Directors Report of Spandana Sphoorty Financial Ltd.

Mar 31, 2024

Your Directors have pleasure in presenting the 21^st Annual Report of the Company together with the audited financial statements for the financial year ended March 31, 2024.

1. FINANCIAL SUMMARY /PERFORMANCE OF THE COMPANY:

The standalone and consolidated financial statements for the financial year ended March 31, 2024 (âFY24''), forming part of this Annual Report, have been prepared in accordance with the Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs.

Key highlights of financial performance of your Company are summarized below:

Particulars	Standalone		Consolidated
Particulars	FY23-24 1	FY22-23	FY23-24 1	FY22-23
income from Operations	2,299.76	1,328.66	2,423.71	1,400.75
Other income	107.15	65.79	110.24	76.28
Profit Before Depreciation, Interest and Tax (PBDIT)	1,543.13	473.99	1,617.76	486.57
Depreciation	19.73	10.68	20.41	10.87
Financial charges	897.38	445.06	926.78	457.88
Profit Before Tax	626.02	18.25	670.57	17.82
Tax expenses	158.14	5.91	169.85	5.43
Profit/(Loss) After Tax	467.88	12.34	500.72	12.39
Transfer to Statutory Reserves	93.58	2.47
Balance carried to Balance sheet	374.30 \|	9.87

During the year, the income from operations of the Company was ''2,299.76 crore. The Asset Under Management (AUM) of the Company was ''11,198.72 crore as on March 31, 2024 as compared to ''7,979.59 crore as on March 31,2023 and the Profit before Tax in FY24 was ''626.02 crore as compared to ''18.25 crore in FY23 driven by AUM growth and improvement in asset quality. Profit before Tax was lower in FY23 primarily due to higher impairment cost SMA and NPA bucket at the beginning of the year i.e. Apr-22.

During FY24, disbursements reached highest of ''3,714.69 crore during Q4/FY 2023-24. Return on Asset ("RoA") stood at 5.46 % and Return on Equity ("RoE") stood at 14.20 % for FY24 on standalone basis. Capital Adequacy Ratio was at 31.95 % on standalone basis. Your Company has generated pre-provision operating profit ("PPOP") of ''953.15 crore and Profit Before Tax ("PBT") of ''670.57 crore in FY24 on a consolidated basis.

Your Company has strong distribution network of 1,559 branches spread across 408 Districts of 19 states and 1 union territory. On portfolio quality the

Collection Efficiency of portfolio was 99.27 % for the quarter ended March 31, 2024.

Your Company has AUM concentration norms at state, district & branch level which ensures low impact from region-specific issues.

1.1 Resource Mobilization

Your Company has raised ''10,017.83 crore of debt during FY24. With the diversified lender base, your Company has raised ''1,304.10 crore through issue of debentures, ''5,177.99 crore through term loan, ''2,682.15 crore through securitization and ''853.58 crore through direct assignment. Your Company has a strong funding access with adequate cash and bank balances of ''1,870.00 crore as on March 31, 2024. The issue proceeds from non-convertible debentures have been fully utilised as per the objects of the issue.

2. DIVIDENDS:

Considering your Company''s growth, future strategy and plans, your Directors consider it prudent to conserve resources and do not recommend any dividend on equity shares for FY24.

3. OPERATIONAL HIGHLIGHTS AND FUNDRAISE:

The operational highlights of your company are as follows:

Details	Mar-24	Mar-23	Mar-22
No. of States and UT	20	18	18
No. of Branches	1,559	1,153	1,049
No. of Districts	408	314	294
No. of Employees	13,097	9,674	8,379
No. of Borrowers (in million)	3.13	2.13	2.27
Gross Disbursements ('' in crore)	10,042.14	7,624.21	3,065.65
Loan Portfolio ('' in crore) on Balance Sheet	10,566.91	7,466.20	5,776.17
Asset Under Management- AUM ('' in crore)	11,198.72	7,979.59	6,198.87

â¢ During FY24, the Company continued its operations in 19 states and 1 union territory (viz. Andhra Pradesh, Bihar, Chhattisgarh, Goa, Gujarat, Haryana, Himachal Pradesh, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh, Uttarakhand, West Bengal and Pondicherry).

â¢ During FY24, the number of borrowers has increased from 22.57 lakhs to 33.19 lakhs on a consolidated basis. The number of branches grew from 1,227 to 1,642 across the states on a consolidated basis.

â¢ Total disbursements is ''10,688 crore for FY24 on consolidated basis.

â¢ During Q4/FY24, on a consolidated basis total disbursement reached highest of ''3,970 crore.

3.1 Securitization:

Your Company has used securitization to improve its asset and liability mix in line with extant guidelines of RBI on securitization. As of March 31, 2024, out of total AUM, securitized portfolio was ''2,115.66 crore on a standalone basis.

3.2 Direct Assignment

During the year, your Company has sold loan portoflio of ''853.58 crore through Direct Assignment. Assigned portfolio was ''686.12 crore out of total AUM of ''11,198.72 crore as of March 31, 2024 on a standalone basis.

3.3 Public Deposits:

Your Company is registered with the Reserve Bank of India (RBI), as a non-deposit accepting NBFC under section 45-1A of the Reserve Bank of India Act, 1934, (RBI Act, 1934) and reclassified as NBFC-MFI, effective from April 13, 2015. Your Directors hereby report that the Company has not accepted any public deposits during the year and it continues to be a non-deposit taking non-banking financial company in conformity with the RBI guidelines.

3.4 RBI Guidelines:

As on March 31, 2024, the Company is in compliance of the regulatory requirements of Net Owned Funds (âNOF'') and Capital to Risk Assets Ratio (âCRAR''), as defined under section 45-IA of the RBI Act, 1934, to carry on the business of a Non-Banking Financial Institution (âNBFI''). Your Company''s Capital Adequacy Ratio is as follows:

Capital Adequacy Ratio	Mar-24	Mar-23	Mar-22
i) CAR -Tier I Capital (%)	31.95	36.87	50.55
ii) CAR - Tier II Capital (%)	-	-	0.19
Capital Adequacy Ratio	31.95	36.87	50.74

3.5 Statutory Reserve Fund:

As per section 45IC of RBI Act 1934, your Company has transferred ''93.58 crore in Statutory Reserve Fund i.e. aggregating 20 % of its standalone net profit.

3.6 Asset Liability Management:

Your Company has a strong funding access with high quality liquid assets (HQLA) which covered the net cash outflow during FY24 in compliance with the RBI Circular on Liquidity Risk Management Framework for Non-Banking Financial Companies and Core Investment Companies dated November 04, 2019. Your Company continued to secure confidence from its lenders for providing funds for its business operations. Your Company has been maintaining a higher liquidity surplus with positive mismatch across all ALM buckets. Details of HQLA and LCR during FY24 are given below:

	June 30, 2023	Sep 30, 2023	Dec 31, 2023	March 31, 2024
High Quality Liquid Assets (HQLA) -comprises of cash and bank balances	826.17	1,462.15	1,243.11	1,385.55
Liquidity Coverage Ratio	678%	2286%	991%	706%

4. SHARE CAPITAL/DEBENTURES:

During FY24, the Paid-Up Equity Share Capital of the Company has increased from ''70,98,32,690/- (Rupees seventy crore ninety-eight lakh thirty-two thousand six hundred and ninety) consisting of 7,09,83,269 (Seven crore nine lakh eighty-three thousand two hundred sixty-nine) Equity shares of the face value of ''10/-each to ''71,29,74,440/- (Rupees seventy-one crore twenty-nine lakh seventy-four thousand four hundred and forty) consisting of 7,12,97,444 (Seven crore twelve lakh ninety-Seven thousand four hundred forty-four) Equity shares of the face value of ''10/- each.

Allotment of shares under Employee Stock Options

Pursuant to the exercise of Employee Stock Options (ESOP''s) by the eligible employees under the Spandana Employee Stock Option Scheme 2018 (ESOP Scheme

2018) and Spandana Employee Stock Option Scheme, 2021 (ESOP Scheme 2021) under Spandana Employee Stock Option Plan 2018 (ESOP Plan 2018); and under Spandana Employees Stock Option Scheme 2021-Series A under Spandana Employees Stock Option Plan 2021 - Series A (ESOP 2021 -Series A), the Company has allotted 3,14,175 (Three lakh fourteen thousand one hundred and seventy-five) Equity Shares of the face value of ''10/- each during FY24.

Preferential issue of shares and warrants

During FY24, the Company has not made any issue of shares or warrants under preferential basis and the Company has not issued shares with differential voting rights nor granted sweat equity. Further, the Company has also not provided any money for the purchase of its own shares by employees or for the benefit of employees of the Company.

Details of Secured Debt Securities as on March 31, 2024:

