to all the shareholders for NCLT Conveyed Meeting of shareholders of IIFLH and 5PCL. Pending final approval of the proposed scheme, the above financial statements of IIFL Holdings Limited is without considering the effect of the proposed demerger.

NOTE 12. Trade payable includes Rs.NIL (previous year - Rs.NIL) payable to âsupplierâ referred under the Micro, Small and Medium Enterprises Development Act, 2006. No Interest has been paid/is payable by company during the year to âSuppliersâ referred under the act. The aforementioned is based on the response received by the Company to its inquiries with suppliers with regards to applicability under the said act.

For the purposes of this clause the term âSpecified Bank Notesâ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O 3407(E), dated the November 8, 2016.

NOTE 13. Previous year figures have been regrouped, reclassified & rearranged, wherever considered necessary to confirm to current yearâs presentation.

Mar 31, 2013

1. CORPORATE INFORMATION:

India Infoline Limited was incorporated on October 18, 1995 and commenced its operations as an independent provider of information, analysis and research covering Indian businesses, financial markets and economy, to institutional clients. Over a period, India Infoline Ltd expanded its service offerings in the financial services space offering equity / currency broking in NSE / BSE and MCX-SX, Depository Participant services, merchant banking, portfolio management services and distribution of mutual fund, bonds etc. India Infoline Ltd is registered with SEBI for the above services. India Infoline Ltd is one of the leading players in the Indian financial services space. India Infoline Ltd operates through a network of close to 2,000 business locations across India.

NOTE 2. During the Previous Financial year 2011-12 the Company had sold its marketing and distribution business (including all its assets and liabilities of marketing and distribution business) of India Infoline Marketing services Ltd. by way of slump sale on a going concern basis to India Infoline Media and Research Ltd. a subsidiary of the company, for a lump sum consideration of Rs. 469,822,400/- vide agreement dated January 16, 2012. The profit earned by Company by virtue of this slump sale was Rs. 143,604,348/-.

NOTE 3. In order to achieve simplified business structure, focused management, strengthen core competencies and enhance value creation for the group, the Board of Directors of your Company have approved transfer of Company''s broking, Depository Participant, Portfolio Management, Mutual Fund Distribution and Investment Banking businesses ("Financial Services Undertaking") to a wholly owned subsidiary, India Infoline Distribution Company Limited ("IIDCL"), through a scheme of arrangement in terms of Section 391 to 394 of the Companies Act, 1956. As the said transfer is to a wholly owned subsidiary, it does not involve issue of new shares by the Company. The Appointed Date of the Scheme is April 1, 2013. The Scheme is subject to necessary approvals of regulatory authorities, shareholders, creditors and High Court. The Company has already initiated the process to seek the various requisite approvals. The Company continues with its remaining business and accordingly the accounts for the financial year have been prepared on a going concern basis.

NOTE 4. The claim against the Company not acknowledged as debt were Rs. 16,939,813/- (previous yearRs. 11,389,141/-), As of March 31, 2013, we had certain contingent liabilities not provided for, including the following:

NOTE 5. CAPITAL AND OTHER COMMITMENTS AT BALANCE SHEET DATE

There were outstanding commitments for capital expenditure (net of advances) to the tune of Rs. 19,738,682/- (previous year Rs. 54,189,295/-) and Other Commitment to the tune of Rs. 450,000,000/- (previous year Rs. 562,500,000/-) of the total contractual obligation entered during the year.

NOTE 6. The Company has taken office premises on operating lease at various locations. Lease rents in respect of the same have been charged to Statement of Profit and Loss. The agreements are executed for a period ranging from one to five years with a renewable clause. Some agreements have a clause for a minimum lock-in period. The agreements also have a clause for termination by either party after giving a prior notice period between 30 to 90 days. The Company has also taken some other assets under operating lease. The minimum future Lease rentals outstanding as at March 31, 2013, are as under:

The Company has taken office premises on operating lease at various locations. Lease rents in respect of the same have been charged to Statement of Profit and Loss. The agreements are executed for a period ranging from one to five years with a renewable clause. Some agreements have a clause for a minimum lock-in period. The agreements also have a clause for termination by either party after giving a prior notice period between 30 to 90 days. The Company has also taken some other assets under operating lease. The minimum future Lease rentals outstanding as at March 31, 2013, are as under:

NOTE 7. The Company has implemented Employee Stock Option Scheme 2005, 2007, 2008 (ESOP Schemes) and has outstanding options granted under the said Schemes. The options vest in graded manner and must be exercised within a specified period as per the terms of the grants made by the Remuneration and Compensation Committee and ESOP Schemes.

