Directors Report of Poonawalla Fincorp Ltd.

COMPANY AND BUSINESS OVERVIEW

The Company is a Non-Banking Financial Company
(“NBFC”) offering a diversified suite of 13 (thirteen)
loan products, catering to diverse borrower segments,
including salaried and self-employed individuals,
professionals from diverse backgrounds, students,
micro, small and medium enterprises (“MSMEs”) and
mid-sized corporates.

The Company commenced its lending operations in
1989 and has a customer base of over twenty two
lakh customers, as of March 31, 2026.

Following its acquisition by Rising Sun Holdings
Private Limited, a member of the Cyrus Poonawalla
Group, in May 2021, the Company has undertaken
several strategic initiatives. These include refined
product suite, introduced new products, embedded
a credit by design “risk-first” approach, invested in
its distribution network, technology and artificial
intelligence (“AI”) initiatives, established an
organizational structure with a multi-tiered leadership
team and scaled its assets under management
("AUM") while maintaining asset quality.

The Company''s product portfolio comprises loan
against property, instant consumer loans, mid¬
market loans, business loans, pre-owned car loans,
prime personal loans, gold loans, education loans,
professional loans, consumer durable loans, machinery
and medical equipment loans, commercial vehicle
loans and shopkeeper loans. The AUM for newly
introduced products comprising prime personal loan,
gold loans, education loans, consumer durable loans,
commercial vehicles loans and shopkeeper loans was
H 8,298 Crores, 14% of our AUM, as of March 31, 2026.
The Company maintained a balanced mix of secured
and unsecured lending, with 54% and 46% of our
onbook AUM categorized as secured and unsecured
lending as of March 31, 2026, respectively.

Our credit-by-design framework embeds a “risk-
first” culture and disciplined risk management
across the lending cycle. The Company prioritizes risk
management and asset quality to pursue growth that
is sustainable, predictable and productive, consistent
with its risk management framework.

The Company operates a ‘phygital'' distribution
network that integrates physical and digital channels
to reach a wider set of customers, increase operational
efficiency and reduce costs. The Company has an
extensive physical distribution channel comprising
504 branches across 20 states and union territories,
over 2,700 Channel Partners, over 12,500 dealers
(including retailers and original equipment
manufacturers), over 500 counsellor partners and 6
call centers, as of March 31, 2026.

Operations are underpinned by advanced
technological and AI systems integrated into our
platform, which span across the lending cycle. Digital
and analytics form the core of our technology AI
capabilities and enable us to enhance revenue streams
and drive productivity to optimize our operating and
credit costs.

The Company is led by an experienced management
team, with key managerial personnel ("KMP") and
senior management personnel ("SMP") possessing
extensive and diverse experience in the financial
service industries. The management team is guided
by the Board of Directors of the Company (“Board of
Directors” or “Board”).

The Company operates with a robust risk
management framework grounded in a credit-
by-design, “risk-first” philosophy. It prioritizes risk
management and asset quality to pursue growth
that is sustainable, predictable and disciplined.
The framework spans the entire lending lifecycle,
including prospecting, underwriting, portfolio
monitoring, collections, fraud risk, information
security and compliance, thereby strengthening
our risk management framework and supporting
disciplined, scalable growth.

FINANCIAL PERFORMANCE AND STATE OF
THE COMPANY’S AFFAIRS:

Financial performance:

Your Company has delivered strong financial
performance marked by growth, robust capitalization
and resilient asset quality. Our AUM grew to
H 60,348 as of March 31, 2026. Total Income grew to
H 6795.65 Crore for the year ended March 31, 2026.
Capital position remains robust with a CRAR, above
the regulatory requirement of 15.00%. Asset quality
remains resilient with Gross NPA of 1.44% and Net
NPA of 0.74% as of March 31, 2026, supported by a
provision coverage ratio of 49.00%.

Total Income on a standalone basis increased to
H 6,795.65 Crore in FY 2025-26 from H 4,222.84 Crore
in FY 2024-25 reflecting strong business growth

across all retail products. Net Interest Income (NII),
including the fees and other income continues to
grow healthy and on a standalone basis increased to
H 4028.98 Crore in FY 2025-26 from H 2,707.75
Crore in FY 2024-25, primarily driven by an increase
in AUM, improved yield profile, and enhanced
operating leverage.

The impairment on financial instruments decreased
to H 1,104.13 Crore in FY 2025-26 from H 1,458.17 Crore
in FY 2024-25 largely attributable to the erstwhile
small ticket personal loan book (STPL), which has
since been recalibrated. Policy interventions, across
other retail products leading to improved quality of
origination, coupled with better collection efficiency,
resulted in reduced forward flows aiding in reduction
in impairment cost.

The Company''s Profit/(loss) after tax (“PAT”) on a
standalone basis increased to H 541.81 Crore in
FY 2025-26 from H (98.34) Crore in FY 2024-25.

As at March 31, 2026, the Company''s Capital to Risk-
weighted Assets Ratio or the Capital Risk Adequacy
Ratio ("CRAR") was 16.83%, which is above the
regulatory minimum requirement of 15% prescribed
by the Reserve Bank of India ("RBI"). Following the
successful capital raise of H 2,500 Crore through
qualified institutional placement (QIP) in the month
of April 2026, the simulated CRAR was 20.74% basis
balance sheet for the financial year ended March 31,
2026, providing enough headroom for growth and
leverage at 3.78x.

ALM statement and Liquidity:

We have a well-diversified liability base supported
by long-term credit ratings of CRISIL AAA/Stable
and CARE AAA;Stable, short-term ratings of CRISIL
A1 and CARE A1 and our perpetual bonds are
rated CRISIL AA /Stable and CARE AA ;Stable, as of
March 31, 2026, reflecting our strong credit position.
Our NCDs are also rated BWR AAA/Stable and
ACUITE AAA/Stable by Brickwork Ratings India
Private Limited and Acuite Ratings and Research
Limited, respectively.

We have a diversified borrowing mix, including short
and long term loans from banks, NCDs, commercial
paper and external commercial borrowings, ensuring
depth and flexibility in market access. Our average
cost of borrowings (i.e., the ratio of our finance costs
for the relevant period/year to a simple average of
daily outstanding borrowings for the relevant period/
year) was 7.73% and 8.09% for FY 2025-26 and
FY 2024-25, respectively. We follow a prudent asset-
liability management (“ALM”) strategy, maintaining

a balanced mix of short-term and long-term assets
and liabilities. As of March 31, 2026, based on residual
maturity, 63.68% of our borrowings were long-term
borrowings, and 36.32% of our borrowings were short¬
term borrowings. Our strong credit rating, diversified
liability base and an optimized mix of short- and
long-term liabilities have supported a measurable
reduction in our cost of borrowings.

We further reinforce risk discipline through a board-
constituted Asset Liability Management Committee
(“ALCO”), which reviews changes in the economic
environment and suggests suitable strategies for
effective resource management, managing our cost
of funds and responsiveness to market conditions.
Further, we manage liquidity and interest rate risks
through ALM policies, daily liquidity coverage ratio
monitoring, duration sensitivity analysis and periodic
stress testing through our ALCO.

Transfer to reserve:

During the year under review, the Company has
transferred H 108.37 Crore to Reserve as required
under Regulation 45-IC of the Reserve Bank of India
Act, 1934.

Dividend:

In view of the future growth of the Company, the
Board of Directors has decided to conserve capital.
Therefore, the Board has decided not to recommend
dividend for FY 2025-26.

The Dividend Distribution Policy, in terms of
Regulation 43A of the Securities and Exchange
Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 ("SEBI Listing
Regulations”) and as reviewed and adopted
by the Board of Directors of the Company, is
available on the Company''s website viz., URL:
https://poonawallafincorp.com/documents
/20121/0/4. PFL Dividend Distribution Policy
Version No. 5.0.pdf/e1e4fa2a-b79f-599f-e02f-
670aa0a803a4

Subsidiary and Joint Venture companies and
its performance highlights:

The Company has one joint venture company, Jaguar
Advisory Services Private Limited (“JASPL”) and no
subsidiary company as on March 31, 2026.

JASPL, a joint venture with HDI Global SE is an
advisory service company domiciled in India. JASPL is
a special purpose vehicle (SPV) company. The Board
of Directors and the Shareholders of the Company

have approved divestment of 11,000 equity shares
constituting 48.89% of the share capital held by the
Company in JASPL, the said transaction is subject to
requisite regulatory approvals. The Board reaffirmed
the proposal to divest its shareholding in JASPL at its
meeting held on May 05, 2026, and accordingly in line
with the requirements of Ind - AS 105 “Non-current
Assets Held for Sale and Discontinued Operations”,
such investment has been classified as assets held
for sale.

During FY 2025-26, no new subsidiary, joint
venture or associate was incorporated/acquired.
The Company''s Policy for determination of
material subsidiaries, as adopted by the Board
of Directors is in conformity with Regulation
16 of the SEBI Listing Regulations, can be
accessed on the Company''s website athttps://
poonawallafincorp.com/documents/20121
/0/PFL-ACB-Policv-on-Material-Subsidiarv-
Version-No-6.0.pdf/701a6e1f-74a2-31a5-6f1a-
4f37e08f1219

Pursuant to the provisions of Section 129(3) of
the Companies Act, 2013 ("Act"), a statement
containing the salient features of financial
statements of the Company''s subsidiary in e-Form
No. AOC-1 is attached to the financial statements of
the Company.

Consolidated financial statements:

In accordance with the requirements of Regulation
34 of SEBI Listing Regulations, your Company has
prepared Consolidated Financial Statements in
accordance with Ind AS -110 - ‘Consolidated Financial
Statements'' and Ind AS- 27 - ‘Separate Financial
Statements''. The Consolidated Financial Statements
form part of this Report.

DEPOSITS:

Being a non-deposit taking NBFC, your Company has
not accepted any deposits from the public within the
meaning of the provisions of the Master Direction
of Reserve Bank of India (Non-Banking Financial
Companies - Acceptance of Public Deposits)
Directions, 2025 and the applicable provisions of
the Act.

CHANGE IN NATURE OF BUSINESS:

During the year under review, there has been no
change in the nature of business and operations of
the Company.

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

There have been no material changes and
commitments which affected the financial position of
your Company that have occurred between the end
of the financial year to which the financial statements
relate and up to the date of this Report.

MANAGEMENT DISCUSSION AND ANALYSIS:

In accordance with the applicable provisions of the
SEBI Listing Regulations, the Management Discussion
and Analysis Report, forms part of this Report.

EMPLOYEE STOCK OPTION SCHEMES:

Equity based compensation is an integral part of
employee compensation across sectors which
enables alignment of personal goals of the employees
with organizational objectives by participating in the
ownership of the Company through share-based
compensation scheme/plan. Your Company believes
in rewarding its employees for their continuous
hard work, dedication, and support, which have
contributed to the Company''s growth and success.

The Employee Stock Option Plan (“ESOP”) granted
to the employees of the Company currently operate
under the following schemes:

- Employee Stock Option Plan 2021
(ESOP- 2021)

The Company has instituted the Employee Stock
Option Plan - 2021 (“ESOP 2021”), administered
by the Nomination and Remuneration
Committee ("NRC"). ESOP 2021 was approved
by the Board of Directors on June 19, 2021 and
our Shareholders on July 24, 2021. Under ESOP
2021, the maximum aggregate number of
stock options that could be allotted was limited
to 15,000,000 stock options, with each option
representing one Equity Share of the Company.
The NRC at its meeting held on June 01, 2024,
approved the termination of ESOP 2021 and
cancelled ungranted stock options under the
scheme. The stock options that have been
granted under ESOP 2021 to eligible employees
of our Company, and remain outstanding,
shall remain operational until such options are
exercised/lapsed.

- Employee Stock Option Plan 2024 Scheme
II (ESOP 2024 Scheme II)

The Company has instituted the Employee Stock
Option Plan - 2024 - Scheme II ("ESOP 24")
administered by the Nomination and
Remuneration Committee. ESOP 2024 was
approved by the Board of Directors on April 8,
2024, and our Shareholders on May 13, 2024.
Under ESOP 2024, the maximum aggregate
number of stock options that could be allotted
was limited to 20,000,000 stock options, with
each option representing one Equity Share of
the Company. These options were granted in the
absolute discretion of the NRC on the basis of
factors such as eligible employee''s performance
appraisal, seniority, period of service, and present
and potential contribution to the growth of the
Company. ESOP 2024 was amended through a
special resolution passed by our Shareholders by
way of postal ballot on June 16, 2025, to increase
the maximum aggregate number of stock
options that could be allotted under this scheme
to 32,500,000 stock options, with each option
representing one Equity Share of the Company.

Accordingly, employee stock options were
granted to eligible employees under ESOP 2024,
from time to time pursuant to multiple grants
made by the Company. During the year under
review, 20,15,000 options were granted under
ESOP 2024 Scheme II of the Company.

The aforesaid schemes are in compliance with
Securities and Exchange Board of India (Share Based
Employee Benefits and Sweat Equity) Regulations,
2021 (“SEBI (SBEB & SE) Regulations, 2021”), to the
extent applicable. The NRC of the Company, inter alia,
administers and monitors the schemes in accordance
with the SEBI (SBEB & SE) Regulations, 2021.

A statement giving complete details, as on March 31,
2026, as required under the Act and Regulation 14
read with Part F of Schedule I of the SEBI (SBEB&SE)
Regulations, 2021 is available on the website of
the Company athttps://poonawallafincorp.com/
investor-governance.These details, along with
the certificate from the Secretarial Auditor of the
Company, as required under Regulation 13 of the
SEBI (SBEB & SE) Regulations 2021, the schemes
have been implemented in accordance with the
said Regulations, would be placed and available
for inspection by the Members during the Annual
General Meeting (“AGM”) of the Company. Grant
wise details of ESOP vested, exercised, allotted
and cancelled are also provided in the notes to the
standalone financial statements.

The Company has instituted the Employee Stock
Option Plan - 2024 (“ESOP 2024 - PFL Trust"),
administered by the NRC, to acquire, purchase, hold
and deal in the Equity Shares by way of secondary
acquisition through the PFL Employee Welfare
Trust. The ESOP 2024 - PFL Trust was approved by
the Board of Directors on January 18, 2024, and our
Shareholders on February 20, 2024. However, the
Board of Directors at their meeting held on June
01, 2024, approved the cancellation of ESOP 2024 -
PFL Trust and the dissolution of the PFL Employees
Welfare Trust, subject to requisite approvals and
compliances under applicable law. Under the said
scheme no stock options were granted by the
Company to any employee under ESOP 2024 - PFL
Trust. ESOP 2024 - PFL Trust is holding 48,30,000
equity shares of the Company as on March 31, 2026.
The shareholding is disclosed as "non-promotor and
non-public shareholding" in the shareholding pattern
of the Company.

CHANGES IN SHARE CAPITAL:

During the year under review, your Company allotted
16,55,156 equity shares of face value of H 2/- each
pursuant to the exercise of Employee Stock Options
by eligible employees of your Company, in accordance
with the applicable Employee Stock Option Scheme.

The Board of Directors, vide resolution dated
September 17, 2025, approved the allotment of
3,31,48,102 fully paid-up equity shares of face value
H 2/- each, at an issue price of H 452.51/- per equity
share (including a premium of H 450.51 per equity
share) aggregating to H 1499.98 Crore (Rupees
One Thousand Four Hundred Ninety Nine Crores
and Ninety Eight Lakh only), by way of preferential
allotment in accordance with the Securities and
Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2018 (“SEBI
ICDR Regulations") on a private placement basis to
Rising Sun Holdings Private Limited, the Promoter of
the Company.

At the close of the financial year, pursuant to the
aforesaid allotments, the issued, subscribed and
paid-up equity share capital of the Company stand
increased to H 1,625,635,316.00/- (Rupees One
Hundred Sixty-Two Crore Fifty Six Lakh Thirty
Five Thousand Three Hundred and Sixteen Only)
consisting of 812,817,658 Nos. of equity shares
(Eighty-One Crore Twenty Eight Lakh Seventeen
Thousand Six Hundred and Fifty-Eight).

After the close of the financial year, the Committee of
Directors of the Board on April 13, 2026, approved the
allotment of 67,430,883 fully paid-up equity shares of
face value H 2/- each, to eligible Qualified Institutional

Buyers, at an issue price of H 370.75 per equity share
(including a premium of H 368.75 per equity share)
aggregating to H 2,500 Crore (Rupees Two Thousand
Five Hundred Crore only), pursuant to the qualified
institutional placement (QIP) in accordance with the
applicable provisions of the SEBI ICDR Regulations,
2018 and the Act. The QIP Issue opened on April 9,
2026, and closed on April 13, 2026.

Further, the NRC on April 24, 2026, allotted 68,207
equity shares of face value of H 2/- each pursuant to
the exercise of Employee Stock Options by eligible
employees of your Company, in accordance with the
applicable Employee Stock Option Scheme.

Pursuant to aforesaid allotments, the issued,
subscribed and paid-up equity share capital of the
Company stand increased to H 1,760,633,496.00/-
(Rupees One Hundred Seventy-Six Crore Six Lakh
Thirty Three Thousand Four Hundred and Ninety Six
Only) consisting of 88,03,16,748 Nos. of equity shares
(Eighty-Eight Crore Three Lakh Sixteen Thousand
Seven Hundred and Forty-Eight).

The new equity shares issued shall rank pari-passu
with the existing equity shares of the Company.

FUND RAISING:

During the year under review, your Company
continued with its diverse methods of sourcing funds
including borrowing through NCDs, commercial
papers, external commercial borrowings, term
loan and working capital facilities and maintained
prudential Asset Liability match throughout the
year. Your Company sourced funds by way of issuing
NCDs to and obtaining loans from banks and other
institutions at competitive rates. Your Company
continues to expand its borrowing profile by tapping
new lenders.

During the year, the Company has raised fresh term
loans of H 14,725 Crore and external commercial
borrowings of H 1,281.40 Crore from banks and
other financial institutions for a door-to-door tenor
ranging from 3 (three) to 5 (five) years. The Company
also raised funds through commercial paper
aggregating to H 13,075 Crore (peak outstanding
of CP during the year was H 4,695 Crore) and
secured NCDs of H 13,580 Crore and Subordinated
NCDs of H 250 Crore during the year. The funds raised
through commercial papers and NCDs were utilized
for the purpose specified in the respective offer
documents. Catalyst Trusteeship Limited is acting
as Debenture Trustee of the Company, the details of
which are given in the Corporate Governance Report.
As on March 31, 2026, your Company does not have
any listed green debt securities.

Further disclosure related to Perpetual Debt
Instrument as per the Reserve Bank of India
(Non-Banking Financial Companies - Prudential
Norms on Capital Adequacy) Directions, 2025, is
provided in the standalone financial statements.

The Company on September 17, 2025, raised a
sum of H 1499.98 Crore fully paid-up equity shares
through preferential issue to its Promoter. Further,
on April 13, 2026, the Company successfully raised
I 2,500 Crore, by issuance of fully paid-up equity
shares through a Qualified Institutions Placement
(QIP). The issue witnessed strong participation from
institutional investors and long-term funds, reflecting
continued confidence in the Company''s strategy and
growth outlook.

Pursuant to the provisions of regulation 32(7A) of
the SEBI Listing Regulations, the Company has
fully utilised the funds raised through preferential
issue for the objects stated in the offer document
and notice seeking Members approval i.e., Prepay/
repay the borrowings including interest thereon of
the Company, AUM growth and for lending towards
various financing activities as per applicable law/
regulation for NBFC and general corporate purposes.
CARE Ratings Ltd., monitoring agency, has issued
reports confirming utilisation of funds as per stated
objects. The said report is available on the Company''s
website athttps://poonawallafincorp.com/investor-
governance. Statement of fund utilisation pursuant
to Regulation 32 of the SEBI Listing Regulations
has also been filed with the stock exchanges for
preferential issue. Pertaining to fund raising through

QIP, utilisation report under regulation 32(7A) of SEBI
Listing Regulations, 2026, will be disclosed as per
applicable timelines.

CREDIT RATING:

During the year under review, CRISIL Ratings
reaffirmed the ratings assigned to bank facilities and
debt instruments in March 2026. The ratings of long¬
term bank facilities, NCDs and Subordinated Debt
were reaffirmed as CRISIL AAA/Stable. Further, the
ratings of Commercial Papers and short-term bank
Facilities were reaffirmed as CRISIL A1 and Perpetual
Debt Instruments were reaffirmed as CRISIL AA /
Stable.

In March 2026, CARE Ratings reaffirmed the rating
assigned to bank facilities and debt instruments.
Ratings of long-term Bank Facilities, NCDs and
Subordinated Debt were reaffirmed at CARE AAA;
Stable, and the ratings of Market Linked Debentures
were reaffirmed at CARE PP-MLD AAA; Stable.
Ratings of Perpetual Debt were reaffirmed at CARE
AA ; Stable. The ratings assigned to short-term bank
facilities and commercial paper were reaffirmed at
‘CARE A1 ''.

In February 2026, Brickwork Ratings reaffirmed the
ratings for the NCDs to ‘BWR AAA/Stable''. Further,
the rating of subordinated debt was also reaffirmed
to BWR AAA/Stable.

In May 2025, Acuite Ratings and Research Limited
also reaffirmed the long-term rating assigned to
NCDs as ‘ACUITE AAA/Stable''.

Status of ratings assigned by rating agencies and
migration of ratings during the year are provided in
note to the standalone financial statements.

PARTICULARS OF LOANS, GUARANTEE AND
INVESTMENTS OUTSTANDING DURING THE
FINANCIAL YEAR:

The Company, being an NBFC registered with the
RBI and engaged in the business of giving loans
in ordinary course of its business, is exempt from
complying with the provisions of Section 186 of the
Act with respect to loans. Accordingly, the disclosures
of the loans given as required under the aforesaid
section have not been made in this Board''s Report.

Particulars of loans and investments outstanding
during the financial year are furnished in notes to the
standalone financial statements of the Company.

Further, the Company has not provided any loans to
Directors, senior officers and relatives of directors
as per the Reserve Bank of India (Non-Banking
Financial Companies - Credit Risk Management)
Directions, 2025.

RISK MANAGEMENT FRAMEWORK:

Risk Management:

The Risk Management Committee presently
comprises of Mr. Rajeev Sardana who serves as the
Chairman of the committee; Mr. Arvind Kapil, Mr. Sunil
Samdani, Mr. Vikas Pandey, Mr. Sanjay Kumar, and
Ms. Sonal Modi, as its other members.

The Company has adopted a Risk Management
Policy in accordance with the provisions of the Act
and Regulation 17(9) of the SEBI Listing Regulations.
Managing risk is fundamental to financial services
industry and it is key to ensure sustained profitability
and stability. In a rapidly changing economic,
geopolitical, regulatory and financial environment,
your Company has continued to leverage on their
strong risk management capabilities.

The Risk Management Committee functions are in
line with the Reserve Bank of India (Non-Banking
Financial Companies - Governance) Directions, 2025,
SEBI Listing Regulations and oversee implementation
of the Risk Management Framework of the Company.
The Risk Management Committee met 5 (five) times
during the year. Meeting details, terms of reference,
and its functioning are set out in the Corporate
Governance Report.

The Company understands that risk evaluation
and risk mitigation is a function of the Board of
the Company, and the Board of Directors are fully

committed to developing a sound system for
identification and mitigation of applicable risks
viz., systemic, and non-systemic. Information on
the development and implementation of a Risk
Management Policy for the Company is given in the
Management Discussion and Analysis. The Board is
of the opinion that there are no elements of risk that
may threaten the existence of the Company.

INTERNAL CAPITAL ADEQUACY ASSESSMENT
PROCESS:

Pursuant to Master Direction - Reserve Bank of India,
a Middle-layer NBFC is required to have an Internal
Capital Adequacy Assessment Process ("ICAAP") in
place which also covers stress testing. The objective
of ICAAP is to ensure availability of adequate capital
to support all material risks in business and also to
encourage NBFCs to develop and use better internal
risk management techniques for monitoring and
managing their risks. Accordingly, the Company has
framed and implemented an ICAAP policy. Pursuant
to which the Company assesses the adequacy of
its capital relative to its risk profile on a forward¬
looking basis.

INTERNAL FINANCIAL CONTROLS:

The management has laid down a set of standards,
processes and structure which enables it to implement
internal financial controls across the organization with
reference to financial statements and such controls
are adequate and are operating effectively. Internal
Finance control framework has been established
in line with the ''Guidance Note on Audit of Internal
Financial Controls over Financial Reporting'' issued
by the Institute of Chartered Accountants of India
("ICAI").

During FY 2025-26, testing was conducted based
on process walkthrough and review of samples as per
documented controls in the Risk and Control Matrix.
Testing was done for the planned controls confirming
the existence and operating effectiveness of controls
over financial reporting. The review was performed
on design, adequacy and operating effectiveness of
the controls.

The internal financial controls are supplemented
by extensive internal audits, regular reviews by the
management and standard policies and guidelines
to ensure reliability of financial and all other records
to prepare financial statements, its reporting and
other data. The Audit Committee of the Board (“ACB”)
reviews internal audit reports given along with
management responses. The ACB also monitors the
implemented suggestions.

The Company has, in all material respects, adequate
internal financial control over financial reporting and
such controls operate effectively.

The Joint Statutory Auditors of the Company have also
certified the existence and operating effectiveness
of the internal financial controls relating to financial
reporting as of March 31, 2026. During the year
under review, no material or serious observation
has been observed for inefficiency or inadequacy of
such controls.

VIGIL MECHANISM/WHISTLE BLOWER POLICY:

The Company promotes ethical behavior in all
its business activities and is in line with the best
governance practices. The Company has a robust
vigil mechanism through its Breach of Integrity and
Whistle Blower/Vigil Mechanism Policy approved and
adopted by the Board of Directors of the Company
pursuant to Section 177(9) of the Act read with
Regulation 4(2)(d)(iv) and 22 of the SEBI Listing
Regulations and Regulation 9A(6) of the Securities
and Exchange Board of India (Prohibition of Insider
Trading) Regulations, 2015, the Company has in
place a vigil mechanism named ‘Breach of Integrity
and Whistle Blower/Vigil Mechanism Policy'' to
provide a formal mechanism to the directors and
employees to report their concerns about unethical
behavior, actual or suspected fraud or violation of
the Company''s Code of Conduct or Business Ethics.
The Policy provides for adequate safeguards against
victimization of employees who avail the mechanism
and provides for direct access to the Chairman of the
ACB in appropriate and exceptional circumstances.
A quarterly report on the whistle-blower complaints
was placed before the ACB for its review.

The details of the said Policy are explained in the
Corporate Governance Report and is available on the
website of the Company athttps://poonawallafincorp.
com/documents/20121/0/2. PFL
Breach of Integrity and Whistle Blower Vigil
Mechanism Policy Version No.7.0 %281%29.pdf/
a4086e28-bead-0511-93e5-b630b38a9bce

COMPLIANCE MANAGEMENT:

The Company is implementing a comprehensive
compliance management tool ("CMT") developed by
consultant, to strengthen its compliance framework.
The objective of CMT tool is to provide: - repository
of regulations, dissemination of actionable, seek
certification and keep audit trail of actionable, monitor

the observations via dashboard and reports and
escalate delays through alerts. This system enhances
transparency, accountability, and effective monitoring
of the Company''s regulatory compliance obligations.

HUMAN RESOURCES:

Your Company firmly believes that employees are its
greatest asset. By orchestrating successful change
management initiatives aligned with the Company''s
Vision and Mission, the Human Resources ("HR")
department has been pivotal in driving organizational
success through a series of transformative efforts. By
prioritizing innovation and efficiency, HR integrated
strategic automation and AI into core functions. Key
initiatives included the launch of the MD''s Honour to
celebrate exemplary contributions, the introduction
of flexible work hours, and AI-driven hiring processes
that increased offer capacity. Additionally, continuous
learning and leadership development programmes,
such as the “Prarambh” induction programme and
the “SkillUp” digital learning platform, have ensured
that employees are well-equipped to meet future
challenges. These efforts have collectively elevated
the employee experience, built a robust, tech-enabled
HR ecosystem, and positioned your Company as a
leader in HR innovation and excellence.

Succession Planning:

The Company has in place succession planning
framework, the objective of the succession planning
inter-alia includes:

• To ensure that the business is not affected on
account of vacancies arising in the SMP, whether
such vacancies are caused by reasons such as
retirement, resignation, death or permanent
incapacitation or sudden exit for any other reason.

• To identify and create a pool of high potential
personnel, who can be considered for appointments
at SMP positions.

• To groom the pool identified and provide a
career path, to assume such higher roles and
responsibilities in a seamless manner whenever
the need arises.

The NRC and Board review succession planning
and transitions at the Board and SMP level. The
Board composition and the desired skill sets/areas
of expertise at the Board level are reviewed and
vacancies, if any, are reviewed in advance through a
systematic process.

Succession planning at SMP level, including business
and assurance functions, is reviewed to ensure
continuity and depth of leadership at 2 (two) below
the Managing Director. Successors are identified
prior to the SMP positions falling vacant, to ensure a
smooth and seamless transition. Succession planning
is a continuous process which is periodically reviewed
by NRC and the Board.

Compliance with the Maternity Benefit Act,
1961:

The Company is in compliance with the applicable
provisions of Maternity Benefit Act, 1961 in respect
of its female employees, including those relating to
maternity leave and associated benefits.

Prevention of sexual harassment at workplace:

The Company has zero tolerance towards sexual
harassment at the workplace and has adopted
a ‘Policy on Prevention and Redressal of Sexual
Harassment'' to prohibit, prevent or deter any acts of
sexual harassment at workplace and to provide the
procedure for the redressal of complaints pertaining
to sexual harassment, thereby providing a safe and
healthy work environment, in line with the provisions
of Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013
and the rules thereunder ("POSH Act”). The Company
has complied with the provisions relating to the
constitution of the Internal Committee ("IC") under
the POSH Act.

During the year under review, no case of sexual
harassment was reported to the IC. The composition
of IC is in accordance with the POSH Act. To build
awareness and appreciation of this area, your
Company has implemented an online knowledge
module leveraging our learning management system.

Your Company continues to strive harder with each
passing year to ensure our organization succeed
in bringing the best out of our people and enable
the organization to create value for its shareholders
and employees.

INFORMATION TECHNOLOGY, GOVERNANCE
AND CYBER SECURITY:

Information Technology ("IT"):

The technological advancement in your Company
has resulted in multi-fold growth in the digital-led
business. There is significant growth in API based end-
to-end digital lending through mobile application,
digital DSAs and co-lending partners.

Your Company''s IT guiding principles are:

(1) Digital first through increased digital footprint
across loan journeys.

(2) Offer best-in-class customer experience
across channels.

(3) Ensure "Scalable, Resilient, Predictable”
technology infrastructure with single governance
and 24x7 availability.

Your Company''s Information Technology primary
focus areas include superior customer experience,
technology upgrade, new products/services,
innovations, productivity/process improvements,
digital acquisition, and data science/analytics with an
overall focus on observability to ensure resilience.

Your Company has launched its digital stack for
customer acquisition on instant personal loan,
business loan for direct customer acquisition. A tight
integration of this with the lead management and
dialer platform enables effective customer nudging
resulting in higher conversion. The EMIC card journey
has also been launched. In addition, the API stack
launched and consumed in embedded partner
journeys has enabled us to onboard more partners
for customer acquisition. Your Company has also
launched leasing business on its in-house platform.
Business processes in operations, customer service
and finance have been re-aligned as per industry-
best practices thus enabling end-to-end automation
of each process through seamless API based
integration of IT systems. Your Company continues
to enhance the website which enables efficient lead
generation through search engine optimization,
customer acquisition, user centric design and content
management framework to enable faster feature
launches on website.

We are focused on adopting AI across the organization
in different functions across customer service, risk
and collections with close integration of AI solutions
with the core IT solutions in customer acquisition,
CRM, core processing and collections.

We continue to build on our secure API stack with
a future proof strategy exposing the APIs for easy
consumption by our systems and external partners.
Our Data Lake architecture enables detailed journey
tracking, one customer view, efficient reporting. The
medallion architecture along with the functional data
pods enables effective business insights to cross sell,
customer 360 and propensity modelling.

Your Company has invested in various new
technologies like Digital Experience Platform, AI
based customer engagement and communications,
personalization, Digital Collections Platform, etc. Your
Company has also set up an IT command center for
24x7 monitoring of IT Infrastructure, applications and
digital services. Your Company has also implemented
Enterprise Data Lake platform, which will enable use
of multiple AI based algorithm for generating various
kinds of reports, MIS, and Dashboards. Use of analytics
will enhance customer penetration through digital
platform by providing various insights at data level.

A single governance platform established across this
application and infrastructure ecosystem ensures
a strong tracking and governance for compliance,
change and resiliency.

Your Company has achieved ISO/IEC 27001:2022
certification, a globally recognized standard in
Information Security Management.

Governance:

In accordance with the Reserve Bank of India
(Information Technology Governance, Risk, Controls
and Assurance Practices) Directions, 2023, the
Company has constituted the Information Security
Committee, IT Steering Committee, and IT Strategy
Committee. These Committees operate in line with
the respective charters approved by the Board and
play a critical role in strengthening the Company''s
IT governance framework. The committees meet
on a quarterly basis, and details of their meetings
and terms of reference are set out in the Corporate
Governance Report.