Sr. No.	ISIN	Date of Debenture Trust Deed	Facility@	Type of charge created	Sanctioned Amount ('' in crore)	Outstanding ('' in crore)	Status (Listed/ Unlisted)	Stock Exchange (BSE/NSE)	Date of Maturity
1.	INE572J07208	25-Jan-21	mld	Exclusive	20.00	20.00	Listed	BSE	27-Jun-24
2.	INE572J07349	31-Mar-21	ncd	Exclusive	25.00	8.33	Unlisted	Unlisted	31-Dec-24
3.	INE572J07356	31-Mar-21	ncd	Exclusive	20.00	20.00	Unlisted	Unlisted	15-Sep-24
4.	INE572J07398	22-Mar-22	ncd	Exclusive	35.00	35.00	Listed	NSE	24-Mar-28
5.	INE572J07406	16-Jun-22	ncd	Exclusive	40.00	5.00	Unlisted	Unlisted	30-Jun-24
6.	INE572J07414	28-Jul-22	ncd	Exclusive	23.00	23.00	Listed	NSE	01-Aug-28
7.	INE572J07448	19-Oct-22	ncd	Exclusive	60.00	22.50	Listed	NSE	20-Oct-24
8.	INE572J07455	07-Nov-22	ncd	Exclusive	25.00	4.07	Listed	NSE	09-May-24
9.	INE572J07463	07-Nov-22	ncd	Exclusive	25.00	4.17	Listed	NSE	09-May-24
10.	INE572J07471	22-Nov-22, 16-Dec-22 (Reissuance)	mld	Exclusive	200.00 200.00	400.00	Listed	NSE	22-May-24
11.	INE572J07489	07-Dec-22	ncd	Exclusive	100.00	27.60	Listed	NSE	08-Sep-24
12.	INE572J07505	21-Dec-22	ncd	Exclusive	65.00	48.75	Listed	NSE	20-Dec-24
13.	INE572J07513	29-Dec-22	ncd	Exclusive	100.00	78.00	Listed	BSE	30-Dec-25
14.	INE572J07547	16-Mar-23	ncd	Exclusive	125.00	62.5	Listed	NSE	17-Mar-25
15.	INE572J07554	10-Apr-23	ncd	Exclusive	25.00	25.00	Listed	NSE	25-May-26
16.	INE572J07562	21-Apr-23	ncd	Exclusive	100.00	62.5	Listed	BSE	24-Apr-25
17.	INE572J07570	21-Apr-23	ncd	Exclusive	5.00	5.00	Listed	BSE	24-Apr-26
18.	INE572J07588	09-Jun-23	ncd	Exclusive	75.00	46.88	Listed	BSE	12-Jun-25
19.	INE572J07596	19-Jun-23	ncd	Exclusive	125.00	78.13	Listed	NSE	20-Jun-25
20.	INE572J07604	23-Aug-23 11-Oct-23 (Reissuance)	ncd	Exclusive	50.00 30.00	53.33	Listed	BSE	24-Feb-25
21.	INE572J07612	01-Sep-23 27-Sep-23 (Reissuance) 25-Oct-23 (Reissuance)	ncd	Exclusive	30.00 30.00 40.00	100.00	Listed	BSE	04-Sep-26
22.	INE572J07620	06-Sep-23	ncd	Exclusive	100.00	100.00	Listed	BSE	07-Mar-25
23.	INE572J07638	05-Oct-23	ncd	Exclusive	50.00	50.00	Listed	BSE	22-Sep-25
24.	INE572J07646	05-Oct-23	ncd	Exclusive	75.00	75.00	Listed	BSE	24-Mar-25
25.	INE572J07653	15-Dec-23 18-Jan-24 (Reissuance)	ncd	Exclusive	100.00 100.00	200.00	Listed	BSE	18-Dec-25
26.	INE572J07661	12-Feb-24	ncd	Exclusive	100.00	100.00	Listed	BSE	13-Aug-25
27.	INE572J07679	06-Mar-24	ncd	Exclusive	70.00	70.00	Listed	BSE	03-Apr-26
28.	INE572J07687	29-Dec-22	ncd	Exclusive	100.00	100.00	Listed	BSE	30-Apr-25
29.	INE572J07695	20-Mar-24	ncd	Exclusive	50.00	50.00	Listed	BSE	21-Dec-26
30.	INE572J07703	27-Mar-24	ncd	Exclusive	50.00	50.00	Listed	BSE	02-Apr-26

5. EMPLOYEE STOCK OPTION PLAN (ESOP PLAN) AND EMPLOYEE STOCK OPTION SCHEME (ESOP SCHEME):

Your Company had instituted Spandana Employees Stock Option Scheme, 2018 ("the "ESOP Scheme 2018") and Spandana Employees Stock Option Scheme, 2021 ("the "ESOP Scheme 2021") under Spandana Employees Stock Option Plan, 2018 (the "ESOP Plan 2018"); and Spandana Employees Stock Option Scheme

2021- Series A" under Spandana Employees Stock Option Plan 2021- Series A ("ESOP 2021 - Series A") to attract, retain, motivate the personnel for positions of substantial responsibility and to provide additional incentive to the Management team, Directors and Employees of the Company and its Subsidiaries. The Members of the Company have approved the ESOP Plan 2018 and ESOP Scheme 2018 by passing a special resolution at their Meeting held on June 14, 2018. ESOP

Scheme 2021 (under ESOP Plan 2018) was approved by the Members on March 26, 2021 by passing a special resolution through Postal Ballot. ESOP Scheme 2021 -Series A (under ESOP Plan 2021) was approved by the Members at the 18^th Annual General Meeting ("AGM") of the Company held on September 28, 2021.

The NRC monitors the Plan in compliance with the Companies Act, 2013 ("the Act"), the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 {"SEBI (SBEB & SE) Regulations"} and related laws. A certificate from Secretarial Auditors of the Company that the Scheme has been implemented in accordance with SEBI (SBEB & SE) Regulations and are as per the resolutions passed by the Members of the Company is being placed at the ensuing Annual General Meeting. The disclosures as required under the SEBI (SBEB & SE) Regulations have been placed on the website of the Company at https://spandanasphoorty. com/investors.

6. AUDITORS:

6.1 Statutory Auditors:

As per Section 139 of the Act, read with the Companies (Audit and Auditors) Rules, 2014, the Members of the Company at the 19^th Annual General Meeting held on September 21, 2022, had appointed Walker Chandiok & Co. LLP (Firm Registration No. 001076N/N500013), Chartered Accountants, as the Statutory Auditors of the Company for 2 consecutive years i.e., to hold office from the conclusion of the 19^th AGM till the conclusion of the 21^th AGM of the Company to be held in the year 2024.

The Audit Reports given by the Statutory Auditors on the Annual Audited Consolidated and Standalone Financial Statements of the Company for FY24 is unmodified and the same forms part of the Annual Report. The Auditors'' Reports read along with the Notes on the Annual Audited Consolidated and Standalone Financial Statements are self-explanatory and do not call for any further clarifications under Section 134(3) (f) of the Act.

There has been no qualification, reservation or adverse remark or disclaimer in our Reports.

During FY24, the Auditors had not reported any matter under Section 143(12) of the Act, therefore no detail is required to be disclosed under Section 134(3) (ca) of the Act.

Term of the existing Statutory Auditors, M/s Walker Chandiok & Co. LLP, Chartered Accountants will end on the conclusion of 21^st Annual General Meeting to be held on July 30, 2024. Therefore, the Board of Directors upon recommendation of the Audit Committee has further recommended appointment of BSR & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022) as Statutory Auditors of the Company for a term of three (3) years commencing from conclusion of 21^st Annual General Meeting till the conclusion of 24^th Annual General Meeting of the Company subject to the approval of the Members of

the Company. A proposal on the same forms part of the AGM Notice.

6.2 Secretarial Auditors:

Pursuant to the requirements of Section 204(1) of the Act read with Rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s RPR & Associates, Practicing Company Secretaries, (CP No. 5360), were appointed as the Secretarial Auditor of the Company for FY24.

During FY24, the Secretarial Auditors had not reported any matter under Section 143(12) of the Act, therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.

Further, in accordance with Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), M/s RPR & Associates, Practicing Company Secretaries, has issued the Annual Secretarial Compliance Report, confirming compliance of the applicable SEBI regulations and circulars / guidelines issued thereunder by the Company. The Secretarial Audit Report and Annual Secretarial Compliance Report for the financial year ended March 31, 2024, are annexed to this report as "Annexure I and Annexure II" respectively.

During FY24, your Company has complied with the provision of applicable Acts, Rules, Regulations, Guidelines and applicable Secretarial Standards issued by the Institute of Company Secretaries of India, etc. except in respect of the matters mentioned in Annexure A of Annual Secretarial Compliance Report along with the Company''s response as mentioned therein.

6.3 Internal Auditors:

Your Company has its in-house Internal Audit team to conduct audits and also has a full-fledged audit team based out of Zonal and Regional/state offices. Each state has a State Audit Head, who has a team of Internal Auditors to manage the audit work of the state. The Internal Audit team follows the Annual Internal Audit plan, and all the branches are audited once a quarter which has operations till the previous quarter. The High-risk rated branches are audited twice in a quarter.

The scope of Internal Audit includes Customer Acquisition, Loan Sanction, Disbursement, Collection, Branch Administration and Compliance.

In terms of Section 138 of the Act, and Companies (Accounts) Rules, 2014, the Board of Directors at its Meeting held on May 02, 2023, upon recommendation of the Audit Committee, had appointed Laxminiwas & Co., as Internal Auditors of the Company, for the FY24, for conducting the internal audit.

6.4 Cost Auditors:

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

7. HOLDING / SUBSIDIARY COMPANIES / ASSOCIATES / JOINT VENTURES:

The Company has the following subsidiaries as on M_arch 31 ?n?4-

S. No.	Name of the Company	Particular	Date of becoming Subsidiary
1.	Caspian	Wholly owned	since its
	Financial	Subsidiary	Incorporation
	Services Limited	Company	i.e., October 13, 2017
2.	Criss Financial	Subsidiary	December 27,
	Limited	Company	2018

The statement required to be provided with respect to subsidiaries, associate companies and joint ventures pursuant to the provisions of Section 129(3) of the Act and Rule 5 of the Companies (Accounts) Rules, 2014 in Form AOC - 1 is annexed herewith as "Annexure MI". During FY24, none of the Company ceased to be the Company''s subsidiaries, joint ventures, or associate companies.

Regulation 16(1)(c) of the SEBI Listing Regulations, defines "material subsidiary" as a subsidiary whose income or net worth exceeds 20% of the consolidated income or net worth respectively, of the listed holding company and its subsidiaries at the end of the immediately preceding financial year. None of the subsidiaries mentioned hereinabove is a material subsidiary as per the thresholds laid down under the SEBI Listing Regulations.

Pursuant to the approval of the Members of the Company on March 25, 2024, during FY24, the Company had invested Rupees one hundred crore in Criss Financial Limited by subscribing to the equity shares offered by Criss Financial Limited.

The Audited Financial Statements, the Auditors Reports thereon and the Board''s Reports for the year ended March 31, 2024, of the subsidiary companies, shall be available for inspection by the Members of the Company at the registered office, during business hours on all working days up to the date of the ensuing Annual General Meeting. A Member who is desirous of obtaining a copy of the accounts of the subsidiaries companies is requested to write to the Company Secretary of the Company at secretarial@ spandanasphoorty.com. Further, pursuant to the provisions of section 136 of the Act, the financial statements, consolidated financial statements of the Company and separate financial statements along with auditors reports thereon of each of the subsidiary is available on the website of the Company at https:// spandanasphoorty.com/investors.

8. CONSOLIDATED FINANCIAL STATEMENTS:

The consolidated financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as prescribed in the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and notified under section 133 of the Companies Act, 2013 (the Act), the circulars, guidelines and directions issued by the Reserve Bank of India (RBI) from time to time ("the RBI guidelines") and other accounting principles generally accepted in India.

9. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

The composition of the Board is in accordance with the provisions of Section 149 of the Act and Regulation 17 of the SEBI Listing Regulations, with an optimum combination of Non-Executive Directors and Independent Directors. The affairs of your Company are being managed by a professional board comprising of eminent personalities having experience and expertise suited to guide the Company in the right direction. Details (including changes) of the Directors of your Company during FY 24 and till the date of this report are as below:

Name of Director	Designation
Ms. Abanti Mitra (DIN: 02305893) Mr. Animesh Chauhan (DIN: 02060457)	Chairperson and Independent Director Independent Director
Mr. Bharat Dhirajlal Shah* (DIN: 00136969) Mr. Deepak Calian Vaidya" (DIN: 00337276) Ms. Dipali Hemant Sheth** (DIN: 07556685)	Independent Director Independent Director Independent Director
Mr. Jagdish Capoor⁵(DIN: 00002516) Mr. Vinayak Prasad "" (DIN: 05310658)	Independent Director Independent Director
Ms. Padmaja Gangireddy# (DIN: 00004842) Mr. Kartikeya Dhruv Kaji """ (DIN: 07641723) Mr. Neeraj Swaroop (DIN: 00061170)	Non-Independent Non-Executive Director Non-Executive Nominee Director Non-Executive Nominee Director
Mr. Ramachandra Kasargod Kamath (DIN: 01715073) Ms. Saakshi Gera""" (DIN: 08737182) Mr. Sunish Sharma (DIN: 00274432) Mr. Shalabh Saxena (DIN: 08908237)	Non-Executive Nominee Director Non-Executive Nominee Director Non-Executive Nominee Director Managing Director & Chief Executive Officer

*Mr. Bharat Dhirajlal Shah, Independent Director of the Company retired w.e.f. April 12, 2023, upon completion of his term of office. "Mr. Deepak Calian Vaidya was re-appointed as an Independent Director for a second term of 3 (three) years with effect from June 06, 2023. This appointment was approved by the Members of the Company on August 01,2023.

**Ms. Dipali Hemant Sheth was appointed as an Independent Director of the Company for a period of 5 (five) years with effect from May 02, 2023. This appointment was approved by the Members of the Company on August 01, 2023.

$ Mr. Jagdish Capoor, Independent Director of the Company retired w.e.f. June 05, 2023, upon completion of his term of office. ""Mr. Vinayak Prasad was appointed as an Independent Director of the Company for a period of 5 years (five) years with effect from May 02, 2023. This appointment was approved by the Members of the Company on August 01 2023.

*Ms. Padmaja Gangireddy, Non-Independent Non-Executive Director of the Company resigned and ceased to be a director of the Company w.e.f. May 27, 2023.

"""Mr. Kartikeya Dhruv Kaji resigned and ceased to be a Non-Executive Nominee Director at the close of business hours on May 21, 2024. Ms. Saakshi Gera was appointed as NonExecutive Nominee Director with effect from May 22, 2024.

The terms and conditions of appointment of independent Directors are available on the website of the Company at https://spandanasphoorty. com/investors. The Board is of the opinion that the independent Directors of the Company possess requisite qualifications, experience, expertise and hold highest standards of integrity.

The profile of the Directors is provided in the beginning of the Annual Report. For more details of the Directors, please refer the Corporate Governance Report.

9.1 Rotation of Directors:

In terms of the provisions of Section 152 of the Act, Mr. Neeraj Swaroop and Mr. Sunish Sharma NonExecutive Nominee Directors of the Company, being longest in the office are liable to retire by rotation at the 21^st Annual General Meeting and being eligible for reappointment, the Board of Director''s at their meeting held on April 29, 2024 recommended the reappointment of Mr. Neeraj Swaroop and Mr. Sunish Sharma as the Non-Executive Nominee Directors to the Members of the Company.

Brief profile of Mr. Sharma and Mr. Swaroop along with Information as required under Regulation 36 of the SEBI Listing Regulations and SS-2 -Secretarial Standard on General Meetings with respect to Director''s appointment forms part of the AGM Notice.

9.2 Regularisation of Directors:

Mr. Kartikeya Kaji resigned as the Non-Executive Nominee Director of the Company with effect from closure of business hours of May 21, 2024 due to personal reasons and preoccupations. In view of the same, Kedaara Capital i Limited, holding company of Corporate Promoter of the Company i.e. Kangchenjunga Limited proposed the candidature of Ms. Saakshi Gera to be appointed as a Non-Executive Nominee Director on the Board of the Company to fill the vacancy arising pursuant to resignation of Mr. Kaji. The Nomination and Remuneration Committee reviewed her eligibility and âfit and proper'' status for proposed appointment, and further recommended the said appointment to the Board of Directors. The Board vide its resolution approved the appointment of Ms. Gera as an Additional Director under the category of Non-Executive Nominee Director of the Company, with effect from May 22, 2024, subject to the approval of the Members of the Company.

Brief profile of Ms. Gera along with Information as required under Regulation 36 of the SEBI Listing Regulations and SS-2 - Secretarial Standard on General Meetings with respect to Director''s appointment forms part of the AGM Notice.

9.3 Declaration by Independent Directors:

The Company has received a declaration from all the Independent Directors of the Company, confirming that they meet the criteria of independence as prescribed under section 149 of the Act and have complied with the Code for independent Directors as prescribed in Schedule IV to the Act.

9.4 Change in the Key Managerial Personnel of the Company:

During FY24, the following changes have taken place: â¢ Mr. Vinay Prakash Tripathi (ACS-18976) has been appointed as the Company Secretary of the Company w.e.f. January 23, 2024, in place of Mr. Ramesh Periasamy (ACS-26247).

Mr. Ramesh Periasamy continues to hold his office as Chief Compliance Officer as per RBI notification on Compliance Function and Role of Chief Compliance Officer (CCO) - NBFCs vide circular No. Ref.No.DoS. CO.PPG./SEC.01/11.01.005/2022-23 dated April 11, 2022

As of March 31,2024, your company has following Key Managerial Personnels:

- Mr. Shalabh Saxena- Managing Director and Chief Executive Officer

- Mr. Ashish Damani- President and Chief Financial Officer

- Mr. Vinay Prakash Tripathi- Company Secretary

10. MEETINGS OF THE BOARD OF DIRECTORS:

During FY24, 07 (Seven) Board Meetings were convened out of which 03 (Three) Board Meetings were convened thorough Audio-Visual Electronic Communication Means (AVEC) and 04 (Four) Board Meetings were convened physically. The details related to Board Meetings are provided in Corporate Governance Report forming part of this Report.

The intervening gap between the Board Meetings was within the period prescribed under the Act and SEBI Listing Regulations. The notice and agenda of the meeting is circulated to all Directors sufficiently well in advance. All material information and minimum information required to be made available to the Board under Regulation 17 read with Schedule II Part-A of the SEBI Listing Regulations, were made available to the Board of Directors.

11. CODE OF CONDUCT FOR ITS DIRECTORS AND SENIOR MANAGEMENT:

Pursuant to Regulation 17(5) of the SEBI Listing Regulations, the Company has a Code of Conduct for its Directors and Senior Management (Code). The Codes provides guidance and support needed for ethical conduct of business and compliance of law. The Codes reflect the core values of the Company viz. Customer Value, Ownership Mindset, Respect, Integrity, One Team and Excellence. The Code is available at the website of the Company at Code of Conduct|| Spandana Sphoorty.

The Code has been circulated to Directors and Senior Management Personnel, and its compliance is affirmed by them as per Regulation 26(3) of the SEBI Listing Regulations. A declaration signed by the Company''s Managing Director to this effect forms part of this Report as Annexure IV.

12. CORPORATE SOCIAL RESPONSIBILITY (CSR):

In terms of Section 135 and Schedule VII of the Act read with rules made thereunder; the Board of Directors of your Company have constituted a CSR Committee. The composition of the Committee is provided in the Corporate Governance Report forming part of this Report.

The details of the Corporate Social Responsibility Policy adopted by the Company have been disclosed on the website of the Company at https://spandanasphoorty. com/policies and the details of various CSR initiatives taken by the Company have been disclosed on the website of the Company at https://spandanasphoorty. com/programs-Impact

The Annual Report on CSR activities is annexed to this report as "Annexure V".

13. DETAILS OF COMMITTEES OF THE BOARD OF DIRECTORS OF COMPANY:

The Committees of the Board of Directors focuses on certain specific areas and make informed decisions in line with the delegated authority. They facilitate debate on important issues and can be effective forums for decision making. The following Board Committees, constituted by the Board of Directors functions as per their respective roles and defined scope:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Corporate Social Responsibility Committee

4. Stakeholders'' Relationship Committee

5. Risk Management Committee

6. IT Strategy Committee

7. Management Committee

8. Asset Liability Management Committee

The details of Committee''s composition, terms of reference, number of meetings held including attendance for respective committee meetings are elaborated in the Report on Corporate Governance which forms a part of this Report.

14. CORPORATE GOVERNANCE:

In terms of Regulation 34(3) read with Schedule V of the SEBI Listing Regulations, the detailed Report on Corporate Governance along with a certificate on compliance of Corporate Governance conditions, received from Mr. Y Ravi Prasada Reddy, Practicing Company Secretary, Hyderabad, forms part of this report as "Annexure VIM".

15. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

The Management Discussion and Analysis Report as required under Schedule V of the SEBI Listing Regulations, forms part of this Report.

16. BUSINESS RESPONSIBILITY AND

SUSTAINABILITY REPORT:

In pursuance of Regulation 34 of SEBI Listing Regulations, the Business Responsibility and Sustainability Report for FY24 is annexed to this report as "Annexure IX".

17. THE ANNUAL RETURN:

Pursuant to sub-section (3)(a) of Section 134 and subsection (3) of Section 92 of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, a copy of Annual Return as at March 31, 2024 is available on the website of the Company at the link: https://spandanasphoorty.com/investors.

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

Information required under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 for the financial year ended March 31, 2024, are as follows:

18.1 Conservation of Energy:

Your Company operations are not energy intensive. However, measures are being undertaken to reduce energy consumption by using energy-efficient computers and electrical equipment. The Company believes in the optimum utilization of resources to reduce usage and conserve energy. Your Company is also exploring products to promote the use of renewable energy sources among clients in their households.

18.2 Research and Development (R&D):

Research and Development (R&D) remains a perpetual endeavour for our company, encompassing social research and the creation of novel products and methodologies. This endeavour serves to elevate our service quality and bolster borrower satisfaction by fostering continuous innovation. Within the framework of Microfinance Institution (MFI) norms, your company has been tailoring diverse lending product versions to fulfil customer needs and thus reinforcing our commitment to serving our customers effectively.

18.3 Technology absorption, adaptation, and innovation:

As we continue to evolve in the digital age, it is imperative that we embrace technology to drive efficiency, enhance customer experience and maintain our competitive edge. Your company is focused on modernizing core business solutions coupled with digitization and automation, leverage transformation solutions to drive cost and process efficiencies, enable analytics to reduce NPA, minimize credit loss, increase profitability, leverage insights driven data to upsell / cross sell products, manage risks effectively, design and deliver a scalable infrastructure to address expansion, build a secured environment to ensure no data breaches and comply with regulatory requirements.

To ensure successful technology absorption, the company prioritizes continuous learning and training for our team members. By investing in their skill development and providing access to relevant resources, we empower our workforce to adapt to new technologies and drive innovation within the organization.

In adapting technology and innovations to support business needs, the company focuses on implementing solutions that are specifically tailored to meet the unique needs and challenges of our industry and bring efficiency in the ecosystem. The Company is in the process of developing micro-services-based architecture to make all applications fully capable of becoming agile in change management processes as per continuously changing business needs of the industry.