NOTE 8. The Company recognized deferred tax assets for the year ended on March 31, 2013, since the management is reasonably / virtually certain of its profitable operations in future. As per Accounting Standard 22 ''Accounting for Taxes on Income'', the timing differences mainly relates to following items and result in a net deferred tax asset.

NOTE 9. In the opinion of the management, there is only one reportable business segment as envisaged by AS 17 ''Segment Reporting''. Accordingly, no separate disclosure for segment reporting is required to be made in the financial statements of the Company.

Secondary segmentation based on geography has not been presented as the Company operates primarily in India and the Company perceives that there is no significant difference in its risk and returns in operating from different geographic areas within India.

NOTE 10. The Company provides for the use by its subsidiaries certain facilities like use of premises, infrastructure and other facilities/services and the same are termed as ''Shared Services''. The cost of such Shared Services are recovered from subsidiaries either on actual basis or on reasonable management estimates, which are constantly refined in the light of additional knowledge gained relevantto such estimation

NOTE 11. Previous year figures have been regrouped, reclassified & rearranged, wherever considered necessary to confirm to current year''s presentation.

Mar 31, 2012

Note: 1. CORPORATE INFORMATION:

India Infoline Limited was incorporated on October 18, 1995 and commenced its operations as an independent provider of information, analysis and research covering Indian businesses, financial markets and economy, to institutional clients. Over a period, India Infoline Ltd expanded its service offerings in the financial services space offering equity / currency broking in NSE / BSE and MCX-SX, depository participant services, merchant banking, portfolio management services and distribution of mutual fund, bonds etc. India Infoline Ltd is registered with SEBI for the above services. The Company is one of the leading players in the Indian financial services space. It operates through a network of over 3,000 business locations spread over more than 500 cities and towns across India. During the year under review, India Infoline Marketing Services Limited a wholly owned subsidiary, merged with the Company pursuant to order issued by Hon'ble High Court at the judicature of Bombay.

a. Terms / rights attached to equity shares

The Company has only one class of equity shares having par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees.

During the year ended March 31, 2012, the amount of per share dividend recognised as distribution to equity shareholders was Rs. 1.50 (Previous Year Rs. 3.00)

b. Shares reserved for issue under options:

For details of shares reserved for issue under the Employee Stock Option (ESOP) plan of the Company, please refer note 32.

Note: 2.

Pursuant to Section 391 - 394 of Companies Act, 1956, India Infoline Marketing Services Limited (IIMSL), a wholly owned subsidiary, was merged with India Infoline Limited. The merger was approved by Hon'ble High Court at the judicature of Bombay vide its order dated April 27, 2012. The appointed date of the merger is April 1, 2011.

IIMSL was engaged in marketing and distribution of financial products and other services.

The merger has been accounted for under the "Pooling of Interest" method as prescribed by the Accounting standard (AS) 14 on "Accounting for Amalgamations" notified under the Companies (Accounting Standard) Rules. The scheme has, accordingly, been given effect to in these financial statements as approved by the Hon'ble High Court at the judicature of Bombay.

All the Assets, Liabilities and Investments have been transferred to the Company at value appearing in the books of accounts of IIMSL as on March 31, 2011. Excess of assets over liabilities amounting to Rs. 1,645,011,953/- has been considered as capital reserve.

Upon the scheme being effective, the authorised share capital of the Company has increased to 600,000,000 equity shares of Rs. 2 each, amounting to Rs. 1,200,000,000/-.

The current year figures include the results of IIMSL and are therefore not comparable with those of the previous year.

Note: 3.

During the year, the Company has sold its marketing and distribution business (including all its assets and liabilities of marketing and distribution business of India Infoline Marketing services Ltd. which got merged with the Company as mentioned above in the Note no 26), by way of slump sale on a going concern basis to India Infoline Media and Research Ltd., a subsidary of the Company, for a lump sum consideration of Rs. 469,822,400/- vide agreement dated January 16, 2012. The profit earned by Company by virtue of this slump sale was Rs. 143,604,348/-.

Note: 4. CAPITAL AND OTHER COMMITMENTS AT BALANCE SHEET DATE:

There were outstanding commitments for capital expenditure (net of advances) to the tune of Rs. 54,189,295/- (previous year Rs. 69,068,704/-) and Other Commitment to the tune of Rs. 562,500,000/- (previous year Rs. Nil) of the total contractual obligation entered during the year.

Note: 5.

The Company has implemented Employee Stock Option Scheme 2005, 2007, 2008 (ESOP Schemes) and has outstanding options granted under the said Schemes. The options vest in graded manner and must be exercised within a specified period as per the terms of the grants made by the Remuneration and Compensation Committee and ESOP Schemes.