Cyber Security:

During the year, your Company continued to
strengthen its cybersecurity posture through multiple
strategic initiatives. To ensure a systematic approach
to protecting sensitive data and enhancing resilience
against cyber threats, the Company successfully
underwent the ISO 27001 certification process and
audit, achieving certification from BSI.

The scope of Security Operations was expanded
to monitor a wider range of security events and
information across all digital assets. Enhanced
monitoring of databases was also implemented to
provide clear visibility into data access and activities.

Various proactive assessments were conducted
to detect and remediate risks, thereby minimizing
potential cyber threats. As part of the leadership-
focused cybersecurity awareness programme, a

cyber-attack simulation exercise was carried out,
followed by targeted awareness sessions.

In alignment with the Digital Personal Data Protection
Act, 2023 and the rules thereunder, awareness
sessions were organized for employees across all
departments. Recognizing the growing risks from
third parties, the Company onboarded a third party
risk monitoring platform to monitor external cyber
threats and risks proactively which are working with
the Company. Furthermore, with the increasing
adoption of AI, the information security team
developed an AI security governance framework and
conducted an AI security maturity assessment to
ensure responsible and secure use of AI technologies.

AI-SOLUTIONS TRANSFORMING OUR FUNCTIONS
AND CAPABILITIES EVOLVED FOR SCALE

AI now serves as a core operating layer across the
lending lifecycle. Our AI-first operating model now
informs pre-screening, underwriting, disbursals,
collections, and customer servicing, improving
turnaround time, credit quality, and cost efficiency.
Our AI/ML models power account aggregator-based
scoring and business rules engine-led underwriting,
persona-based models and bounce prediction in
collections, anomaly detection and policy review
automation in compliance, among others. The
ML-based model of repayment propensity and
engagement channels have improved early-stage
delinquency resolution and enhanced collection
efficiency with human oversight. Fraud risk is
addressed through layered AI-driven application
screening, real-time triggers biometrics, AI-based
face matching, and linkages to industry fraud
registries and watchlists. AI is embedded in frontline
and support functions alike HR use AI-driven hiring,
resume parsing, attrition prediction, conversational
support, and a candidate sourcing engine, improving
time-to-offer and onboarding effectiveness. Finance,
operations, secretarial, and strategy functions utilize
AI copilots, invoice auto-verification, and competition
mapping, while commercial teams deploy generative-
AI voice bots and cross-sell automation.

As of March 31, 2026, we advanced 76 AI initiatives,
including 42 fully deployed and 34 underway viz.,
spanning credit, underwriting, collections, analytics,
risk, compliance, audit and compliance, operations,
customer service, admin and infrastructure, secretarial,
HR, among others. We have also established a
"MarTech” marketing technology stack centered on
AI-driven automation to improve customer acquisition
and engagement, particularly in the digital lending

space. “MarTech” focuses on real-time, minimum
human intervention marketing, including the ability
to generate targeted marketing campaigns which
do not require any human intervention. Further, we
have launched our Al-powered credit underwriting
assistant which is designed to reduce manual
processes and enhance consistency and accuracy
by reviewing and interpreting customer information
and documentation to generate a summary for the
underwriters. The credit AI underwriting platform
utilizes large language models and machine
learning to enhance underwriting productivity, in
line with our “risk-first” model. In addition, we have
developed a fully-automated suspicious transaction
reporting layer, an AI and machine learning powered
solution designed to improve anti-money laundering
compliance by reducing false positives and identifying
genuinely risky behaviors. We have also developed
our “RegIntel” compliance assistant, an autonomous
AI tool that analyzes RBI advisories, maps them
to internal policies, and provides instant, context-
aware summaries to ensure regulatory compliance.
Moreover, we have also developed AI-powered HR and
travel tools, such as “PAI@HR”, a WhatsApp-powered
chatbot for instant employee support on policies
and payroll, and “Travel Bot”, an AI-integrated bot in
Microsoft Teams that streamlines travel bookings,
ensures policy compliance and centralizes records.
Further, one of our AI initiatives which is underway is
“Build Buddy”, an AI-powered development assistant
that will be integrated into our existing technology
stack to accelerate application development and
improve software quality. These AI-led interventions
are translating into measurable improvements in
productivity, cost efficiency, decision accuracy, and
customer experience, while enabling scalable growth.

We have received several awards and recognitions in
relation to our AI infrastructure and initiatives.

CORPORATE IMAGE BUILDING & ENGAGING
TARGET AUDIENCE:

Public Relations and External Communication:

In FY 2025-26, the Company scaled up its
communications from a strong foundation,
foregrounding visibility and strengthening its
positioning as a responsible, risk-first lender under
a stable, execution-focused leadership team. During
the year, the Company focused on broadening its
media footprint, sharpening its corporate identity,
and proactively shaping a consistent and compelling
narrative around the business being built on
the ground.

Public relations efforts in FY 2025-26 were anchored
around three themes, mainly, the Company''s
multichannel growth story, its technology and
AI adoption across functions, and its expanding
product suite for underserved segments in the credit
ecosystem. A significant milestone of FY 2025¬
26 was the successful expansion from 7 (seven) to
13 (thirteen) businesses under the new leadership.
The company''s strategic PR efforts highlighted
this rapid transformation. High-impact media
engagements anchored the corporate narrative. 4
(four) product launches being Shopkeeper Loan, Gold
Loan, Consumer Durable Loan, and Business 24x7
Loan were communicated through a national press
release strategy with financial, capital markets, and
trade media, supported by a hyperlocal approach
across 16 (sixteen) key regional cities along with digital
amplification on owned channels. The Company''s AI-
first transformation across governance, compliance,
customer engagement, and HR processes was
communicated systematically through national and
trade press releases, strengthening the Company''s
positioning as a digital-first lender embedding
technology across every function.

Sustained communication around its technology
transformation and expanding product suite resulted
in increased media recall and strengthened brand
positioning. Overall media visibility grew nearly
15x, significantly enhancing brand visibility and
investor engagement. The H 1,499.98 Crore promoter
infusion and the subsequent H 2,500 Crore QIP were
communicated as markers of sustained institutional
and promoter confidence in the Company''s capital
strength and growth trajectory.

Awards and Recognitions:

Company received several awards during the year
under review, including:

• “Prestigious Brands of Asia” at 9^th Edition of
Prestigious Brands of Asia 2026;

• “Most Innovative Digital Journey” at the India NBFC
Summit & Awards 2025;

• “Technology Senate Awards 2025 in Artificial
Intelligence” at The Indian Express Groups and
Express Computer 2025;

• “Innovative in Customer Experience” at CII DX
Awards 2025;

• “Most Innovative Organizations 2025” by ET Edge;

• “The Technology Senate Awards 2025” for the
“Artificial Intelligence” category, by The Indian
Express Group and Express Computer;

• “Express BFSI Technology Award 2025” for
customer experience, in relation to our PL Prime
Digital 24x7 platform, by Express Computer;

• Recognition in the "Innovative in Customer
Experience” category at the DX Awards 2025;

• “Winner in the ‘Future of Work'' category” at the 3^rd
FICCI National HR Innovation Awards 2025;

• “Most Innovative Digital Journey - Education Loans”
at the India NBFC Summit and Awards 2025; and

• “Most Innovative Practice Awards” at the 2^nd
edition of the CII National Artificial Intelligence (AI)
Awards 2025 for the categories “AI in underwriting
solution” and “AI in hiring solution”.

CORPORATE SOCIAL RESPONSIBILITY

Your Company has a comprehensive Corporate Social
Responsibility (“CSR”) Policy outlining programmes,
projects and activities that your Company
undertakes to create a significant positive impact
on disadvantaged section of the society. All these
programmes fall within the purview of Section 135
read with Schedule VII of the Act and the Companies
(Corporate Social Responsibility Policy) Rules, 2014
(“CSR Rules”). Your Company has undertaken socially
impactful CSR projects during the year under review.
Your Company has partnered with implementing
agencies to implement projects in the CSR focus area
viz., healthcare, education and skill development and
livelihood and women empowerment.

During FY 2025-26, your Company was required
to spend H 6.56 Crore under CSR as enumerated in
Section 135(5) of the Act. Your Company has spent an
amount of H 6.56 Crore on CSR activities. The Annual
Report on CSR activities covering details pertaining
to CSR Policy developed and implemented by the
Company, CSR project undertaken during the year,
CSR Committee and meeting details is annexed
herewith and marked as Annexure-1. Further, in
terms of the CSR Rules, the Chief Financial Officer
has certified that the funds disbursed have been
utilized for the purpose and in the manner approved
by the CSR Committee and the Board of Directors of
your Company.

CSR Policy weblink:https://poonawallafincorp.
com/documents/20121/0/PFL CSR Policy
Version No. 6.0.pdf/26949d61-3047-4792-4600-
33e5a62ec4ac

CUSTOMER RELATIONSHIP MANAGEMENT:

Aligned with our Vision to become the most trusted
financial services brand and our philosophy of
customer first approach, customer service remains
central to our operations and receives significant
attention from management. The Company
upholds values of ethics, integrity, good governance,
professionalism, transparency, and customer
satisfaction. Special focus has been on the quality and
consistency of service delivery.

Your Company is committed to gauging customer
feedback as a true reflection of its service levels.
Valuable customer insights at each stage of
relationship with the Company have been the
guiding factor to continuously improving and
digitizing its processes and service delivery. Our
Net Promoter Score (NPS) - a key indicator of
customer perception and brand loyalty is used
to gauge customer feedback on our product,
processes and service level. Introducing digital
NPS through link based survey trigger allowed
us to increase the coverage to gather timely
feedback and make necessary improvements.
Your Company actively addresses customer
insights and identified opportunities for process
improvement as part of our ongoing commitment
to continuous enhancement.

Our customers have multiple options like dedicated
toll-free number, dedicated email ids, branches, social
media accounts to reach us for their queries, requests
or grievances.

Your Company has enabled robust self-service
platforms like mobile application, WhatsApp bot,
web-bot, customer portal and smart IVR for instant
servicing, which is available 24x7, enhancing
customer convenience.

Key initiatives were undertaken to enhance
Customer Service and Experience:

1. Launch of Conversational AI Platform for
Unified Customer Support

To further strengthen service responsiveness
and scalability, the Company launched a
conversational AI platform designed to
simultaneously handle a majority of routine
customer queries.

• The platform provides a unified and consistent
experience across both chat and voice
channels, enabling customers to access
information and support seamlessly through
their preferred mode of interaction.

• With intelligent intent recognition and
automated resolution capabilities, the solution
significantly improves turnaround time for
customer queries while allowing service
agents to focus on more complex cases.

2. Enablement of End-to-End Payment-Related
Servicing on Digital Channels

To enhance customer convenience and reduce
dependency on assisted channels, the Company
enabled comprehensive payment-related
servicing on digital platforms such as the mobile
application and WhatsApp for selected products.

• Customers can now digitally complete key
transactions including loan foreclosure, part
payment and payment of overdue EMIs, at
anytime and from anywhere.

• This resulted in faster transaction completion,
improved transparency of charges and
outstanding amounts, and greater control for
customers over their loan accounts without
the need for branch or call center intervention.

3. Launch of Customer Portal to Strengthen
Self-Service Capabilities

As part of its digital self-service strategy, the
Company introduced a customer portal as an
additional servicing platform alongside the
existing mobile app and WhatsApp channel.

• The portal provides access to customers to
important loan-related documents such
as Statement of Accounts, welcome letter
and other communication, ensuring easy
availability of information on demand.

• Customers can also initiate and complete
payment-related services, thereby improving
service accessibility, consistency and
continuity across multiple digital touchpoints.

Handling Grievances effectively:

• Prompt acknowledgment to customers via
auto E-mail and SMS trigger upon receipt of
any complaint.

• A detailed Root Cause Analysis (RCA) carried out
for each complaint.

• All critical cases including regulatory escalations
are reviewed by Principal Nodal Officer and Chief
Compliance Officer.

• Close looping feedback mechanism ensures
customers are informed at the time of closure of
the Service Request for customer concurrence on
the resolution being provided and upon closure in

system the same is backed by an SMS trigger for
customers'' reference.

• All partially/wholly rejected complaints (subject to
exclusions as per regulatory circular) are reviewed
by the Internal Ombudsman of the Company and
the final decision is communicated to the customer
within the regulatory timelines.

• Necessary governance mechanism is in place for
any case of violation of Code of Conduct while
dealing with customer.

Customer service and grievance redressal:

The customer service and grievance redressal
framework is built on a Board-approved policy
architecture that aligns with applicable laws
and regulations, including the RBI Guidelines on
customer service for regulated entities, fair practices,
outsourcing of financial services and information
security. The framework is designed to provide clear
service standards, transparent communication, time-
bound resolution of customer issues, and continuous
improvement through measurement, governance
and root-cause remediation.

The customer service model is omni-channel,
supported by relationship teams, branches and
a centralized service organization. Customers
can access us via branches, a toll-free call center,
email, web and mobile portals, chat interfaces and
assisted channels. We define turnaround times for
key service requests, including onboarding queries,
loan servicing, statement and certificate issuance,
foreclosure and part-prepayment, refunds and
charge reversals, and dispute handling. These service
standards are communicated on our website and
in customer communications and are periodically
reviewed based on customer feedback, operational
analytics and regulatory expectations. We provide
customers with clear pre and post-disbursement
disclosures, including the key fact statement,
amortization schedules, applicable fees and charges,
and contact points for support and escalation. Our
fair practices and responsible lending approach
emphasize suitability, transparency of pricing and
charges, and non-discriminatory treatment.

Grievance redressal is governed by a documented,
Board approved policy and an escalation framework
designed to ensure timely, fair and effective resolution
of customer complaints. The Company follows a four
level escalation matrix, which is communicated to
customers through branches, digital channels and
the Company''s website.

At Level 1, customers may raise concerns by reaching
out to the customer service executive through the

branch network, contact centre, email or other digital
channels. All complaints are logged in a centralized
ticketing system and assigned unique reference
numbers, have defined categories and time bound
resolution targets in line with the Company''s policy.

At Level 2, complaints that remain unresolved or
where customers are not satisfied with the resolution
at Level 1 may be escalated to the Grievance Redressal
Officer for supervisory review and resolution within
the prescribed timelines.

At Level 3, customer if not satisfied at Level 2, may
further escalate the complaint to the Principal Nodal
Officer, who oversees grievance handling across the
organization and ensures compliance with regulatory
requirements and internal service standards.

At Level 4, if the customer is not satisfied with the
resolution provided or if no response is received
within 30 (thirty) days of lodging the complaint,
customers may escalate the matter to the RBI under
the Integrated Ombudsman Scheme. Details of the
escalation process, along with contact information of
the Grievance Redressal Officer and Principal Nodal
Officer, are prominently displayed at branches and on
the Company''s website.

The Company employs a governance structure that
includes a Board-level Customer Service Committee
and a management level forum to oversee service
quality, complaints, product suitability and
customer conduct risk. These bodies review periodic
dashboards on complaint volumes, categories,
turnaround times, ageing and first-contact resolution,
as well as thematic analyses, root-cause trends and
action plans. Significant issues, systemic risks and
regulatory interactions are reported to the Board with
remediation tracking. We also conduct internal audits
and process reviews of customer-facing functions,
outsourced arrangements and activities, with
particular emphasis on sales practices, disclosures,
collections conduct and information security.

Technology underpins our service delivery through a
unified customer relationship management platform
integrated with our loan management systems.
This platform enables end to end ticket lifecycle
management, knowledge bases for standardized
responses, AI assisted triage and prioritization,
sentiment analysis and automated notifications.
During the year, the Company also launched a
conversational AI platform capable of autonomously
addressing a significant portion of customer queries,
providing a seamless and consistent experience
across chat and voice channels. We maintain robust
information security and data privacy controls,
including role based access, encryption, data retention

and consent management, in line with applicable
Indian laws and RBI expectations. Our staffing model
includes continuous training and certification on
product knowledge, fair practices, grievance handling
and vulnerable customer considerations.

DIRECTORS AND KEY MANAGERIAL
PERSONNEL:a. Board Composition

The composition of the Board of Directors
of the Company is governed by the Act and
Regulation 17 of the SEBI Listing Regulations
and is in conformity with the same. As on the
date of this Report, the Board of Directors
comprised a combination of 10 (ten) Directors
viz. Mr. Adar Cyrus Poonawalla, Chairman, Non¬
Executive Director, Mr. Arvind Kapil, Managing
Director and Chief Executive Officer, Mr. Sunil
Samdani, Executive Director, Mr. Vikas Pandey,
Executive Director, Ms. Sonal Modi, Non¬
Executive Director, and, Mr. Prabhakar Dalal,
Mr. Sanjay Kumar, Ms. Kemisha Soni, Mr. Kewal
Handa, and Mr. Rajeev Sardana as Non-Executive
Independent Directors. The Board mix provides
a combination of professionalism, knowledge
and experience required in the NBFC sector.
The details of skills possessed by each director
have been provided in detail in the Corporate
Governance report. The terms and conditions
of appointment of Independent Directors are
available on the website of the Company athttps://
poonawallafincorp.com/investor-governance.

b. Change in composition of the Board
during the year:

Appointment/Re-appointment:

The Board of Directors, at its meeting held on
January 16, 2026, approved the appointment of
Mr. Vikas Pandey (DIN: 11463386) as the Whole
Time Director of the Company (also designated as
KMP) for a period of 5 (five) years with effect from
January 16, 2026 till January 15, 2031. Thereafter,
the Members of the Company approved his
appointment by postal ballot through remote
e-voting on February 19, 2026.

Cessation:

During the year under review Mr. Bontha Prasada
Rao (DIN: 01705080), Independent Director,
ceased to be the Director of your Company with
effect from December 09, 2025, upon completion
of his two consecutive terms. The Board and entire

management team acknowledge the invaluable
contributions made by Mr. Bontha Prasada Rao,
during his tenure as an Independent Director,
and place on record their deep appreciation
for his guidance, support, and contribution to
the Board.

c. Retirement by Rotation:

In accordance with the provisions of Section 152
of the Act read with the Articles of Association of
the Company, Mr. Adar Cyrus Poonawalla, (DIN:
00044815) Chairman, Non-Executive Director
will retire by rotation at the ensuing AGM and
being eligible, offers himself for re-appointment.
The Board of Directors of your Company
recommends the re-appointment of the Director
liable to retire by rotation at the ensuing AGM.
Appropriate resolution seeking your approval
for the aforesaid re-appointment along with
brief profile of the said Director is forming part
of the Notice convening the Forty Sixth AGM of
your Company.

d. Declaration from Directors:

The Company has, inter alia, received the
following declarations from all the Independent
Directors confirming that:

a. they meet the criteria of independence
as prescribed under the provisions of the
Act, read with Schedule IV and the rules
issued thereunder, and the SEBI Listing
Regulations. There has been no change in
the circumstances affecting their status as
Independent Directors of the Company;

b. they have complied with the Code for
Independent Directors prescribed under
Schedule IV to the Act; and

c. they have registered themselves with
the Independent Director''s data bank
maintained by the Indian Institute of
Corporate Affairs and have qualified the
online proficiency self-assessment test or are
exempted from passing the test as required
in terms of Section 150 of the Act read with
Rule 6 of the Companies (Appointment and
Qualifications of Directors) Rules, 2014.

The Board of Directors of the Company has taken
on record the declaration and confirmation
submitted by the Independent Directors.

All members of the Board of Directors and SMP
have affirmed compliance with the Code of
Conduct for the FY 2025-26.

None of the Directors of the Company are
disqualified from being appointed as Director
as specified under Section 164(1) and
164(2) of the Act read with Rule 14(1) of the
Companies (Appointment and Qualifications of
Directors) Rules, 2014 (including any statutory
modification(s) and/or re-enactment(s) thereof
for the time being in force) or are debarred or
disqualified by the Securities and Exchange Board
of India ("SEBI”), Ministry of Corporate Affairs
("MCA”) or any other such statutory authority.

In the opinion of the Board, the Independent
Directors possess the requisite integrity,
experience, expertise, and proficiency required
under applicable laws and the policies of
the Company.

During the year under review, separate meetings
of the Independent Directors were held on
October 15, 2025, and March 27, 2026.

During the year under review, the Non-Executive
Directors of the Company had no pecuniary
relationship or transactions with the Company,
other than sitting fees and commission, as
applicable, received by them.

The Company has obtained certificates from
Practicing Company Secretaries confirming that:

• None of the Directors on the Board of the
Company has been debarred or disqualified
from being appointed and/or continuing as
Director by the SEBI/MCA or any other such
statutory authority.

e. Fit and Proper Policy:

The Company adheres to the process and
methodology prescribed by the RBI in respect of
the ‘fit & proper'' criteria as applicable to NBFCs,
signing of Deed of Covenants which re-affirms
that the directors are required to discharge
their responsibilities to the best of their abilities,
individually and collectively in order to be eligible
for being appointed/re-appointed as a director of
the Company.

All the Directors of the Company have confirmed
that they satisfy the "fit and proper” criteria
as prescribed in Chapter IV of Reserve Bank
of India (Non-Banking Financial Companies -
Governance) Directions 2025 and that they are
not disqualified from being appointed/continuing
as directors in terms of Section 164(2) of the Act.
The prescribed declarations/undertakings given

by the Directors were placed before the NRC for
its review and noting.

f. Familiarization Programme for Independent
Directors:

In compliance with the requirement of
Regulation 25 of SEBI Listing Regulations, the
Company has put in place a familiarization
programme for the Independent Directors to
familiarize them about the Company and their
roles, rights and responsibilities in the Company.
The details of the familiarization programme
along with the number of hours spent by each of
the Independent Directors during the FY2025-
26 are explained in the Corporate Governance
Report. The same is also available on the website
of the Company athttps://poonawallafincorp.
com/documents/20121/0/Familiarization-
program-FY25-26 %281%29.pdf/da464113-
946c-af95-e0f4-1e14637b425c

g. Performance Evaluation:

The Board conducted the performance evaluation
of the individual Directors, Board Committees,
Board as a whole and the Chairman of the
Board, in accordance with the provisions of the
Act and the SEBI Listing Regulations, including
the ''Guidance Note on Board Evaluation'' issued
by SEBI.

The Board evaluated the effectiveness of its
functioning and that of the committees and of
individual Directors by seeking their input on
various aspects of Board/committee Governance
through structured questionnaire. Also, the NRC
has carried out evaluation of every Director''s
performance and reviewed the self-evaluation
submitted by the respective directors. The
performance evaluation of the Independent
Directors was carried out by the entire Board,
excluding the director being evaluated.

The aspects covered in the evaluation
included the contribution to and monitoring of
corporate governance practices, participation
in the long-term strategic planning and the
fulfilment of directors'' obligations and fiduciary
responsibilities, including but not limited to,
active participation at the Board and Committee
meetings. Also, the NRC has carried out an
evaluation of every Director''s performance
and reviewed the self-evaluation submitted
by the respective Directors. These meetings

were intended to obtain Directors'' input on the
effectiveness of Board/Committee processes.

The evaluations were carried out in a confidential
manner, and the Directors provided their
feedback by rating based on various metrics.

The Board considered and discussed the
input received from the Directors. Further,
the Independent Directors at their meeting
reviewed the performance and role of Non¬
Independent Directors and the Board as a whole
and Chairperson of the Company and had also
assessed the quality, quantity, and timeliness
of flow of information between the Company
management and the Board that was necessary
for the Board to perform their duties effectively
and reasonably.

h. Outcome of evaluation process:

Based on inputs received from the Board
members, it emerged that the overall

performance evaluation of the Board,

composition, and quality, understanding of the
business including risks, process and procedures,
oversight of financial reporting process including
internal controls and audit functions, ethics
and compliances and monitoring activities, has
been found to be reasonably good. Similarly,
the effectiveness of the Board committees have
been rated high. The committees of the Board
function effectively. Sufficient time is allotted for
discussion of the agendas. Contrary views were
also encouraged and the same were viewed in
the right perspective. The performance of the
Chairman of the Company has been found to
be excellent. Overall, the Board is functioning
very well in a cohesive and interactive manner.
Last year the recommendations of Independent
Directors and Board on performance evaluation
were largely implemented.

i. Remuneration Policy:

The Remuneration Policy for Directors, KMP,
SMP and all other employees is aligned
to the philosophy on the commitment of
fostering a culture of leadership with trust. The
Remuneration Policy aims to ensure that the
level and composition of the remuneration
of the Directors, KMPs, SMPs and all other
employees is reasonable and sufficient to
attract, retain and motivate them to successfully
run the Company. The salient features of the
Remuneration Policy are stated in the Corporate
Governance Report. The Remuneration Policy

of the Company is available on the Company''s
website athttps://poonawallafincorp.com/
documents/20121/0/PFL-Remuneration-Policv-
Version-No-8.0.pdf/0b67101a-0143-22da-31ae-
597eb8e47056. The remuneration details of
Directors and KMPs are provided in the Corporate
Governance Report.

j. Compensation Policy:

In accordance with the applicable guidelines
issued by the RBI, the Company has adopted
a Compensation Policy applicable to all
employees. The Policy is designed to ensure that
compensation practices are aligned with the
Company''s core value, strategic business goals
risk framework, and regulatory expectations.

k. Code of Conduct for Directors and
Employees:

The Company has adopted a Code of Conduct
for its Directors and employees including a
Code of Conduct for Independent Directors
which suitably incorporates the duties of
Independent Directors as laid down in the
Act. The said Codes can be accessed on the
Company''s website athttps://poonawallafincorp.
com/documents/20121/0/1. PFL
Code for Independent Directors
Version No.7 %281%29.pdf/4a547586-aacd-
c48e-d87d-2ec572df77fb

In terms of the SEBI Listing Regulations, all
Directors and SMP have affirmed compliance
with their respective Codes. The Managing
Director and Chief Executive Officer have also
confirmed and certified the same, for which
certification is provided at the end of the Report
on Corporate Governance.

l. Key Managerial Personnel:

In terms of Section 203 of the Act, the following
are the KMP of the Company as on the date of
this report:

1. Mr. Arvind Kapil, Managing Director & Chief
Executive Officer;

2. Mr. Sunil Samdani, Executive Director;

3. Mr. Vikas Pandey, Executive Director

4. Mr. Sanjay Miranka, Chief Financial
Officer; and

5. Ms. Shabnum Zaman, Company Secretary.

DIRECTORS’ RESPONSIBILITY STATEMENT:

To the best of our knowledge and belief, your directors
make the following statements in terms of Section
134 (5) of the Act:

a. that in the preparation of the annual accounts for
the year ended March 31, 2026, the applicable
Ind AS have been followed along with proper
explanation relating to material departures, if any;

b. that such accounting policies as mentioned in
Notes to the annual accounts have been selected
and applied consistently and judgement and
estimates have been made that are reasonable
and prudent so as to give a true and fair view of
the state of affairs of the Company as at March
31, 2026 and of the profit for the year ended on
that date;

c. that proper and sufficient care has been taken
for the maintenance of adequate accounting
records in accordance with the provisions of the
Act for safeguarding the assets of the Company
and for preventing and detecting fraud and
other irregularities;

d. that the annual accounts have been prepared on
a going concern basis;

e. that proper internal financial controls are in place
and that the financial controls are adequate and
are operating effectively; and

f. that proper systems to ensure compliance
with the provisions of all applicable laws are in
place and that such systems are adequate and
operating effectively.

MEETINGS AND COMMITTEES OF THE BOARD
OF DIRECTORS:

Number of Meetings of the Board:

During the year under review, 4 (Four) Board
meetings were held, the details of which are given
in the Corporate Governance Report. The maximum
interval between any 2 (two) consecutive meetings
did not exceed 120 days, as prescribed by the Act and
the SEBI Listing Regulations.

Committees of the Board of Directors:

The committees of the Board focus on certain specific
areas and make informed decisions in line with the
delegated authority. The Board committees have
been constituted to deal with specific areas/activities
as mandated by applicable rules and regulations or as
delegated by the Board, which need a closer review.

Audit Committee

The ACB presently comprises of Mr. Kewal Handa
who serves as the Chairman of the committee and
Ms. Sonal Modi, Mr. Prabhakar Dalal, Mr. Sanjay Kumar,
and Ms. Kemisha Soni as other members. 4 (Four)
meetings were held during the year under review,
details of which and terms of reference for the ACB
have been furnished in the Corporate Governance
Report. All the recommendations made by the ACB
during the year were accepted by the Board.

Nomination and Remuneration Committee

The NRC presently comprises of Mr. Prabhakar Dalal
who serves as the Chairman of the committee,
Mr. Kewal Handa, Mr. Rajeev Sardana, and Ms. Sonal
Modi as other members. The terms of reference of
the NRC and details of NRC meetings and attendance
thereof have been furnished in the Corporate
Governance Report.

Stakeholders Relationship Committee

The Stakeholders Relationship Committee presently
comprises of Mr. Prabhakar Dalal who serves as the
Chairman of the Committee, Mr. Sunil Samdani,
Mr. Vikas Pandey, Ms. Sonal Modi, and Mr. Sanjay
Kumar as other members. The terms of reference of
the Stakeholders'' Relationship Committee have been
furnished in the Corporate Governance Report.

Corporate Social Responsibility Committee

The CSR Committee presently comprises of
Ms. Kemisha Soni who serves as the Chairperson
of the Committee and Mr. Sunil Samdani, Mr. Vikas
Pandey, Ms. Sonal Modi and Mr. Prabhakar Dalal, as
other members.

The other Committees of the Board are the Asset
Liability Management Committee, Risk Management
Committee, IT Strategy Committee, Review
Committee, Customer Service Committee and the
Management Committee. The details of composition,
terms of reference and number of meetings held for
the respective committees have been furnished in
the Corporate Governance Report.

CONTRACTS OR ARRANGEMENTS WITH
RELATED PARTIES:

In line with the requirements of the Act and
the SEBI Listing Regulations, the Company has
in place a Policy on Related Party Transactions
and the same can be accessed on the

Company''s website athttps://poonawallafincorp.
com/documents/20121/0/3. Policy
for Related Party Transactions Clean
Version No. 8.pdf/1c289655-513f-f60d-cb8f-
5b6fb35196c6.

All transactions with related parties are placed before
the ACB for approval. All related party transactions
that were entered into during the financial year were
on an arm''s length basis and in the ordinary course
of business, the particulars of such transactions are
disclosed in the notes to the financial statements.
During the year under review, there were no materially
significant related party transactions. Disclosures of
related party transactions of the Company with the
promoter/promoter group, which holds 10% or more
shareholding in the Company, if any, are given in note
to the standalone financial statements.

None of the related party transactions entered into
by the Company during FY 2025-26 attracted the
provisions of Section 188(1) of the Act. Accordingly,
disclosure in e-Form No. AOC-2 pursuant to Section
134(3)(h) of the Act is not applicable to the Company.
e-Form No. AOC-2 is attached to this Report
as Annexure-2.

SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS OR COURTS OR
TRIBUNALS:

During the year under review, there were no significant
material orders passed by the Regulators/Courts/
Tribunals against the Company which would impact
the going concern status or its future operations.

STATUTORY AUDITORS:

Based on the recommendation of the ACB and the
Board, the Members of the Company, at the 44^th AGM
held on July 23, 2024, approved the appointment
of M S K A & Associates LLP (formerly known as M S
K A & Associates)(Firm Registration No. 105047W/
W101187), as Joint Statutory Auditors of the Company,
to hold office from the conclusion of the 44^th AGM
until the conclusion of the 47^th AGM of the Company.

In terms of the RBI Circular No. RBI/2021-22/25
Ref. No. DoS.CO.ARG/SEC.01/08.91.001/2021-22
dated April 27, 2021, on Guidelines for Appointment
of Statutory Central Auditors (“SCAs”)/Statutory
Auditors (“SAs”) of Commercial Banks (excluding
Regional Rural Banks), Urban Co-operative Banks
(“UCBs”) and Non-Banking Financial Companies
(“NBFCs”) (including Housing Finance Companies)
(“RBI Guidelines”), the statutory audit of the entities
having asset size of H 15,000 crore and above as at

the end of previous year, should be conducted under
the joint audit of a minimum of two audit firms, and
in accordance with the requirements of Section 139
of the Act, read with Rules made thereunder, MSKA &
Associates LLP, Chartered Accountants and Kirtane &
Pandit LLP, Chartered Accountants, act as the Joint
Statutory Auditors of the Company.

The terms of appointment of Kirtane & Pandit
LLP, Chartered Accountants, (Firm Registration
No.105215W/W100057) as one of the Company''s
Joint Statutory Auditors expire at the conclusion of
the 46^th (Forty Sixth) AGM of the Company.

In view of the same, based on the recommendation
of the ACB, the Board at its meeting held on May 05,
2026, recommended the appointment of B. K. Khare
& Co., Chartered Accountants (Firm Registration
No. 105102W), as Joint Statutory Auditors of the
Company, to hold office from the conclusion of the
46^th (Forty Sixth) AGM until the conclusion of the 49^th
(Forty Ninth) AGM of the Company, subject to the
approval of the Members at the ensuing AGM.