The Company additionally recognizes the importance of customizing and integrating technology solutions to seamlessly fit into our existing processes and infrastructure. By working closely with technology partners and vendors, we ensure that the solutions we implement enhance efficiency and effectiveness across the Organization.

18.4 Foreign exchange earnings and outgo:

During the year under review, the foreign exchange outgo was equivalent to ''19.71 crore towards term loan interest payments to foreign lenders, procurement of software license and travelling expenses etc.

19. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:

The ratio of the remuneration of each director to the median''s employee''s remuneration and other details in terms Section 197(12) of the Act read with Rule 5(1) of the Companies (Companies Appointment and Remuneration of Managerial Personnel) Rules, 2014, has been annexed herewith as "Annexure VI" to this Report.

The details of employee remuneration as required under Section 197(12) of the Act, read with Rule 5 (2) and 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and second proviso to Section 136 of the Act are available for inspection without any fee, up to the date of the ensuing AGM and shall also be made available to any Member upon request. Members seeking to inspect such documents can send an email to [email protected].

None of these employees is a relative of any Director of the Company.

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

During FY24, there were no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company''s

operations in future, therefore the disclosure under Rule 8 (5)(vii) of Companies (Accounts) Rules, 2014, is not applicable to the Company.

21. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES:

The details of Vigil mechanism are covered in the Corporate Governance Report forming part of this Report.

22. INVESTOR RELATION:

Your Company has set up an Investor Relations Program through which the Company on a regular basis keep all its investors updated on all the crucial information by disseminating the same on the Company''s website. The Company also informs the National Stock Exchange of India Ltd. (NSE) and BSE Limited (BSE) regarding earnings call, investors meet, press release on the financial results of the Company and such other matters having direct/indirect bearing on the share price of the Company, in compliance with the SEBI Listing Regulations.

23. BORROWER GRIEVANCES:

Your Company has a dedicated Borrower Grievance Cell to receive and handle the day-to-day grievances of the borrowers. Further, details of the Customer Support Service, Grievance Redressal Officer of MFIN (Microfinance Institution Network), Grievance Redressal Officer of Sa-dhan and Principal Nodal Officer are also mentioned on the website of the Company, and a toll-free number is also displayed at every branch for the borrowers to lodge their complaints, if any. The borrowers can also directly reach out to the grievance redressal cell through the tollfree number to raise their concerns. All the grievances of borrowers are dealt expeditiously, in a fair and transparent manner.

The Board of Directors have also appointed an Internal Ombudsman as per RBI notification CO.CEPD.PRS. NO.S874/13-01 -008/2021-2022 dated November 15, 2021.

24. CODE OF CONDUCT FOR INSIDER TRADING:

Your Company has duly formulated and adopted a Code of Conduct for Prohibition of Insider Trading and Internal Procedure in accordance with SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended. The objective of this Code is to regulate, monitor and report trading by its Designated Persons and Immediate Relatives of Designated Persons towards achieving and protecting the interest of the Stakeholders at large.

This Code of Conduct is available on the Company''s website at https://spandanasphoorty.com/code-of-conduct.

25. FAIR PRACTICE CODE:

Your Company has duly formulated and adopted Fair Practice Code (FPC) in compliance with the guidelines issued by RBI, to deliver quality services

to the borrowers by maintaining highest levels of transparency and integrity. It also aims to provide valuable information to the borrowers for making an informed decision. The FPC (in English, Hindi, Oriya, Gujarati, Kannada, Bengali, Malayalam, Marathi, Tamil, Telugu Version) is available on the Company''s website at https://spandanasphoorty.com/code-of-conduct.

26. RISK MANAGEMENT:

Risk management is ingrained in the Company''s operational framework. Proper processes are in place for risk identification, measurement, reporting and management. The Company has a Risk Management Policy, wherein risk management practices are integrated into governance and operations and has developed a strong risk culture within the Organization. Further, the risk management process is continuously reviewed, improved and adapted in the context of changing risk scenario and the agility of the risk management process is monitored and reviewed for its appropriateness in the changing risk landscape. The process of continuous evaluation of risks includes taking stock of the risk landscape on an event-driven basis. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

The Board of Directors has constituted Risk Management Committee to identify, monitor and review all the elements of risk associated with the Company. The detail of the Risk Management Committee and its terms of reference are elaborated in the Report on Corporate Governance which forms a part of this Report.

27. DIVIDEND DISTRIBUTION POLICY:

Your Company has formulated a Dividend Distribution Policy in accordance with SEBI Listing Regulations, for bringing transparency in the matter of declaration of dividend and to protect the interest of investors. The Dividend Distribution Policy is available on the website of the Company at https://spandanasphoorty.com/ policies.

28. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE ACT:

Pursuant to the provisions of Section 186 (11) of the Act, disclosure requirement w.r.t. particulars of loans given, investments made or guarantee given or securities provided is not applicable to the Company.

29. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

Your Company has formulated a policy on Related Party Transactions (RPT Policy) and is available on Company''s website at https://spandanasphoorty. com/policies.

This Policy deals with the review and approval of Related Party Transactions. The Board of Directors of the Company has approved the criteria for granting

the omnibus approval by the Audit Committee within the overall framework of the RPT Policy. Prior omnibus approval is obtained for Related Party Transactions which are of repetitive nature and entered in the ordinary course of business and on an arm''s length basis.

As per Regulation 23 of the SEBI Listing Regulations, any transaction with a Related Party shall be considered material, if the transaction(s) entered into/ to be entered into individually or taken together with the previous transactions during a financial year, exceeds ''1,000 crore or 10% of annual consolidated turnover as per the last audited financial statements of the Company, whichever is lower, and the same requires prior approval of Members by means of an ordinary resolution. The said limits are applicable, even if the transactions are in the ordinary course of business of the concerned company and undertaken on an arm''s length basis. The annual consolidated turnover of the Company for the Financial Year 202223 was ''1,477.03 crore and accordingly, the limit applicable to the Company is ''147.70 crore (âapplicable threshold for Material RPTs'').

Accordingly, during FY24, the Company obtained approval from the Members of the Company for entering into certain material Related Party Transactions and the details of the postal ballot and business transacted thereto are mentioned in the Corporate Governance Report forming part of this Report.

There are no materially significant Related Party Transactions made by the Company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the Company at large. All Related Party Transactions are placed before the Audit Committee for approval. The details of the Related Party Transactions are disclosed as per Indian Accounting Standard (IND AS) - 24 and set out in the notes to the Financial Statements forming part of this annual report.

Particulars of contracts/ arrangements with Related Parties under Section 188 of the Act in Form AOC-2 is annexed with this report as "Annexure VII".

30. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

The Company has a sound Internal Control System, commensurate with the nature, size, scale and complexity of its operations, which ensures that transactions are recorded, authorized and reported correctly. The Company has put in place policies and procedures for continuously monitoring and ensuring the orderly and efficient conduct of the business, including adherence to the Company''s Policies, for safeguarding its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records. The Audit Committee

periodically reviews and evaluates the effectiveness of internal financial control system.

31. DEBENTURE TRUSTEE:

To protect the Interest of the Debenture Holders of the Company, your Company has appointed the below mentioned Debenture Trustees:

Catalyst Trusteeship Limited

Registered Office: GDA House, Plot No. 85, Bhusari

Colony (Right), Paud Road, Pune-411038

Tel: 91 (020) 25280081/Fax: 91 (020) 25280275

[email protected]

Website: www.catalysttrustee.com

IDBI Trusteeship Services Limited

Registered Office: Ground Floor, Universal Insurance Building, Sir Phirozshah Mehta Road, Fort, Bazargate, Mumbai, Maharashtra - 400001 Tel: (91) (22) 40807068 [email protected] Website: www.idbitrustee.com

32. INFORMATION REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013:

Your Company has constituted an Internal Committee as required to be formed under Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules made thereunder which were notified on December 09, 2013. The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. The Company had also conducted several awareness programs for the employees during the year. During FY24, no complaints were received by the Committee under the aforesaid Act. The policy on Prevention of Sexual Harassment at

workplace is available on the website of the Company at https://spandanasphoorty.com/policies.

33. DIRECTORS'' RESPONSIBILITY STATEMENT:

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Act:

a) that in the preparation of the annual financial statements for the financial year ended March 31, 2024; the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) that such accounting policies as mentioned in Note no. 1 of the Notes to the Financial Statements have been selected and applied consistently and judgments 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 financial statements for the financial year ended March 31, 2024 have been prepared on a going concern basis;

e) that the proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively; and

f) that the Directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

34. CREDIT RATING (INCLUDING REVISION):

During FY24, your Company has obtained credit ratings for Bank facilities and debt instruments. The details of the same as on March 31, 2024, are provided below:

Instrument	Rating Agency	Rating Action	Rated Amount ('' Crore)
Bank Facilities	CARE Ratings Limited	CARE A ; Stable	1,000.00
	ICRA Limited	[ICRA]A (Positive)	2,105.00
	CRISIL Ratings Limited	CRISIL A /Positive	3,500.00
	India Rating and Research Private Limited	IND A Stable	2,000.00
Non- Convertible Debentures	CARE Ratings Limited	CARE A ; Stable	500.00
	ICRA Limited	[ICRA]A (Positive)	358.00
	India Rating and Research Private Limited	IND A Stable	2,080.00
Market Linked Debentures	ICRA Limited	PP-MLD[ICRA]A (Positive);	20.00
	India Rating and Research Private Limited	IND PP-MLD A /Stable	500.00
Commercial Paper	CARE Ratings Limited	CARE A1	100.00
Pass Through Certificates	CARE Ratings Limited	CARE A (SO)	79.07
		CARE AA-(SO)	721.42
		CARE AA(SO)	75.00
	CRISIL Ratings Limited	CRISIL AA-(SO)	150.00
		CRISIL AA(SO)	691.77
		CRISIL AA (SO)	100.00
	ICRA Limited	[ICRA]A-(SO)	48.52
		[ICRA]AA(SO) and [ICRA] A-(SO)	30.11
		[ICRA]AA-(SO)	101.74
	India Rating and Research Private Limited	India Rating A and A-(SO) India Rating A (SO)	53.44 98.48
		India Rating AA-(SO)	201.66
		India Rating AA(SO) and India Rating A-(SO)	90.31
		India Rating AA(SO) and India Rating A (SO)	87.73
		India Rating AA(SO)	152.89

During the year, ICRA Limited and CRISIL reaffirmed the rating and revised outlook to Positive from Stable. Further, the Company was assigned a new rating of A Stable by CARE Ratings Limited. This is the highest credit rating that has been assigned to the Company amongst all the Rating Agencies.

35. APPLICATION UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016:

The Company has not made any application under the Insolvency and Bankruptcy Code, 2016 during FY 2023-24.

36. 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:

The Company has not made any such valuation during the FY 2023-24.