Note: 6.

The Company recognized deferred tax assets for the year ended March 31, 2012, since the management is reasonably / virtually certain of its profitable operations in future. As per Accounting Standard 22 'Accounting for Taxes on Income', the timing differences mainly relates to following items and result in a net deferred tax asset.

Note: 7.

In the opinion of the management, there is only one reportable business segment as envisaged by AS 17 'Segment Reporting'. Accordingly, no separate disclosure for segment reporting is required to be made in the financial statements of the Company.

Secondary segmentation based on geography has not been presented as the Company operates primarily in India and the Company perceives that there is no significant difference in its risk and returns in operating from different geographic areas within India.

Note: 8.

The Company provides for the use by its subsidiaries certain facilities like use of premises, infrastructure and other facilities / services and the same are termed as 'Shared Services'. The cost of such Shared Services are recovered from subsidiaries either on actual basis or on reasonable management estimates, which are constantly refined in the light of additional knowledge gained relevant to such estimation.

The above monies have been received against ESOPs exercised by certain eligible employees. The above shares have been issued during the current financial year and are well within the overall authorised capital of the Company. The shares were allotted as per the term of the respective ESOP Schemes.

Note: 9.

Previous year figures have been regrouped, reclassified & rearranged, wherever considered necessary to confirm to current year's presentation.

Mar 31, 2011

1. At balance sheet date, there were outstanding commitments for capital expenditure (net of advances) to the tune ofRs 69,068,704 (previous year Rs 104,993,301) of the total contractual obligation entered up to the end of the year.

2. The claims against the company not acknowledged as debt wereRs 65,233,873. contingent liability on account of income tax matter amounts to Rs 9,249,439 (previous yearRs 7,695,910) the company has filed appeals with the tax authorities against the said demands.

3. The company has provided corporate Guarantee on behalf of the following subsidiaries.

4. The company has implemented employee Stock Options Scheme 2005, 2007 and 2008 (ESOP Schemes) and has outstanding options granted under the said schemes. the options vest in graded manner and must be exercised within a specified period as per the terms of grants by the compensation / Remuneration committee and ESOP Schemes.

5. Pursuant to the resolution passed by the Board of Director of the company and in accordance with the provisions of the companies act, 1956 and the Securities and exchange Board of India (Buyback of Securities) Regulations, 1998, the company made a public announcement on December 24, 2010, to buy-back the companys equity shares at a price not exceeding Rs 99 share, aggregating to Rs 1,040 mn. the buy-back was successfully completed and the company bought back 12,998,877 equity shares and utilised maximum offer size of Rs 1,040 mn.

6. The company recognised deferred tax assets since the management is reasonably / virtually certain of its profitable operations in future. as per accounting Standard 22 accounting for taxes on income, the timing differences mainly relates to following items and result in a net deferred tax asset.

7. Company has pledged fixed deposits to the extent ofRs 2,670.00 mn (previous year Rs 2,515.14 mn) with banks for bank guarantees/ overdraft facilities and with the stock exchanges.

8. In the opinion of the management, there is only one reportable business segment as envisaged by AS 17 Segment Reporting. accordingly, no separate disclosure for segment reporting is required to be made in the financial statements of the company.

Secondary segmentation based on geography has not been presented as the company operates primarily in India and the company perceives that there is no significant difference in its risk and returns in operating from different geographic areas within India.

9. Financial income includes dividend on non trade and other investments of Rs 158,066,959 (previous year Rs 55,160,035), interest of Rs 696,477,129 (previous yearRs 186,282,511) and Profit on sale of investments Rs 150,992,725 (previous year Rs 80,746,527 ).

10. Interest expenses include the interest on debentures Rs 22,681,825 (Previous year Rs 71,881,046) and discount on commercial paper Rs 810,600,446 (Previous yearRs 22,623,911).

11. The company provides for the use by its subsidiaries certain facilities like use of premises, infrastructure and other facilities/services and the same are termed as Shared Services. the cost of such Shared Services are recovered from subsidiaries either on actual basis or on reasonable management estimates, which are constantly refined in the light of additional knowledge gained relevant to such estimation.

12. There are no dues to micro & small enterprises (MSEs) outstanding for more than 45 days.

13. Other requirements of Para 3 and 4 of part ii to Schedule VI of the companies act, 1956 are not applicable to the company.

14. Previous year figures have been regrouped, reclassified & rearranged, wherever considered necessary to conform to current years presentation.