B. K. Khare & Co., Chartered Accountants, is professional
services firm in the field of Assurance, Direct Tax,
Transfer Pricing, Indirect Tax and Risk Advisory. The
firm has twenty Partners and 150 associates. The
firm operates from Mumbai, Pune, Bangalore, Delhi
and Chennai, and have associates in all major cities in
India. The firm has rich experience for over 6 decades
in sectors like NBFC, Banking, Insurance, Mutual
Funds, Automobile & Auto component, Real Estate,
Engineering, IT & Software and Oil & Gas. Established
in 1955 by Late Mr. B. K. Khare, a statesman in the
Indian accounting and tax profession, B.K. Khare & Co.
has grown to become a prestigious firm.

As required under Regulation 33(1)(d) of the SEBI
Listing Regulations, the Joint Statutory Auditors have
confirmed that they have subjected themselves to
the peer review process of the ICAI and that they hold
a valid certificate issued by the Peer Review Board
of ICAI.

The Standalone and the Consolidated Financial
Statements of the Company have been prepared in
accordance with Indian Accounting Standards (Ind
AS) notified under Section 133 of the Act. The notes
on financial statements referred to in the Auditors''
Report are self-explanatory and do not call for any
further comments.

There are no qualifications, reservations or adverse
remarks or disclaimers made by M S K A & Associates
LLP, Chartered Accountants, and Kirtane & Pandit
LLP, Chartered Accountants, Joint Statutory Auditors,
in their reports dated May 05, 2026, on the Financial
Statements of the Company for FY 2025-26.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of
the Act and the Companies (Appointment and
Remuneration of Managerial Personnel) Rules,
2014, the shareholders of the Company at the
45^th AGM approved the appointment of SIUT & Co
LLP, Company Secretaries (Firm Registration No.
L2021MH011500) to conduct the Secretarial Audit
for a period of 5 (five) years from FY 2025-26 till and
including FY 2029-30.

The Secretarial Audit Report for the FY 2025-26
confirms that the Company has complied with the
provisions of the Act, the rules thereunder, SEBI Listing
Regulations and Guidelines and that the report does
not contain any qualification, reservation, adverse
remark, or disclaimer. The Secretarial Audit Report in
the format given in Form No. MR-3, for the financial
year ended March 31, 2026, is annexed herewith and
marked as an Annexure-3.

COST AUDITORS:

Being an NBFC, maintenance of cost records and
requirement of cost audit as prescribed under
the provisions of Section 148(1) of the Act are not
applicable in respect of the business activities carried
out by the Company.

SECRETARIAL STANDARDS:

The applicable Secretarial Standards, i.e. SS-1 and
SS-2, relating to ‘Meetings of the Board of Directors''
and ‘General Meetings'' respectively, have been duly
complied by your Company.

BUSINESS RESPONSIBILITY AND

SUSTAINABILITY REPORT:

Environment, Social and Governance Practices
(“ESG”) is a critical area of focus. Your Company
has constituted ESG Committee and adopted
the Environmental and Social Governance Policy
& Governance Framework. As a responsible
organization your Company takes various
measures to mitigate our negative impact on the
environment, ensure our conduct is responsible
towards our internal and external stakeholders and
invest in good governance practices. Our various
efforts towards responding to the stakeholder
needs and concerns are addressed in the Business
Responsibility and Sustainability Report (“BRSR”),
covering the nine principles of National Guidelines
on Responsible Business Conduct issued by MCA.

The BRSR provides an avenue for disclosing
an overview of the entity''s material ESG risks

and opportunities, goals and targets related to
sustainability and performance against them. As per
Regulation 34 of the SEBI Listing Regulations, BRSR
for FY 2025-26 forms part of this Report.

RBI GUIDELINES:

The Company continues to fulfil all the norms and
standards laid down by RBI pertaining to non¬
performing assets, capital adequacy, statutory
liquidity assets, etc. As against the RBI norm of 15%
on a standalone basis, the CRAR as of March 31, 2026,
was 16.83%.

In line with the RBI guidelines for ALM system for
NBFCs, the Company has an ALCO, which meets
quarterly to review its ALM risks and opportunities.
The primary goal of ALM is to effectively manage
risks such as liquidity risk and interest rate risk within
the broader risk management framework, which
incorporates both internal limits and regulatory
tolerance thresholds. The ALM policy aims to establish
a comprehensive framework and define early warning
signals for both short-term and long-term actions to
be taken.

The RBI has implemented the Reserve Bank of India
(Non-Banking Financial Companies - Asset Liability
Management) Directions, 2025 wherein Chapter III -
Liquidity Coverage Ratio (“LCR”) therein is applicable
to NBFCs except (“LRM Framework”). Under this LRM
Framework, all non-deposit taking NBFCs with an
asset size below I 5,000 Crore. The LCR is a measure
of an entity''s stock of high quality liquid assets
divided by its total net cash outflows over the next 30
(thirty) calendar days. As at March 31, 2026, the LCR
of the Company was 181% well above the regulatory
limits, reflecting strong liquidity position and balance
sheet resilience.

The Company continues to be in compliance with
the Reserve Bank of India (Non-Banking Financial
Companies - Prudential Norms on Capital Adequacy)
Directions, 2025.

CORPORATE GOVERNANCE:

Our Board presently consists of 10 (ten) Directors. In
compliance with the requirements of the SEBI Listing
Regulations, our Board consists of five Independent
Directors. Our Company is in compliance with
the requirements of the applicable regulations,
including the SEBI Listing Regulations, the Act and
the SEBI ICDR Regulations, in respect of corporate
governance, including constitution of our Board
and Committees thereof. The corporate governance

framework is based on an effective independent
Board, separation of our Board''s supervisory role from
the executive management team and constitution
of our Board Committees, as required under law.
Our Board has been constituted in compliance
with the Companies Act, 2013, and the SEBI Listing
Regulations. Our Board functions either as a full
Board or through various Committees constituted to
oversee specific functions. Our Company''s executive
management provides our Board with presentations
on its performance periodically.

The Company is committed to achieving and adhering
to the highest standard of Corporate Governance. It
believes in and practices good corporate governance.
The Company maintains transparency and also
enhances corporate accountability. In terms of
Regulation 34 read with Schedule V of SEBI Listing
Regulations the following forms part of this Report
and as required under the Reserve Bank of India
(Non-Banking Financial Companies - Governance)
Directions, 2025, forms part of this Annual Report.
Further, the additional disclosure requirements for
NBFCs in accordance with the aforesaid RBI Directions
forms part of the Corporate Governance Report.:

a. Declaration signed by the Managing Director &
Chief Executive Officer regarding compliance
to Code of Conduct by the Board Members
and SMP;

b. A certificate from a Practicing Company Secretary
that none of the directors on the Board of the
Company have been debarred or disqualified
from being appointed or continuing as directors
of Companies by the Board/MCA or any such
statutory authority;

c. Report on the Corporate Governance; and

d. Practicing Company Secretaries certificate
regarding compliance of conditions of
Corporate Governance.

CONSERVATION OF ENERGY, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS
AND OUTGO:

Conservation of Energy:

The operations of the Company are not energy
intensive. The Company implements various energy
conservation measures across all its functions, which
are highlighted in the BRSR which is annexed to
this Report.

Steps taken/impact on conservation of
energy:

The Company has undertaken multiple initiatives to
drive energy efficiency across its operations. Inverter
air conditioners have been installed across 257 new
operational branches (~950 units with a total tonnage
of 1281 TR). This transition from conventional ACs has
resulted in an estimated savings of ~5.05 lakh units of
electricity, translating to cost savings and a reduction
of ~354 tonnes of CO₂ emissions in a year.

Additionally, the Company has initiated installation
of LED lights in new and upcoming branches.
Installation of LED lights across new branches (4,158
units of 15W, 20W and 36W) has led to cost savings
and a reduction of ~26792 tonnes of CO2 emissions
in a year.

Steps taken for utilising alternate sources of
energy:

The adoption of green sourced energy at the corporate
office reflects the Company''s commitment towards
alternative and sustainable energy sources.

Capital investment in energy conservation
equipment:

The Company has invested approximately net
cost of H 12.57 Lakh in energy-efficient inverter
air conditioning units and H 10.55 Lakh in LED
lighting systems.

Technology Absorption:

The details pertaining to technology absorption at
the Company (usage of digital and data analytics to
build sustainable competitive advantage) have been
explained in the "Information Technology” section
and the "Management Analysis and discussion”
of this Report. Considering the nature of services
and businesses, no specific amount of expenditure
is earmarked for Research and Development.
However, the Company on an ongoing basis strives
for various improvements in the products, platforms,
and processes.

Foreign Exchange Earnings and Outgo:

During FY 2025-26, there were no foreign exchange
earnings (previous year: NIL) and the foreign exchange
outgo in terms of actual outflow amounted to H 7.71
Crore (previous year: H 3.71 Crore).

OTHER DISCLOSURES:

a. During the year, there was no application made
or any proceeding pending under the Insolvency
and Bankruptcy Code, 2016 and any one-time
settlement with any bank or financial institution
during the year under review and hence the
details of difference between amount of the
valuation done at the time of one time settlement
and the valuation done while taking loan from
the Banks or Financial Institutions along with the
reasons thereof is not applicable.

b. The Company has not defaulted in repayment of
loans from banks and financial institutions;

c. There were no delays or defaults in payment of
interest/principal of any of its debt securities;

d. There was no raising of funds through rights issue.

e. The Company has not entered into any
agreements as required to be disclosed under
Clause 5A of Paragraph A of Part A of Schedule III
of SEBI Listing Regulations.

f. Disclosures pursuant to Reserve Bank of
India (Non-Banking Financial Companies -
Governance) Directions, 2025, unless provided in
the Board''s Report, form part of the notes to the
standalone financial statements;

ANNUAL RETURN:

Pursuant to Section 92 and Section 134(3) of the
Act read with the Companies (Management and
Administration) Rules, 2014 as amended from time
to time, the Annual Return is available at the website
of the Company athttps://poonawallafincorp.com/
investor-financials.

PARTICULARS OF EMPLOYEES AND RELATED
DISCLOSURES:

The information required under Section 197(12) of the
Act read with Rule 5 of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules,
2014, is disclosed in this report as Annexure 4.

In terms of the second proviso to Section 136(1)
of the Act, the Report is being sent to all Members,
excluding the statement with respect to employees
employed throughout the year and employees

employed for part of the year who were in receipt
of remuneration in excess of limits prescribed under
Section 197 (12) of the Act read with Rule 5(2) and (3)
of the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014. It is to be noted
that the Board''s Report is abridged to that extent and
all other information as required under applicable law
form part of this Report. The statement is available for
inspection by any Member on request. Any Member
interested in obtaining a copy of the said statement,
may write an email to the Company Secretary at
[email protected]

TRANSFER WOF AMOUNT TO INVESTOR
EDUCATION AND PROTECTION FUND:

Pursuant to Section 124(5) of the Act read with
Investor Education and Protection Fund Authority
(Accounting, Audit, Transfer and Refund) Rules, 2016,
as amended from time to time ("IEPF Rules”) relevant
amount, which remained unpaid or unclaimed for a
period of 7 (seven) years have been transferred by
the Company, from time to time on due dates, to
the Investor Education and Protection Fund ("IEPF”).
During the year under review, your Company has
transferred H 3,09,720/- (Rupees Three Lakh Nine
Thousand Seven Hundred and Twenty Only) to
IEPF Authority.

Pursuant to Section 124 (6) of the Act and read with
Rule 6 of IEPF Rules, all the underlying shares in
respect of which dividends are not claimed/paid for
the last seven consecutive years, or more are liable
to get transferred to the IEPF Authority. Accordingly,
during the year under review 20,622 equity shares
of face value of H 2/- each were transferred to
IEPF Authority.

The Company has uploaded the details of
unpaid and unclaimed amounts lying with
the Company and also the details of equity
shares transferred to IEPF Authority on the
Company''s websitehttps://poonawallafincorp.
com/investor-infoand also on the MCA''s website
(www.mca.gov.in).

FRAUD MONITORING AND REPORTING:

A dedicated Fraud Control Unit and fraud risk
framework deploys real-time analytics, anomaly
detection, and coordinated investigations, with
oversight by Committee of the Executives (COE)
constituted in accordance with the Master Directions
on Fraud Risk Management in Non-Banking
Financial Companies (NBFCs) (including Housing
Finance Companies) issued by RBI and the ACB. The
COE meets on a quarterly basis, and details of their
meetings and terms of reference are set out in the
Corporate Governance Report.

During the year under review, neither the Joint
Statutory Auditors nor the Secretarial Auditor has
reported to the ACB under Section 143 (12) of Act, any
instances of fraud committed against the Company
by its officers or employees, the details of which need
to be mentioned in the Board''s Report.

APPRECIATION:

Your directors would like to record their appreciation
of the hard work and commitment of the Company''s
employees and warmly acknowledge the unstinting
support extended by their banks, financial institutions,
rating agencies, shareholders and other stakeholders
in contributing to the results. Your directors also
express their gratitude for the guidance received
from RBI, SEBI and other regulatory agencies.

For and on behalf of the Board

Arvind Kapil Sunil Samdani

Managing Director & Executive Director

Chief Executive Officer DIN: 10301175

DIN:10429289

Place: Mumbai Mumbai

Date: May 05, 2026 Date: May 05, 2026

FINANCIAL PERFORMANCE AND STATE OF THE COMPANY''S AFFAIRS:

Total Income on a standalone basis increased to H4,222.84 Crore in FY 2024-25 from H3,151.82 Crore in FY 2023-24. Further, Net Income on a standalone basis increased to H2,707.75 Crore in FY 2024-25 from H2,196.72 Crore in FY 2023-24 due to increase in AUM.

The impairment on financial instruments increased to H1,458.17 Crore in FY 2024-25 from H72.02 Crore in FY 2023-24 largely on account of the erstwhile Small ticket personal loan book (STPL), this product was subsequently re-calibrated.

The Company’s Profit/loss After Tax (“PAT”) on a standalone basis decreased to H(98.34) Crore in FY 2024-25 from H2,055.96 Crore in FY 202324. PAT excluding exceptional items decreased to H(98.34) Crore in FY 2024-25 from H1,027.37 Crore in FY 2023 - 24, due to one-time Opex and accelerated provisioning on erstwhile STPL book in Q2FY25 and continued investment in the new businesses.

The Company’s Net Interest Margin (“NIM”) decreased to 9.6% in FY 2024-25 as compared to 11.2% in

FY 2023-24 primarily on account of higher secured book mix.

On a standalone basis, the Capital Risk Adequacy Ratio (“CRAR”) as at March 31, 2025, was 22.94% against the RBI stipulated norm of 15%.

MANAGEMENT DISCUSSION AND ANALYSIS:

The Management Discussion and Analysis, as required in terms of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”), forms part of this Report.

CHANGE IN THE NATURE OF BUSINESS:

During the year, there was no change in the nature of business of the Company.

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

There are no material changes and commitments which affected the financial position of your Company, which occurred between the end of the

financial year to which the financial statements relate and up to the date of this Report.

CONSOLIDATED FINANCIAL STATEMENTS:

In accordance with the requirements of Regulation 34 of SEBI Listing Regulations, your Company had prepared Consolidated Financial Statements in accordance with Ind AS -110 - ‘Consolidated Financial Statements’ and Ind AS- 27 - ‘Separate Financial Statements’. The Consolidated Financial Statements forms part of this Report.

SUBSIDIARY AND JOINT VENTURE COMPANIES AND ITS PERFORMANCE HIGHLIGHTS:

The Company has one Joint Venture Company Jaguar Advisory Services Private Limited (“JASPL”) and no Subsidiary as on March 31, 2025.

JASPL, a Joint Venture with HDI Global SE is an advisory services Company domiciled in India. JASPL is a special purpose vehicle (SPV) of the Company. The Board of Directors and the Shareholders of the Company have approved divestment of 11,000 equity shares constituting 48.89% of the share capital held by the Company in JASPL, the said transaction is subject to requisite regulatory approvals. The Board reaffirmed the proposal to divest it’s shareholding in JASPL at its meeting held on April 25, 2025, and accordingly in line with the requirements of Ind - AS 105 "Non-Current Assets Held for Sale and Discontinued Operations", such investments have been classified as assets held for sale.

Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Company''s joint venture in Form No. AOC-1 is provided in the financial statements of the Company.

TRANSFER TO RESERVE:

During the year under review, since there is no profit, the Company has not transferred amount to Reserve as required under Regulation 45-IC of the Reserve Bank of India Act, 1934.

DIVIDEND:

In view of the future growth of the Company, the Board of Directors has decided to conserve capital. Therefore, the Board has decided not to recommend any dividend for the FY 2024-25.

The Dividend Distribution Policy, in terms of Regulation 43A of the SEBI Listing Regulations and RBI regulations and as reviewed and adopted by

the Board of Directors of the Company, is available on the Company’s website viz., URL: https:// poonawallafincorp.com/documents/20121/0/ Dividend-Distribution-Policy.pdf/f441908d-d562-4e0b-9900-2cac67b11686

DEPOSITS:

Being a non-deposit taking Non-Banking Financial Company, your Company has not accepted any deposits from the public within the meaning of the provisions of the Master Direction Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016 and the provisions of the Act.

EMPLOYEE STOCK OPTION SCHEMES:

Equity based compensation is an integral part of employee compensation across sectors which enables alignment of personal goals of the employees with organizational objectives by participating in the ownership of the Company through share-based compensation scheme/plan. Your Company believes in rewarding its employees for their continuous hard work, dedication, and support, which have contributed to the Company’s growth and success.

During the year, the Shareholders of the Company on May 13, 2024 had instituted Employee Stock Option Plan 2024 Scheme II (ESOP 2024 Scheme II). The options are to be granted to the eligible employees at the discretion of the Nomination and Remuneration Committee of the Company and at the fair market value. The options generally will vest in a graded manner and are exercisable which have contributed to the Company’s growth and success.

The Employee Stock Option Schemes (“ESOS”) granted to the employees of the Company currently operate under the following Schemes:

• Employee Stock Option Plan 2021 (ESOP- 2021)

• Employee Stock Option Plan 2024 Scheme II (ESOP 2024 Scheme II)

During the year under review, the Company has granted 40,000 options under ESOP 2021 and 1,80,52,000 options under ESOP 2024 Scheme II.

Further, the Board of Directors at its meeting held on April 25, 2025 has approved amendment in the ESOP 2024 Scheme II to increase the number of stock options in the Plan Pool allocated under ESOP 2024 Scheme II from 2,00,00,000 options to 3,25,00,000 options subject to approval of Shareholders.

During the year, the Nomination and Remuneration Committee of the Company at its meeting held on June 01, 2024 cancelled ungranted stock options under the Employee Stock Option Plan-2021 ("ESOP - 2021”) and that any stock option getting lapsed in future shall also not be reissued. Further the committee has recommended evaluation for cancellation of Employee Stock Option Plan-2024 through trust route and subsequent dissolution of the PFL Employee Welfare Trust subject to requisite approvals and compliances as per applicable law.

The Employee Stock Option Plan 2007 and Restricted Stock Option Plan 2014 have been terminated by the Board of Directors based on the recommendation of the Nomination and Remuneration Committee. All the options granted under the respective plan have been exercised or have lapsed or ungranted options have been cancelled.

The aforesaid Schemes are in compliance with SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SEBI (SBEB&SE) Regulations, 2021”), to the extent applicable.

The Nomination and Remuneration Committee of the Company, inter alia, administers and monitors the Schemes in accordance with the SEBI (SBEB&SE) Regulations, 2021.

A statement giving complete details, as on March 31, 2025, as required under the Act and Regulation 14 read with Part F of Schedule I of the SEBI (SBEB&SE) Regulations, 2021 is available on the website of the Company at https://poonawallafincorp. com/investor-governance. These details, along with the certificate from the Secretarial Auditor of the Company, as required under Regulation 13 of the SEBI (SBEB&SE) Regulations 2021, the ESOP Schemes have been implemented in accordance with the Regulations, would be placed and available for inspection by the Members during the Annual General Meeting ("AGM”) of the Company.

Grant wise details of ESOP vested, exercised, allotted and cancelled are also provided in the notes to the standalone financial statements.

The Company has not issued any sweat equity shares or equity shares with differential voting rights during FY 2024 - 25.

CHANGES IN SHARE CAPITAL:

During the year, your Company allotted 34,63,738 equity shares arising out of the exercise of Employee Stock Options granted to eligible employees of your Company.

fter the allotment of the aforesaid equity shares, he total issued, subscribed and paid-up share :apital of the Company as of March 31, 2025, stood )t H155,60,28,800/- comprising 77,80,14,400 equity ;hares of H2/- each. The new equity shares issued shall ank pari-passu with the existing equity shares of the Company in all respects.

^:urther, PFL Employee Welfare Trust is holding S0,80,000 equity shares of the Company as on arch 31, 2025. The shareholding is disclosed as non-promotor and non-public shareholding” in the Shareholding pattern of the Company.

-UND RAISING:

During the year under review, your Company ontinued with its diverse methods of sourcing unds including borrowing through Non Convertible Debentures (NCD), Commercial Paper, External ommercial Borrowings, Term Loan and Working apital Facilities and maintained prudential Asset _iability match throughout the year. Your Company ;ourced funds by way of issuing debentures to and obtaining loans from banks and other institutions )t competitive rates. Your Company continues to expand its borrowing profile by tapping new lenders.

During the year, the Company has raised fresh erm loans H6,450 Crore and external commercial sorrowings of H1,477 Crore from banks and other inancial institutions for a door-to-door tenor ranging rom 2 to 5.5 years. The Company also raised funds hrough Commercial Paper aggregating to H 17,115 Drore (peak outstanding of CP during the year vas H 5,350 Crore) and Secured Non-Convertible Debentures of H 960 Crore during the year. The unds raised through Commercial Papers and Non-onvertible Debentures for the purpose specified n the respective offer documents. As on March 31, >025, your Company does not have any listed green ebt securities.

^:urther disclosure related to Perpetual Debt nstrument as per Reserve Bank of India (NonBanking Financial Company - Scale Based Regulation) Directions, 2023 ("RBI Scale Based Regulations”) is provided in the standalone financial statements.

IREDIT RATING:

During the year under review, CRISIL Ratings eaffirmed the ratings assigned to bank facilities and febt instruments in August 2024. The ratings of long-erm bank facilities, Non-Convertible Debentures and Subordinated Debt were reaffirmed as CRISIL AAA/ Stable. Further, the ratings of Commercial Papers and Short-Term Bank Facilities were reaffirmed as CRISIL

A1 and Perpetual Debt Instruments were reaffirmed as CRISIL AA /Stable.

In October 2024 and March 2025, CARE Ratings reaffirmed the rating assigned to bank facilities and long-term debt instruments. Ratings of long-term Bank Facilities, Non-Convertible Debentures and Subordinated Debt were reaffirmed at CARE AAA; Stable, and the ratings of Market Linked Debentures were reaffirmed at CARE PP-MLD AAA; Stable. Ratings of Perpetual Debt were reaffirmed at CARE AA ; Stable. The ratings assigned to Short-Term Bank facilities and Commercial Paper were reaffirmed at

A status of ratings assigned by rating agencies and migration of ratings during the year are provided in notes to the standalone financial statements.

PARTICULARS OF LOANS, GUARANTEE AND INVESTMENTS OUTSTANDING DURING THE FINANCIAL YEAR:

The Company, being an NBFC registered with the RBI and engaged in the business of giving loans in the ordinary course of its business, is exempt from complying with the provisions of Section 186 of the Act with respect to loans. Accordingly, the disclosures of the loans given as required under the aforesaid section have not been made in this Board’s Report.

Particulars of loans and investments outstanding during the financial year are furnished in notes to the standalone financial statements of the Company.

Further, the Company has not provided any Loans to Directors, Senior Officers and Relatives of Directors as per Para 40 of RBI Scale Based Regulations.

RISK MANAGEMENT:

The Risk Management Committee presently comprises of Mr. Bontha Prasada Rao who serves as the Chairman of the Committee; and Mr. Arvind Kapil, Mr. Sunil Samdani, Mr. Sanjay Kumar, Mr. Rajeev Sardana and Ms. Sonal Modi, as its other members.

The Company has adopted a Risk Management Policy in accordance with the provisions of the Act and Regulation 17(9) of the SEBI Listing Regulations. Managing risk is fundamental to financial services industry and it is key to ensure sustained profitability and stability. In a rapidly changing economic, geopolitical, regulatory and financial environment, your Company has continued to leverage on their strong risk management capabilities.

The Risk Management Committee functions in line with RBI Scale Based Regulations and SEBI Listing Regulations. The Risk Management Committee, met five (5) times during the year. Meeting details, terms of reference, and its functioning are set out in the Corporate Governance Report.

The Company understands that risk evaluation and risk mitigation is a function of the Board of the Company, and the Board of Directors are fully committed to developing a sound system for identification and mitigation of applicable risks viz., systemic, and non-systemic. Information on the development and implementation of a Risk Management Policy for the Company is given in the Management Discussion and Analysis. The Board is of the opinion that there are no elements of risk that may threaten the existence of the Company.

INTERNAL FINANCIAL CONTROL:

The Management has laid down a set of standards, processes and structure which enables it to implement internal financial controls across the organization with reference to financial statements and such controls are adequate and are operating effectively. Internal Finance control framework has been established in line with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (the ‘Guidance Note’).

During FY 2024-25, testing was conducted based on process walkthrough and review of samples as per documented controls in the Risk and Control matrix. Testing was done for each of the controls confirming the existence and operating effectiveness of controls over financial reporting. The review was performed on design, adequacy and operating effectiveness of the controls.

The internal financial control is supplemented by extensive internal audits, regular reviews by the Management and standard policies and guidelines to ensure reliability of financial and all other records to prepare financial statements, its reporting and other data. The Audit Committee of the Board reviews internal audit reports given along with management responses. The Audit Committee also monitors the implemented suggestions. The Company has, in all material respects, adequate internal financial control over financial reporting and such controls are operating effectively.

The Joint Statutory Auditors of the Company have also certified the existence and operating effectiveness of the internal financial controls relating to financial reporting as of March 31, 2025. During the year that increased offer capacity. Additionally, continuous learning and leadership development programs, such as the "Prarambh" induction program and the "SkillUp" digital learning platform, have ensured that employees are well-equipped to meet future challenges. These efforts have collectively elevated the employee experience, built a robust, tech-enabled HR ecosystem, and positioned your Company as a leader in HR innovation and excellence.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE:

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a ‘Policy for Prevention of Sexual Harassment’ to prohibit, prevent or deter any acts of sexual harassment at workplace and to provide the procedure for the redressal of complaints pertaining to sexual harassment, thereby providing a safe and healthy work environment, in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and the rules thereunder ("POSH Act”). The Company has complied with the provisions relating to the constitution and composition of the Internal Committee under the POSH Act.

During the year under review, no case of sexual harassment was reported to the Internal Committee ("IC”). To build awareness and appreciation of this area, your Company has implemented an online knowledge module leveraging our learning management system. Your Company continue to strive harder with each passing year to ensure our organization succeed in bringing the best out of our people and enable the organization to create value for its Shareholders and Employees.

INFORMATION TECHNOLOGY:

The technological advancement in your Company has resulted in multi-fold growth in the digital led business. There is a significant growth in API based end-to-end digital lending through Mobile App, Digital DSAs partners.

Your Company’s Information Technology guiding principles are:

(a) Offer Best-in-Class Customer Experience

across channels

(b) Ensure "Robust & Scalable” Technology Infrastructure with 24x7 availability

(c) Increase Productivity & Profit using Digital First, Technology-driven approach

CORPORATE IMAGE BUILDING & ENGAGING TARGET AUDIENCE:

Some of the key initiatives undertaken by the Company during the year are:

Public Relations and External Communication:

Your Company has effectively leveraged Public Relations (PR) to build awareness and strengthen its positive image among the stakeholders. Through PR, the Company has communicated its commitment to simplifying lending, creating customer delight, and enhancing experiences, which remain its top priorities. PR initiatives were designed to deliver messages that reflect these values and reinforce the company’s governance-first, risk-first, and customer-first approach.

Building on this foundation, PR has also played an important role in communicating the journey towards becoming the smartest Company, emphasizing technology’s role in creating a competitive edge. Key differentiators of the Company such as leveraging AI, building digital journeys, and using risk analytics were highlighted through focused media outreach, including announcements on the four-year collaboration with I IT for AI initiatives, the launch of 24/7 digital journey for salaried professionals, Al-powered HR and underwriting solutions. These developments were strategically communicated through press release dissemination and high-impact media engagements with top-tier media outlets.

In addition to showcasing the technological transformation, strategic PR efforts were undertaken through extensive media outreach to enhance awareness and increase visibility for your company’s six groundbreaking product launches, announced in March and April 2025: PL Prime Digital 24x7, Education Loan, Commercial Vehicle Loan, Shopkeeper Loan, Gold Loan, and Consumer Durable Loan.

Press releases issued for these launches delivered key messages across targeted markets, emphasizing digital innovation, portfolio expansion, geographic expansion, governance-first and risk-first approach, transparency, and cross-selling potential across various products. These developments received strong media coverage, with stories appearing in top-tier English and regional media outlets.

AWARDS AND RECOGNITIONS:

Your Company received accolades in the following field during the year under reviewAwards & Campaign Performance Highlights - FY 2024-25:

CORPORATE EXCELLENCE:

Outstanding Contribution to Financial Inclusion ASSOCHAM India Fintech & BFSI Summit 2025:

This honour was conferred in recognition of our efforts to deepen credit access in underserved Tier-2/Tier-3 markets through a balanced phygital distribution model and AI driven onboarding.

Most Impactful NBFCs 2025:

Awarded at the NBFC Transformation Conclave by VERINT. Recognised for excellence in digital transformation and commitment to enabling financial dreams.

Express BFSI Technology Award 2025:

Awarded for PL Prime 24x7 -Customer Experience. Tech-enabled loan servicing platform for personalised journeys.

GOVERNANCE AND RISK MANAGEMENT:

Leadership in Governance Excellence Governance Now Awards 2025

Awarded for our strong governance practices, board diversity, transparent disclosures, and alignment with stakeholder expectations.

Best Risk Management Framework - NBFC Sector

Indian Risk Management Awards 2025

Acknowledging our implementation of robust, technology-enabled risk monitoring tools and our proactive approach to managing credit, fraud, and operational risks.

TECHNOLOGY AND INNOVATION:

Innovation in AI and Data Analytics FinTech India Innovation Awards 2025

Awarded for our use of advanced analytics, predictive modelling, and machine learning algorithms to improve customer profiling, underwriting precision, and collections efficiency.

MARKETING:

DIGIXX Summit Awards -Adgully

Awarded for Best Festive Marketing DVC Recognised for the multi-platform festive campaign - Sapno Ka Celebration.

CORPORATE SOCIAL RESPONSIBILITY

Your Company has a comprehensive Corporate Social Responsibility (“CSR”) Policy outlining programs, projects and activities that your Company undertakes to create a significant positive impact

on disadvantaged section of the society. All these programs fall within the purview of Section 135 read with Schedule VII of the Act and the Companies (Corporate Social Responsibility Policy) Rules, 2014 (“CSR Rules”). Your Company has undertaken socially impactful CSR Projects during the year under review. Your Company has partnered with implementing agencies to implement projects in the CSR focus area viz., Healthcare, Education and Sports.

During the financial year 2024-25, your Company was required to spend H10.46 Crore under CSR as enumerated in Section 135(5) of the Act. Your Company has spent an amount of H10.51 Crore on CSR activities. The Annual Report on CSR activities covering details pertaining to CSR Policy developed and implemented by the Company, CSR Projects undertaken during the year, CSR committee and meeting details is annexed herewith and marked as Annexure-1. Further, in terms of the CSR Rules, the Chief Financial Officer has certified that the funds disbursed have been utilized for the purpose and in the manner approved by the CSR Committee and the Board of Directors of your Company.

CUSTOMER RELATIONSHIP MANAGEMENT:

Aligned with our vision to become the most trusted financial services brand and our philosophy of customer first approach, customer service remains central to our operations and receives significant attention from management. The Company

upholds values of ethics, integrity, good governance, professionalism, transparency, and customer

satisfaction. Special focus has been on the quality and consistency of service delivery.

Your Company is committed to gauge customer feedback as a true reflection of its service levels. Valuable customer insights at each stage of

relationship with the Company has been the guiding factor to continuously improve and digitize its

processes and service delivery. Our Net Promoter Score (NPS) - a key indicator of customer perception and brand loyalty is used to gauge customer feedback on our product, processes & service level. Introducing Digital NPS through link based survey trigger allowed us to increase the coverage to gather timely feedback and make necessary improvements. Your Company is actively addresses customer insights and identified opportunities for process improvement as part of our ongoing commitment to continuous enhancement.

Our customers have multiple options like dedicated toll-free number, dedicated email ids, branches, social media accounts to reach us for their query, requests or grievances.

Your Company has enabled robust self-service platforms like mobile application, WhatsApp Bot, Web-bot and Smart IVR for instant servicing, which is available 24x7, enhancing customer convenience.

The following key initiatives were undertaken to enhance Customer Service and Experience in FY 2024-25:

1) To streamline customer interactions and improve efficiency, your Company has launched the Email Bot & Voice Bot.