37. OTHER DISCLOSURES:

â¢ The Company has not revised Financial Statements as mentioned under Section 131 of the Act during FY24.

â¢ There were no material changes and commitments affecting the financial position of the Company which occurred between the end of the financial year to which these financial statements relate and the date of this Report.

â¢ The information on the affairs of the Company has been provided in the Management Discussion and Analysis Report forming part of this Report.

â¢ Details of Penalty or Strictures are disclosed in Corporate Governance Report forming part of this Report.

38. GRATITUDE AND ACKNOWLEDGEMENT:

Your Board expresses its deep sense of gratitude to the Government of India, Reserve Bank of India, Stock Exchanges, Depositories and other Regulators for the valuable guidance and support, the Company has received from them during the year. The Board would also like to express its sincere appreciation of the co-operation and assistance received from its Stakeholders, Members, Bankers, Service Providers

and other Business Constituents during the year. The Board places on record its appreciation of the dedicated services and contributions made by the employees for the overall performance of the Company.

For & on behalf of the Board of Directors

Abanti Mitra Shalabh Saxena

Chairperson and Managing Director and Chief

Independent Director Executive Officer

DIN:02305893 DIN:08908237

Date: June 4, 2024 Date: June 4, 2024

Place: Mumbai Place: Mumbai

Mar 31, 2023

Your Directors have pleasure in presenting the 20^th Annual Report on the business and operations of the Company together with the audited accounts for the financial year ended March 31, 2023.

1. FINANCIAL SUMMARY /PERFORMANCE OF THE COMPANY:

The standalone and consolidated financial statements for the financial year ended March 31, 2023, forming part of this Annual Report, have been prepared in accordance with the Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs.

Key highlights of financial performance of your Company are summarised below:

(Rs. in Million)
Particulars	Standalone		Consolidated
Particulars	FY22-23	FY21-22 \|	FY22-23	FY21-22
Revenue from operations	13,286.60	13,763.38	14,007.54	14,627.92
Other Income	657.93	152.62	762.78	172.43
Profit Before Depreciation, Interest and Tax (PBDIT)	4,739.77	5,872.30	4,865.70	6,461.49
Depreciation	106.78	85.46	108.66	91.77
Financial cost	4,450.52	5,140.98	4,578.76	5,401.00
Profit Before Tax	182.47	645.86	178.28	968.72
Tax expenses	59.10	179.48	54.34	270.45
Profit after tax	123.37	466.38	123.94	698.27
Transfer to Statutory Reserves	24.67	93.28	27.49	139.56
Balance carried to Balance sheet	98.70	373.10	96.45	558.71

During the Financial Year under review, the Income from operations of the Company was ''13,286.60 million. The Asset Under Management (AUM) of the Company was ''79,795.94 million as on March 31, 2023 as compared to ''61,988.68 million as on March 31,2022 and the Profit before Tax in FY23 is ''182.47 million as compared to ''645.86 million in FY22 primarily due to higher impairment cost SMA and NPA bucket at the of the year.

During the Financial Year under review, disbursements reached highest of ''2,9711.33 million during Q4/FY23. Return on asset ("RoA") stood at 0.21% and Return on Equity ("RoE") stood at 0.43% for FY23. Capital Adequacy ratio was at 36.87% on a standalone basis. Your Company has generated pre-provision operating profit ("PPOP") of ''5,621.43 million and Profit Before Tax ("PBT") of ''178.28 million in FY23 on a consolidated basis.

Your Company has strong distribution network of 1,153 branches spread across 314 Districts of 17 states and 1 union territory. On portfolio quality the Collection Efficiency of portfolio was 102.3% for the quarter ended March 31, 2023.

Your Company has AUM concentration norms at state, district & branch level which ensures low impact from region-specific issues.

1.1 Resource Mobilisation

Your Company has raised ''56,692.57 million of debt during FY23. With the diversified lender base, your Company has raised ''12,392.00 million through issue of debentures, ''25,065.00 million through term loan, ''1,646.00 million through external commercial borrowings, ''11,993.08 through securitisation and ''5,596.49 million through direct assignment. Your Company has a strong funding access with adequate liquidity surplus of ''10,015.26 million as on March 31, 2023.

2. DIVIDENDS:

Considering your Company''s growth, and future strategy and plans, your Directors consider it prudent to conserve resources and despite having sufficient distributable profits, do not recommend any dividend on equity shares for the financial year under review.

3. OPERATIONAL HIGHLIGHTS AND FUNDRAISE:

The operational highlights of your company are as follows:

('' in million unless otherwise stated)
Details	March 2023	March 2022
No. of States and UT	18	18
No. of Branches	1,153	1,049
No. of Districts	314	294
No. of Employees	9,674	8,379
No. of Borrowers	2.1	2.2
Gross Disbursements	76,242.12	30,656.47
Loan Portfolio on Balance Sheet	74,662.03	57,761.73
Asset Under Management- AUM	79,795.94	61,988.68

â¢ During FY23, the Company continued its operations in 17 states and 1 union territory (viz. Andhra Pradesh, Bihar, Chhattisgarh, Goa, Gujarat, Haryana, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh, West Bengal and Puducherry).

â¢ During FY23, the number of borrowers base has increased from 2.3 million as of March 31, 2022 to 2.9 million as of March 31, 2023 on consolidated basis.

â¢ Total disbursements is ''81,249.35 million for FY23 on consolidated basis.

â¢ During Q4/FY23, on a consolidated basis total disbursement reached highest of ''30,537.32 million.

3.1 Securitisation:

Your Company has used securitisation to improve its asset and liability mix in line with extant guidelines of RBI on securitisation. As of March 31,2023, out of total AUM, securitised portfolio was ''10,923.21 million.

3.2 Direct Assignment

During the year, your Company has sold loan portfolio of ''5,596.49 million through Direct Assignment. Assigned portfolio was ''5,017.38 million out of total AUM of ''85,110.53 million as of March 31, 2023 as on consolidated basis.

3.3 Public Deposits:

Your Company is registered with Reserve Bank of India (âRBI''), as a non-deposit accepting NBFC under section 45-1A of the RBI Act, 1934, and reclassified as NBFC-MFI, effective from April 13, 2015. Your Directors hereby report that the Company has not accepted any public deposits during the year under review and it continues to be a non-deposit taking non-banking financial company in conformity with the guidelines of the RBI.

3.4 RBI Guidelines:

As on March 31, 2023, the Company is in compliance of the regulatory requirements of net owned funds (âNOF'') and Capital to Risk Assets Ratio (âCRAR''), as

defined under section 45-IA of the Reserve Bank of India Act, 1934, to carry on the business of a nonbanking financial institution (âNBFI''). Your Company''s Capital Adequacy Ratio is as follows:


Capital Adequacy Ratio	FY23	FY22
i) CAR -Tier I Capital (%)	36.87	50.55
ii) CAR - Tier II Capital (%)	-	0.19
Capital Adequacy Ratio	36.87	50.74
(CAR)

3.5 Statutory Reserve Fund:

As per section 45IC of RBI Act 1934, the Company has transferred ''24.67 million to statutory reserve fund i.e. aggregating 20 % of its standalone profit after tax.

3.6 Asset Liability Management:

Your Company had a strong funding access with high quality liquid assets (HQLA) of ''4,361 million as on June 30, 2022, ''8,648 million as on September 30, 2022, ''10,232 million as on December 31, 2022 and ''8,104 as on March 31, 2023 which covered the net cash outflow during the FY23 in compliance with the RBI Circular on Liquidity Risk Management Framework for NonBanking Financial Companies and Core Investment Companies dated November 04, 2019. As per the said guidelines, Liquidity Coverage Ratio (LCR) requirement shall be binding on all non-deposit taking systemically important NBFCs with asset size of ''5000 crore and above but less than ''10,000 crore from December 1, 2020, with the minimum LCR to be 30%, progressively increasing, till it reaches the required level of 100%, by December 1, 2024.

Your Company continued to secure confidence from its lenders for providing funds for its business operations. Your Company has been maintaining a higher liquidity surplus with positive mismatch across all ALM buckets. Details of HQLA and LCR during the FY23 are given below:

Particulars

30-

Jun-22

30-

Sep-22

31-

Dec-22

31-

Mar-23

High Quality Liquid Assets (HQLA) -comprises of cash and bank balances

4,361

8,648

10,232

8,104

Liquidity Coverage Ratio

712%

1340%

1116%

348%

4. SHARE CAPITAL/DEBENTURES:

The Issued and paid-up Equity Share Capital of the Company as on March 31,2023, stood at ''70,98,32,690 (Rupees Seventy crore ninety-eight lakh thirty-two thousand six hundred and ninety) consisting of 7,09,83,269 (Seven crore nine lakh eighty-three thousand two hundred sixty-nine) Equity Shares of ''10/- each.

During the financial year under review, the paid-up Equity Share Capital of the Company has increased from ''69,09,45,300 (Rupees Sixty-nine crore nine lakh forty-five thousand and three hundred) consisting of 6,90,94,530 (Six crore nine lakh ninety-four thousand five hundred and thirty) Equity shares having the face value of ''10/- each to ''70,98,32,690 (Rupees Seventy crore ninety-eight lakh thirty-two thousand six hundred and ninety) consisting of 7,09,83,269 (Seven crore nine lakh eighty-three thousand two hundred sixty-nine) Equity shares having the face value of ''10/-each.

Allotment of shares under Employee Stock Options

Pursuant to the exercise of Employee Stock Options (ESOP''s) by the eligible employees under the Spandana Employee Stock Option Plan 2018 (ESOP Plan 2018) and Spandana Employee Stock Option Scheme 2018 (ESOP Scheme 2018), the Company has allotted 36,000 (Thirty-six thousand) Equity Shares of the face value of ''10/- each on September 08, 2022 and October 19, 2022.

Preferential issue of shares and warrants

Pursuant to the special resolution passed through Postal Ballot process on March 16, 2022, the Members approved the proposal for Preferential Issue of Equity Shares and Warrants.

The Company has made a Preferential Allotment of 46,86,342 (Forty-six lakh eighty-six thousand three hundred and forty-two) Equity shares of the Company of face value of ''10.00 each, at a price of ''458.78 (Rupees Four hundred and fifty-eight and seventy-eight paisa) per Equity Share, which includes a premium of ''448.78 (Rupees Four hundred and forty-eight and seventy-eight paisa) per Equity Share, aggregating up to ''2,14,99,99,982.76 (Two hundred and fourteen crore

ninety-nine lakh ninety-nine thousand nine hundred eighty-two and seventy-six paisa) on March 17, 2022.

Also, the Company has made a Preferential issue of 18,52,739 (Eighteen lakh Fifty-two thousand Seven hundred and thirty-nine) fully convertible warrants ("Warrants") entitling the warrant holder to apply for and get allotted one (1) Equity Share of the face value of ''10/- each, fully paid-up against every Warrant held, at a price of ''458.78 per warrant, aggregating up to ''84,99,99,598.42 (Eighty-four Crore ninety-nine lakh ninety-nine thousand five hundred ninety-eight and forty-two paise) on March 17, 2022.