Mar 31, 2010

1. At balance sheet date, there were outstanding commitments for capital expenditure (net of advances) to he tune of Rs. 104,993,301 (previous year Rs. 76,135,859) of the total contractual obligation entered during the year

2. The Company does not have contingent iabilities not provided for other than an ncome ax mater amountng to Rs.7,695,910. The Company has filed an appeal with the tax authorities against the said demand.

3. The Company has implemented Employee Stock Options Scheme 2005, 2007 and 2008 ESOP Schemes) and has outstanding options granted under the said schemes. The options vest in graded manner and must be exercised within a specified period as per the terms of grants by the Remuneration and Compensation Committee and ESOP Schemes.

4. Pursuant to the resolution passed by the Board of Directors of the Company and in accordance with the provisions of the Companies Act, 1956 and the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998, the Company made a Public Announcement on December 4, 2008, to buy-back the equity shares of the Company at a price not exceeding Rs. 43.20 per share, aggregating to Rs. 98.91 crore subject to a Buy-back of minimum 5,000,000 Equity Shares and maximum of 60,000,000 Equity Shares. The Buy-back was open from December 18, 2008 and closed on November 28, 2009 and the Company bought back 2,557,915 equity shares at an aggregate value of Rs. 10.80 crore. Consequently, the paid-up equity share capital of the Company declined from Rs. 57.19 crore to Rs. 56.68 crore as on November 28, 2009.

5. The Company has reduced its Gross block and accumulated depreciation for those assets having zero net block as on 31st March 2010 amounting to Rs. 80,116,662 (P.Y. Rs.156,049,067) The Company has also regrouped assets amounting to Rs. 81,689,935 during the year (P.Y. Rs. Nil)

6. During the year the Company has invested in NFL Wealth (UK) Ltd (wholly owned subsidiary) and India Infoline Trustee Company Ltd (wholly owned subsidiary) amounting to Rs.3,825,000 and Rs. 500,000 respectively. The Company has also contributed Rs.67,500,000 to India Infoline Venture Fund.

7. The Company recognised deferred tax assets for the year ended on 31st March 2010 since the management s reasonably/virually certain of its profitable operations in future. As per Accounting Standard 22 Accounting for Taxes on Income the timing differences mainly relates to following items and result in a net deferred tax asset.

8. Company has pledged fixed deposits to the extent of Rs. 2,515.14 Millon previous year 1,554.20 Millon) wih banks for bank guarantees/ overdraft facilities and with the stock exchanges.

9. Disclosure of oans/advances and investments in s own shares by the Listed Company, subsidiares and associates etc. as required

10. The Company has taken office premises on operating lease at various locations. Lease rent in respect of the same have been charged to Profit and Loss account .The agreements are executed for a period ranging from one to five years with a renewable clause. Some agreements have a clause for a minimum lock-in period. The agreements also have a clause for termination by either party giving a prior notice period between 30 to 90 days. The Company has also taken some other assets under operating lease. The minimum Lease rentals outstanding as at March

11. In the opinion of the management, here s only one reportable business segment as envisaged by AS 17 Segment Reporng1. Accordingly, no separate disclosure for segment reporting is required to be made in the financial statements of the Company.

Secondary segmentation based on geography has not been presented as the Company operates primarily in India and the Company perceives that there is no significant difference in its risk and returns in operating from diferent geographic areas within India.

12. The Company has reported revenues net of service tax, stamp duty and other regulatory charges compared to an inclusive method of reporting followed earlier This has resulted in a reduction in total revenues and direct costs to the extent of Rs. 1,046 mn each for he current year and Rs. 795 mn each for the previous year.

13. Financial income includes dividend on investments of Rs. 55,160,035 (previous year Rs. 151,667,039) interest of Rs. 186,282,511 (previous year Rs. 162,376,930) and Profit on sale of nvestments Rs. 80,746,527 (previous year (Rs. 21,355,583)).

14. Interest expenses include the interest on debentures Rs. 71,881,046 Previous year Rs. 28,289,522) and discount on commercial paper Rs. 22,623,911 (Previous year 47,834,812).

15. The Company provides for the use of its wholly owned subsidiaries certain facilities like use of premises, infrastructure and other facilities and services and the same are termed as Shared Services. Such shared services consisting of administrative and other revenue expenses paid for by the Company are recovered on an actual basis from subsidiaries and estimates are used where actuals are diffcult to determine.

16. There are no dues to micro & smal enterprises (MSEs) outstanding for more than 45 days.

17. Other equirements of Para 3 and 4 of part II o Schedule VI of he Companies Act,1956 are not applicable to the Company.

18. Previous year gures have been egrouped, eclassifed & earranged, wherever considered necessary to confrm to curent years presentation.

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