• Email BOT enables quick response to customer queries on email through instant categorization, prioritization and draft response templates.

• Voice BOT now proactively engages with customers, providing important loan details through welcome call. The BOT is also being used for other service campaigns to reach out to our customers.

2) We have launched our new SMART IVR (Interactive Voice Response) system with improved customer experience. With automated authentication, critical loan details are now voiced out upfront to the customers. The IVR now provides menu options for instant servicing via an automated process along with efficient call routing to agents.

3) Mobile APP is enhanced with service stack to include Chat Bot for interactive assistance to customers. Straight through journeys have been enabled on the App for instant servicing.

Transparency

• Effective communications on confirmation of repayment mandate registration.

• Ensure recorded interactions with customers for future reference and adequate quality checks.

• Proactive issuance of NOC/NDC (No-Object Certificate/No-Due Certificate) to customers.

• Enabled payment via QR code for branch walk in customers for real time payment updates.

Handling Grievances effectively

• Proactive acknowledgment to customers via auto E-mail and SMS trigger upon receipt of any complaint.

• A detailed Root Cause Analysis (RCA) carried out for each complaint.

• All critical cases including regulatory escalation are reviewed by Principal Nodal Officer and Chief Compliance Officer.

• Close looping feedback mechanism ensures customers are out called at the time of closure of the Service Request for customer concurrence on the resolution being provided and upon closure in system the same is backed by an SMS trigger for customers’ reference.

• All Partially/Wholly Rejected complaints (subject to exclusions as per Regulatory Circular) are reviewed by the Internal Ombudsman of the Company and the final decision is communicated to the customer within the regulatory timelines.

• Necessary governance mechanism is in place for any case of violation of code of conduct while dealing with customer.

• Regular trainings for frontline officials and agents are conducted for upkeep of customer experience.

• Post analysis of complaint trends and gap identification, different initiatives are taken to ensure preventive actions leading to seamless experience.

DIRECTORS AND KEY MANAGERIALPERSONNEL:a. Board Composition

The composition of the Board of Directors of the Company is governed by the Act and Regulation 17 of the SEBI Listing Regulations and is in conformity with the same. As on the date of this Report, the Board of Directors comprised a combination of Ten Directors viz. Mr. Adar Cyrus Poonawalla, Chairman, Non-Executive Director, Mr. Arvind Kapil, Managing Director and Chief Executive Officer, Mr. Sunil Samdani, Executive Director, Ms. Sonal Modi, Non-Executive Director, and Mr. Bontha Prasada Rao, Mr. Prabhakar Dalal, Mr. Sanjay Kumar, Ms. Kemisha Soni, Mr. Kewal Handa and Mr. Rajeev Sardana are Non-Executive Independent Directors. The Board mix provides a combination of professionalism, knowledge and experience required in the NBFC sector. The details of skills possessed by each director have been provided in detail in the Corporate Governance report.

b. Change in composition of the Board during the year

Appointment/Re-appointment:

During the year, the Board of Directors (“Board”) of the Company had approved the appointment

of Mr. Arvind Kapil (DIN: 10429289) as a Managing Director & Chief Executive Officer of the Company, for a period of 5 (Five) years effective from June 10, 2024 and thereafter the Members of the Company approved his appointment in the Annual General Meeting held on July 23, 2024.

Ms. Sonal Modi (DIN: 03403571) was appointed as a Non-Executive, Non-Independent Director of the Company, liable to retire by rotation, effective from August 16, 2024, thereafter, the Members of the Company approved her appointment by way of Postal Ballot on November 04, 2024.

Mr. Kewal Handa (DIN : 00056826 ) was appointed as a Non-Executive Independent Director of the Company, for a period of 3 (Three) years effective from October 01, 2024, thereafter, the Members of the Company approved his appointment by way of Postal Ballot dated November 04, 2024. In the opinion of the Board, Mr. Kewal Handa is independent of the management of the Company and fulfils the conditions specified in the Act and SEBI Listing Regulations, RBI Scale Based Regulations for appointment as a NonExecutive Independent Director and possess the requisite skills and capabilities and hold highest standards of integrity. The Board is of the view that Mr. Kewal Handa’s continuation on the Board of the Company as an Independent Director even after attaining the age of 75 years as on August 22, 2027 will be in the interest of the Company.

The Board of Directors, at its meeting held on December 18, 2024, approved

the re-appointment of Mr. Sanjay Kumar (DIN: 09466542) as a Non-Executive Independent Director of the Company for a period of three years, effective from January 15, 2025. Thereafter, the Members of the Company approved his re-appointment at the Extraordinary General Meeting held on January 09, 2025.

The Board of Directors on December 18, 2024 has approved the appointment of Mr. Rajeev Sardana (DIN: 06648276) as a Non-Executive Independent Director of the Company, for a period of 3 (Three) years effective from December 18, 2024, thereafter, the Members of the Company approved his appointment in the Extraordinary General Meeting held on January 09, 2025. In the opinion of the Board, Mr. Rajeev Sardana is independent of the management of the Company and fulfils the conditions specified in the Act and SEBI Listing Regulations, RBI Scale Based Regulations for appointment as a Non-

Executive Independent Director and possess the requisite skills and capabilities and hold highest standards of integrity.

The terms and conditions of appointment of Independent Directors are available on the website of the Company at https:// poonawallafincorp.com/investor-governance.

Cessation:

During the year under review Mr. Sajid Fazalbhoy (DIN: 00022760), Non-Executive Director, stepped down from the Board with effect from June 01, 2024 due to other professional commitments.

Mr. Abhay Bhutada (DIN: 03330542), took early retirement as Managing Director of the Company w.e.f. June 09, 2024 and continued as Non-Executive Director thereafter. He also, took retirement as Non Executive Director due to preoccupation at strategic level with Cyrus Poonawalla Group w. e. f. August 03, 2024.

Mr. Amar Deshpande (DIN:07425556) has tendered his resignation as a Non-Executive Director of the Company, with effect from August 30, 2024, due to his pre-occupation and other professional commitments.

Mr. Atul Kumar Gupta (DIN: 01052730), Independent Director, has stepped down from close of business hours on December 09, 2024 due to various pre-occupation.

The Board of Directors of your Company placed on record their appreciation for the contribution made by Mr. Sajid Fazalbhoy, Mr. Abhay Bhutada, Mr. Amar Deshpande and Mr. Atul Kumar Gupta during their tenure as directors on the Board of the Company.

c. Retirement by Rotation:

I n accordance with the provisions of Section 152 of the Act read with Articles of Association of the Company, Mr. Sunil Samdani (DIN: 10301175), Executive Director retires by rotation at the ensuing AGM and being eligible, offers himself for re-appointment. The Board of Directors of your Company recommends the re-appointment of the Director liable to retire by rotation at the ensuing AGM. Appropriate resolution seeking your approval for the aforesaid re-appointment along with brief profile of the said Director is forming part of the Notice convening the 45^th AGM of your Company.

d. Declaration from Directors

The Company has, inter alia, received the following declarations from all the Independent Directors confirming that:

a. they meet the criteria of independence as prescribed under the provisions of the Act, read with Schedule IV and Rules issued thereunder, and the SEBI Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company;

b. they have complied with the Code for Independent Directors prescribed under Schedule IV to the Act; and

c. they have registered themselves with the Independent Director’s Database maintained by the Indian Institute of Corporate Affairs and have qualified the online proficiency selfassessment test or are exempted from passing the test as required in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014.

The Board of Directors of the Company has taken on record the declaration and confirmation submitted by the Independent Directors.

All members of the Board of Directors and Senior Management have affirmed compliance with the Code of Conduct for Board and Senior Management for the FY 2024-25.

None of the Director of the Company are disqualified from being appointed as Directors as specified under Section 164(1) and 164(2) of the Act read with Rule 14(1) of the Companies (Appointment and Qualifications of Directors) Rules, 2014 (including any statutory modification(s) and/or re-enactment(s) thereof for the time being in force) or are debarred or disqualified by the Securities and Exchange Board of India (“SEBI”), Ministry of Corporate Affairs (“MCA”) or any other such statutory authority.

In the opinion of the Board, the Independent Directors possess the requisite integrity, experience, expertise, and proficiency required under applicable laws and the policies of the Company.

During the year under review, a separate meeting of the Independent Directors was held on January 24, 2025.

During the year under review, the Non-Executive Directors of the Company had no pecuniary

relationship or transactions with the Company, other than sitting fees and commission, as applicable, received by them.

The Company had obtained certificates from Practicing Company Secretaries confirming that:

• None of the Directors on the Board of the Company has been debarred or disqualified from being appointed and/or continuing as Directors by the SEBI/MCA or any other such statutory authority.

e. Fit and Proper Policy:

The Company adheres to the process and methodology prescribed by the RBI in respect of the ‘Fit & Proper’ criteria as applicable to NBFCs, signing of Deeds of Covenants which re-affirms that the directors are required to discharge their responsibilities to the best of their abilities, individually and collectively in order to be eligible for being appointed/re-appointed as a director of the Company.

All the Directors of the Company have confirmed that they satisfy the "fit and proper” criteria as prescribed in Chapter XI of RBI Scale Based Regulations and that they are not disqualified from being appointed/continuing as directors in terms of Section 164(2) of the Act. The prescribed declarations/undertakings given by the Directors were placed before the Nomination and Remuneration Committee for its review and noting.

f. Familiarization Program for Independent Directors:

In compliance with the requirement of Regulation 25 of SEBI Listing Regulations, the Company has put in place a familiarization programme for the Independent Directors to familiarize them about the Company and their roles, rights, responsibilities in the Company. The details of the familiarization program along with the number of hours spent by each of the Independent Directors during the FY2024-25 are explained in the Corporate Governance Report. The same is also available on the website of the Company at https:// poonawallafincorp.com/documents/20121/0/ Draft-Familiarization-program-FY24-25-upload-ve rsion.pdf/4e4f7bb0-a682-9f19-7655-a9643e22b4b2.

g. Performance Evaluation:

The Board conducted the performance evaluation of the individual Directors, Board Committees, Board as a whole and the Chairman of the Board in accordance with the provisions of the Act and the SEBI Listing Regulations, including the Guidance Note on Board Evaluation issued by SEBI.

The Board evaluated the effectiveness of its functioning and that of the Committees and of individual Directors by seeking their inputs on various aspects of Board/Committee Governance through structured questionnaire. Also, the Nomination and Remuneration Committee has carried out evaluation of every director’s performance and reviewed the self-evaluation report submitted by the respective directors. The performance evaluation of the Independent Directors was carried out by the entire Board, excluding the director being evaluated.

The aspects covered in the evaluation included the contribution to and monitoring of corporate governance practices, participation in the long-term strategic planning and the fulfilment of directors’ obligations and fiduciary responsibilities, including but not limited to, active participation at the Board and Committee meetings. Also, the Nomination and Remuneration Committee has carried out an evaluation of every Director’s performance and reviewed the self-evaluation submitted by the respective Directors. These meetings were intended to obtain Directors’ inputs on the effectiveness of Board/Committee processes.

The evaluations are carried out in a confidential manner and the Directors provide their feedback by rating based on various metrics.

The Board considered and discussed the input received from the Directors. Further, the Independent Directors at their meeting reviewed the performance and role of NonIndependent Directors and the Board as a whole and Chairperson of the Company and had also assessed the quality, quantity, and timeliness of flow of information between the Company management and the Board that was necessary for the Board to perform their duties effectively and reasonably.

h. Outcome of evaluation process:

Based on inputs received from the board members, it emerged that the overall performance evaluation of the Board, composition, and quality, understanding the business including risks,

process and procedures, oversight of financial reporting process including internal controls and audit functions, ethics and compliances and monitoring activities, has been found to be reasonably good. Similarly, the effectiveness of the Board Committees has been rated high. The Committees of the Board function effectively. Sufficient time is allotted for discussion of the agendas. Contrary views were also encouraged and the same were viewed in the right perspective. The performance of the Chairman of the Company has been found to be Excellent and was rated 5 within the overall rating scale of 1 to 5. Overall, the Board is functioning very well in a cohesive and interactive manner. Last year the recommendations of Independent Directors and Board on Performance Evaluation were largely implemented.

i. Remuneration Policy:

The Remuneration Policy for Directors, Key Managerial Personnel ("KMP”), Senior Management Personnel and all other employees is aligned to the philosophy on the commitment of fostering a culture of leadership with trust. The Remuneration Policy aims to ensure that the level and composition of the remuneration of the Directors, KMPs, SMPs and all other employees is reasonable and sufficient to attract, retain and motivate them to successfully run the Company. The salient features of the Remuneration Policy are stated in the Corporate Governance Report. The Remuneration Policy of the Company is available on the Company’s website at https://poonawallafincorp.com/ documents/20121/0/PFL-Remuneration-Policv-Version-No-8.0.pdf/0b67101a-0143-22da-31ae-597eb8e47056.

The Remuneration details of Directors and KMP are provided in the Corporate Governance Report.

j. Code of Conduct for Directors and Employees:

The Company has adopted a Code of Conduct for its Directors and employees including a Code of Conduct for Independent Directors which suitably incorporates the duties of Independent Directors as laid down in the Act. The said Codes can be accessed on the Company’s website at https:// poonawallafincorp.com/documents/20121/0/ PFL-Code-for-Independent-Directors. pdf/532e85bb-fac8-a77a-36ed-065de305659c.

In terms of the SEBI Listing Regulations, all directors and Senior Management Personnel

have affirmed compliance with their respective codes. The Managing Director and Chief Executive Officer has also confirmed and certified the same, for which certification is provided at the end of the Report on Corporate Governance.

k. Key Managerial Personnel:

In terms of Section 203 of the Act, the following are the Key Managerial Personnel ("KMP”) of the Company as on the date of this report:

1. Mr. Arvind Kapil, Managing Director & Chief Executive Officer;

2. Mr. Sunil Samdani, Executive Director;

3. Mr. Sanjay Miranka, Chief Financial Officer; and

4. Ms. Shabnum Zaman, Company Secretary.

DIRECTORS'' RESPONSIBILITY STATEMENT:

To the best of our knowledge and belief, your directors

make the following statements in terms of Section

134 (5) of the Act:

a. that in the preparation of the annual accounts for the year ended March 31, 2025, the applicable Ind AS have been followed along with proper explanation relating to material departures, if any;

b. t hat such accounting policies as mentioned in Notes to the annual accounts have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2025 and of the loss of the Company for the year ended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the annual accounts have been prepared on a going concern basis;

e. that proper internal financial controls are in place and that the financial controls are adequate and are operating effectively; and

f. that proper systems to ensure compliance with the provisions of all applicable laws are in place and that such systems are adequate and operating effectively.

MEETINGS:

During the year under review, 10 (Ten) Board Meetings and 6 (Six) Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report.

The maximum interval between any two meetings did not exceed 120 days, as prescribed by the Act and the SEBI Listing Regulations.

COMMITTEES OF THE BOARD OF DIRECTORS:

The Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority. The Board Committees have been constituted to deal with specific areas/ activities as mandated by applicable laws, rules and regulations or as delegated by the Board, which need a closer review.

Audit Committee

The Audit Committee presently comprises of Mr. Kewal Handa who serves as the Chairman of the Committee and Ms. Sonal Modi, Mr. Prabhakar Dalal, Mr. Sanjay Kumar, and Ms. Kemisha Soni as other members. The terms of reference for the Audit Committee have been furnished in the Corporate Governance Report. All the recommendations made by the Audit Committee during the year were accepted by the Board.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee (“NRC”) presently comprises of Mr. Prabhakar Dalal who serves as the Chairman of the Committee, Mr. Kewal Handa, Mr. Rajeev Sardana, and Ms. Sonal Modi as other members. The terms of reference of the Nomination and Remuneration Committee and details of NRC Meetings and attendance thereof have been furnished in the Corporate Governance Report.

Stakeholders'' Relationship Committee

The Stakeholders’ Relationship Committee presently comprises of Mr. Prabhakar Dalal who serves as the Chairman of the Committee, Mr. Sunil Samdani, Ms. Sonal Modi, and Mr. Sanjay Kumar as other members. The terms of reference of the Stakeholders’ Relationship Committee have been furnished in the Corporate Governance Report.

Corporate Social Responsibility Committee

The Corporate Social Responsibility Committee presently comprises of Ms. Kemisha Soni who serves as the Chairperson of the Committee

Chartered Accountants, (Firm Registration No. 105047W), as Joint Statutory Auditors of the Company, to hold office from the conclusion of the 44^th AGM until the conclusion of the 47^th AGM of the Company.

Based on the recommendation of the Audit Committee and the Board, the Members of the Company, at the 43^rd AGM held on July 25, 2023, approved the appointment of Kirtane & Pandit LLP, Chartered Accountants, (Firm Registration No.105215W/W100057), as Joint Statutory Auditors of the Company, to hold office from the conclusion of the 43^rd AGM until the conclusion of the 46^th AGM of the Company.

In terms of the RBI Circular No. RBI/2021-22/25 Ref. No. DoS.CO.ARG/SEC.01/08.91.001/2021-22

dated April 27, 2021 on Guidelines for Appointment of Statutory Central Auditors (“SCAs”)/Statutory Auditors (“SAs”) of Commercial Banks (excluding Regional Rural Banks), Urban Co-operative Banks (“UCBs”) and Non-Banking Financial Companies (“NBFCs”) (including Housing Finance Companies) (“RBI Guidelines”), the statutory audit of the entities having asset size of H15,000 crore and above as at the end of previous year, should be conducted under the joint audit of a minimum of two audit firms. and in accordance with the requirements of Section 139 of the Act, read with Rules made thereunder, M S K A & Associates, Chartered Accountants and Kirtane & Pandit LLP, Chartered Accountants, act as the Joint Statutory Auditors of the Company.

As required under Regulation 33(1)(d) of the SEBI Listing Regulations, the Joint Statutory Auditors have confirmed that they have subjected themselves to the peer review process of the Institute of Chartered Accountants of India (“ICAI”) and that they hold a valid certificate issued by the Peer Review Board of ICAI.

The Standalone and the Consolidated Financial Statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind - AS) notified under Section 133 of the Act. The notes on financial statements referred to in the Auditors’ Report are self-explanatory and do not call for any further comments.

There are no qualifications, reservations or adverse remarks or disclaimers made by and M S K A & Associates, Chartered Accountants, and Kirtane & Pandit LLP, Chartered Accountants, Joint Statutory Auditors, in their Reports dated April 25, 2025 on the Financial Statements of the Company for FY 2024-25.

SECRETARIAL AUDITOR:

Pursuant to the provision of Section 204(1) of the Act & Rule 9 of the Companies (Appointment and Remuneration of Personnel) Rules, 2014 and other applicable provisions, if any of the Act and Regulation 24A of the SEBI Listing Regulations read with circulars issued thereunder to the extent applicable, other applicable regulations framed by the Securities and Exchange Board of India in this regard, the Secretarial auditor needs to be appointed for a period of 5 (Five) years.

In view of the above, the Board of Directors have appointed SIUT & Co LLP, Company Secretaries (Firm Registration No.: L2021MH011500) as Secretarial Auditor of the Company for a period of five (5) years i.e. from FY 2025-26 to FY 2029-30 subject to the approval of Members at the ensuing AGM of the Company, to undertake secretarial audit as required under the Act and SEBI Listing Regulations and issue the necessary secretarial audit report for the aforesaid period.

SIUT & Co LLP have confirmed that their appointment, if made, will comply with the eligibility criteria in terms of SEBI Listing Regulations. Further, the Secretarial Auditor has confirmed that they have subjected themselves to Peer Review process by the Institute of Company Secretaries of India (“ICSI”) and hold valid certificate issued by the Peer Review Board of ICSI.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company has appointed SIUT & Co LLP, Company Secretaries (Firm Registration No. L2021MH011500) to conduct the Secretarial Audit for the FY 2024-25. The Secretarial Audit Report does not contain any qualification, reservation and adverse remark. The Secretarial Audit Report in Form MR-3 for the financial year ended March 31, 2025, is annexed herewith and marked as Annexure-3.

COST AUDITORS:

Being an NBFC, maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Act are not applicable in respect of the business activities carried out by the Company.

SECRETARIAL STANDARDS:

TThe mandatorily applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to ‘Meetings of the Board

of Directors’ and ‘General Meetings’ respectively, have been duly complied by your Company.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT:

Environment, Social and Governance Practices (“ESG”) is a critical area of focus. Your Company has constituted ESG Committee and adopted the Environmental and Social Governance Policy & Governance Framework. As a responsible organization your Company takes various measures to mitigate our negative impact on the environment, ensure our conduct is responsible towards our internal and external stakeholders and invest in good governance practices. Our various efforts towards responding to the stakeholder needs and concerns are addressed in the business responsibility and sustainability report (“BRSR”), covering the nine principles of National Guidelines on Responsible Business Conduct (NGRBC).

The BRSR provides an avenue for disclosing an overview of the entity’s material ESG risks and opportunities, goals and targets related to sustainability and performance against them. As per Regulation 34 of the SEBI Listing Regulations, BRSR for FY 2024-25 forms part of this Report.

RBI GUIDELINES:

The Company continues to fulfil all the norms and standards laid down by RBI pertaining to nonperforming assets, capital adequacy, statutory liquidity assets, etc. As against the RBI norm of 15%, On a standalone basis, the Capital Risk Adequacy Ratio (“CRAR”) as of March 31, 2025, was 22.94% against the RBI stipulated norm of 15%. In line with the RBI guidelines for Asset Liability Management (ALM’) system for NBFCs, the Company has an Asset Liability Management Committee, which meets quarterly to review its ALM risks and opportunities.

The Company continues to be in compliance with the RBI Scale Based Regulations.

CORPORATE GOVERNANCE:

The Company is committed to achieving and adhering to the highest standard of Corporate Governance. It believes in and practices good corporate governance. The Company maintains transparency and also enhances corporate accountability. In terms of Regulation 34 of SEBI Listing Regulations read with Schedule V, the following forms part of this Report and as required under the RBI Scale Based Regulations, forms part of this Annual Report. Further, the additional disclosure requirements for NBFCs in accordance with the aforesaid RBI Directions forms part of the Corporate Governance Report.:

a. Declaration signed by the Managing Director & Chief Executive Officer regarding compliance to Code of Conduct by the Board Members and Senior Management Personnel;

b. A certificate from a Practicing Company Secretary that none of the directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as directors of Companies by the Board/Ministry of Corporate Affairs or any such statutory authority;

c. Report on the Corporate Governance; and

d. Practicing Company Secretary’s certificate regarding compliance of conditions of Corporate Governance.

Conservation of Energy

The operations of the Company are not energy intensive. The Company implements various energy conservation measures across all its functions, which are highlighted in the Business Responsibility and Sustainability Report.

Technology Absorption

The details pertaining to technology absorption at the Company (usage of digital and data analytics to build sustainable competitive advantage) have been explained in this Report. Considering the nature of services and businesses, no specific amount of expenditure is earmarked for Research and Development. However, the Company on an ongoing basis strives for various improvements in the products, platforms, and processes.

Foreign Exchange Earnings and Outgo

During FY 25, there were no foreign exchange earnings (previous year: NIL) and the foreign exchange outgo in terms of actual outflow amounted to H3.71 Crore (Rupees Three Crore Seventy One Lakh) (previous year: H0.64 Crore).

OTHER DISCLOSURES:

a. During the year, there was no application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) and any one-time settlement with any Bank or Financial Institution during the year under review and hence the details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof are not applicable.

b. The Company has not defaulted in repayment of loans from Banks and Financial Institutions;

c. There were no delays or defaults in payment of interest/principle of any of its debt securities;

d. Disclosures pursuant to RBI Scale Based Regulations, unless provided in the Board’s Report, form part of the notes to the standalone financial statements;

e. There was no raising of funds through Preferential Allotment, Rights Issues or Qualified Institutional Placements, etc.

f. The Company has not entered into any agreements as required to be disclosed under clause 5A of paragraph A of Part A of Schedule III of SEBI Listing Regulations.

ANNUAL RETURN:

Pursuant to Sections 92 and 134(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014 as amended, the Annual Return is available at the website of the Company at https://poonawallafincorp.com/investor-financials.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:

The information required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is disclosed in this report as an Annexure 4.

In terms of the proviso to Section 136(1) of the Act, the Report is being sent to all Members, excluding the statement with respect to employees employed throughout the year and employees employed for part of the year who were in receipt of remuneration in excess of limits prescribed under Section 197 (12) of the Act read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. It is to be noted that the Board’s Report is abridged to that extent and all other information as required under applicable law form part of this Report. The statement is available for inspection by any Member on request. Any Member interested in obtaining a copy of the said statement, may write an email to the Company Secretary at [email protected]

TRANSFER OF AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND:

Pursuant to Section 124(5) of the Act read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules,

2016, (as amended from time to time) (“IEPF Rules”) relevant amount, which remained unpaid or unclaimed for a period of seven years have been transferred by the Company, from time to time on due dates, to the Investor Education and Protection Fund (“IEPF”). During the year under review, your Company has transferred H609,579/- (Rupees Six Lakh Nine Thousand Five Hundred and Seventy Nine.) to IEPF Authority.

Pursuant to Section 124 (6) of the Act and read with Rule 6 of IEPF Rules all the underlying shares in respect of which dividends are not claimed/paid for the last seven consecutive years or more are liable to get transferred to the IEPF Authority. Accordingly, during the year under review 23,365 equity shares of face value of H2/- each, were transferred to IEPF Authority.

The Company has uploaded the details of unpaid and unclaimed amounts lying with the Company and also the details of equity shares transferred to IEPF Authority on the Company’s website (www. poonawallafincorp.com) and also on the Ministry of Corporate Affairs’ website (www.mca.gov.in).

FRAUD REPORTING:

During the year under review, neither the Joint Statutory Auditors nor the Secretarial Auditor has reported to the Audit Committee under Section 143 (12) of Act, any instances of fraud committed against the Company by its officers or employees, the details of which needs to be mentioned in the Board’s Report.

APPRECIATION:

Your directors would like to record their appreciation of the hard work and commitment of the Company’s employees and warmly acknowledge the unstinting support extended by its banks & financial institutions, shareholders and other stakeholders in contributing to the results. Your directors also express their gratitude for the guidance received from RBI, SEBI and other regulatory agencies.

(Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘SEBI Listing Regulations’), forms part of this Report.

CHANGE IN NATURE OF BUSINESS:

During the year, there was no change in the nature of business of the Company.

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

There are no material changes and commitments which affected the financial position of your Company, which occurred between the end of the financial year to which the financial statements relate and up to the date of this Report.

CONSOLIDATED FINANCIAL STATEMENTS:

Your Company has divested its investment in Grihum Housing Finance Limited (Formerly known as Poonawalla Housing Finance Limited) (‘GHFL’) on July 26, 2023 (‘effective date’) pursuant to approval of the Board of Directors, Shareholders of the Company and requisite regulatory approvals to Perseus SG Pte. Ltd., an entity affiliated to TPG Global LLC. Upon completion of the aforesaid divestment transaction, GHFL ceased to be a subsidiary of the Company from

the effective date and consequently, the financial accounts have been consolidated till July 25, 2023.

In accordance with the requirements of Regulation 34 of SEBI Listing Regulations, your Company had prepared Consolidated Financial Statements in accordance with Ind-AS 110 ‘Consolidated Financial Statements’ and Ind-AS 27 ‘Separate Financial Statements’. The Consolidated Financial Statements forms part of this Report.

SUBSIDIARY AND JOINT VENTURE COMPANIES AND ITS PERFORMANCE HIGHLIGHTS:

The Company has one Joint Venture Company Jaguar Advisory Services Private Limited (‘JASPL’) and no Subsidiary as on March 31, 2024.

GHFL

Grihum Housing Finance Limited (Formerly known as Poonawalla Housing Finance Limited) (‘GHFL’) Subsidiary till July 25, 2023 has total income of H290.99 Crore and earned PAT of H31.55 Crore during the period ended July 25, 2023.

GHFL is in the business of mortgage financing in the affordable segment. GHFL ceased to be a Subsidiary of the Company with effect from July 26, 2023, by divestment of its entire stake to Perseus SG Pte. Ltd.

During FY 2023-24, no new Subsidiary was incorporated/acquired. The Company’s Policy for Determination of Material Subsidiaries, as adopted by the Board of Directors is in conformity with Regulation 16 of the SEBI Listing Regulations, can be accessed on the Company’s website at https://poonawallafincorp. com/pfca/assets/pdf/Policv-on-Material-Subsidiarv. pdf.

The audited special purpose condensed Interim Financial Statements of GHFL for the period ended July 31, 2023 can be accessed on the Company’s website at https://poonawallafincorp.com/investor-financials.php

JASPL

JASPL, a Joint Venture with HDI Global SE is an advisory services Company domiciled in India. JASPL is SPV of the Company. The Board of Directors and the Shareholders of the Company has approved divestment of 11,000 equity shares constituting 48.89% of the share capital held by the Company in JASPL, the said transaction is subject to requisite regulatory approvals. The Board has reaffirmed the proposal to divest it’s shareholding in JASPL in its

meeting held on April 29, 2024, and accordingly in line with the requirements of Ind - AS 105 ‘Noncurrent assets held for Sale, such investments have been classified as assets held for sale.

Pursuant to Section 129(3) of the Companies Act, 2013 (‘the Act’) a statement in Form AOC-1 containing the salient features of the financial statements of your Company’s subsidiary forms part of this Report and hence not repeated here for the sake of brevity.

TRANSFER TO RESERVE:

During the year, the Company is proposing to transfer H411.20 Crore to Reserve as required under Regulation 45-IC of the Reserve Bank of India Act, 1934.

DIVIDEND:

To deliver sustainable value to its Shareholders, your Company has paid the interim dividend of ^153.78 Crore (at the rate 100% i.e. ^2/- per share) on February 13, 2024 for the FY 2023-24.

In view of the future growth of the Company, the Board of Directors has decided to conserve capital and therefore no final dividend was declared for FY 2023-24.

The Dividend Distribution Policy, in terms of Regulation 43A of the SEBI Listing Regulations and as reviewed and adopted by the Board of Directors of the Company, is available on the Company’s website at https:// poonawallafincorp.com/pfca/assets/pdf/Dividend-Distribution-Policy.pdf.

DEPOSITS:

Being a non-deposit taking systemically important Non-Banking Financial Company, your Company has not accepted any deposits from the public within the meaning of the provisions of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016 and the provisions of the Act.

EMPLOYEE STOCK OPTION SCHEMES:

Equity based compensation is an integral part of employee compensation across sectors which enables alignment of personal goals of the employees with organisational objectives by participating in the ownership of the Company through share-based compensation scheme/plan. Your Company believes in rewarding its employees for their continuous hard work, dedication, and support, which has led the Company on the growth path.

The Employee Stock Option Schemes (‘ESOPs’) granted to the employees of the Company currently operate under the following Schemes:

- Employee Stock Option Plan-2007 (ESOP -2007);

- Restricted Stock Option Plan-2014 (RSOP -2014); and

- Employee Stock Option Plan-2021 (ESOP- 2021).

There are no changes made to the above Schemes during the year under review.

During the year, your Company has implemented Employee Stock Option Plan - 2024 (‘ESOP- 2024’), through PFL Employee Welfare Trust through secondary acquisition which was approved by the Shareholders on February 19, 2024. The Board has also approved Employee Stock Option - 2024 -Scheme II on April 08, 2024; the same was approved by the Shareholders on May 13, 2024.

The aforesaid Schemes are in compliance with SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (‘SEBI (SBEB&SE) Regulations, 2021’), to the extent applicable.

The Nomination and Remuneration Committee of the Board of Directors of the Company, inter alia, administers and monitors the Schemes in accordance with the SEBI (SBEB&SE) Regulations, 2021.

During the year, the Company has granted ESOPs to the eligible employees of the Company, in accordance with the ESOP- 2021 as approved by the Nomination and Remuneration Committee.

The details of the ESOPs granted and outstanding as on March 31, 2024, along with other particulars as required by Regulation 14 of the SEBI (SBEB&SE) Regulations, 2021 is available on the website of the Company at https://poonawallafincorp.com/ investor-governance.php. These details, along with the certificate from the Secretarial Auditor of the Company, as required under Regulation 13 of the SEBI (SBEB&SE) Regulations 2021, the ESOP Schemes have been implemented in accordance with the Regulations, would be placed and available for inspection by the Shareholders during the Annual General Meeting (‘AGM’).

Grant wise details of ESOPs vested, exercised, allotted and cancelled are also provided in the notes to the Standalone Financial Statements.

In September 12, 2023, CARE Ratings reaffirmed the rating assigned to Bank Facilities and long-term debt instruments. Ratings of long-term Bank Facilities, Non-Convertible Debentures and Subordinated Debt were reaffirmed at CARE AAA; Stable and the ratings of Market Linked Debentures were reaffirmed at CARE PP-MLD AAA; Stable. Ratings of Perpetual Debt were reaffirmed at CARE AA Stable. The ratings assigned to Short-Term Bank facilities and Commercial Paper

\A/oro roaffirmorl at ‘PADF A1 ’

A status of ratings assigned by rating agencies and migration of ratings during the year is provided in notes to the Standalone Financial Statements of the Company.