The Company had received the upfront money of ''75,00,00,000/- (Seventy-five crores only) upon issuance of such 18,52,739 convertible warrants on March 17, 2022, toward the Warrant subscription price. Upon receipt of balance amount of ''9,99,99,598.42 (Rupees nine crore ninety-nine lakh ninety-nine thousand five hundred and ninety-eight and forty-two paisa only), the Management Committee of the Board of Directors of the Company at its meeting held on May 21, 2022 approved the allotment of 18,52,739 (Eighteen lakh fifty-two thousand seven hundred and thirty-nine) Equity Shares pursuant to exercise of option attached to such convertible warrants.

The Preferential Issue enabled the Company to further strengthen the Company''s capital base and balance sheet and augmenting the long-term resources for meeting funding requirements of its business activities, financing the future growth opportunities, general corporate purposes.

During the year under review, the Company has not issued shares with differential voting rights nor granted sweat equity. Further, the Company has also not provided any money for the purchase of its own shares by employees or for the benefit of employees.

5. EMPLOYEE STOCK OPTION PLAN (ESOP PLAN) AND EMPLOYEE STOCK OPTION SCHEME (ESOP SCHEME):

The Company had instituted Spandana Employees Stock Option Scheme, 2018 ("the "ESOP Scheme 2018") and Spandana Employees Stock Option Scheme, 2021 ("the "ESOP Scheme 2021") under Spandana Employees Stock Option Plan, 2018 (the "ESOP Plan 2018"), and Spandana Employees Stock Option Scheme 2021- Series A" under Spandana Employees Stock Option Plan 2021- Series A ("ESOP 2021 - Series A") to attract, retain, motivate the personnel for positions of substantial responsibility and to provide additional incentive to the Management team, Directors and Employees of the Company and its Subsidiaries. The Members of the Company have passed the special resolution at their Meeting held on June 14, 2018, approved the ESOP Plan 2018 and ESOP Scheme 2018. ESOP Scheme 2021 was approved by the Members on March 26, 2021 by the special resolution passed through Postal Ballot. ESOP 2021 - Series A was approved by the Members at the 18^thAnnual General Meeting (âAGM'') of the Company held on September 28, 2021.

During the year under review, with the approval of Nomination and Remuneration Committee (âNRC''), the Company has granted 10,63,000 stock options to eligible employees of the Company under ESOP 2021-Series A.

The NRC monitors the Plan in compliance with the Companies Act, 2013 ("the Act"), the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 {"SEBI (SBEB & SE) Regulations"} and related laws. The Company shall place before the Members a certificate from Secretarial Auditors of the Company that the Scheme has been implemented in accordance with SEBI (SBEB & SE) Regulations and are as per the resolutions passed by the Members of the Company at the ensuing Annual General Meeting. The disclosures as required under the SEBI (SBEB & SE) Regulations have been placed on the website of the Company at https://spandanasphoorty.com/investors.php.

6. AUDITORS:

6.1 Statutory Auditors:

As per Section 139 of the Act, read with the Companies (Audit and Auditors) Rules, 2014, the Members of the Company at the 19^th Annual General Meeting, held on September 21, 2022, has appointed Walker Chandiok & Co. LLP, (Firm Registration No. 001076N/N500013), Chartered Accountants, as the Statutory Auditors of the Company for a further period of 2 consecutive years i.e., to hold office from the conclusion of the 19^thAGM till the conclusion of the 21^th AGM of the Company to be held in the year 2024. Pursuant to amendments

in Section 139 of the Act, the requirements to place the matter relating to such an appointment for ratification by Members at every annual general meeting have been omitted with effect from May 07, 2018.

The Reports were given by Walker Chandiok & Co. LLP, Chartered Accountants on the Annual Audited Consolidated and Standalone Financial Statements of the Company for the FY23 is part of the Annual Report. The Auditors'' Reports read along with the Notes on the Annual Audited Consolidated and Standalone Financial Statements are self-explanatory and do not call for any further comments.

There has been no qualification, reservation or adverse remark or disclaimer in their Reports.

During the FY23, the Auditors had not reported any matter under Section 143(12) of the Act, therefore no detail is required to be disclosed under Section 134(3) (ca) of the Act.

6.2 Secretarial Auditors:

Pursuant to the requirements of Section 204(1) of the Act read with Rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI Listing Regulations''), M/s RPR & Associates, Practicing Company Secretaries, (CP No. 5360), were appointed as Secretarial Auditor of the Company for the FY 2022-23. The Secretarial Audit Report for the financial year ended March 31, 2023, is annexed to this report as "Annexure I".

During the FY23, the Secretarial Auditors had not reported any matter under Section 143(12) of the Act, therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.

During the year under review, your Company has complied with the provision of applicable Acts, Rules, Regulations, Guidelines and applicable Secretarial Standards issued by the Institute of Company Secretaries of India, etc. except in respect of the matters mentioned in Annexure I to this report along with the Company''s response and as mentioned below:

The Reserve Bank of India (RBI), by an order dated August 05, 2022, imposed a monetary penalty of ''2.33 crore (Rupees Two Crore Thirty-Three lakh only) on the Company for non-compliance with certain provisions of the Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016.

In response to the above observation made by the Secretarial Auditors, your Company hereby submits that-

The Company had received a Show Cause Notice (âNotice'') dated March 21, 2022 issued by RBI Enforcement Department, Central Office, Mumbai under Sections 58B (5) (aa) and 58G read with 45JA,

45L and 45M of the RBI Act, 1934 with respect to noncompliance of Pricing of Credit for MFIs in terms of Paragraph 54 of the Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 observed during the inspection with reference to the Company''s financial position as on March 31, 2019 and March 31, 2020.

The Company has submitted its response to the Notice vide letters dated April 8, 2022 and June 28, 2022. RBI vide its order dated August 8, 2022 imposed a monetary penalty of ''2.33 crore and the Company has paid the said penalty on September 2, 2022.

6.3 Internal Auditors:

Your Company has its own internal audit team to conduct branch audits and also has a full-fledged audit team based on respective states. Each state has a Regional Head Internal Audit, who has a team of Internal Auditors to manage the audit work of the state. The Internal Audit team follows the Annual Internal Audit plan and each branch is audited once in a quarter; however, branches with bronze grading is audited once in 45 days.

The scope of Internal Audit includes Customer Acquisition, Loan Sanction, Disbursement, Collection, Branch Administration and Compliance.

In terms of Section 138 of the Act, and Companies (Accounts) Rules, 2014, the Board of Directors at its Meeting held on July 11, 2022, upon recommendation of Audit Committee, had appointed Laxminiwas & Co, as Internal Auditors of the Company, for the FY23, for conducting the internal audit.

6.4 Cost Auditors:

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

7. HOLDING / SUBSIDIARY COMPANIES / ASSOCIATES / JOINT VENTURES:

The Company has the following subsidiaries as on March 31, 2023:

No.

Name of the Company

Particular

Date of

becoming

Subsidiary

Caspian Financial Services Limited

Wholly owned

Subsidiary

Company

Since its Incorporation i.e., October 13, 2017

Criss Financial Limited

Subsidiary

Company

December 27, 2018

The Audited Financial Statements, the Auditors Reports thereon and the Board''s Reports for the year ended March 31, 2023, of the subsidiary companies, shall be available for inspection by the Members at its registered office, during business hours on all working days up to the date of the Annual General Meeting. A Member who is desirous of obtaining a copy of the accounts of the subsidiaries companies is requested to write to the Company.

During the financial year, none of the Company ceased to be the Company''s subsidiaries, joint ventures, or associate companies.

Pursuant to Regulation 16(1)(c) of the SEBI Listing Regulations, defines "material subsidiary" as a subsidiary whose income or net worth exceeds 20% of the consolidated income or net worth respectively, of the listed holding company and its subsidiaries at the end of the immediately preceding accounting year. Further, none of the subsidiaries mentioned hereinabove is a material subsidiary as per the thresholds laid down under the SEBI Listing Regulations.

At the Extra-Ordinary General Meeting of the Caspian Financial Services Limited ("CFSL"), a wholly owned subsidiary of the Company, held on March 31, 2022, the Objects 7 and 8 in Main Object Clause of Memorandum of Association ("MoA") of CFSL as mentioned below was modified vide a Special Resolution passed by the members of CFSL: -

"7. To carry on the business of purchase, sale and otherwise deal in all kinds of consumer durables, utilities, food stuff, appliances, building material, agricultural inputs etc., including marketing and dealing in all kinds of financial products for the sale and otherwise deal in all kinds of consumer durables, utilities, food stuff, appliances, building material, agricultural inputs etc.

8. To act as an agent/ collaborator/ partner/ dealer/ distributor with traders, companies, dealers, distributors and other organisations carrying on the business of purchase, sale and manufacture of consumer durables, utilities, food stuff, appliances, building material, agricultural inputs etc."

On June 21, 2022, as a part of settlement transaction with erstwhile MD, Mrs. Padmaja Gangireddy, Abhiram Marketing Services Limited (AMSL) and other parties, CFSL has purchased inventory from AMSL.

Details of inter corporate loans to the subsidiaries are set out in the note 6 & 32 to the Standalone Financial Statements forming part of this annual report.

Pursuant to the provisions of section 136 of the Act, the financial statements, consolidated financial statements of the Company and separate financial statements along with auditors reports thereon of each of the subsidiary is available on the website

of the Company at https://spandanasphoorty.com/ investors.php.

8. CONSOLIDATED FINANCIAL STATEMENTS:

The Consolidated Financial Statements of the Company prepared in accordance with relevant Indian Accounting Standards (IND-AS) viz. (include the relevant standards) forms part of this Annual Report.

9. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Affairs of your Company are being managed by a professional Board comprising of eminent personalities having experience and expertise suited to guide the Company in the right direction. Present Directors of your Company are:

Name of Director	Designation
Ms. Abanti Mitra	Chairperson and Independent Non-Executive Director
Mr. Bharat Dhirajlal Shah	Independent Non-Executive Director
Mr. Deepak Calian Vaidya	Independent Non-Executive Director
Mr. Jagdish Capoor	Independent Non-Executive Director
Mr. Animesh Chauhan	Independent Non-Executive Director#
Mrs. Padmaja Gangireddy	Non-Independent Non-Executive Director
Mr. Ramachandra Kasargod Kamath	Nominee Director
Mr. Kartikeya Dhruv Kaji	Nominee Director
Mr. Sunish Sharma	Nominee Director
Mr. Amit Sobti	Nominee Director*
Mr. Neeraj Swaroop	Nominee Director**
Mr. Shalabh Saxena	Managing Director & Chief Executive Officer

*Mr. Amit Sobti (DIN: 07795874) who was the Nominee Director, liable to retire by rotation, did not seek for re-appointment and retired with effect from September 21, 2022.