PARTICULARS OF LOANS, GUARANTEE AND INVESTMENTS OUTSTANDING DURING THE FINANCIAL YEAR:

The Company, being an NBFC registered with the RBI and engaged in the business of giving loans in ordinary course of its business, is exempt from complying with the provisions of section 186 of the Act with respect to loans. Accordingly, the disclosures of the loans given as required under the aforesaid section have not been made in this Board’s Report.

Particulars of loans and investments outstanding during the financial year are furnished in notes to the Standalone Financial Statements of the Company.

RISK MANAGEMENT:

The Risk Management Committee of the Board (‘RMCB’), functions in line with the Reserve Bank of

Furthermore, in January 10, 2024, Acuite Ratings and Research Limited also upgraded the long-term rating assigned to Non-Convertible Debentures to ‘ACUITE AAA/ Stable’.

In March 01, 2024, Brickwork Ratings reaffirmed the ratings for the Non-Convertible Debentures at ‘BWR AA /Stable’ and withdrew the rating assigned to the Innovative Perpetual Debt Instruments (IPDI) on the request of the Company.

India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023 No. RBI/DoR/2023-24/106 dated October 19, 2023 (‘RBI Scale Based Regulation’) and SEBI Listing Regulations. The RMCB met four times during the year, its terms of reference and functioning are set out in the Corporate Governance Report. The Company understands that risk evaluation and risk mitigation is a function of the Board of the Company, and the Board of Directors are fully committed to develop a sound system for identification and mitigation of applicable risks viz., systemic and non-systemic. For detailed Risk Management procedure of the Company, please refer to the Management Discussion & Analysis Report.

INTERNAL FINANCIAL CONTROL:

The Company has in place adequate internal financial controls with reference to financial statements, commensurate with the size, scale, nature and complexity of its operations and regulatory requirements. A comprehensive review of the internal financial controls environment of the Company was undertaken during the year which covered testing

of Process, IT and Entity level controls including review of key business processes for updating risk control, matrix, etc. The risk and control matrices are annually reviewed, and control measures are tested and documented. Moreover, the Company continuously upgrades its systems and undertakes review of policies, guidelines, manuals, and authority matrix. The internal financial control is supplemented by extensive internal audits, regular reviews by the Management and standard policies and guidelines to ensure reliability of financial and all other records to prepare financial statements, its reporting and other data. The Audit Committee of the Board reviews internal audit reports given along with management responses. The Audit Committee also monitors the implemented suggestions. The Company has, in all material respects, adequate internal financial control over financial reporting and such controls are operating effectively. The Joint Statutory Auditors of the Company have also certified the existence and operating effectiveness of the internal financial controls relating to financial reporting as of March 31, 2024.

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

Pursuant to Section 177(9) of the Act and Regulation 4(2)(d)(iv) of the SEBI Listing Regulations, the Company has in place a vigil mechanism named ‘Breach of Integrity and Whistle Blower/Vigil Mechanism Policy’ to provide a formal mechanism to the directors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company’s Code of Conduct or Business Ethics Policy. The Policy provides for adequate safeguards against victimisation of employees who avail the mechanism and also provides for direct access to the Chairman of the Audit Committee in appropriate and exceptional circumstances.

The details of the said Policy is explained in the Corporate Governance Report and is available on the website of the Company at https://poonawallafincorp. com/pfca/assets/pdf/Breach-of-Integrity-and-Whistle-Blower-Vigil-Mechanism-Policy.pdf

HUMAN RESOURCES:

Your Company firmly believes that employees are its greatest asset. From orchestrating successful change management and alignment with the Company’s Vision and Mission. Human Resources (‘HR’) has played a vital role in purposefully shaping and promoting the Company’s Culture and Values. From acquiring talent to developing leaders the focus of the HR strategy is to enable the growth of the Company through talent fulfilment for growth areas, capability building in emerging technologies and building internal talent

pipeline. Your Company strives to create a conducive environment for growth and development of its employees. Training & Development initiatives are being taken for employees from time to time. More details can be found in the human resource section in the Management Discussion & Analysis Report.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE:

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a ‘Policy for Prevention of Sexual Harassment’ to prohibit, prevent or deter any acts of sexual harassment at workplace and to provide the procedure for the redressal of complaints pertaining to sexual harassment, thereby providing a safe and healthy work environment in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and the rules made thereunder (‘POSH Act’). The Company has complied with the provisions relating to the constitution of the Internal Committee under the POSH Act. During the year under review, no case of sexual harassment was reported to the Internal Committee (‘IC’). The composition of IC is in accordance with the POSH Act. To build awareness and appreciation of this area, we have implemented an online knowledge module leveraging our learning management system. We continue to strive harder with each passing year to ensure we succeed in bringing the best out of our people and enable the organisation to create value for its Shareholders and Employees.

INFORMATION TECHNOLOGY:

The technological advancement in your Company has resulted in multi-fold growth in the digital led business. There is a significant growth in API based end-to-end digital lending through Mobile App, Digital DSAs & Co-lending partners.

Your Company’s Information Technology guiding principles are:

(a) Offer Best-in-Class Customer Experience across channels.

(b) Ensure ‘Robust & Scalable’ Technology Infrastructure with 24x7 availability.

(c) Increase Productivity & Profit using Digital First, Technology-driven approach.

Your Company’s Information Technology primary focus areas include superior customer experience, technology upgrade, new products/services, innovations, productivity/process improvements, digital acquisition, and data science/analytics.

Your Company has launched a web & mobile app with various features such as instant personal loan, loan servicing etc. Customers can now avail an instant personal loan in just 5 minutes by completing the end-to-end digital process. Business processes have been re-aligned as per industry-best practices thus enabling end-to-end automation of each process. Your Company has also launched instant personal loan on WhatsApp.

There was a major reform in Business-model transition in the form of API based lending where we have launched STPL (Small Ticket Personal Loan) using standard digital lending API stack. Any Digital DSA can integrate their digital journey with our API stack quickly.

Your Company has implemented a robust digital platform and an API gateway with over 100 APIs which can be used for various purposes like eKYC, PAN validation, Digilocker, penny drop, eSigning, eStamping, IMPS, etc.

Your Company has invested in various new technologies like Digital Experience Platform, AI based customer engagement and communications, personalisation, Digital Collections Platform, etc. Your Company has also set up an IT Command Center for 24x7 monitoring of IT Infrastructure, Applications and Digital Services. Your Company is also implementing Enterprise Data Lake platform, which will enable use of multiple AI based algorithm for generating various kinds of reports, MIS, and Dashboards. Use of analytics will enhance customer penetration through digital platform by providing various insights at data level.

CORPORATE IMAGE BUILDING & ENGAGING TARGET AUDIENCE:

Some of the key initiatives undertaken by the Company during the year are:

> Public Relations and External Communication:

Under Public Relations your Company extensively focused on creating awareness and positive recall for the organisation. Your Company also focused on strengthening the brand image through various PR campaigns and exclusive media interactions for the management.

Through specific communication and through emails, letters, texts or otherwise your Company has reached out to its stakeholders and informed them about the constant progress and growth of the organisation. Your Company focused on

getting the best visibility for the organisation and made sure that there is an overall positive sentiment for the organisation. Leading media houses including newspapers, electronic media as well as online media covered the journey of your Company. All the leading media houses and print publications positively covered various business announcements and financial results. During some of the strategic media stories your Company successfully presented its vision as well as future plans which further fueled the growth journey. Your Company is successfully positioned as one of the fastest growing NBFCs with digital-first approach with continuous focus on USPs as well as growth story and business and performance achievements. Your Company also did extensive media outreach and PR for special days or season specific customer campaigns such as Father’s Day campaign to promote its business Loan product, Credit Films to create awareness on the importance of choosing the right lender if you have good credit score, Film on personal loan around the Raksha Bandhan theme to enable the dreams of its customers. These campaigns and films gave positive recall and good visibility both in print and digital media.

Apart from press releases on various occasions your Company also did strategic media interviews with the senior management to create visibility and awareness about the leadership. Through these media interviews your Company focused on leadership and its flawless execution while growing the business. Your Company also focused on regional media as aspirations are growing in tier-2 and tier-3 markets and reaching out to them. Your Company also did media stories and received coverage in various regional language newspapers and websites. A healthy mix of English and regional media coverage has positioned your Company as a force to reckon within NBFC space.

a. Leadership profiling at various leading publications

With strategic communication and media reach out your Company covered large format interviews for its senior management with leading publications like Moneycontrol, Financial Express, Economic Times, Hindu Business Line, ET Now, CNBC TV18, etc. This gave your Company good media visibility and helped to position our leadership as an industry thought leader.

b. Digital PR campaigns and content placements

Your Company is building the brand digitally through strategic content placements in the form of authored articles, press releases as well as opinion pieces. So far, successfully featured content on various leading digital publications like Moneycontrol, LiveMint, Hindustan Times, ETBFSI, Indian Express, Forbes Advisors, etc.

c. Do It Tibara Cricket World Cup Anthem

As part of brand building and creating awareness for the Company during the most anticipated and highly viewed sporting event in the country, your Company made Cricket Anthem ‘Do It Tibara’, a theme song dedicated to Indian cricket team. This song was a tribute to Indian cricket and an appeal from the cricket loving nation to the Indian team to win the 50 overs world cup third time after 1983 & 2011. This song created a positive and top of the mind recall for your Company and created good visibility for the brand. This song got more than 6 million views after posting it on the Company’s official YouTube channel. It also became a viral sensation on social media and more than 2000 influencers posted this song or used it in making reels for social media platforms. This song was talk of the town during the entire world cup and was trending with #DoItTibara on X (formerly Twitter) whenever India was playing its match. Apart from social media influencers, various leading A&M Media (Advertising & Marketing) organically covered the ‘Do It Tibara’ Cricket song in their stories around how brands/ organisations are enjoying the cricket fever. Leading News channel network Republic Media also aired the cricketing song on their news channel during their prime time shows in between the breaks and their Editor-inChief Mr. Arnab Goswami also spoke about the song’s popularity and relevance to the cricket fever in India during telecast.

> Employer Branding:

a. Brand management activities on social media including LinkedIn

Successfully positioned your Company as employer of choice through various interventions. Your Company has been regularly posting on Company’s official social media handles about key milestones,

important awards, and recognitions as well as various employee engagement activities. Some of the LinkedIn posts on important days and festivals helped garner good engagement as well as followers for the organisation’s LinkedIn profile. Your Company has also actively started posting about the joining of new team members under our ‘Embark’ initiative.

b. Awards & Recognitions for employer branding

The Company not only applied and was recognised in key employer branding platforms like ‘Great Place to Work’, but also built visibility in various forums through communication channels and leadership visibility. Your Company also received other recognitions such as ‘India’s Best Workplace in Health in Health & Wellness 2023’ by Great Place to Work, ‘Healthy Workplace 2023’ by Arogya World and ‘The Most Preferred Workplace 2022-23’ by Team Marksmen in the premier edition of the survey etc.

> Branding and Internal Communication:

Prompt and effective communication about the Company and all its functions. All the important announcements and information about key initiatives, Company results, senior management communication, new products, projects, Company and functional awards, branch updates, employee reward & recognition etc. are designed and disseminated from the internal communications desk to enhance employee engagement and collaboration to work towards achieving our common goals. End to end branding for all stakeholders like customers, channel partners, digital aggregators & employees across all available touchpoints like, Corporate Office and Branch Network, DSA Premises, Events, Sales activations & Media.

> Events and Awards:

a. Partnership with various events

Collaborated with leading media houses for their marquee events like:

• Sakal Schoolympics- A flagship event by Sakal Media to promote sporting culture.

• TV9 Network’s What India Thinks Today Conclave- Your Company was the title sponsor for this event which created good visibility for brand PFL and its leadership.

• Soldierathon Marathon- Partnership with Fitistan for first of its kind Marathon with soldiers of Indian Army where your Company’s employees took part in this marathon.

• Saluting the Heroes- Flagship event with Pune Mirror to recognize the efforts of Pune Police.

• News18 Storyboard’s DNPA summit and conclave- A forum to bring all the representatives from digital media publication association under one roof and honor their work in shaping digital India.

• Sushasan Mahotsav 2024- Event from Rambahu Mhalgi Prabodhini to celebrate the models of good governance from public as well as private institutions and industry bodies.

b. Awards and Recognitions

Your Company received accolades in the

following field during the year under review:

• Great Place to Work Certification

• Healthy Workplace by Arogya World

• ETNow Best BFSI Brand 2024

• ET Brand Equity Trendies Award for DO It Tibara Influencer Marketing

• Gold Award for Best Video Campaign at the IAMAI’s 14^th India Digital Awards

• Best Use of Influencers and Social Media for ‘Do It Tibara’- At DIGIES: Digital Conference and Awards

• ET Future Ready Organisations from Economic Times

• Quantic Media - Best Customer Experience NBFC

• Marksmen Daily- Most Preferred Workplace 2023-24

• Elets Media- Excellence in Compliance and Legal Management

• Compliance and Legal Team of the year - UBS Forums

• Fastest Growing NBFC of the year by Elets Media

• Best Social Welfare Initiative of the Year-Indian Social Impact Awards 2024

• Risk Management Team of the year-Golden Peacock Award

• Rising Corporate Legal & Compliance Team of the Year- At Lex Falcon Global Awards India 2024

CORPORATE SOCIAL RESPONSIBILITY

Your Company has a comprehensive Corporate Social Responsibility (‘CSR’) Policy outlining programmes, projects and activities that your Company undertakes to create a significant positive impact on disadvantaged section of the society especially in rural India. All these programmes fall within the purview of Section 135 read with Schedule VII of the Act and the Companies (Corporate Social Responsibility Policy) Rules, 2014 (‘CSR Rules’). Your Company has undertaken socially impactful CSR Projects during the year under review. Your Company has partnered with implementing agencies to implement projects in the CSR focus area viz., Education, Women Empowerment, Financial Literacy and Healthcare.

During the year under review your Company was humbled to receive CSR awards for its contribution to society.

During the FY 2023-24, your Company was required to spend H2.33 Crore under CSR as enumerated in Section 135(5) of the Act. Your Company has spent an amount of H2.33 Crore on CSR activities. The Annual Report on CSR activities is annexed herewith and marked as an Annexure-1. Further, in terms of the amended CSR Rules, the Chief Financial Officer has certified that the funds disbursed have been utilised for the purpose and in the manner approved by the CSR Committee and the Board of Directors of your Company.

CUSTOMER RELATIONSHIP MANAGEMENT:

Your Company strives to be the most trusted financial services brand with Quality of Customer Service being one of the critical pillars for your Company. Your Company also believes in ethics, integrity, good governance, professionalism, transparency, and customer satisfaction. Special focus has been on the quality and consistency of service delivery.

Below key initiatives were undertaken to enhance the Customer Service and Experience in FY 2023-24:

> Net Promoter Score (‘NPS’) is the leading indicator of customer perception and brand loyalty. Your Company have been committed to gauge customer feedback as a true reflection of its service levels. Your Company have embarked on this journey since FY 2022-23. Valuable customer insights at each stage of their relationship with

the Company has been the guiding factor to continuously improve and digitize its processes and service delivery. The NPS has significantly improved to 76 for March’24 as compared to 44 for March’23 across all moments of truth -Sales, Onboarding, Service and Exit. Customer insights and identified opportunities of process improvement are being addressed as a part of continuous improvements.

> To ensure a 360view of customer interaction across all key stakeholders, a Customer Relationship Management (‘CRM’) is being customized to ensure visibility across all teams which also acts as a central data hub for customer service.

> With ever changing customer needs and ability to adapt with customer requirements and ensuring a real time customer service, self-serve channels are being enhanced with cutting edge technology coupled with AI/ML backed self-service options via IVR, WhatsApp & chatbot. Self-Service adoption was at ~70% of the overall QRGs (Query, Requests and Grievances) received through physical mode.

> Leveraged WhatsApp adoption by customers onboarded on WhatsApp for service through selfhelp mode.

> Segmented and proactive communication to customers for awareness of servicing capabilities leading to increase in digital servicing.

To ensure your Company treat its customers fairly,

your Company has implemented the following:

Transparency

> Effective communications on confirmation of repayment mandate registration.

> Ensure recorded interactions with customers for future reference and adequate quality checks.

> Diligent and timely filing of customer credit information with bureaus.

> Proactive issuance of NOC/ NDC (No-Objection Certificate/ No-Due Certificate) to customers.

> Enabled virtual account number as a repayment mode.

> Enabled payment via QR code for branch walk in customers for real time payment updates.

> ISO level quality standards such as Daily Control Function Chart (‘DCFC’) & Corrective Action Preventive Action (‘CAPA’) are being implemented for all operational processes.

Handling Grievances effectively

> Proactive acknowledgment to customers via auto E-mail and SMS trigger upon receipt of any complaint.

> A detailed Root Cause Analysis (RCA) carried out for each complaint.

> All critical cases including regulatory escalation are reviewed by Principal Nodal Officer and Chief Compliance Officer.

> Close looping feedback mechanism ensures customers are out called at the time of closure of the Service Request for customer concurrence on the resolution being provided and upon closure in system the same is backed by an SMS trigger for customers’ reference.

> All Partially/Wholly Rejected complaints (subject to exclusions as per Regulatory Circular) are reviewed by the Internal Ombudsman of the Company and the final decision is communicated to the customer within the regulatory timelines.

> Necessary governance mechanism is in place for any case of violation of code of conduct while dealing with customer (e.g. misbehaviour during collection follow-up).

> Regular trainings for frontline officials and agents are conducted for upkeep of customer experience.

> Post analysis of complaint trends and gap identification, different initiatives are taken to ensure preventive actions leading to seamless experience.

DIRECTORS AND KEY MANAGERIALPERSONNEL:

a. Board Composition

The composition of the Board of Directors of the Company is governed by the Act and Regulation 17 of the SEBI Listing Regulations and is in conformity with the same. As on the date of this Report, the Board of Directors comprised a combination of Nine Directors viz. Mr. Adar Cyrus Poonawalla, Chairman, Non-Executive Director, Mr. Abhay Bhutada, Managing Director, Mr. Sunil Samdani, Executive Director, Mr. Amar Deshpande, Non- Executive Director and Mr. Bontha Prasada Rao, Mr. Prabhakar Dalal, Mr. Sanjay Kumar, Mr. Atul Kumar Gupta, and Ms. Kemisha Soni are Non-Executive, Independent Directors.

The Board mix provides a combination of professionalism, knowledge and experience

required in the NBFC sector. The details of skills possessed by each director have been provided in detail in the Corporate Governance report.

b. Change in composition of the Board during the year

During the year, the Board of Directors (‘Board’) of the Company had approved re-designation of Mr. Atul Kumar Gupta (DIN: 01052730) from Non-Executive Director to Non-Executive, Independent Director of the Company, for a period of 3 (three) years effective from August 23,

2023, thereafter the Members of the Company granted their consent by way of Postal Ballot on September 13, 2023.

The Board had also approved the appointment of Mr. Sunil Samdani (DIN: 10301175) as Whole - time Director (‘Executive Director’) of your Company for a period of 5 (five) years effective from October 20, 2023, thereafter the Members of the Company granted their consent by way of Postal Ballot on January 14, 2024.

Ms. Kemisha Soni (DIN: 06805708) was appointed as a Non- Executive, Independent Director for a period of 3 (three) years effective from January 30, 2024, thereafter, the Members of the Company granted their consent by way of Postal Ballot on March 07, 2024.

On March 18, 2024 and June 01, 2024 based on the recommendation of the Nomination and Remuneration Committee, the Board has approved appointment of Mr. Arvind Kapil (DIN: 10429289) as an Additional Director in the capacity of Managing Director & Chief Executive Officer and a Key Managerial Personnel of the Company, for a period of 5 (five) years effective from June 10, 2024, subject to the approval of Members of the Company. The Board has also approved early retirement of Mr. Abhay Bhutada as Managing Director of the Company effective from the close of business hours on June 09,

2024, and to continue as the Non-Executive Director on the Board of your Company with effect from June 10, 2024.

The Board of Directors on April 08, 2024 has approved re-appointment of Mr. Prabhakar Dalal (DIN:00544948) as a Non-Executive, Independent Director for a period of 3 (three) years effective from May 05, 2024, thereafter the Members of the Company approved his reappointment.

Mr. G Jaganmohan Rao, Non-Executive, Independent Director, stepped down from

the Board with effect from August 26, 2023. Ms. Vijayalakshmi R Iyer, Non-Executive, Independent Director, completed her term as Independent Director of the Company, with effect from January 30, 2024. Mr. Sajid Fazalbhoy, Non-Executive Director, stepped down from the Board with effect from June 01, 2024. The Board of Directors of your Company placed on record their appreciation for the contribution made by Mr. G Jaganmohan Rao, Ms. Vijayalakshmi R Iyer and Mr. Sajid Fazalbhoy during their tenure as directors on the Board.

c. Retirement by Rotation:

In accordance with the provisions of Section 152 of the Act read with Articles of Association of the Company, Mr. Abhay Bhutada (DIN:03330542), Director retires by rotation at the ensuing AGM and being eligible, offers himself for reappointment. The Board of Directors of your Company recommends the re-appointment of the Director liable to retire by rotation at the ensuing AGM. Appropriate resolution seeking your approval for the aforesaid re-appointment along with brief profile of the said director is forming part of the Notice convening the 44^th AGM of your Company.

d. Key Managerial Personnel :

In terms of Section 203 of the Act, the following are the Key Managerial Personnel (‘KMPs’) of the Company as on the date of this report:

1. Mr. Abhay Bhutada, Managing Director;

2. Mr. Sunil Samdani, Executive Director (with effect from October 20, 2023);

3. Mr. Sanjay Miranka, Chief Financial Officer; and

4. Mrs. Shabnum Zaman, Company Secretary.

Save and except as stated above, there are no other changes in the KMPs during the FY 2023-24.

e. Declaration from Independent Directors:

The Company has received the necessary declaration from each Independent Director in accordance with Section 149(7) of the Act and Regulation 16(1)(b) and 25(8) of the SEBI Listing Regulations, that he/she meets the criteria of independence as laid out in Section 149(6) of the Act and Regulation 16(1)(b) of the SEBI Listing Regulations.

In terms of Regulation 25(8) of the SEBI Listing Regulations, Independent Director

have confirmed that they are not aware of any circumstances or situation which exists or may be reasonably anticipated that could impair or impact their ability to discharge their duties. Based upon the declarations received from the Independent Directors, the Board of Directors has confirmed that they meet the criteria of independence as mentioned under Regulation 16(1)(b) of the SEBI Listing Regulations and that they are independent of the management.

In terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, Independent Directors of the Company have included their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs. There has been no change in the circumstances affecting their status as Independent Directors of the Company.

In the opinion of the Board, the Independent Directors possess the requisite integrity, experience, expertise, and proficiency required under applicable laws and the policies of the Company.

During the year under review, a separate meeting of the Independent Directors was held on January 13, 2024.

During the year under review, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees and commission, as applicable, received by them.

f. Fit and Proper Policy:

The Company adheres to the process and methodology prescribed by the RBI in respect of the ‘Fit & Proper’ criteria as applicable to NBFCs, signing of Deeds of Covenants which binds the directors to discharge their responsibilities to the best of their abilities, individually and collectively in order to be eligible for being appointed/ reappointed as a director of the Company.

All the directors of the Company have confirmed that they satisfy the ‘fit and proper’ criteria as prescribed in Chapter XI of RBI Scale Based Regulation and that they are not disqualified from being appointed/continuing as directors in terms of Section 164(2) of the Act. The prescribed declarations / undertakings given by the directors were placed before the Nomination and Remuneration Committee and Board for its review and noting.

g. Familiarization Programme for Independent Directors:

In compliance with the requirement of Regulation 25 of SEBI Listing Regulations, the Company has put in place a familiarization programme for the Independent Directors to familiarize them about the Company and their roles, rights, responsibilities in the Company. The details of the familiarization programme along with the number of hours spent by each of the Independent Director during the FY 2023-24 are explained in the Corporate Governance Report. The same is also available on the website of the Company at https://poonawallafincorp.com/ pfca/assets/pdf/PFL-Familiarization-Program-FY23-24.pdf

h. Performance Evaluation:

The Board conducted the performance evaluation of the Individual directors, Board Committees, Board as a whole and the Chairman of the Board in accordance with the provisions of the Act and the SEBI Listing Regulations, including the Guidance Note on Board Evaluation issued by SEBI.

The Board evaluated the effectiveness of its functioning and that of the Committees and of individual directors by seeking their inputs on various aspects of Board/Committee Governance through structured questionnaire. The aspects covered in the evaluation included the contribution to and monitoring of corporate governance practices, participation in the long-term strategic planning and the fulfilment of directors'' obligations and fiduciary responsibilities, including but not limited to, active participation at the Board and Committee meetings. Also, the Nomination and Remuneration Committee has carried out an evaluation of every director’s performance and reviewed the self-evaluation submitted by the respective directors. These meetings were intended to obtain Directors’ input on effectiveness of Board/Committee processes.

The Board considered and discussed the input received from the directors. Further, the Independent Directors at their meeting reviewed the performance and role of NonIndependent Directors and the Board as a whole and Chairperson of the Company and had also assessed the quality, quantity, and timeliness of flow of information between the Company management and the Board that was necessary for the Board to perform their duties effectively and reasonably.

i. Outcome of evaluation process:

Based on inputs received from the members, it emerged that the overall performance evaluation of the Board, composition, and quality, understanding the business including risks, process and procedures, oversight of financial reporting process including internal controls and audit functions, ethics and compliances and monitoring activities, has been found to be reasonably good. Similarly, the effectiveness of the Board Committees has been rated high. The Committees of the Board function effectively. Sufficient time is allotted for discussion of the agendas. Contrary views were also encouraged and the same were viewed in the right perspective. The performance of the Chairman of the Company has been found to be Excellent and was rated 5 within the overall rating scale of 1 to 5. The Chairman demonstrates effective leadership qualities and skills, provides strategic directions and guidance to the Company and addresses recommendations/ suggestions of the Board Members including divergent views. Overall, the Board is functioning very well in a cohesive and interactive manner. Last year the recommendations of Independent Directors and Board on Performance Evaluation were largely implemented.

j. Remuneration Policy:

The Board has, on the recommendation of the Nomination and Remuneration Committee adopted the Remuneration Policy, which inter alia includes policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management Personnel, and their remuneration. The salient features of the Remuneration Policy are stated in the Corporate Governance Report. The Remuneration Policy of the Company is available on the Company’s website at https:// poonawallafincorp.com/pfca/assets/pdf/PFL-Remuneration-Policy.pdf.

k. Code of Conduct for Directors and Employees:

The Company has adopted a Code of Conduct for its directors and employees including a Code of Conduct for Independent Directors which suitably incorporates the duties of Independent Directors as laid down in the Act. The said Codes can be accessed on the Company’s website at https://poonawallafincorp.com/pfca/assets/pdf/ PFL-Code-of-Business-Ethics.pdf.

In terms of the SEBI Listing Regulations, all directors and Senior Management Personnel have affirmed compliance with their respective codes. The Managing Director has also confirmed and certified the same, which certification is provided at the end of the Report on Corporate Governance.

DIRECTORS'' RESPONSIBILITY STATEMENT:

To the best of our knowledge and belief, your directors make the following statements in terms of Section 134 (5) of the Act:

a. that in the preparation of the annual accounts for the year ended March 31, 2024, the applicable Ind AS have been followed along with proper explanation relating to material departures, if any;

b. t hat such accounting policies as mentioned in Notes to the annual accounts have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2024 and of the profit of the Company for the year ended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the annual accounts have been prepared on a going concern basis;

e. that proper internal financial controls are in place and that the financial controls are adequate and are operating effectively; and

f. that proper systems to ensure compliance with the provisions of all applicable laws are in place and that such systems are adequate and operating effectively.

MEETINGS:

A minimum of four pre-scheduled Board meetings are held annually. Additional Board meetings are convened by giving appropriate notice to address the Company’s specific needs. In case of business exigencies or urgency of matters, resolutions are passed by circulation.

During the year under review, seven Board Meetings and seven Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Act and the SEBI Listing Regulations.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

In line with the requirements of the Act and the SEBI Listing Regulations, the Company has in place a Policy on Related Party Transactions and the same can be accessed on the Company’s website at Policy on https:// poonawallafincorp.com/pfca/assets/pdf/PFL-Related-Partv-Transaction-Policv.pdf . All transactions with Related Parties are placed before the Audit Committee for approval. All related party transactions that were entered into during the financial year were on an arm’s length basis and in the ordinary course of business, the particulars of such transactions are disclosed in the notes to the financial statements. Disclosures of related party transactions of the Company with the promoter/ promoter group, which holds 10% or more shareholding in the Company, if any, is given in note to the Standalone Financial Statements. The nature of related party transaction require disclosure in AOC -2, the same is attached with this Report as an Annexure-2.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:

During the year under review there were no significant material orders passed by the Regulators/ Courts/ Tribunals against the Company which would impact the going concern status or its future operations.

STATUTORY AUDITORS:

Based on the recom mendation of the Audit Com mittee and the Board, the members of the Company, at the 43 ^rd AGM held on July 25, 2023, approved the appointment of Kirtane & Pandit LLP, Chartered Accountants, (Firm Registration No.105215W/W100057), as Joint Statutory Auditors of the Company, to hold office from the conclusion of the Forty Third AGM until the conclusion of the Forty Sixth AGM of the Company.

Pursuant to the Company’s Policy on appointment of Statutory Auditors (‘Policy’) and the Circular No. DoS. CO.ARG/SEC.01/08.91.001/2021-22 dated April 27, 2021 issued by the RBI (‘RBI Circular’/ ‘Guidelines’), prescribing the guidelines for Appointment of Statutory Central Auditors (SCAs)/ Statutory Auditors (Sas) of Commercial Banks (excluding Regional Rural Banks (‘RRBs’)), Urban Co-operative Bank (‘UCBs’) and Non-Banking Financial Companies (‘NBFCs’) (including Housing Financial Companies (‘HFCs’)) and in accordance with the requirements of Section 139 of the Act, read with Rules made thereunder, Walker Chandiok & Co LLP, Chartered Accountants, and Kirtane & Pandit LLP, Chartered Accountants, act as the Joint Statutory Auditors of the Company.

The terms of appointment of Walker Chandiok & Co LLP (Firm Registration No. 001076N/N500013) as one of the Company’s Joint Statutory Auditors shall expire at the conclusion of the Forty Fourth AGM of the Company.

In view of the same, based on the recommendation of the Audit Committee, the Board at its meeting held on April 29, 2024, recommended and approved the appointment of M S K A & Associates, Chartered Accountants, (Firm Registration No. 105047W), as Joint Statutory Auditors of the Company, to hold office from the conclusion of the Forty Forth AGM until the conclusion of the Forty Seventh AGM of the Company, subject to the approval of the Members at the ensuing AGM.

M S K A & Associates established in 1978, is an Indian partnership firm registered with the Institute of Chartered Accountants of India (ICAI) and the PCAOB (US Public Company Accountancy Oversight Board) having offices across key cities in India. The Firm provides a range of services which include Audit & Assurance, Taxation and Accounting Advisory. The Firm’s Audit and Assurance practice has significant experience in auditing financial services clients including large NBFCs and Banks.

As required under Regulation 33(1)(d) of the SEBI Listing Regulations, the Joint Statutory Auditors have confirmed that they have subjected themselves to the peer review process of the Institute of Chartered Accountants of India (‘ICAI’) and that they hold a valid certificate issued by the Peer Review Board of ICAI.

The Standalone and the Consolidated Financial Statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Act. The notes on financial statements referred to in the Auditors’ Report are self-explanatory and do not call for any further comments. The Auditors’ Report does not contain any qualification, reservation, adverse remark, or disclaimer.

SECRETARIAL AUDITORS:

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company has appointed SIUT & Co LLP, Company Secretaries (Firm Registration No. L2021MH011500) to conduct the Secretarial Audit for the FY 2023-24. The Secretarial Audit Report confirms that the Company has complied with the provisions of the Act, Rules, SEBI Listing Regulations and Guidelines and that the report does not contain any qualification, reservation, adverse remark, or

disclaimer. The Secretarial Audit Report for the financial year ended March 31, 2024, is annexed herewith and marked as an Annexure-3.

Further, the Board of Directors at its meeting held on April 29, 2024, has re-appointed SIUT & Co LLP as the Secretarial Auditor of the Company for FY 2024-25 and FY 2025-26.

COST AUDITORS:

Being a NBFC, maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Act are not applicable in respect of the business activities carried out by the Company.

SECRETARIAL STANDARDS:

Your Company is in compliance with the applicable secretarial standards issued by the Institute of Company Secretaries of India and approved by the Central Government under Section 118(10) of the Act.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT:

In the financial sector, Environment, Social and Governance Practices (‘ESG’) has become a critical area of focus. Your Company has constituted ESG Committee and adopted Environmental and Social Governance Policy & Governance Framework. As a responsible organisation your Company takes various measures to mitigate our impact on the environment, ensure our conduct is responsible towards our internal and external stakeholders and invest in good governance practices. Our various efforts towards responding to the stakeholder needs and concerns are addressed in the business responsibility and sustainability report (‘BRSR’), covering the nine principles of National Guidelines on Responsible Business Conduct (NGRBC).

The BRSR provides an avenue for disclosing an overview of the entity''s material ESG risks and opportunities, goals and targets related to sustainability and performance against them. As per Regulation 34 of the SEBI Listing Regulations, BRSR for FY 2023-24 forms part of this Report.

RBI GUIDELINES:

The Company continues to fulfil all the norms and standards laid down by RBI pertaining to nonperforming assets, capital adequacy, statutory liquidity assets, etc. As against the RBI norm of 15%, the capital to risk-weighted assets ratio of the Company was 33.80% as on March 31, 2024. In line with the RBI guidelines for asset liability management (‘ALM’) system for NBFCs, the Company has an Asset

Liability Management Committee, which meets quarterly to review its ALM risks and opportunities.

The Company continues to be in compliance with the RBI Scale Based Regulation.

CORPORATE GOVERNANCE:

The Company is committed to achieving and adhering to the highest standard of Corporate Governance. It believes in and practices good corporate governance. The Company maintains transparency and also enhances corporate accountability. In terms of Regulation 34 of SEBI Listing Regulations read with Schedule V, the following forms part of this Report:

a. Declaration regarding compliance to Code of Conduct by the Board Members and Senior Management Personnel;

b. A certificate from a Practicing Company Secretary that none of the directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as directors of Companies by the Board/ Ministry of Corporate Affairs or any such statutory authority;

c. Report on the Corporate Governance; and

d. Practicing Company Secretaries certificate regarding compliance of conditions of Corporate Governance.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO:

Your Company does not have any activity requiring conservation of energy or technology absorption and foreign exchange earnings and outgo.

OTHER DISCLOSURES:

a. During the year, there was no application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) and any one-time settlement with any Bank or Financial Institution during the year under review and hence the details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof is not applicable.

b. The Company has not defaulted in repayment of loans from Banks and Financial Institutions;

c. There were no delays or defaults in payment of interest/principle of any of its debt securities;

d. Disclosures pursuant to RBI Scale Based Regulation unless provided in the Board’s

Report, form part of the notes to the Standalone Financial Statements;

e. There was no raising of funds through Preferential Allotment, Rights Issues or Qualified Institutional Placements, etc.

ANNUAL RETURN:

Pursuant to Sections 92 and 134(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014 as amended, the Annual Return is available at the website of the Company at https://poonawallafincorp.com/investor-financials. php

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:

The information required under Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is disclosed in this Report as an Annexure 4.

In terms of the proviso to Section 136(1) of the Act, the Report is being sent to all Members, excluding the statement with respect to employees employed throughout the year and employees employed for part of the year who were in receipt of remuneration in excess of limits prescribed under Section 197 (12) of the Act read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The statement is available for inspection by any Member on request. Any Member interested in obtaining a copy of the said statement, may write an email to the Company Secretary at [email protected]

TRANSFER OF AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND:

Pursuant to Section 124(5) of the Act read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, (as amended from time to time) (‘IEPF Rules’) relevant amount, which remained unpaid or unclaimed for a period of seven years have been transferred by the Company, from time to time on due dates, to the Investor Education and Protection Fund (‘IEPF’). During the year under review, your Company has transferred H5,61,478/- (Rupees Five Lakh Sixty One Thousand Four Hundred and Seventy Eight only) to IEPF Authority.

Pursuant to Section 124 (6) of the Act and read with Rule 6 of IEPF Rules all the underlying shares in respect of which dividends are not claimed/ paid for the last seven consecutive years or more are liable to get transferred to the IEPF Authority. Accordingly, during

APPRECIATION:

Your directors would like to record their appreciation of the hard work and commitment of the Company’s employees and warmly acknowledge the unstinting support extended by its bankers, financial institutions, shareholders, regulators and other stakeholders in contributing to the results.

Your Directors have pleasure in presenting the 43^rd Annual Report along with the Audited Financial Statements of the Company for the financial year ended March 31, 2023.

FINANCIAL HIGHLIGHTS (STANDALONE):

FINANCIAL PERFORMANCE AND STATE OF THE COMPANY''S AFFAIRS:

Total Income increased to ''2,010.03 Crore in FY 2022-23 from ''1,567.08 Crore in FY 2021-22.

Net Income on a standalone basis increased to ''1,414.75 Crore in FY 2022-23 from ''1,057.79 Crore in FY 2021-22.

The impairment on financials instruments decreased from ''68.61 Crore in FY 2021-22 to ''(144.53) Crore in FY 2022-23.

The Company’s Profit after Tax ("PAT") on a standalone basis increased to ''584.94 Crore in FY2022-23 from ''293.20 Crore in FY2021-22.

The Company’s net interest margin ("NIM") increased to 10.7% in FY2022-23 as compared to 9.8 % in FY 2021-22.

On a Standalone basis, the Capital Risk Adequacy Ratio ("CRAR") for the year FY 2022-23 was 38.91% against the RBI stipulated norm of 15%.

MANAGEMENT DISCUSSION AND ANALYSIS:

The Management Discussion and Analysis, as required in terms of the Securities and Exchange Board of India

SUBSIDIARY AND JOINT VENTURE COMPANIES:

The Company has one subsidiary, viz. Poonawalla Housing Finance Limited (“PHFL”) and one Joint Venture Company Jaguar Advisory Services Private Limited (“JASPL”).

During the year under review, Sanoti Properties LLP has acquired from the Company 4,53,62,281 equity shares of the Company’s Joint Venture with HDI Global SE for General Insurance Business in India named as Magma HDI General Insurance Company Limited ("Magma HDI") pursuant to receipt of all the applicable approvals. Subsequently, Magma HDI has ceased to be joint venture of your Company.

During FY 2022-23, no new subsidiary was incorporated/ acquired.

The Company’s policy for determination of material subsidiary, as adopted by the Board of Directors, in conformity with regulation 16 of the SEBI Listing Regulations, can be accessed on the Company’s website at https://poonawallafincorp.com/investor-governance. php

In terms of the said policy and provisions of regulation 16 of the SEBI Listing Regulations, PHFL is a material subsidiary of the Company.

Performance highlights of the Subsidiary and Joint Venture (“JV”) are given below:

PHFL (Subsidiary Company)

PHFL has made disbursements of ''2,585.20 Crore in FY 2022-23 against ''1,970.13 Crore in previous year. PHFL has earned a PBT of ''154.19 Crore for the year ended March 31, 2023 against ''101.16 Crore in previous year.

During the year under review, the Board of Directors and the Shareholders of the Company had approved the divestment of all the 24,98,21,117 equity shares held by Company in its Subsidiary to Perseus SG Pte ltd, an entity affiliated to TPG Global LLC, at a purchase consideration based on a per equity share price of ''152.84/- representing a total equity value of the Company of ''3,900 Crore (Indian Rupees Three Thousand Nine Hundred Crore) subject to approvals from Reserve Bank of India (RBI) and lenders and completion of customary conditions.

The financial statements of the Subsidiary Company is also available on the Company’s website at https:// poonawallafincorp.com/investor-financials.php

JASPL (JV Company):

Jaguar Advisory Services Private Limited ("JASPL"), a Joint Venture with HDI Global SE is an advisory services Company domiciled in India. JASPL is a SPV of the Company. Pursuant to divestment of 11,000 equity shares constituting 48.89% of the share capital held by the Company in JASPL as approved by shareholders, the transactions will be consummated upon receipt of certain regulatory approvals. Accordingly, in line with the requirements of Ind AS 105 “Non-current assets Held for Sale”, such investments have been designated as assets held for sale.

Pursuant to Section 129(3) of the Companies Act, 2013 (‘the Act’) a statement in Form AOC-1 containing the salient features of the Financial Statement of your Company’s subsidiary forms part of this report and hence not repeated here for the sake of brevity.

TRANSFER TO RESERVE:

During the year the Company is proposing to transfer ''117.00 Crore to Reserve as required under Regulation 45-IC of Reserve Bank of India Act, 1934 issued by Reserve Bank of India ("RBI").

DIVIDEND:

The Board of Directors of the Company have at their meeting held on April 26, 2023, recommended a dividend @ 100 % on equity shares i.e ''2/- per equity share of the face value of ''2/- each for FY 2022-23 vis- a- vis @20 % on equity shares i.e ''0.40 per equity shares in FY 2021-22 to deliver sustainable value to its shareholders. The dividend would be paid to all the equity shareholders, whose names would appear in the Register of Members / list of Beneficial Owners on the Record Date fixed for this purpose.

The dividend recommended is in accordance with the Company’s Dividend Distribution Policy.

The Dividend Distribution Policy, in terms of Regulation 43A of the SEBI Listing Regulations and as reviewed and adopted by the Board of Directors of the Company, is available on the Company’s website viz., https:// poonawallafincorp.com/investor-governance.php

DEPOSITS:

Being a non-deposit taking systemically important Non-Banking Finance Company, your Company has not accepted any deposits from the public within the meaning of the provisions of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016 and the provisions of the Act.

EMPLOYEE STOCK OPTION SCHEME:

Equity based compensation is an integral part of employee compensation across sectors which enables alignment of personal goals of the employees with organizational objectives by participating in the ownership of the Company through share-based compensation scheme/plan. Your Company believes in rewarding its employees as well as that of the Subsidiary Company for their continuous hard work, dedication and support, which has led the Company, and the Subsidiary Company on the growth path.

The Employee Stock Options (“ESOPs”) granted to the employees of the Company and its Subsidiary currently operate under the following Schemes:

• Employees Stock Option Plan 2007 (ESOP 2007);

• Restricted Stock Option Plan 2014 (RSOP 2014); and

• Employees Stock Option Plan 2021 (ESOP 2021).

The aforesaid Schemes complied with the SEBI (Share Based Employee Benefits) Regulations, 2014 and SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (“SEBI (SBEB&SE) Regulations, 2021”), to the extent applicable.

The Nomination and Remuneration Committee of the Board of Directors of the Company, inter alia, administers and monitors the Schemes in accordance with the SEBI (SBEB&SE) Regulations, 2021.

During the year, the Company granted ESOPs to the eligible employees of the Company, in accordance with the respective Schemes and as approved by the Nomination and Remuneration Committee.

The details of the ESOPs granted and outstanding as on March 31, 2023 along with other particulars as required by Regulation 14 of the SEBI (SBEB&SE) Regulations, 2021 is available on the website of the Company at https://poonawallafincorp.com/investor-governance. php

The certificate from the Secretarial Auditor, as required under Regulation 13 of the SEBI (SBEB&SE) Regulations 2021, stating that the ESOP Schemes have been implemented in accordance with the SEBI (SBEB&SE) Regulations, 2021 would be available for inspection by the Members during the Annual General Meeting (“AGM”).

Grant wise details of ESOP vested, exercised and cancelled are also provided in the notes to the standalone financial statements.

CHANGES IN SHARE CAPITAL:

During the year, your Company allotted 3,024,053 equity shares arising out of the exercise of Employees Stock Options granted to eligible employees of your Company and its Subsidiary.

Post allotment of the aforesaid equity shares, the total issued, subscribed and paid-up share capital of the Company as of March 31, 2023, stood at ''1,53,58,95,184.00 comprising 76,79,47,592 equity shares of ''2/- each.

The new equity shares issued shall rank pari-passu with the existing equity shares of the Company in all respects.

FINANCE:

Borrowing

During the year, the Company has raised fresh secured term loans of ''4,600 Crore from banks and financial Institutions for an average tenor of 3 to 7 years. Besides public sector banks/financial institutions incremental credit lines were received from private/foreign banks to diversify the borrowing base. The Company also raised commercial paper aggregating to ''1,975 Crore and ''500 Crore of non-convertible debentures raised during the year through private placement. The funds raised through non-convertible debentures were utilized for the purpose specified in the respective offer documents.

RBI GUIDELINES:

The Company continues to fulfil all the norms and standards laid down by RBI pertaining to nonperforming assets, capital adequacy, statutory liquidity assets, etc. As against the RBI norm of 15%, the capital to risk-weighted assets ratio of the Company was 38.91% as on March 31, 2023. In line with the RBI guidelines for Asset Liability Management ("ALM") system for NBFCs, the Company has an Asset Liability Management Committee, which meets quarterly to review its ALM risks and opportunities.

CREDIT RATING:

During the year under review, the long-term ratings assigned to various debt instruments and bank facilities of the Company were upgraded to ‘AAA; Stable’ by CARE Ratings based on strong parentage, low leverage, improved asset quality, focused and diversified product approach in retail segment and a strong senior management team. In April 2023, CRISIL also upgraded the long-term rating assigned to debt instruments and bank facilities to ‘AAA/Stable’.

In September 2022, CARE Ratings upgraded the rating assigned to bank facilities and long-term debt instruments. Ratings of long-term Bank Facilities, Nonconvertible Debentures and Subordinated Debt were upgraded to CARE AAA; Stable, while ratings of Market Linked Debentures were upgraded to CARE PP-MLD AAA; Stable. Ratings of Perpetual Debt were upgraded to CARE AA ; Stable. The ratings assigned to Short-Term Bank facilities and Commercial Paper were reaffirmed at ‘CARE A1 ''.

In October 2022, CRISIL reaffirmed the rating of ‘CRISIL AA /Stable'' assigned to bank facilities and non-convertible Debentures, and ‘CRISIL A1 '' rating assigned to the Commercial Paper issue for an enhanced amount. In April 2023, CRISIL upgraded the

rating assigned to Bank facilities and Long-Term Debt instruments. Ratings of Long-Term Bank Facilities and Non-convertible Debentures were upgraded to ‘CRISIL AAA/Stable''. The ratings assigned to Commercial Paper were reaffirmed at ‘CRISIL A1 ''.

There was no change in ratings assigned by ACUITE and Brickwork Ratings during the year.

‘AAA'' rating indicates highest degree of safety regarding timely servicing of financial obligations and lowest credit risk.

‘AA '' rating indicates high degree of safety regarding timely servicing of financial obligations and very low credit risk.

A status of ratings assigned by rating agencies and migration of ratings during the year is provided in note to the standalone financial statements of the Company.

PARTICULARS OF LOANS, GUARANTEE AND INVESTMENTS OUTSTANDING DURING THE FINANCIAL YEAR:

The Company, being an NBFC registered with the RBI and engaged in the business of giving loans in ordinary course of its business, is exempt from complying with the provisions of section 186 of the Companies Act, 2013 (“Act”) with respect to loans. Accordingly, the disclosures of the loans given as required under the aforesaid section have not been made in this Board''s Report.

Particulars of loans and investments outstanding during the financial year are furnished in notes to the standalone financial statements of the Company.

RISK MANAGEMENT:

The Risk Management Committee (RMC), functions in line with the Non-Banking Financial Companies -Corporate Governance ("Reserve Bank") Directions, 2015 and SEBI Listing Regulations. The Committee met six times during the year, its terms of reference and functioning are set out in the Corporate Governance Report. The Company understands that risk evaluation and risk mitigation is a function of the Board of the Company, and the Board of Directors are fully committed to developing a sound system for identification and mitigation of applicable risks viz., systemic and nonsystemic. For detailed Risk Management procedure of the Company, please refer to the Management Discussion & Analysis Report.

INTERNAL FINANCIAL CONTROL:

The Company has in place adequate internal financial controls with reference to financial statements,

commensurate with the size, scale, nature and complexity of its operations and regulatory requirements. A comprehensive review of the internal financial controls environment of the Company was undertaken during the year which covered testing of Process, IT and Entity level controls including review of key business processes for updating Risk Control, Matrices, etc. The risk and control matrices are annually reviewed, and control measures are tested and documented. Moreover, the Company continuously upgrades its systems and undertakes review of policies, guidelines, manuals, and authority matrix. The internal financial control is supplemented by extensive internal audits, regular reviews by the Management and standard policies and guidelines to ensure reliability of financial and all other records to prepare financial statements, its reporting and other data. The Audit Committee of the Board reviews internal audit reports given along with management responses. The Audit Committee also monitors the implemented suggestions. The Company has, in all material respects, adequate internal financial control over financial reporting and such controls are operating effectively. The Statutory Auditors of the Company have also certified on the existence and operating effectiveness of the internal financial controls relating to financial reporting as of March 2023.

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

Pursuant to Section 177(9) of the Act and Regulation 4(2) (d)(iv) of the SEBI Listing Regulations, the Company has in place a vigil mechanism named "Breach of Integrity and Whistle Blower (Vigil Mechanism) Policy” to provide a formal mechanism to the Directors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company’s Code of Conduct or Business Ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee in appropriate and exceptional circumstances.

The details of the said Policy is explained in the Corporate Governance Report and is available on the website of the Company at https://poonawallafincorp. com/investor-governance.php.

HUMAN RESOURCES:

Your Company firmly believes that employees are its greatest asset and foundation of our operations is human capital. The focus of the Human Resources (HR) strategy is to enable the growth of the Company through talent fulfilment for growth areas, capability building in emerging technologies and building internal talent pipeline. Your Company strives to create

a conducive environment for growth and development of our employees. Training & Development initiatives are being taken for employees from time to time. More details can be found in the human resource section in the Management Discussion & Analysis Report.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE:

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a ‘Policy for Prevention of Sexual Harassment’ to prohibit, prevent or deter any acts of sexual harassment at workplace and to provide the procedure for the redressal of complaints pertaining to sexual harassment, thereby providing a safe and healthy work environment, in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act 2013 and the rules thereunder ("POSH Act”). The Company has complied with the provisions relating to the constitution of the Internal Committee under the POSH Act. During the year under review, no case of sexual harassment was reported to the Internal Committee ("IC”). The composition of IC is in accordance with POSH Act. To build awareness and appreciation of this area, we have implemented an online knowledge module leveraging our learning management system. We continue to strive harder with each passing year to ensure we succeed in bringing the best out of our people and enable the organization to create value for its shareholders and employees.

INFORMATION TECHNOLOGY:

The Company has made unprecedented progress in establishing best-in-class technology infrastructure and ecosystem. A total paradigm shift has been executed by the Company from in-house developed applications landscape to Software-As-A-Service ("SAAS") model. This has enabled the Company to start benefiting from the latest features and integrations within a short time. By using SAAS applications, the Company has also leveraged industry best practices which are baked into these systems.

SAAS platform has been implemented for Enterprise Resource Planning ("ERP") system. This software system provided by a US-based technology giant is a market leader in the ERP space. As part of this implementation business processes have been aligned as per industry-best practices. There are multiple API based integrations thus enabling end-to-end automation of each process. Automation of procure-to-pay cycle will equally benefit the suppliers and employees. Deployment of this standard ERP product is a testament to our commitment to complete transparency in our operations.

Further technological advancements have been executed in asset management. With a large footprint of branches spread across the country, it was imperative to have traceability of all the Company assets and fixtures. This has now been achieved such that administration and technology departments have much better control over their assets.

A new Collections system has also been launched. This application is fully integrated with the core loan management system. Our collections officers can use the mobile app on which the cases allocated to them for collecting shall appear. Simple and convenient interface of this application will help improve collection efficiency of the Company.

On the infrastructure side also, we have seen a major upgradation. The on-premises data center has been completely shut down. This will result in substantial cost savings for the Company. With the entire technology infrastructure now hosted in cloud, the Company is poised very well to handle rapid upscaling of business with ease.

Looking forward, the Company has laid out a vision to increase focus on customer centricity. In alignment with this vision, it has been planned to enhance customer facing applications. As a first step a new mode of EMI payment, Bharat Bill Payment System (BBPS) has been introduced by the Company. With this initiative the penetration of digital payments will definitely see a huge rise.

Work is also underway at expanding the scope of data warehouse and implementing a data lake. This will enable analysts to use superior algorithms like machine learning and artificial intelligence to derive better insights into our customers’ needs and their behaviors. The new platform will cater to internal MIS, analytics, and real time insights.

CORPORATE IMAGE BUILDING & ENGAGING TARGET AUDIENCE:

Some of the key initiatives undertaken by the Company during the year are:

> Public Relations

To create awareness about Poonawalla Fincorp Limited (“PFL”) and the new management with external stakeholders and the media, we did an extensive Public Relations ("PR") campaign throughout the year. Through specific communication and messaging we reached out to our stakeholders and informed them about the organization’s development as well as work post-acquisition. We focused on getting the

right visibility for the Company and made sure that there is an overall positive sentiment for the organization. Some of the leading media houses including electronic channels, newspapers as well as online publications covered the growth story of the organization and gave us good visibility. The Company’s vision and mission were well placed in the media and we got excellent positive visibility for the Brand Poonawalla Fincorp. We successfully overshadowed the erstwhile Magma Fincorp’s legacy and were successful in positioning Poonawalla Fincorp as one of the leading NBFCs in the country with digital-first tech-led approach. We also positioned our organization as best in class financial products and solution providing company in the consumer and MSME financing space.

As part of our PR initiatives, we did an extensive media outreach to inform our stakeholders about the management, its vision along with its flawless execution. A healthy mix of english and regional media coverage has positioned Poonawalla Fincorp as a force to reckon within NBFC space.

a. Leadership Profiling at various leading publications

With strategic communication and media reach out we did some large format interviews for our top management with leading publications like Moneycontrol, Financial Express, Economic Times, Hindu Business Line, etc. This gave us media visibility and helped us position our leadership as an industry though leaders.

b. Digital PR campaigns

We are building the brand digitally through strategic content placements in the form of authored articles, press releases as well as opinion pieces. So far, successfully featured content on various leading digital publications like Moneycontrol, LiveMint, Hindustan Times, ETBFSI, Indian Express.

c. Regional Influencer Engine

Successfully identified, onboarded, and coordinated with various regional youtubers on creating content around brand Poonawalla Fincorp and its various products. So far 12 videos have been published and more than 10,000 people viewed these videos. These videos were made and published by various regional youtubers with a cumulative subscriber base of 3 Lakh.

> Events and Awards:

a. Partnership with various events

Collaborated with marquee brands to participate in national level media events like News18’s Rising India Summit 2023, Yourstory’s Tech Sparks 2023, MoneyControl’s Fintech Summit 2023. These events attracted top think tanks of India and the financial and tech sectors, thus giving Poonawalla Fincorp significant visibility amongst our key stakeholders as well as helping the brand build thought leadership and visibility in key markets.

b. Awards and Recognitions

Awards and Recognitions received during the year:

• Most Preferred Workplaces 2022-23 by Merkesmen Daily in association with India Today;

• The Economic Times Best Brands 2022 at 5^th Edition of Economic Times Conclave;

• Top CX Delivering Brands at 3^rd Economic Times Customer Experience (CX) summit 2022;

• Best Digital NBFC of the year 2022 at 4^th annual NBFC India summit;

• The Fastest Growing NBFC of the year at ELETS 100 leaders of excellence awards;

• Cybersecurity Financial Team of the year at Cyber Security Excellence Awards 2022; and

• Best NBFC in Customer Service at 4^th annual NBFC India summit.

> Corporate Social Responsibility

During the Financial Year 2022-23, the Company did not have any obligation to spend under Corporate Social Responsibility as enumerated in Section 135(5) of the Act. The Company has spent an amount of ''74.45 Lakh towards ongoing projects.

CUSTOMER RELATIONSHIP MANAGEMENT:

Poonawalla Fincorp strives to be the most trusted financial services brand with Quality of Customer Service being one of the pillars for our Company. Our Company also believes in ethics, integrity, good governance, professionalism, transparency, and customer satisfaction.

Several key initiatives were undertaken to enhance the

Customer Experience:

• Implementation of Net Promoter Score (“NPS”) which is a leading indicator of Customer Loyalty and Cross Sell. PFL have tied up with Litmus World, a leading brand in Customer Loyalty Assessment to conduct NPS survey through unbiased customer feedback. Customer experience across key moments of truth - Sales, Onboarding, Service and Exit is conducted based on questionnaire to identify opportunities for improvement;

• Annual NPS score is 54, which is very competitive as per industry standards;

• Reaching out to customers digitally being a core area which our Company has started working on with data migration to start with several blueprints;

• With Customer Centricity at core, PFL embarked on the mission to enable its customer services digitally for real time instant servicing leading to instant resolution of customer Queries, via IVR and WhatsApp, with an average Self-Serve Adoption > 20% of the Overall QRGs.

Key Initiatives in FY23:

• Enhancement of Self-Service Adoption;

• Dedicated Social Media Desk;

• Enabled WhatsApp for real time Customer servicing;

• Centralized NOC Desk to dispatch proactively for POC Product.

To ensure we treat customers fairly; we have

implemented the following:

Transparency

• Tariff sheet included in Welcome Letter to ensure complete transparency of all charges;

• System enabled acknowledgement for every request & complaint communicated to customer at the time of registration;

• Unbiased customer feedback recorded via NPS framework at critical moments of truth across the loan journey to understand customers’ expectations.

Servicing customers in their preferred language

• Agreement copy in vernacular languages are available at branches;

• Sanction letters are also provided in vernacular language.

Handling Grievances effectively

• Complaints are resolved within defined Service Level Agreement ("SLA") as per the Case Type ("CT") Sub Type ("ST");

• Complaints Root Cause Analysis ("RCA") Forum conducted on a quarterly basis to address key process gaps, if any;

• Rigorous training and continuous improvements for front line staff conducted on a regular basis to ensure highest standards of service quality;

• Continuous Call Quality monitoring;

• All Grievance resolutions checked for service recovery; and

• Proactive approach to identify potential escalations/ grievances from customers for quick redressal.

DIRECTORS AND KEY MANAGERIAL PERSONNEL: Board Composition

The composition of the Board of Directors of the Company is governed by the Act and Regulation 17 of the SEBI Listing Regulations and is in conformity with the same. As on March 31, 2023, the Board of Directors comprised a combination of ten Directors as mentioned below:

There were no changes in the Board composition during the year.

The Board mix provides a combination of professionalism, knowledge and experience required in the NBFC sector.

Re-appointment:

Mr. Bontha Prasada Rao (DIN: 01705080) was re-appointed as an Independent Director of the Company for a second term of three years with effect from December 10, 2022 to December 09, 2025 considering his expertise, skills and knowledge. His reappointment as Independent Director was approved by the Members of the Company through Postal Ballot passed on November 29, 2022. Mr. Rao is not liable to retire by rotation.

Retirement by Rotation:

In accordance with the provisions of Section 152 of the Act read with Articles of Association of the Company, Mr. Amar Deshpande (DIN: 07425556) retires by rotation at the ensuing AGM and being eligible, offers himself for re-appointment.

The Board of Directors of your Company recommends the re-appointment of the Director liable to retire by rotation at the ensuing AGM.

Appropriate resolution seeking your approval for the aforesaid re-appointment along with brief profile of the said Director is forming part of the Notice convening the 43^rd AGM of your Company.

Key Managerial Personnel:

In terms of Section 203 of the Act, the following are the Key Managerial Personnel of the Company as on March 31, 2023:

1. Mr. Abhay Bhutada, Managing Director;

2. Mr. Sanjay Miranka, Chief Financial Officer; and

3. Mrs. Shabnum Zaman, Company Secretary.

There were no changes in Key Managerial Personnel during the year.

Declaration from Independent Directors:

The Company has received the necessary declaration from each Independent Director in accordance with Section 149(7) of the Act and Regulation 16(1)(b) and 25(8) of the SEBI Listing Regulations, that he/she meets the criteria of independence as laid out in Section 149(6) of the Act and Regulation 16(1)(b) of the SEBI Listing Regulations.

In terms of Regulation 25(8) of the SEBI Listing Regulations, Independent Director have confirmed that they are not aware of any circumstances or situation which exists or may be reasonably anticipated that could impair or impact their ability to discharge their

duties. Based upon the declarations received from the Independent Directors, the Board of Directors has confirmed that they meet the criteria of independence as mentioned under Regulation 16(1)(b) of the SEBI Listing Regulations and that they are independent of the management.

In terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, Independent Directors of the Company have included their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs. There has been no change in the circumstances affecting their status as Independent Directors of the Company.

In the opinion of the Board, the Independent Directors possess the requisite integrity, experience, expertise, and proficiency required under all applicable laws and the policies of the Company.

A separate meeting of the Independent Directors was held on January 20, 2023.

During the year under review, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees and commission, as applicable, received by them.

Fit and Proper Policy:

The Company adheres to the process and methodology prescribed by the RBI in respect of the ‘Fit & Proper’ criteria as applicable to NBFCs, signing of Deeds of Covenants which binds the Directors to discharge their responsibilities to the best of their abilities, individually and collectively in order to be eligible for being appointed/ re-appointed as a Director of the Company.

All the Directors of the Company have confirmed that they satisfy the "fit and proper” criteria as prescribed in Chapter XI of RBI Master Direction No. DNBR. PD. 008/ 03.10.119/2016-17 dated September 1, 2016 and that they are not disqualified from being appointed/ continuing as Directors in terms of Section 164(2) of the Act. The prescribed declarations / undertakings given by the Directors, are placed before the Nomination and Remuneration Committee for its review and noting.

Familiarisation Programme for Independent Directors:

In compliance with the requirement of Regulation 25 of SEBI Listing Regulations, the Company has put in place a Familiarisation Programme for the Independent Directors to familiarise them about the Company and their roles, rights, responsibilities in the Company.

The details of the Familiarisation Programme along with the number of hours spent by each of the Independent Directors during the Financial Year 2022-23 is explained in the Corporate Governance Report. The same is also available on the website of the Company at https:// poonawallafincorp.com/investor-financials.php

Performance Evaluation:

The Board conducted the performance evaluation of the Individual Directors, Board Committees, Board as a whole and the Chairman of the Board in accordance with the provisions of the Act and the SEBI Listing Regulations, including the Guidance Note on Board Evaluation issued by SEBI.

The Board evaluated the effectiveness of its functioning and that of the Committees and of individual Directors by seeking their inputs on various aspects of Board/Committee Governance through structured questionnaire.

The aspects covered in the evaluation included the contribution to and monitoring of corporate governance practices, participation in the long-term strategic planning and the fulfilment of Directors'' obligations and fiduciary responsibilities, including but not limited to, active participation at the Board and Committee meetings.

Also, the Nomination and Remuneration Committee has carried out an evaluation of every Director’s performance and reviewed the self-evaluation submitted by the respective Directors. These meetings were intended to obtain Directors’ inputs on effectiveness of Board/ Committee processes.

The Board considered and discussed the inputs received from the Directors. Further, the Independent Directors at their meeting reviewed the performance and role of Non-Independent Directors and the Board as a whole and Chairperson of the Board Meeting of the Company. Further, the Independent Directors at their meeting had also assessed the quality, quantity, and timeliness of flow of information between the Company management and the Board that was necessary for the Board to effectively and reasonably perform their duties.

Outcome of evaluation process:

Based on inputs received from the members, it emerged that the overall performance evaluation of the Board, composition, and quality, understanding the business including risks, process and procedures, oversight of financial reporting process including internal controls and audit functions, ethics and compliances and monitoring activities, has been found to be reasonably good.

Similarly, the effectiveness of the Board Committees has been rated high. The Committees of the Board function effectively. Sufficient time is allotted for discussion of the agendas. Contrary views were also encouraged and the same were viewed in the right perspective. The performance of the Chairman of the Company has been found to be Excellent and was rated 5 within the overall rating scale of 1 to 5. The Chairman demonstrates effective leadership qualities and skills, provides strategic directions and guidance to the Company and addresses recommendations/ suggestions of the Board Members including divergent views. Overall, the Board was functioning very well in a cohesive and interactive manner. Last year recommendations of Independent Directors and Board on Performance Evaluation have been largely implemented.

Remuneration Policy:

The Board has, on the recommendation of the Nomination and Remuneration Committee adopted the Remuneration Policy, which inter alia includes policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management Personnel and their remuneration. The salient features of the Remuneration Policy are stated in the Corporate Governance Report. The Remuneration Policy of the Company is available on the Company’s website under the web link https:// poonawallafincorp.com/investor-financials.php

Code of Conduct for Directors and Employees:

The Company has adopted a Code of Conduct for its Directors and employees including a Code of Conduct for Independent Directors which suitably incorporates the duties of Independent Directors as laid down in the Act. The said Codes can be accessed on the Company’s website at https://poonawallafincorp.com/investor-governance.php

In terms of the SEBI Listing Regulations, all Directors and Senior Management Personnel have affirmed compliance with their respective codes. The Managing Director has also confirmed and certified the same, which certification is provided at the end of the Report on Corporate Governance.

DIRECTORS'' RESPONSIBILITY STATEMENT:

To the best of our knowledge and belief, your Directors make the following statements in terms of Section 134 (5) of the Act:

a. that in the preparation of the annual accounts for the year ended March 31, 2023, the applicable Ind AS have been followed along with proper explanation relating to material departures, if any;

b. that such accounting policies as mentioned in Notes to the annual accounts have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2023 and of the profit of the Company for the year ended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the annual accounts have been prepared on a going concern basis;

e. that proper internal financial controls are in place and that the financial controls are adequate and are operating effectively; and

f. that proper systems to ensure compliance with the provisions of all applicable laws are in place and that such systems are adequate and operating effectively.

MEETINGS:

A minimum of four pre-scheduled Board meetings are held annually. Additional Board meetings are convened by giving appropriate notice to address the Company’s specific needs. In case of business exigencies or urgency of matters, resolutions are passed by circulation.