**Mr. Neeraj Swaroop (DIN: 00061170) was appointed as Nominee Director with effect from August 04, 2022 and he shall be liable to retire by rotation.

#Mr. Animesh Chauhan (DIN: 02060457) was appointed as NonExecutive Independent Director of the Company for a term of 5 (five) years with effect from August 04, 2022 and he shall not be liable to retire by rotation.

"Ms. Abanti Mitra (DIN: 02305893) was re-appointed as a NonExecutive Independent Director for a second term of 5 (five) years with effect from May 04, 2022 and she shall not be liable to retire by rotation.

9.1 Rotation of Directors:

In terms of the provisions of Section 152 of the Act, Mr. Ramachandra Kasargod Kamath (DIN: 01715073) and Mr. Kartikeya Dhruv Kaji (DIN: 07641723), Nominee Directors of the Company, being longest in the office were liable to retire by rotation at the 20^th Annual General Meeting and being eligible to be reappointed, the Board of Director''s at their meeting held on

May 02, 2023 recommended the reappointment of Mr. Ramachandra Kasargod Kamath and Mr. Kartikeya Dhruv Kaji as the Nominee directors of Company.

9.2 Declaration by Independent Directors:

The Company has received a declaration from all the Independent Directors of the Company, confirming that they meet with the criteria of independence as prescribed under subsection (6) of section 149 of the Act. The Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Act.

9.3 Change in the Key Managerial Personnel of the Company:

During the year under review and till the date of this report, the following changes have taken place:

â¢ Mrs. Sharmila S, has resigned as Chief Risk Officer (KMP) of the Company w.e.f. June 29, 2022 and after her resignation Mr. Amit Anand has been appointed as Chief Risk Officer of the Company w.e.f. July 18, 2022.

10. MEETINGS OF THE BOARD OF DIRECTORS:

During the FY23, 05 (Five) Board Meetings were convened out of which 02 (Two) Board Meetings were convened thorough Audio-Visual Electronic Communication Means (AVEC) and 03 (Three) Board Meetings were convened Physically. The details related to Board Meetings are provided in Corporate Governance Report forming part of this Report.

The intervening gap between the Board Meetings was within the period prescribed under the Act and SEBI Listing Regulations. The notice and agenda including all material information and minimum information required to be made available to the Board under Regulation 17 read with Schedule II Part-A of the SEBI Listing Regulations, were circulated to all Directors before the Meeting or presented at the Meeting.

11. BOARD EVALUATION:

Pursuant to the provisions of the Act, the Board has carried out the annual evaluation of its own performance, its committees, and Individual directors including Independent Directors ("Performance Evaluation"). It covers the areas relevant to the functioning as Independent Directors or other directors, member of Board, or Committees of the Board. A structured questionnaire was prepared, covering various aspects of the Board''s functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.

A formal performance evaluation was carried out at the meeting of the NRC held on April 25, 2023 where the

Committee made an annual evaluation of performance of every Director, Key Managerial Personnel and Senior Management Personnel for the FY23.

The Directors have expressed their satisfaction with the evaluation process.

12. CODE OF CONDUCT FOR ITS DIRECTORS AND SENIOR MANAGEMENT:

Pursuant to Regulation 17(5) of the SEBI Listing Regulations, the Company has a Code of Conduct for its Directors and Senior Management including NonExecutive and Independent Directors to the extent of their role and responsibilities in the Company. The said code is available at the website of the Company at https://spandanasphoorty.com/code-of-conduct.php.

Further, in accordance with Schedule V (D) of the SEBI Listing Regulations, declaration from Managing Director of the Company has been received confirming that all the Directors and the Senior Management Personnel of the Company have complied to the Code of Conduct for the Financial Year ended March 31, 2023 as attached with this Report.

13. FAMILIARISATION PROGRAMME OF THE INDEPENDENT DIRECTORS:

The Company follows a structured induction programme for Directors at the time of their joining to provide them with an opportunity to familiarise themselves with the Company, its management, its operations and the industry in which the Company operates. The Director is also explained in detail the compliance required from him/her under the Act, the SEBI Listing Regulations and other relevant regulations and affirmation taken with respect to the same.

The induction programme includes:

1) For each Director, a one-to-one discussion with the Managing Director & CEO and Chief Financial Officer to familiarise the former with the Company''s operations.

2) An opportunity to interact with other business heads and senior officials of the Company, who also make presentations to the Directors briefing them on the operations of the Company, strategy, risk, new initiatives, etc.

3) The Chief Compliance Officer of the Company makes presentations to the Board periodically on the amendments to applicable laws, new enactments which are critical to the business operations of the Company and the compliance status of such laws.

The details of the familiarisation programme may be accessed on the Company''s corporate website at https://spandanasphoorty.com/investors.php.

14. CORPORATE SOCIAL RESPONSIBILITY (CSR):

In terms of section 135 and Schedule VII of the Act read with Rules made thereunder, the Board of Directors of your Company have constituted a CSR Committee. The current composition of the Committee is as follows;

S. No.	Name	Designation & Category
1.	Mr. Ramachandra Kasargod Kamath	Chairperson, Nominee Director
2.	Mrs. Padmaja Gangireddy	Member, Non-Independent Non-Executive Director
3.	Mrs. Abanti Mitra	Member, Independent NonExecutive Director
4.	Mr. Sunish Sharma	Member, Nominee Director
5.	Mr. Deepak Calian Vaidya	Member, Independent NonExecutive Director

The details of the Corporate Social Responsibility Policy adopted by the Company have been disclosed on the website of the Company at https:// spandanasphoorty.com/policies.php and the details of various CSR initiatives taken by the Company have been disclosed on the website of the Company at https://spandanasphoorty.com/programs-Impact. php.

The Annual Report on CSR activities is annexed to this report as "Annexure MIâ.

15. DETAILS OF COMMITTEES OF BOARD OF DIRECTORS OF COMPANY:

The details of Committees of the Board of Directors of Company are elaborated in the Report on Corporate Governance which forms a part of this Report.

16. CORPORATE GOVERNANCE:

In terms of Regulation 34(3) read with Schedule V of the SEBI Listing Regulations, the detailed Report on Corporate Governance along with a certificate on Corporate Governance compliance received from RPR & Associates, Company Secretary, Hyderabad forms part of this report.

17. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

The Management Discussion and Analysis Report as required under Schedule V of the SEBI Listing Regulations forms an part of this report.

18. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT:

In pursuance of Regulation 34 of SEBI Listing Regulations, the Business Responsibility and Sustainability Report for the year under review is annexed to this report as "Annexure IVâ.

19. THE ANNUAL RETURN:

Pursuant to sub-section (3)(a) of Section 134 and subsection (3) of Section 92 of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the copy of Annual Return as at March 31,

2023 will be available on the website of the Company at the link: https://spandanasphoorty.com/investors.php.

20. DEBENTURE REDEMPTION RESERVE:

Pursuant to Rule 7(b)(ii) of the Companies (Share Capital and Debentures) Rules, 2014, the Company is not required to create Debenture Redemption Reserve as the Debentures of the Company are privately placed.

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

Information required under Section 134(3)(m) of the Act read with Rule, 8 of the Companies (Accounts) Rules, 2014 for the financial year ended March 31, 2023, are as follows:

21.1 Conservation of Energy:

Your Company operations are not energy-intensive. However, significant measures are taken to reduce energy consumption by using energy-efficient computers and electrical equipment. Further, the Company believes in the optimum utilisation of alternative resources available to reduce usage and conserve energy. Your Company is also promoting the use of renewable energy sources among clients in their households.

21.2 Research and Development (R&D):

Social research and development of new products and methodologies continue to be an ongoing process for the Company. This helps us to enhance the quality of service and borrower satisfaction through continuous innovation. The Company has been adapting various lending models within the limited scope of MFI norms so as to ensure that the needs of the customers are taken care of in a manner which is convenient to them.

21.3 Technology absorption, adaptation, and innovation:

Technology is being used as a business enabler in your Company. Your Company is improving the processes and controls with higher technology development and adoption to get better operational efficiencies keeping scalability in high consideration. The Company has migrated to a browser-based LMS application e-FIMO which has the accounts, loans, insurance, and payroll modules integrated. e-FIMO have enabled the Company to have the entire data in a single database and has real-time data available without any time lag. The collection efficiency of each branch is tracked daily. The operations & field team are enabled with required MIS to track the loan lifecycle end to end to ensure they are efficiently serviced. New-HRMS application enables employees to serve them better with information transparency.

Credit bureau verification is integrated and the bureau check happens seamlessly via API''s. To avoid data manipulation at the branch level, applications login has been centralised. Loan applications are sourced from mobile as well as from web platform and they are logged into e-FIMO for processing of loans. A full-fledged back-office team is available for scrutinising the loan applications and validating it at multiple levels and then process the loan applications. Also, system level dedupe checks at appropriate places are available.

The improvements are planned for the upcoming year with new digital initiatives like the biometric e-KYC (Aadhar based e-KYC) with e-Sign, scorecard based automated loan approvals with fully digital journey, new LOS mobile application, microservices based architecture to enable agility and resilience in the application changes, new customer-self-service application empowering customers, geo-tagging of borrower house, centres, branches which will ensure a paperless process, efficient and a substantially lower TAT on processing of loans and service requests. Field force tracking application will also bring efficiency in the system. The changes will bring in efficiency at every end point in the loan process and ensure more borrowers are served per Loan Officer (LO) in a seamless digital way.

21.4 Foreign exchange earnings and outgo:

There are no foreign exchange earnings and outgo during the financial year ended March 31, 2023.

22. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:

The ratio of the remuneration of each director to the median''s employee''s remuneration and other details in terms of Section 197(12) of the Act read with Rule 5(1) of the Companies (Companies Appointment and Remuneration of Managerial Personnel) Rules, 2014, has been annexed herewith as "Annexure V" to the Directors'' Report.

The details of employee remuneration as required under provisions of Section 197(12) of the Act, read with Rule 5 (2) and 5 (3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and second proviso to Section 136 of the Act are available for electronic inspection without any fee, 21 days before and up to the date of the Annual General Meeting and shall be made available to any Member on request. Members seeking to inspect such documents can send an email to secretarial@spandanasphoorty. com. None of these employees is a relative of any Director of the Company.

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

During the year under review, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future, therefore the disclosure under Rule 8 (5)(vii) of Companies

(Accounts) Rules, 2014, is not applicable to the Company.

24. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES:

Your Company has established the Vigil Mechanism to encourage employees to report suspected legal violations, fraudulent or irregular conduct of an employee or business associate of the Company. Such incidents, if not reported would breach trust and endanger the Company''s reputation. Through this mechanism, the Company provides a channel to the employees and Directors to report to the management about unethical behaviour, actual or suspected fraud or violation of the Codes of Conduct or legal or regulatory requirements incorrect or misrepresentation of any financial statements and reports, etc.