During the year under review, five Board Meetings and Seven Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Act and SEBI Listing Regulations.

COMMITTEES OF THE BOARD OF DIRECTORS:

The Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority.

Audit Committee

The Audit Committee presently comprises ofMr. Prabhakar Dalal who serves as the Chairman of the Committee, Mr. Amar Deshpande, Mr. G Jaganmohan Rao, Mr. Sanjay Kumar and Mrs. Vijayalakshmi R Iyer, as other members. The terms of reference of the Audit Committee have been furnished in the Corporate Governance Report. All the recommendations made by the Audit Committee during the year were accepted by the Board.

which holds 10% or more shareholding in the Company, if any, is given in note to the standalone financial statements.

All the related party transactions that were entered into during the year were on an arm’s length basis and in ordinary course of business. All the related party transactions that were entered into during the year were on an arm’s length basis and in ordinary course of business. The nature of related party transaction require disclosure in AOC -2, the same is attached with this Report as Annexure-2.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:

During the year under review there were no significant material orders passed by the Regulators/ Courts/ Tribunals against the Company which would impact the going concern status or its future operations.

STATUTORY AUDITORS:

Walker Chandiok & Co LLP, Chartered Accountants, (Firm Registration No. 001076N/N500013 have been appointed as the Statutory Auditors of the Company for a period of three years to hold office from the conclusion of the Forty-First AGM till the conclusion of the Forty-Fourth AGM as per Section 139 of the Act and Guidelines for Appointment of Statutory Central Auditors (SCAs)/ Statutory Auditors (Sas) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) dated April 27, 2021 issued by Reserve Bank of India ("RBI Circular”). The Statutory Auditors have given confirmation to the effect that they are eligible to be appointed and that they have not been disqualified in any manner from continuing as Statutory Auditors. The remuneration payable to the Statutory Auditors shall be determined by the Board of Directors based on the recommendation of the Audit Committee.

The standalone and the consolidated financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013. The notes on financial statements referred to in the Auditors’ Report are self-explanatory and do not call for any further comments. The Auditors’ Report does not contain any qualification, reservation, adverse remark, or disclaimer.

Pursuant to the RBI Circular and the Policy, the Company is required to appoint a Joint Statutory Auditor for a period of three years, to hold office from the conclusion of the Forty-Third AGM until the conclusion of the Forty-Sixth AGM of the Company.

In this regard, based on a review of the profile, including the size, experience and area of specialization and recommendation of the Audit Committee the Board has, on April 26, 2023, inter alia, approved and recommended for the approval of the members, the appointment of M/s. Kirtane & Pandit LLP, Chartered Accountants (Firm Registration Number: 105215W/W100057), as the Joint Statutory Auditor of the Company, for a period of three years to hold office from the conclusion of the Forty-Third AGM until the conclusion of the Forty-Sixth AGM of the Company for the purpose of the audit of the financial statements, with power to the Board (including the Audit Committee of the Board or any other person(s) authorized by the Board or Audit Committee in this regard), to do all such acts, matters, deeds and things as may be necessary or desirable in connection with or incidental for giving effect to the said appointment of the Joint Statutory Auditors.

M/s. Kirtane & Pandit LLP was established in 1956, the firm has offered over six decades of audit & quality assurance, value-added services, and a solution-driven system for all its clients. The firm endeavor to provide sound financial solutions and guidance to their clients. An institution of professionally authorized chartered accountants and financial advisors who are committed to strengthening the significance and optimizing the quality of deliverables while maintaining its goal of deep ethical commitment and professional responsibility.

SECRETARIAL AUDITORS:

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board ofDirectors of the Company has appointed M/s. MKB & Associates, Practicing Company Secretaries [Membership No-7596] to conduct the Secretarial Audit for the FY 2022-23. The Secretarial Audit Report confirms that the Company has complied with the provisions of the Act, Rules, SEBI Listing Regulations and Guidelines and that the report does not contain any qualification. The Secretarial Audit Report for the financial year ended March 31, 2023, is annexed herewith and marked as Annexure-3.

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of your Company had appointed M/s. SIUT & Co LLP, Company Secretaries (Firm Registration No. L2021MH011500) to act as the Secretarial Auditor of the Company for FY 2023-24.

M/s. SIUT & Co LLP, Company Secretaries is a peer reviewed Practicing CS firm registered with the Institute of Company Secretaries of India (ICSI), providing services in diverse domains having more than three

decades of experiences in the field of Company Law and allied matters, Securities Laws, Foreign Exchange Management Laws, MSME, and Insolvency and Bankruptcy law, Secretarial Audit, Due Diligence & SEBI, Company Law etc.

COST AUDITORS:

Being an NBFC, maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Act are not applicable in respect of the business activities carried out by the Company.

SECRETARIAL STANDARDS:

The Company complies with all applicable Secretarial Standards issued by Institute of Company Secretaries of India.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT:

In May 2021, SEBI made an amendment to Regulation 34(2)(f) of the SEBI Listing Regulations, by introducing enhanced disclosure requirements regarding ESG parameters through a revised format called Business Responsibility and Sustainability Report (“BRSR”). The BRSR format replaced the previous Business Responsibility Report. The revised disclosures were introduced to increase transparency in reporting and enable market participants to identify and assess sustainability-related risks and opportunities. BRSR is mandatory from FY 2022-23.

As a responsible organization we take various measures to mitigate our impact on the environment, ensure our conduct is responsible towards our internal and external stakeholders and invest in good governance practices. This year we have undertaken detailed stakeholder engagement on ESG as a part of materiality assessment, which will help us adopt a structured approach towards ESG and will also become a cornerstone of our ESG journey. Our various efforts towards responding to the stakeholder needs and concerns are addressed in the BRSR, covering the 9 principles of National Guidelines on Responsible Business Conduct ("NGRBC").

The BRSR provides an avenue for disclosing an overview of the entity''s material ESG risks and opportunities, goals and targets related to sustainability and performance against them. As per Regulation 34 of the SEBI Listing Regulations, BRSR for FY 2022-23 is annexed as Annexure-4.

CORPORATE GOVERNANCE:

Your Company complies with the provisions laid down in Corporate Governance laws. It believes in and practices good corporate governance. The Company maintains transparency and also enhances corporate accountability. In terms of Regulation 34 of SEBI Listing Regulations read with Schedule V, the following forms part of this Report:

(i) Declaration regarding compliance to Code of Conduct by the Board Members and Senior Management Personnel;

(ii) A certificate from a Practicing Company Secretary that none of the directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as directors of companies by the Board/Ministry of Corporate Affairs or any such statutory authority;

(iii) Report on the Corporate Governance; and

(iv) Practicing Company Secretaries Certificate regarding compliance of conditions of Corporate Governance.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO:

Your Company does not have any activity requiring conservation of energy or technology absorption and foreign exchange earnings and outgo.

OTHER DISCLOSURES:

• During the year, there was no application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) and any onetime settlement with any Bank or Financial Institution during the year under review;

• The Company has not defaulted in repayment of loans from banks and financial institutions;

• There were no delays or defaults in payment of interest/principle of any of its debt securities;

• Disclosures pursuant to RBI Master Directions, unless provided in the Board’s Report, form part of the notes to the standalone financial statements;

• There was no raising of funds through Preferential Allotment, Rights Issues or Qualified Institutional Placements etc.

ANNUAL RETURN:

Pursuant to Sections 92 and 134(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014 as amended, the Annual Return is available at the website of the Company at https://poonawallafincorp.com/i nvestor-financials.php

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:

The information required under Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is disclosed in this report as Annexure 5.

In terms of the proviso to Section 136(1) of the Act, the report is being sent to all members, excluding the statement with respect to employees employed throughout the year and employees employed for part of the year who were in receipt of remuneration in excess of limits prescribed under Section 197 (12) of the Act read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The statement is available for inspection by any member on request. Any member interested in obtaining a copy of the said statement, may write an email to the Company Secretary at [email protected]

TRANSFER OF AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND:

Pursuant to Section 124(5) of the Act read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, (as amended from time to time) relevant amount which remained unpaid or unclaimed for a period of seven years have been transferred by the Company, from time to time on due dates, to the Investor Education and Protection Fund ("IEPF"). During the year under review, your Company has transferred ''5,00,692/- (Rupees Five Lakh Six Hundred Ninety-Two only) to IEPF Authority.

Pursuant to Section 124 (6) of the Act and read with Rule 6 of the Investor Education and Protection Fund

Your Directors have pleasure in presenting the 41st Annual Report along with the Audited Financial Statements of the Company for the financial year ended 31 March, 2021.

ECONOMIC AND INDUSTRY OVERVIEW

Global Economic Overview

The coronavirus pandemic, or COVID-19, has had a significant impact on the global economy. In Calendar Year (CY) 2020, the global economy contracted by 3.3% compared to growth of 2.8% in CY2019 and 3.6% in CY2018, the decline being the biggest since the Great Depression of the 1930s. The global trade contracted by 8.5% in CY2020 due to border closures as countries around the world imposed lockdowns. Supply disruptions interrupted the international provision of goods and services. The impact of the pandemic on merchandise trade volumes differed across regions in 2020, with most regions recording large declines in both exports and imports. Merchandise trade volumes have now more or less

returned to pre-pandemic levels. Cross-border trade in services remains subdued.

With COVID-19 pandemic still spreading across the world, and caseloads reaching record levels in many economies, the global outlook will remain heavily dependent on the pandemic''s evolution. The widespread deployment of effective vaccines will play a key role in halting the pandemic''s progression, and is also expected to strengthen economic activity by raising confidence and improving financial market conditions.

The International Monetary Fund''s (IMF) recent report on World Economic Outlook projects 6% growth for the global economy in CY2021, reflecting additional fiscal support in a few large economies

and the anticipated vaccine-powered recovery in the second half of the year.

indian Economic Overview

The implementation of a national lockdown on March 24, 2020 (i.e. on the eve of the new FY21 fiscal year), brought economic activity to a halt, affecting both production and consumption. India''s GDP growth was negative in the first half of the fiscal year (April to September 2020) and only modestly positive in the second half. Over the entire FY21, India''s economy is estimated to have contracted by ~8%.

The response of the Government to the COVID-19 outbreak has been swift and comprehensive. A national lockdown to contain the health emergency was complemented by a comprehensive policy package to mitigate the impact on the poorest households (through various social protection measures) as well as on small and medium enterprises (through enhanced liquidity and financial support).

India seemed to have evolved through the pandemic on the back of strong policy initiatives by the government, along with an optimistic outlook for economic recovery. Structural reforms initiated by the government have helped restrict the fatality rate in India to 1.2%— one of the lowest in the world. After some success in curbing the virus considerably, India''s economy had returned to functioning normally by the second half of 2020. However, over recent months, the unexpected second wave of the virus has started spreading rapidly which could impact recovery pace of the Economy. The RBI has projected FY22 GDP growth at 10.5%, while IMF and World Bank put it at 12.5% and 10.1% respectively.

industry Overview

NBFC Sector

Non-banking finance companies (NBFCs) play an important role in nation building and financial inclusion by complementing the banking sector in reaching out credit to the unbanked segments of society, especially to the micro, small and medium enterprises (MSMEs), which form the cradle of entrepreneurship and innovation.

India''s non-bank lending sector was hit by a crisis in 2018 when a large financier unexpectedly defaulted. Further, contraction of activity in 2020 on account of COVID-19 Pandemic led to incremental slowdown. To mitigate the impact of COVID-19 on NBFC sector, the government of India and Reserve Bank of India (RBI) came up with stimulus package and announced various schemes such as Emergency Credit Line Guarantee Scheme (ECLGS), Partial Credit Guarantee Scheme (PCGS), Special Liquidity Scheme (SLS), extension of Credit Linked Subsidy scheme for MIG under PMAY(U), Targeted Long-Term Repo Operations (TLTRO), Moratorium etc., clearly laying down the vision for NBFCs and thus facilitated a strong recovery in second half of the year.

Adhoc Line of Credit and Guaranteed Emergency Credit Line scheme provided timely relief to MSME sector/business community by providing them much needed liquidity during the crisis period. Similarly, for the NBFC sector, the partial credit guarantee scheme helped them to tide over liquidity crisis. These measures helped in not only providing the much-needed liquidity but also ensuring a path of stability for the NBFC sector.

The overall loans and advances contracted in H1FY21 due to weak demand on the back of nationwide lockdown. However, as the economic activities gradually resumed, loan disbursements gained momentum in H2FY21. Collection efficiency also gradually improved to be near normal in Q4FY21.

The growth in FY22 is envisaged to be driven by the improvement in demand from all key target segments vis-a-vis the current fiscal, which was impacted by the Covid-19 related lockdown. Growth would be contingent upon the access to adequate funding lines i.e. incremental bank loans to non- banks, which would in turn depend on overall bank credit growth. However, all this is contingent on successful implementation of the vaccination programme and the ability of government agencies to arrest the rising infections in the near term.

Overview of underlying asset class

Automobile sector

• The Indian automobile industry made a stellar comeback in the second half of FY21 despite the adverse impact of the Covid-19 induced economic downturn as sales surged due to better than expected economic recovery and shift in customer preference towards personal mobility. Overall decline in volumes have been substantially less than what was expected by analysts and industry experts at the start of the pandemic.

• The passenger vehicles domestic sales reached nearly same levels as last year in FY21 (-2.3% Y-o-Y) as per a CARE ratings report.

• Tractor sales remained unaffected through the year and in fact, FY21 was one of the best years for this segment.

• The commercial vehicles segment, which was the first to be affected by lockdowns saw Q1FY21 as a complete washout by witnessing just 30,000 units of domestic sales. However, as the economy opened up, their sales grew and in the last quarter it clocked 2.1 lakh units of sales, the highest since Q4FY19. On a cumulative basis, commercial vehicles segment reached 80% of last year''s volumes.

• Used vehicle is considered as one of the least impacted segment as consumers prefer more personal yet affordable mobility solutions during the pandemic. The online used car market is seeing an increased uptake, online used car marketplaces and platforms have seen a growth of 17-18% in FY21, according to a Deloitte report.

extension to claim the tax holiday on profits from affordable housing projects until March 2022.

• As delivery timelines remain a key concern even now, demand for ready to move in homes is likely to be remain strong. However, the effective and uniform implementation of RERA across all States/UTs in India is expected to improve the confidence of homebuyers and ultimately, lead to greater sales traction in under construction residential projects.

OVERVIEW OF COMPANY''S PERFORMANCE

In volatile economic environment, the Company focused on capital preservation, collections, stringent operating expenses management and strengthening Balance Sheet.

The new initiatives undertaken by the Company continues to show positive impact in all areas during the current year.

Disbursements and Loan Assets

The standalone disbursements for the year declined from H511,319 lakh in FY2019-20 to H242,962 lakh in FY2020-21. Similarly, the consolidated disbursements declined from H6,42,832 lakh in FY2019-20 to H368,021 lakh in FY2020-21. The decline was mainly due to discontinuation of Non Focus products (New Cars, CV, CE) and on account of COVID-19 pandemic. The focus of the Company was on maintaining the portfolio quality in the light of adverse economic trends and therefore, be conservative in incremental lending and restricting it to customers with existing track record and/or good security.

Total Loan Assets as on 31 March 2021 on standalone basis stood at H10,56,288 lakh against H13,23,368 lakh for the previous year and on consolidated basis at H14,22,546 lakh against H16,13,353 lakh for the previous year.

Asset Quality :

a. Stricter write off policy

During the year, the Company moved to more stringent write off policy for its portfolio. For Asset backed finance portfolio, write-off has been advanced to 180 days past due (dpd) against 730 dpd earlier on Unsecured SME portfolio the write off has been advanced to 90 dpd against 450 dpd earlier, and on mortgage portfolio the write off has been introduced at 730 dpd. This has resulted in additional charge of H28,205.54 lacs during the quarter and year ended 31 March 2021. The recovery efforts continue for the written off portfolio, and recoveries made will be credited to profit and loss account in the subsequent quarters in line with the applicable accounting policies.

b. COViD-19 impact on portfolio COViD-19 wave 1:

The Company implemented a moratorium policy in accordance with the Reserve Bank of India (RBI) COVID-19 Regulatory

Package announced on March 27, 2020, April 17, 2020 and May 23, 2020. For all loans where moratorium was availed by the borrowers, the Company had kept ageing of such loans and their asset classification at standstill during the moratorium period. The Company''s business was adversely impacted during the period of lockdown in March-June 2020 period, and the impact continued for some time even subsequently.

There was an adverse impact of COVID on the credit loss incurred by the Company for the year ended March 2021.

COVID-19 wave 2:

The COVID-19 wave 2 induced significant rise in infections and tragic loss of human lives, resulting in lockdowns that have caused disturbance in the overall operations at beginning of the new financial year. The impact has spread in hinterland tier towns and impacted the collections from the customers, once again disturbing the operations of the Company significantly.

The Company estimates that impact of COVID wave 2 and resultant lockdowns shall lead to higher credit losses. The management expects muted response to the restructuring guidelines announced by the Reserve Bank of India on May 6, 2021 as its implementation would require physical connect with the customers, which is not feasible until the lockdowns are lifted. This will result in forward flow of the loan book to higher buckets in future and will thereafter take time to return to normalcy leading to significant increase in credit risk.

The Company has estimated the impact of COVID-19 wave 2 on its portfolio and created required additional provision of H62,110.70 lacs as at 31 March 2021.

The Company holds cumulative provision against the potential impact of COVID-19 to the tune of H71,433.07 lacs (H11,660.45 lacs as on 31 March 2020) and basis management estimate is adequate to cover the impact of second wave of COVID-19 on the entire loan portfolio.

The consolidated Gross Stage 3 Assets ratio on 3-month overdue basis on loans, stood at 3.7% in March 2021 compared to 6.4% in March 2020. Similarly, the Net Stage 3 Assets ratio on loans stood at 1.2% in March 2021 compared to 4.2% in March 2020.

Liquidity

Magma maintained strong liquidity through the year. Our key strength is our long standing in the industry and retail focused Business Model, both in NBFC and HFC, which provides comfort to our lending partners:

a. Average ticket size of H2 to 5 lakh for ABF, H10 to 15 lakh for Mortgage and H10 to 15 lakh for SME Business;

b. Pan India presence through its 254 branches spread across 21 States;

c. Diversified product mix, with no single product comprising more than 20% of the portfolio;

d. Our robust track record of asset securitization, having done securitization (on consolidated basis) of over 263 pools for total asset value of over H46,815 Crore over past 14 years with diverse investors, namely Public Sector Banks, Private Sector Banks, Foreign Banks and Mutual Funds.

e. We exited March 2021 with liquidity of H2,002 Crore comprising of available cash in hand of H414 Crore and unutilized credit limits of H 1,588 Crore.

Business - Strategy and Outlook

Key initiatives FY2021:-

• Successfully pivoted Product and Geo strategy towards profitable products and markets

• Realignment of our Collections team with dedicated teams at middle and hard bucket level for effective NPA control

• Successful utilisation of Govt. schemes viz. EMI Moratorium, ECLGS, OTR, Credit guarantee and Interest subventions to ease customer hardship

• Three rounds of Customer surveys ("India Bol Raha Hai") were conducted basis which underwriting and collections norms were realigned with on ground market situation

• Introduction of large non-conventional channels to diversify our traditional channel base

• Journey towards automation of Lead2Disbursal workflow continued with successful development of channel portal, revenue approvals workflow and upload options for customer documents in our Sales app.

• Transformation of SME business in FY21 with key strategic themes: Go-Direct, Go-Secured and Go-Digital.

Asset Backed Finance (ABF)

Disbursement declined by 55%, from H405,497 lakh in FY2019-20 to H181,173 lakh in FY2020-21. The decline is mainly due to following reasons:

• Discontinuation of Non Focus products (Car, CV and CE) in FY21.

• Low disbursement in Focus products during H1FY21 on account of lockdown imposed due to COVID-19 pandemic.

• Deliberate slowdown in disbursals for certain products & customer segments due to deployment issues.

Used Assets AUM contribution increased from 19% in FY2018-19 to 28% in FY2020-21. Direct channel contribution significantly grew from 31% in Q1FY2017-18 to 52% in Q4FY2020-21

ABF business continues to re-shape its portfolio, by increasing contribution of focus products, which is yielding positive results.

Mortgages Business

Disbursement under mortgage business ramped up significantly each quarter after a subdued Q1 to report 94% of FY20 numbers of H 126,702 lakh in FY2020-21 as against H 1,35,508 lakh in FY2019- 20.

• The disbursement in home loans grew by 5% from H82,671 lakh in FY2019-20 to H86,702 lakh in FY2020-21 in line with "GO HOME LOAN" strategy implemented by the Company.

• The contribution of home loan portfolio increased from 25% in FY2016-17 to 53% in FY2020- 21 in the overall housing AUM.

• Company''s "GO DIRECT" strategy for transition from DSA model to direct sales model improved direct sourcing from 28% in Q1FY18 to 75% in Q4FY21.

• Focused deep market penetration in 103 locations across 19 states using unit model implementation.

The push for affordable housing by the Government of India will further expand the Company''s current housing portfolio. The Company is poised towards being a unique affordable finance Company having a national presence.

SME Business

Disbursement declined from H101,827 lakh in FY2019-20 to H60,146 lakh in FY2020-21 as a result of tightening of SME lending on account of overall economic slowdown due to COVID-19 pandemic and its impact on the SME segment. The asset under management decreased by 23% i.e. from H1,85,860 lakh as on 31 March 2020 to H1,42,272 lakh as on 31 March 2021.

FY21 was a year of transformation for SME business with key strategic themes: Go-Direct, Go-Secured, & Go-Digital. Our Go-Direct initiative helped us to diversify the sourcing mix from pure channel based to channel plus direct model and we could source 11% of the total business under direct. In terms of Go-Secured strategy, business saw successful launch of the MSME Secured Loan product in the year and got some early wins at three pilot regions. Under Go-Digital initiative we could offer end to end digital and paperless experience to over 3,500 of our SME customers availing ECLGS limit. Overall, the business expects to focus on improving asset quality through direct and secured strategy and contribute to bottom line of the Company.

Insurance business achieved H 1,34,904 lakh Gross Written Premium for FY2020-21 registering a growth of 4.3% YoY vs the industry GDP growth of 5.2%. The insurance business reached a customer base of 2.1 million in FY2020-21 with 7600 channel partners as at March 2021. The business continues to witness productivity improvements in retail Agency, OEM and Bancassurance channels. The Company is empaneled with fourteen OEMs as at March 2021, of which 8 were added in FY2020-21. The company has commenced business with 13 OEMs till FY 21. Digital channel has grown by 185% in FY21. The Company continues to increase its Non motor commercial portfolio backed by strong panel of reinsurers. The servicing infrastructure

for retail and group health business has been put in place which has led to 54% growth in Health segment with 6% contribution in FY21 GWP. Motor Own Damage claims assessment through video streaming remained stable at 45% during the year. Investment AUM has crossed H3000 Crs and investment leverage continuing to improve.

Branch network

Magma''s branch network stood at 254 branches in FY2021. The Company has a pan India presence with good geographical diversification. The Company continues to exploit the untapped potential of existing branches and ensure that more products are available across our branch network.

SWOT ANALYSIS

Opportunities, Challenges and Outlook

Strengths

• Diversified asset financier both in term of products as well as geographies, which helps mitigate risks.

• Pan-India presence with 254 branch offices, primarily in Rural and Semi Urban locations.

• Sound business model, presence in high yield, high growth business segments and superior sustainable returns.

• Magma has invested heavily on technology as a strategic enabler which has helped it to run operations even during COVID-19 pandemic times.

• Customer focus, Product innovation and Superior delivery.

• Experienced senior management team.

• Strong relationships with public, private as well as foreign banks, institutions and investors.

• Ability to meet the expectations of a diverse group of investors and excellent credit ratings

• Innovative resource mobilisation techniques and prudent fund management practices

Weakness

• Business and growth directly linked with the GDP growth of the country.

• Liability profile and dependence on banks for leverage and ALM matching.

• Company''s Customers are more vulnerable to negative effects of economic downturn.

• Uncertain economic environment on account of surge in COVID-19 cases and several States imposing restrictions such as night curfew and full lockdowns.

Opportunities

• Focus on MSME segments traditionally not serviced by banks (non-salaried professionals, individuals, traders and transporters).

• Large untapped rural and urban markets.

• Enhance digital solutions for business/collections.

Threats

• Slower economic activity and weak rural demand could lead to high credit costs due to COVID-19 pandemic.

• Increased competition across the Company''s product segments from captive finance companies and small finance banks.

• External risks associated with liquidity stress, political uncertainties, fiscal slippage concerns, etc.

• Growing number of Fintech companies.

FINANCIAL PERFORMANCE AND STATE OF THE COMPANY''S AFFAIRS

(All figures are on consolidated basis unless specifically mentioned otherwise)

The Company''s Profit after Tax (PAT) on consolidated basis decreased to H(55,896) lakh in FY2020- 21 compared to H2,705 lakh in FY2019-20.

The Company''s net interest margin (NIM) increased to 8.2% in FY2020-21 as compared to 7.6% in FY2019-20 on account of decreased finance cost.

Net Income from Operations (i.e. total income less finance cost) on a consolidated basis decreased by 1.3% from H126,906 lakh in FY2019-20 to H125,202 lakhs in FY2020-21.

Total Income decreased by 8.2% from H256,288 lakhs in FY2019-2020 to H235,248 lakhs in FY2020-21.

The write offs and provision increased from H48,579 lakhs in FY2019-20 to H144,799 lakhs in FY2020-21, as the Company has moved to stricter write off policy and made additional provision for likely adverse impact of COVID wave 2 as explained in more details in the para Asset Quality above.

On a Standalone basis, the Capital Risk Adequacy Ratio (CRAR) for the year FY2020-21 was 20.3%, against the RBI stipulated norm of 15% for non-deposit taking Asset Finance Companies.

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios:

1. Debt Equity ratio has increased from 3.98 as on 31st March 2020 to 4.08 as on 31st March 2021 at standalone level and increased from 4.36 as on 31st March 2020 to 4.75 as on 31st March 2021 at consolidated level. This represents an increase of 2% and 9% at standalone and consolidated level respectively.

2. Return on Assets (ROA) decreased from 0.2% in FY2019-20 to -17.7% in FY2020-21 and Return on Equity (ROE) decreased from 1.0% in FY2019-20 to -102.9% in FY2020-21. This is primarily on account of change in write-off policy and additional COVID

CHANGES IN SHARE CAPITAL Equity Shares

During the year, the following changes were effected in the Share Capital of the Company: Issue of Equity Shares under the Magma Employees Stock Option Plan 2007:

During the year, 1,01,400 Equity Shares of the face value of H2/-each, were allotted to the eligible employees at a price of H2/- per Equity Share upon the exercise of stock options by the employees:

After the close of financial year 10,09,649 Equity Shares of face value of H2/- each were allotted to the eligible employees upon the exercise of stock options by the employees.

Preferential issue of Equity Shares

Pursuant to shareholders'' approval by way of Special Resolution in the Extra Ordinary General Meeting and other necessary regulatory approvals and in compliance with provisions of the Companies Act, 2013 and Chapter V of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations), and other applicable laws, your Company has allotted 49,37,14,286 Equity shares of face value H2/- each at an issue price of H70/- per equity share aggregating to H3456 crores by way of preferential allotment to Rising Sun Holdings Private Limited (RSHPL), Mr. Sanjay Chamria and Mr. Mayank Poddar.

Pursuant to the said allotment, RSHPL is the largest shareholder of the Company and have a controlling stake in the Company and is classified as a ''Promoter'' of the Company alongwith the existing promoters in accordance with ICDR Regulations. Post issuance, the Net worth of the Company has increased to over H5398 crores, enhancing the capital adequacy from 20.3% as of 31 March 2021 to 69.7%

The Proposed allotment triggered an obligation on RSHPL (together with Mr. Chamria and Mr. Poddar, in their capacity as persons acting in concert with RSHPL) to make an open offer to the public shareholders of your Company, under Regulations 3(1) and 4 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 which has been duly complied with.

Consequent to the issue of the additional Equity Shares as above, the issued, subscribed and paid up Equity Share Capital of the Company as on the date of this Report stands increased to 152,86,86,094/-(Rupees One Hundred Fifty Two Crores Eighty Six Lakhs Eighty Six Thousand and Ninety Four only) consisting of 76,43,43,047 Nos. (Seventy Six Crores Forty Three Lakhs Forty Three Thousand Forty Seven only) of Equity Shares of H2/- each as on date.

The new Equity Shares issued shall rank pari passu with the existing Equity Shares of the Company in all respects.

The funds raised through the said Preferential Issue would be utilized to augment the growth of the Company and to further invest in the required growth capital in other group entities.

FINANCEPrivate Placement Issue of Debentures and Bank borrowings

During the year, the Company has raised H175 crore through issuance of 1,750 nos. of privately placed Listed, Secured, Redeemable,Non-Convertible Debentures of face value H10 lakh each. The proceeds of the issue have been utilized for the Company''s general corporate purpose and to augment working capital needs.

During the year, the Company has raised fresh Secured Loans of H575 crore from Banks and Financial Institutions. The Company has also raised funds of H576 crore from Banks and NBFCs through fresh issue of Pass Through Certificates (PTCs).

rbi guidelines

The Company continues to comply with all the applicable regulations prescribed by the Reserve Bank of India ("RBI"), from time to time.

CREDIT RATING

During FY2020-21, rating for Short-term debt instruments from CRISIL were re-affirmed at CRISIL A1 . CARE Ratings reaffirmed its ratings on the Company''s Short term debt instruments at CARE A1 , Bank Facilities, long term Secured and Subordinated Debt instruments at CARE AA- and Perpetual Debt instruments at CARE A . The Bank Facility ratings of the Company have been reaffirmed by ICRA & India Ratings & Research Private Limited at ICRA AA - and IND AA- respectively. In line with the Ratings of the other agencies, Brickwork Ratings have revised its rating for long term Secured Debt and Subordinated Debt instruments to BWR AA- and Perpetual Debt instruments to BWR A .

AA- reflects that these instruments have high degree of safety regarding timely payment of financial obligations and carry very low credit risk. ACUITE (erstwhile SMERA) have reaffirmed AA rating for Secured Redeemable Non-Convertible Debenture & Unsecured Subordinated Debt Instrument rated by them.

Based on the recent preferential allotment announcement made by the Company, CARE, ICRA, India Ratings, Brickwork Ratings have affirmed ratings at AA- with ratings kept under watch with developing implication. Acuite affirmed the ratings at AA with ratings kept under watch with positive implication.

Credit Rating placed under ''Watch with Developing Implications'' indicates that once credit uncertainty gets resolved, the Credit Rating may either be upgraded/reaffirmed or downgraded (only if approvals and other statutory requirements are not met & underlying event does not happen). Similarly, Credit Rating placed under ''Watch with Positive Implications'' indicates that once the credit uncertainty gets resolved, the Credit Rating is more likely to be upgraded

A status of ratings assigned by rating agencies and migration of ratings during the year is provided in note no. 53 (i) to the standalone financial statements of the Company.

particulars of loans, guarantee and

investments outstanding during the

financial year

Particulars of loans, guarantee and investments outstanding during the financial year is furnished in note nos. 6 and 7 to the standalone financial statements of the Company.

RISK MANAGEMENT

The Risk Management Committee (RMC), functions in line with the Non-Banking Financial Companies - Corporate Governance (Reserve Bank) Directions, 2015 and Listing Regulations. The Committee met six times during the year, its terms of reference and functioning are set out in the Corporate Governance Report. The Company understands that risk evaluation and risk mitigation is a function of the Board of the Company and the Board of Directors are fully committed to developing a sound system for identification and mitigation of applicable risks viz., systemic and non-systemic. The Company has also implemented/adopted Risk Management Policy duly approved by the Board.

To make the current Risk Management practice more robust and aligned to the industry practice, the management has set up an internationally accepted forward looking Integrated Risk Management (IRM) Framework. This covers all risk families including but not limited to Credit Risk, Market & Interest Risk, Compliance Risk, Operational Risk, Reputational Risk and Financial Risk. The said framework facilitates identification, measurement, mitigation and reporting of risks through constant monitoring of Key Risk Indicators within the organisation. Involvement of the Senior Management team in implementation of the IRM framework ensures achievement of overall organisational objectives across all business units.

The risk management infrastructure operates on five key principles:

1. An overarching Risk Appetite Statement that defines the shape of the portfolio, delivering predictable returns, through

3. Use of Identification & Monitoring tools such as OR Incident reporting, Risk and Control Self- Assessment (RCSA), Key Risk Indicators (KRIs).

4. Standardized reporting templates, reporting structure and frequency.

5. Regular workshops and training for enhancing awareness and risk culture.

Magma has adopted the internationally accepted 3-lines of defense approach to operational risk management.

First line - Each function/vertical undergoes transaction testing to evaluate internal compliance and thereby lay down processes for further improvement. Thus, the approach is "bottom-up", ensuring acceptance of findings and faster adoption of corrective actions, if any, to ensure mitigation of perceived risks.

Second line - Independent risk management vertical supports the first line in developing risk mitigation strategies and provides oversight through regular monitoring. All key risks are presented to the Risk Management Committee on a quarterly basis.

Third line - Internal Audit conducts periodic risk-based audits of all functions and process to provide an independent assurance to the Audit Committee.

In FY21, the Operational Risk (OR) team has helped identify, assess, monitor and mitigate risks across the organization. RCSA exercises and OR reviews have been conducted for key business units / support functions, and action plans have been developed to plug process gaps. An incident reporting process has been implemented during the year for reporting of OR incidents. The OR team helps senior management monitor risks through quarterly reporting of OR information to the Operational Risk Management Committee (ORMC) and the RMC.

Fraud Risk Management

Overview

Fraud can undermine the effective functioning and divert scarce and valuable resources of the organization. Moreover, fraudulent and corrupt behavior can seriously damage reputation and diminish trust to deliver results in an accountable and transparent manner. To combat the fraud the organization has effective corporate governance and framework for preventing, identifying, reporting and effectively dealing with fraud and other forms of corruption. Magma is consistently putting effort to prevent, detect and contain frauds. There is an independent Unit (Fraud Risk Management) to monitor, investigative, detect and prevent frauds.

Scope

Magma is committed to preventing, identifying and addressing all acts of fraud against the organization, whether committed by the staff members or other personnel or by third parties. Your Company has zero tolerance for fraud. To this effect, your Company is committed to raising awareness of fraud risks, implementing controls aimed

Market Risk

Any mismatch in tenures of borrowed and disbursed funds may result in liquidity risk and thereby impact the Company''s ability to

service its loans. Thus, it is imperative that there exists nil or minimal mismatch between the tenure of borrowed funds and assets funded. The Company has endeavored to maintain appropriate asset liability maturity with regard to its tenure and interest rates.

The pandemic risk was unprecedented and caused many disruptions and uncertainties globally. Magma swiftly activated its Liquidity Continuity Plan encompassing measures to face challenges of pandemic through its well-defined treasury policies for managing liquidity, investments, interest rate and borrowings. The Company has taken the following measures to rectify/bridge the cumulative negative mismatch and diversify the borrowing profile in the FY2020-21:

1. Raised long term funds from banks and financial institutions.

2. Raised long term funds through Securitisation

3. Raising long term funds through private placement Secured NCDs.

Foreign exchange risk

The Company does not have any exposure to foreign exchange risk, since its disbursements are in rupee terms and the nature of its borrowings are also in domestic rupee debt.

Liquidity risk management

Magma, over a period of 3 decades has adopted prudent fund management practices and has worked meticulously to diversify its borrowing profile thereby repeatedly enhancing the set of institutions it borrows from. Such diversified and stable funding sources emanate from several segments of lenders such as Banks, Insurance Companies, Mutual Funds, Pension funds, Financial and other institutions including Corporates and Foreign Portfolio Investors due to Company''s impeccable record in servicing its debt obligations on time. In addition to this, the Company has established an excellent track record in its access to the securitization / assignment market. As a matter of prudence and with a view to manage liquidity risk at optimum levels, Magma keeps suitable levels of unutilized bank limits to effectively mitigate possible contingencies arising out therefrom.

The Company has in place an Asset Liability Management Committee (ALCO) comprising of Board Members, which periodically reviews the asset-liability positions, cost of funds, and sensitivity of forecasted cash flows including Stress Testing over both, short and long-term time horizons. It accordingly recommends for corrective measures to bridge the gaps, if any. The ALCO reviews the changes in the economic environment and financial markets and suggests suitable strategies for effective resource management. This results in proper planning on an on-going basis with respect to managing various financial risks viz. asset liability risk, foreign currency risk and liquidity risk.

The Company has a comfortable liquidity position by way of unutilized Bank lines and investment in Fixed Deposits and

further supported by funds raised through Term Loans, Secured Debentures, and Securitization.

People Risk

Magma provides a conducive work environment to its employees that enables them to perform well and hone their skills. Our policies are designed to ensure a healthy and safe workplace, free from discrimination or harassment. Our people are our most valuable asset, and we are committed to attract, engage and retain talent to create long-term value for our customers and stakeholders.

People risks that Magma focuses on includes following:

Inadequate availability of skilled manpower:

• Limited availability of candidates with appropriate skillset, experience and culture fitment.

Productivity Risk:

• Longer learning curve leads to low output.

• Time taken to filling of required manpower hampers installed capacity.

Succession planning:

• Risk to business continuity due to lack of leadership succession.

Magma is proactive in identifying and addressing risk aspects around people and address them in a timely and comprehensive manner.

Further, the Board is of the opinion that at present there are no material risks that may threaten the functioning of the Company.

INTERNAL CONTROL SYSTEM

Magma has an adequate system of internal controls in place. The Company has documented its policies, controls and procedures, covering all financial and operating activities. Internal controls include IT general controls, IT application controls, controls designed to provide a reasonable assurance with regard to reliability on financial reporting, monitoring of operations for their efficiency and effectiveness, protecting assets from unauthorised use or losses, compliances with regulations, prevention and detection of fraudulent activities, etc. The Company continues its efforts to align all its processes and controls with leading practices.

A well-established, independent Internal Audit function is responsible for providing independent assurance on Company''s system of internal controls, risk management and governance processes, including its subsidiaries. The scope and authority of the Internal Audit division is derived from the Audit Charter, duly approved by the Audit Committee. To maintain independence of Internal Audit, the Chief Internal Auditor (CIA) reports functionally to the Audit Committee. Internal Audit prepares an annual audit plan following risk-based audit approach, which is approved by the Audit Committee. The Audit Committee reviews the annual audit plan, the significant audit findings presented on a quarterly basis and the updated status of implementation of management action plan.

The company has a system of internal control over financial reporting that adequately addresses the risk that a material misstatement in the company''s financial statements would not be prevented or detected on a timely basis and that these controls are operating effectively.

internal Financial Control

The Company has in place adequate internal financial controls with reference to financial statements, commensurate with the size, scale and complexity of its operations. Review of the internal financial controls environment of the Company was undertaken during the year which covered testing of Process, IT and Entity level controls including review of key business processes for updating Risk Control Matrices, etc. The risk and control matrices are annually reviewed, and control measures are tested and documented. Moreover, the Company continuously upgrades its systems and undertakes review of policies, guidelines, manuals and authority matrix. The internal financial control is supplemented by extensive internal audits, regular reviews by the Management and standard policies and guidelines to ensure reliability of financial and all other records to prepare financial statements, its reporting and other data. The Audit Committee of the Board reviews internal audit reports given along with management responses. The Audit Committee also monitors the implemented suggestions. The Company has, in material respect, an adequate internal financial control over financial reporting and such controls are operating effectively. The statutory auditors of the Company have also certified on the existence and operating effectiveness of the internal financial controls relating to financial reporting as of March 2021.

vigil mechanism/ whistle blower policy

Pursuant to Section 177(9) of the Companies Act, 2013 and Regulation 4(2)(d)(iv) of the Listing Regulations, the Company has in place a vigil mechanism named "Breach of Integrity and Whistle Blower (Vigil Mechanism) Policy" to provide a formal mechanism to the Directors and employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Company''s Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimisation of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee.

The details of the said Policy is explained in the Corporate Governance Report and is available on the website of the Company www.magma.co.in at https://magma.co.in/about-us/investor-relations/secretarial-documents/download-secretarial-documents/.

HUMAN RESOURCE - PEOPLE COUNT AT EVERY STEP

At Magma, we believe that imperatives to business success are enhancements on people practices, processes, product and technology. Our endeavour is to create an environment where all four pillars work in harmony for the success of the organization.

• Dealing with the situation arising from COVID 19

o The COVID-19 outbreak has been unprecedented for our country and for the world. The global coronavirus (Covid-19) pandemic has upturned life for all of mankind. Magma navigated the crisis, through the year, we took several measures to place the safety of our employees, increasing sanitization/hygiene at our branch offices, providing masks/ gloves, creating an Emergency Response team (comprising for HR and admin teams) which continues to connect with and provide support to employees who were feeling unwell, and launching a special Helpline for assistance. The entire leadership team nimbly worked to implement our Business Continuity Plans (BCP) for various critical processes, we had implemented Work-From-Home (WFH) for several job roles and enforcing social distancing, we promoted several digital collection modes.

o At top leadership level, we were having huddles to review and ensure people safety, and collections to the extent possible with help of digital platforms.

o We set up 24*7 helpline and Emergency Response Team on Pan India basis to support employees working on any health-related issues for self and their families and created a fund to support them financially.

• Learning and development

In continuation of our efforts to make Magma a self-developing Organization, we have taken various learning initiatives delivered through an e-Learning platform and web based instructor led programmes. This year special emphasis has been on developing ''digital learning mediums'' and Magma as a group had experienced the webinar culture way before COVID. We have been doing these webinars from 2019 and in 2020 moving completely to webinar mode of learning. We have converted our Induction program to a digital medium to bring a wholistic and safe on-boarding experience for our employees. We also provide a joining docket called "Aarambh" with the necessary details, this document is provided to employees in their regional language apart from English.

Few Key Learning Initiatives taken during the year across Magma:

o The Navoday Project has been introduced to do the reengineering in the business processes of Magma and enable it to become digitally enabled, Simulation based system training done for all employees.

o Functional Learning Support through - Nuggets/video/ webinars

o We introduced several Web-based e-learning programs for branch safety, Infosec and other employee safety related topics.

o We developed branch safety modules on COVID related

protocols for re-opening of our offices, each Magma employee was covered.

The key focus is to leverage L&D and business partnership to cocreate novel learning methods and embedding them to deliver business outcomes.

Driven by technology

We have embedded technology to ease our people processes. Our onsite PeopleSoft platform has all modules which are delivered on the internet including recruitment, employee confirmation, performance management, separation for employees and real-time dashboard for leaders to take informed decision. We continue to ensure a great new joiner experience through our online Onboarding program, right from joining formalities to the induction with the Organisation, HR Policies and departments all of it happen online.

Incentive schemes

Incentive is an important driver of business outperformance. We have schemes for employees in Line (revenue generating, customer facing) roles designed with clear key performance indicators (KPIs). The scheme design incorporates specific nuances to ensure that each plan is aligned with the business objectives. At the frontline, we have monthly incentive schemes, while at supervisory roles, the frequency is quarterly and annually. These are dynamic schemes that reflect changes in the external macroeconomics environment and revisited each year.

Key HR Initiatives

Our retention strategy starts from the hiring stage and continues through the entire employee life cycle management. We are having the following retention strategies:

o Hire people who meet the job role and Value system of Magma

o Be a partner to business and help business teams gets deeper insights from the ground through ideas and information bubble up mechanism.

o Help business teams connect with employees through online connect sessions to inform, nurture and guide teams.

o Promote people Internally as the first choice for a vacant position. Several leadership positions were appointed internally.

o To strengthen our new joiners experience we launched "Aarambh" & "Maitree 3.0", our flagship Online Induction programs.

o Developed "Stay Healthy stay Positive" initiative for wholesome wellness of employees during the pandemic.

Culture

Initiatives are being deployed to create stories and symbols that manifest the Values of integrity, collaboration and respect. We

of this area, we have implemented an online knowledge module leveraging our learning management system.

We continue to strive harder with each passing year to ensure we succeed in bring the best out of our people and enable the organization to create value for its shareholders and employees.

INFORMATION TECHNOLOGY

Magma continues to leverage technology to drive efficiency and effectiveness of critical functions across the value chain of processes encompassing Customer service, sales, operations and risk management. This year Information Technology focused on empowering the sales, collections and customer service teams with tools for deeper customer engagement and understanding; development of tools for enhancing the credit assessment for the business and development of a comprehensive ''systems of insight'' were the other focus areas. In this year, Magma also strengthened and stabilized its digital footprint on the cloud.

Being committed to stand by its customers during the pandemic, Magma provided 2 rounds of moratorium and a one-time loan restructuring (OTR) package to its customers; these exercises were entirely driven by the robust technology platform that Magma uses for managing customer loans.

Magma also introduced Agri term loan as a new product for its customers from the farming community. Additionally, the automated credit engine was further extended to cover construction equipment loan product to increase the process efficiency of credit risk assessment through straight- through processing.

This year, Magma successfully introduced an indigenous digital survey application for enhanced customer understanding and engagement. Through a pioneering engagement with the first generation NBFC customers across the country, Magma tried to assess the new reality from the pandemic. The digital app helped Magma to reach out to more than three lakh customers across the country to find out the impact of the pandemic on customers'' business, cash flows and outlook for the future.

Data Analytics continues to remain as a top enabler for Magma and as part of the final leg of the Navodaya program, Magma introduced systems of insight, to provide 360 degree insight on sales, crosssale, financial data to various teams and empower them to take decisions ahead of time and elevate Magma''s maturity in business intelligence.

Magma implemented Scienaptic (a leading Al-powered credit decision platform company) enabled an artificial intelligence (AI) /machine learning (ML) model for underwriting, collections and customer analytics; the high accuracy predictive models will enable lower credit losses, higher approval rate and better life cycle management for the loans within Magma''s portfolio

The COVID 19 situation developed rapidly from the end of March 2020 and Magma could successfully use technology to empower

its employees to work from home and remain productive, while not compromising on information and cyber security.

During FY2021-2022, the Information Technology will continue to deliver digital capabilities by driving productivity improvements, technology partnerships and synergy of operations and opening up new avenues of business opportunities.

CORPORATE IMAGE BUILDING & ENGAGING TARGET AUDIENCE

Some of the key initiatives undertaken by Magma during the year are:

> Internal activities

Going into the pandemic, internal communications emerged as the focus area for the organisation during the past financial year. The Internal Communication and Brand team was responsible for crafting and communicating regular Covid advisories, Organisational updates, Work-From-Home protocol, e-handbook, branch level advisories etc. aiming to create the necessary awareness. Employee engagements, Reward & Recognition programmes like Magma Tarang were conducted digitally to keep the Teams motivated where focused communication was done to create excitement among employees. The management continued to hold virtual Town hall -Magma Vartalaap to communicate to the teams. The internal vertical wise contests and results were regularly highlighted as a part of business support.

> Customer connect programmes

During FY 21, owing to the pandemic, we could not connect actively with our customers for large part of the year. We avoided physical on ground activities at catchments and conducted a few customer connect programs in-branch by conducting Red Carpet Day (Grahak Diwas) as branches started operations. We conducted 150 Red Carpet events in branches connecting with over 3000 customers for servicing their requirements.

> Public Relations

Magma maintained its corporate image with external stakeholders and the media throughout the year. Our views on the impact of Covid on the NBFC industry, liquidity management and business outlook have all been covered by the best in the financial media, print and electronic media channels. Stake sale and fund raising, authored articles and views on industry challenges were the highlights of the year. The leadership spoke at large BFSI and Technology events which were conducted online. We won NBFC Excellence - Technology Leader of the Year - in Asset Finance 2020 apart from being recognised at large forum for our achievements in financing, Information Technology, Corporate Social Responsibility. We have been able to enhance our corporate image with our Vice Chairman and Managing Director being announced Co-Chairman of FIDC (Finance Industry Development Council). We have integrated

regional communication into our strategy in 2021 which helped us gain visibility in new geographies.

> Digital initiatives

We have further strengthened our presence not only on digital platforms but also focused on digital transformation projects to strengthen our connect with customers and dealers. The corporate website is now responsive to suit the mobile devices. Our social media presence increased on platforms like Facebook, LinkedIn, Twitter and YouTube with regular business updates, posts on the achievements of the Company, articles, TV interviews of the management which helped in Thought leadership.

> Corporate Social Responsibility

Despite the outbreak of COVID pandemic, Magma continued its social projects by strictly adhering to Covid-19 norms. Some of the projects which had high degree on ground implementation, had to be paused for a while only to be renewed with greater intensity post lockdown. During Lockdown, when the migrant workers and street dwelling population had to face a lot of hardship, Magma responded by offering Dry ration and cooked meals to 28,000 people many of whom had lost their jobs and were stranded on the road. Our campaign included building awareness on Social distancing and providing mask and sanitizer to the migrant workers and daily wagers across locations. Due to Lockdown, we had to alter some of the existing projects like Magma Highway Heroes, M-Care, M-Scholar etc. For our Mid-Day meal programme, instead of meals, we offered Happiness kit to the kids comprising of dry ration, school stationery, hygiene kit etc. This was necessitated since the schools remained closed due to the virus outbreak. Further we conducted several projects across states through our Employee Volunteering programme Swayam.

customer relationship management

Magma aims to be the most trusted and accessible financial services institution, promoting financial inclusion and creating value for all its stakeholders. Customer Service is a key focus area for our Company. Our Company also believes in integrity, good governance, professionalism, transparency and client satisfaction.

Several key initiatives were undertaken to transform Customer Experience:

> Implementation of Net Promoter Score (NPS) which is a leading indicator of Customer Loyalty and Cross Sell. We have tied up with Litmus World, a leading brand in Customer Loyalty Assessment to conduct NPS survey through independent assessment. Customer experience across key touch points - Sales, Onboarding, Service and Exit conducted based on a detailed questionnaire.

> Asset finance business has an extremely healthy NPS score in the range of 40 -45 which is one of the best in the industry.

> We believe that front line officers often create ''customer wow'' moments and are ambassadors of Customer Centricity Culture. We have enabled technology solutions which enable customers to rate their experience with Field Officers. Average Field Officer rating is 3.7 on a scale of 5.

> Structured Customer Engagement program is implemented -Proactive connect to prevent complaints etc.

> Reaching out to customers at times of need through digital mode. WhatsApp Channel was introduced as a mode of communication to share digital statements to customers.

Post implementation of Customer Relationship Management solution (Microsoft Dynamics) for Customer Service and Lead Management in FY 2019, Magma continues to track the benefits realized and work on the next level of customization needed.

Key initiatives in FY 21:

> Digital communication adopted for all communications associated with Moratorium during lockdown.

> Call Centre operated from WFH to ensure touchpoint availability for customers during lockdown.

> Chatbot integrated on Website to handle Moratorium queries.

> Dedicated IVR for Moratorium queries.

> Digital statements were enabled via WhatsApp to ensure seamless service.

> Customer Centric culture was driven via online training to 1000 frontline staff.

In order to ensure we treat customers fairly; we have implemented the following:

Transparency:

> Tariff sheet included in Welcome Letter to ensure complete transparency of all charges.

> SLA for each request & complaint communicated to customer at the time of registration.

> Voice of customer recorded for every request & complaint that gets resolved to track customer satisfaction.

Servicing customers in their preferred language

> Agreement copy in vernacular languages are displayed at branches and uploaded on website.

> Sanction letter is also provided in vernacular language & acknowledgement taken.

> Customer calls & SMS are handled in regional language to maintain & increase awareness.

Handling Grievances effectively:

> Mode of Welcome Letter & Agreement copy dispatch changed to registered post to avoid delay in document receipt.

Mr. Chamria is not disqualified from being appointed as a Director as specified in terms of Section 164 of the Companies Act, 2013.

Your Company has received notice from a member pursuant to Section 160(1) of the Companies Act, 2013, signifying the intention to propose the candidature of Mr. Chamria as the Director of the Company.

Retirement by Rotation

In accordance with the provisions of the Companies Act, 2013 and Regulation 36 of the Listing Regulations, Mr. Sanjay Chamria (DIN: 00009894), retires at the ensuing AGM, and being eligible offers himself for re-appointment.

The Board of Directors of your Company recommends the reappointment of the Director liable to retire by rotation at the ensuing AGM.

Appropriate resolution seeking your approval to the aforesaid appointment/re-appointment along with brief profile of the Directors appear in the Notice convening the 41st AGM of your Company.

Cessation

Mr. Narayan K Seshadri (DIN:00053563), Independent Non-Executive Chairman of the Company , resigned as a Director from the close of business hours of 31 August 2020.

Mr. V K Viswanathan (DIN: 01782934), Independent Non-Executive Director of the Company, resigned as a Director from the close of business hours of 8 February 2021.

The Board of Directors recognizes and places on record their valued contribution and unstinted support to the Company in the capacity of Independent Directors.

Change in designation

Mr. Mayank Poddar (DIN: 00009409), serving the Company as an Whole-time Director of the Company for more than 30 years have decided to step down from the Executive role and now continue as a Non-Executive Director of the Company with effect from 8 November 2020. Consequently, the designation of Mr. Poddar has changed from Whole time Director to Non-Executive Director with effect from 8 November 2020.

independent Directors

The Company has received declarations pursuant to Section 149(7) of the Companies Act, 2013, from all the Independent Directors (IDs) of the Company confirming that they meet the criteria of independence as prescribed both under Section 149(6) of the Companies Act, 2013, read with rules framed thereunder and in terms of Regulation 16(1)(b) of Listing Regulations. All the IDs of the Company have registered their names with the data bank of IDs maintained by Indian Institute of Corporate Affairs (IICA).

In terms of Regulations 25(8) of the Listing Regulations, the Independent Directors have confirmed that they are not aware of

any circumstance or situation which exists or may be anticipated that could impair or impact their ability to discharge their duties. The Board is of the opinion that the independent directors appointed have requisite experience and expertise (including proficiency).

Separate meeting of the Independent directors was held on 1 February 2021.

Fit and Proper Policy

All the Directors of the Company have confirmed that they satisfy the "fit and proper" criteria as prescribed in Chapter XI of RBI Master Direction No. DNBR. PD. 008/ 03.10.119/2016-17 dated 1st September, 2016 and that they are not disqualified from being appointed/continuing as Directors in terms of Section 164(2) of the Companies Act, 2013.

Familiarisation Programme for independent Directors

In compliance with the requirement of Regulation 25 of Listing Regulations, the Company has put in place a Familiarisation Programme for the Independent Directors to familiarise them about the Company and their roles, rights, responsibilities in the Company. The details of the Familiarisation Programme along with the number of hours spent by each of the Independent Directors during the Financial Year 2020-21 is explained in the Corporate Governance Report. The same is also available on the website of the Company www.magma.co.in at https://magma.co.in/about-us/ investor-relations/secretarial-documents/download-secretarial-documents/.

Performance Evaluation

The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and individual Directors, pursuant to the provisions of the Companies Act, 2013 and Listing Regulations.

The Board evaluated the effectiveness of its functioning and that of the Committees and of individual directors by seeking their inputs on various aspects of Board/Committee Governance through structured questionnaire.

The aspects covered in the evaluation included the contribution to and monitoring of corporate governance practices, participation in the long-term strategic planning and the fulfilment of Directors'' obligations and fiduciary responsibilities, including but not limited to, active participation at the Board and Committee meetings.

The Chairman of the Nomination and Remuneration Committee had one-on-one meetings with the Executive and Non-Executive Directors. Also, the Nomination and Remuneration Committee has carried out evaluation of every director''s performance and reviewed the self-evaluation submitted by the respective directors. These meetings were intended to obtain Directors'' inputs on effectiveness of Board/Committee processes.

The Board considered and discussed the inputs received from the Directors. Further, the Independent Directors at their meeting,

reviewed the performance and role of non-independent directors and the Board as a whole and Chairperson of Board Meeting of the Company. Further, the Independent Directors at their meeting had also assessed the quality, quantity and timeliness of flow of information between the Company management and the Board that was necessary for the Board to effectively and reasonably perform their duties.

Outcome of evaluation process

Based on inputs received from the Board members, it emerged that the overall performance evaluation of the Board, composition and quality, understanding the business including risks, process and procedures, oversight of financial reporting process including internal controls and audit functions, ethics and compliances and monitoring activities, has been found to be Very Good. Similarly, the effectiveness of Board Committees has been rated high and the performance of the erstwhile Chairman of the Company and the present Chairperson of the Board Meeting have been found to be Very Good. Overall, the Board was functioning very well in a cohesive and interactive manner.

Previous year''s observations and actions taken

Based on the evaluation undertaken few observations and action taken for FY2019-20 interalia include:

> In respect of Regulatory Changes, it was suggested that a short smart note should be circulated to the Board Members as soon as possible highlighting the changes and implications on the Industry/ Company. The Company regularly updates the Board on the regulatory changes along with its impact on the Company. Further regulatory updates and its impact on the industry also forms part of the presentation placed at the Committee and Board Meetings on a quarterly basis.

> Independent interactions with the internal auditors: The internal auditor and the statutory auditor had a separate session with the independent directors of the Company at the Audit Committee meeting.

Last year recommendations of IDs and Board on Performance Evaluation have been largely implemented.

Proposed actions based on current year observations

Based on the evaluation of FY2020-21, some areas of improvement were suggested specifically highlighting the following points:

> Presentation on regulatory updates and its impact to be made to the Board members to facilitate their training and update their knowledge on a periodical basis and experts on the subject matter may be invited as and when required.

> Presentation by the Committees Chair''s to the Board on the discussions and key decisions taken at the respective Committees.

> The Committees have functioned well under the supervision

of the Board. The Board may look at the composition of the committees in the coming year to engage more effectively with the new Board members.

Remuneration Policy

The Board has on the recommendation of the Nomination and Remuneration Committee adopted the Remuneration Policy, which inter alia includes policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management Personnel and their remuneration. The salient features of the Remuneration Policy is stated in the Corporate Governance Report.

Key Managerial Personnel

In terms of Section 203 of the Companies Act, 2013, the following are the Key Managerial Personnel of the Company as on 31 March 2021:

1. Mr. Sanjay Chamria, Vice Chairman and Managing Director

2. Mr. Kailash Baheti, Chief Financial Officer

3. Mrs. Shabnum Zaman, Company Secretary

Pursuant to change in Board composition on 31 May 2021, the Key Managerial Personnel shall also include Mr. Abhay Bhutada and Mr. Vijay Deshwal.

Code of Conduct for Directors and Employees

The Company has adopted a Code of Conduct for its Directors and employees including a code of conduct for Independent Directors which suitably incorporates the duties of Independent Directors as laid down in the Companies Act, 2013. The said Codes can be accessed on the Company''s website at www.magma.co.in

In terms of the Listing Regulations, all Directors and Senior Management Personnel have affirmed compliance with their respective codes. The Vice Chairman and Managing Director has also confirmed and certified the same, which certification is provided at the end of the Report on Corporate Governance.

DIRECTORS'' RESPONSIBILITY STATEMENT

To the best of our knowledge and belief, your Directors make the following statements in terms of Section 134 (5) of the Companies Act, 2013:

a. that in the preparation of the annual accounts for the year ended 31 March 2021, the applicable Ind AS have been followed along with proper explanation relating to material departures, if any;

b. that such accounting policies as mentioned in Notes to the annual accounts have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2021 and of the profit of the Company for the year ended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the annual accounts have been prepared on a going concern basis;

e. that proper internal financial controls are in place and that the financial controls are adequate and are operating effectively; and

f. that proper systems to ensure compliance with the provisions of all applicable laws are in place and that such systems are adequate and operating effectively.

MEETINGS

Minimum four pre-scheduled Board meetings are held annually. Additional Board meetings are convened by giving appropriate notice to address the Company''s specific needs. In case of business exigencies or urgency of matters, resolutions are passed by circulation.

During the year, nine Board Meetings and nine Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and Listing Regulations.

COMMITTEES OF THE BOARD OF DIRECTORS

The Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority.

Pursuant to resignation of Mr. Narayan K Seshadri and Mr. V K Viswanathan, Audit Committee, Nomination and Remuneration Committee and Stakeholders'' Relationship Committee were reconstituted.

Audit Committee

The Audit Committee presently comprises of Mr. Sunil Chandiramani who serves as the Chairman of the Committee, Mr. Mayank Poddar and Mrs. Vijayalakshmi R Iyer as other members. The terms of reference of the Audit Committee has been furnished in the Corporate Governance Report. All the recommendations made by the Audit Committee during the year were accepted by the Board.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee presently comprises of Mr. Bontha Prasada Rao who serves as the Chairman of the Committee, Mr. Mayank Poddar and Mrs. Vijayalakshmi R Iyer as other members. The charter of the Nomination and Remuneration Committee has been furnished in the Corporate Governance Report.

Stakeholders'' Relationship Committee

The Stakeholders'' Relationship Committee presently comprises of Mr. Bontha Prasada Rao who serves as the Chairman of the Committee, Mr. Sunil Chandiramani and Mr. Sanjay Chamria as other members. The terms of reference of the Stakeholders'' Relationship Committee has been furnished in the Corporate Governance Report.

Corporate Social Responsibility (CSR) Committee

The Corporate Social Responsibility Committee presently comprises of Mr. Mayank Poddar who serves as the Chairman of the Committee and Mr. Bontha Prasada Rao and Mrs. Vijayalakshmi R Iyer as other members.

The Annual Report on CSR activities is annexed herewith and marked as Annexure 1. The other Committees of the Board are Management Committee, Asset Liability Management Committee, Risk Management Committee, Review Committee and the IT Strategy Committee. The terms of reference of these Committees have been furnished in the Corporate Governance Report.

contracts or arrangements with related

PARTIES

In line with the requirements of the Companies Act, 2013 and the Listing Regulations, the Company has formulated a Policy on Related Party Transactions and the same can be accessed on the Company''s website at its weblink i.e. https://magma.co.in/about-us/investor-relations/secretarial-documents/download-secretarial-documents/. All transactions with Related Parties are placed before the Audit Committee for approval. All related party transactions that were entered into during the financial year were on an arm''s length basis and in the ordinary course of business, the particulars of such transactions are disclosed in the notes to the financial statements. Disclosures of related party transactions of the Company with the promoter/promoter group which holds 10% or more shareholding in the Company is given in note no. 44 to the standalone financial statements. The nature of related party transactions does not require disclosure in AOC-2.

The Policy on Related Party Transactions is available on the Company''s website at its weblink i.e. https://magma.co.in/about-us/investor-relations/secretarial-documents/download-secretarial-documents/.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

There were no significant material orders passed by the Regulators / Courts / Tribunals which would impact the going concern status of the Company and its future operations.

STATUTORY AUDITORS

M/s. B S R & Co. LLP, Chartered Accountants, Bangalore, bearing Registration No. 101248W/W-100022 have been appointed as the

BUSINESS RESPONSIBILITY REPORT

As stipulated in Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility Report describing the initiatives taken by the Company from environmental, social and governance perspective forms part of this Report and is annexed as Annexure- 3.

CORPORATE GOVERNANCE

Your Company complies with the provisions laid down in Corporate Governance laws. It believes in and practices good corporate governance. The Company maintains transparency and also enhances corporate accountability. In terms of Regulation 34 of Listing Regulations read with Schedule V, the following forms part of this Report:

(i) Declaration regarding compliance to Code of Conduct by Board Members and Senior Management Personnel;

(ii) A certificate from a Practicing Company Secretary that none of the directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as directors of companies by the Board/Ministry of Corporate Affairs or any such statutory authority;

(iii) Report on the Corporate Governance and

(iv) Auditors'' Certificate regarding compliance of conditions of Corporate Governance.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO

Your Company does not have any activity requiring conservation of energy or technology absorption and foreign exchange earnings and outgo.

EXTRACT OF ANNUAL RETURN

Pursuant to Sections 92 and 134(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014, a copy of the Annual Return is available at the website of the Company at https://magma.co.in/about-us/investor-relations/ secretarial-documents/download-secretarial-documents/.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

In terms of the provisions of Section 197(12) of the Companies Act, 2013 (''the Act'') read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in this Report and marked as Annexure- 4.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of

the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 are also provided in this Report and marked as Annexure-4.

TRANSFER OF AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to Section 124(5) of the Companies Act, 2013, read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, (as amended from time to time) relevant amount which remained unpaid or unclaimed for a period of seven years have been transferred by the Company, from time to time on due dates, to the Investor Education and Protection Fund (IEPF). During the year under review, your Company has transferred H4,64,324/- (Rupees Four Lakhs Sixty Four Thousand Three Hundred and Twenty Four Only) to IEPF.

Pursuant to Section 124 (6) of the Companies Act, 2013 and read with Rule 6 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (as amended from time to time), all the underlying shares in respect of which dividends are not claimed/paid for the last seven consecutive years or more are liable to get transferred to the IEPF DEMAT Account with a Depository Participant as identified by the IEPF Authority. Accordingly, during the year under review 15,031 equity shares of face value of H2/- each, were transferred to IEPF DEMAT Account.

The Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 31 August 2020 (date of last Annual General Meeting) and also the details of equity shares

transferred to IEPF DEMAT Account on the Company''s website (www.magma.co.in), and also on the Ministry of Corporate Affairs'' website (www.mca.gov.in).

FRAUD REPORTING

During the year under review, neither the statutory auditors nor the secretarial auditor has reported to the Audit Committee under Section 143 (12) of Companies Act, 2013, any instances of fraud committed against the Company by its officers or employees, the details of which needs to be mentioned in the Board''s Report.

APPRECIATION

Your Directors would like to record their appreciation of the hard work and commitment of the Company''s employees and warmly acknowledge the unstinting support extended by its bankers, alliance partners and other stakeholders in contributing to the results.

CAUTIONARY STATEMENT

Statements in the Board''s Report and Management Discussion and Analysis, describing the Company''s objectives, outlook, opportunities and expectations may constitute "Forward Looking Statements" within the meaning of applicable laws and regulations. Actual results may differ from those expressed or implied expectations or projections, among others. Several factors make a significant difference to the Company''s operations including the government regulations, taxation and economic scenario affecting demand and supply, natural calamity and other such factors over which the Company does not have any direct control.