The Company also has a Vigil Mechanism / WhistleBlower Policy to deal with instances of fraud and mismanagement, if any. This Policy ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination will be meted out to any person for a genuinely raised concern. The Whistle Blower Policy/Vigil Mechanism is uploaded on the Company''s website: https://spandanasphoorty. com/policies.php.

25. INVESTOR RELATION:

Your Company has set up an Investor Relations Program through which the Company on a regular basis keep all its investors updated on all the crucial information by disseminating the same on the Company''s website. The Company also inform both the exchanges regarding earning calls, investor meets, press release on the financial results of the Company and such other matters having direct/indirect bearing on the Share Price of the Company, in compliance with the SEBI Listing Regulations.

26. BORROWER GRIEVANCES:

Your Company has a dedicated Borrower Grievance Cell to receive and handle the day-to-day borrower grievances. Further the details Company''s Customer Support Service, Grievance Redressal Officer of MFIN (Microfinance Institution Network), Grievance Redressal Officer of Sa-adhan and Principal Nodal Officer are also mentioned on the website of the Company, and a toll-free number is also displayed at every branch for the borrowers to lodge their complaints (if any). The borrowers can also directly reach out for their grievance redressal. All the grievances of borrowers are dealt expeditiously, in a fair and transparent manner.

The Board of Directors have also appointed an Internal Ombudsman as per RBI notification CO.CEPD.PRS. NO.S874/13-01 -008/2021-2022 dated November 15, 2021 at their meeting held on July 11, 2022.

27. CODE OF CONDUCT FOR INSIDER TRADING:

Your Company has duly formulated and adopted Code of Conduct for Prohibition of Insider Trading and Internal Procedure in accordance with SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended. The objective of this Code is to regulate, monitor and report trading by its Designated Persons and Immediate Relatives of Designated Persons towards achieving and protecting the interest of Stakeholders at large.

The Code of Conduct for Insider Trading is available on the Company''s website at https://spandanasphoorty. com/code-of-conduct.php.

28. FAIR PRACTICE CODE:

Your Company has duly formulated and adopted Fair Practice Code (FPC) in compliance with the guidelines issued by RBI, to deliver quality services to borrowers by maintaining highest levels of transparency and integrity. It also aims to provide valuable information to Borrowers for making an informed decision. The Board of Directors has amended FPC in line with the RBI Master Direction - Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022 dated March 14, 2022 at their meeting held on July 11, 2022. The Board of Directors had further amended FPC in line with Industry code of conduct published by MFIN & Sa-Dhan as per the RBI revised regulatory framework for Microfinance Loans at their meeting held on January 31, 2023.

The FPC (in English, Hindi, Oriya, Gujarati, Kannada, Bengali, Malayalam, Marathi, Tamil, Telugu Version) is available on the Company''s website at https://spandanasphoorty.com/code-of-conduct.php.

29. RISK MANAGEMENT:

Risk management is ingrained in the Company''s operational framework. Proper processes are in place for risk identification, measurement, reporting and management. The Company has duly approved and adopted Risk Management Policy, wherein risk management practices has integrated into governance and operations and has developed a strong risk culture within the Organisation. Further, the risk management process is continuously reviewed, improved and adapted in the context of changing risk scenario and the agility of the risk management process is monitored and reviewed for its appropriateness in the changing risk landscape. The process of continuous evaluation of risks includes taking stock of the risk landscape on an event-driven basis. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

The Board of Directors has constituted Risk Management Committee to identify, monitor and review all the elements of risk associated with the Company. The detail of Committee and its terms of

reference are elaborated in the Report on Corporate Governance which forms a part of this Report.

30. DIVIDEND DISTRIBUTION POLICY:

Your Company has formulated Dividend Distribution Policy in accordance with SEBI Listing Regulations, for bringing transparency in the matter of declaration of dividend and to protect the interest of investors. The Dividend Distribution Policy is available on the website of the Company at https://spandanasphoorty. com/policies.php.

31. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE ACT:

Pursuant to the provisions of Section 186 (11) of the Act disclosure requirement of particulars of loans given, investments made or guarantee given or securities provided is not applicable to the Company.

32. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

Your Company has formulated a policy on related party transactions and is available on Company''s website at https://spandanasphoorty.com/policies/.

This policy deals with the review and approval of related party transactions. The Board of Directors of the Company had approved the criteria for making the omnibus approval by the Audit Committee within the overall framework of the policy on related party transactions. Prior omnibus approval is obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and on an arm''s length basis.

All related party transactions that were entered into during the financial year were on arm''s length basis and were in the ordinary course of the business. There are no materially significant related party transactions made by the Company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the Company at large. All Related Party Transactions are placed before the Audit Committee for approval. The details of the related party transactions are disclosed as per Indian Accounting Standard (IND AS) - 24 and set out in the note 32 to the Standalone Financial Statements forming part of this annual report.

Contracts / arrangements / transactions entered by the Company during the year under review with related parties under Section 188 of the Act were in ordinary course of business and on arm''s length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the provisions of Section 188 of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014, Regulation 23 of SEBI Listing Regulations and the Company''s policy on related party transactions. Therefore, particulars of contracts/ arrangements with related

parties under Section 188 of the Act in Form AOC-2 is not annexed with this report.

33. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

The Company has a sound Internal Control System, commensurate with the nature, size, scale and complexity of its operations which ensures that transactions are recorded, authorised and reported correctly. The Company has put in place policies and procedures for continuously monitoring and ensuring the orderly and efficient conduct of the business, including adherence to the Company''s Policies, for safeguarding its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records. The Audit Committee periodically reviews and evaluates the effectiveness of internal financial control system.

34. DEBENTURE TRUSTEE:

To protect the Interest of the Debenture Holders of the Company, your Company has appointed the Debenture Trustees named as: -

Catalyst Trusteeship Limited

Registered Office: GDA House, Plot No. 85, Bhusari

Colony (Right), Paud Road, Pune-411038

Tel: 91 (020) 25280081/Fax: 91 (020) 25280275

[email protected]

Website: www.catalysttrustee.com

IDBI Trusteeship Services Limited Asian Building, Ground Floor,

17, R. Kamani Marg, Ballard Estate, Mumbai - 400001. Tel: (91) (22) 40807068 [email protected] Website: www.idbitrustee.com

35. INFORMATION REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013:

The Company has constituted an Internal Compliant Committee as required to be formed under Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules made thereunder which were notified on December 09, 2013.

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy

on prevention, prohibition and Redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. During the FY23, there were no complaints received by the Committee. The policy on Prevention of Sexual Harassment at workplace is available on the website of the Company at https:// spandanasphoorty.com/policies.php.

36. DIRECTORS'' RESPONSIBILITY STATEMENT:

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Act:

a) that in the preparation of the annual financial statements for the financial year ended March 31, 2023; the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) that such accounting policies as mentioned in Note no. 1 of the Notes to the Financial Statements have been selected and applied consistently and judgments 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 financial statements for the financial year ended March 31, 2023 have been prepared on a going concern basis; and

e) that the proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

f) that the Directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

37. CREDIT RATING:

During the year under review, your Company has obtained credit ratings for Bank facilities and debt instruments. The details as on March 31, 2023 are given below:

Instrument	Rating Agency	Rating Action	Rated Amount ('' Million)
Bank Facilities	CRISIL	A / Stable	35,000
	ICRA Limited	A- / Positive	21,050
	India Ratings	A / Stable	20,000
Market-linked Debentures	ICRA Limited	A- / Positive	1,200
	India Ratings	Aemr / Stable	18,000
Non-Convertible Debentures	ICRA Limited	A- / Positive	5,636
	India Ratings	A / Stable	11,300
Pass Through Certificate	ICRA Limited	A / (SO)	4,291.17
(PTCs)		A- / (SO)	526.84
		AA / (SO)	2,735.80
		AA / (SO) and A- / (SO)	321.49
	India Ratings	A / (SO)	471.30
	CARE Limited	AA- / (SO)	3646.48
Commercial Paper	India Ratings	A / Stable	5,000

38. APPLICATION UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016:

The Company has not made any application under the Insolvency and Bankruptcy Code, 2016 during the FY23.

39. 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:

The Company has not made any such valuation during the FY23.

40. REGULATORY COMPLIANCE:

â¢ The Reserve Bank of India (RBI) notified Master Direction - Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022 (âNew Framework") on March 14, 2022 to provide a framework which is uniformly applicable to all regulated lenders in the microfinance space including scheduled commercial banks, small finance banks and NBFC-Investment and Credit Companies.

Your Company has put in place necessary policies, processes and systems as under the new framework. Your Directors believes that the new framework is a welcome step in the overall development of the Company.

â¢ Pursuant to RBI Notification No.DOR.CRE. REC.No.60/03.10.001/2021 -22 dated October 22, 2021 on Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs read with RBI Notification No. DoS.CO.PPG./

SEC.01/11.01.005/2022-23 dated April 11, 2022 on Compliance Function and Role of Chief Compliance Officer (CCO) - NBFCs, the Company is required to appoint Chief Compliance Officer (CCO) for the Company.

Your Company has appointed Mr. Ramesh Periasamy, Company Secretary & Compliance Officer as the Chief Compliance Officer of the Company for a period of 3 years with effect from February 01, 2023.

41. OTHER DISCLOSURES:

â¢ The Company has not revised Financial Statements as mentioned under section 131 of the Act.

â¢ During the year under review, the Company has complied with the provisions of the Foreign Exchange Management (Non-Debt Instrument) Rules, 2019, read with RBI Master Direction - Foreign Investment in India issued vide notification no. RBI/FED/2017-18/60 dated January 4, 2018 (the "FED Master Direction"), the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 and the Consolidated FDI Policy, as amended.

â¢ Due to delay in submission of Q4/FY22 results National Stock Exchange of India Limited has imposed a monetary penalty of ''3,08,000/-on the Company for non-compliance with Regulation 33 and Regulations 52(4) and 52(7) of SEBI Listing Regulations and BSE Limited has imposed a monetary penalty of ''3,08,000/- on the Company for non-compliance with Regulation 33 and Regulations 52(4) and 52(7) of SEBI Listing Regulations.

Due to delay in submission of the notice of record date for various listed debentures, National Stock Exchange of India Limited has imposed a monetary penalty of ''10,000/- on the Company for non-compliance with Regulation 60(2) of SEBI Listing Regulations, and BSE Limited has imposed a monetary penalty of 60,000/- on the Company for non-compliance with Regulation 60(2) of SEBI Listing Regulations.

Due to delay in furnishing prior intimation with respect to date of payment of interest/payment amount for listed debenture and due to delay in disclosure of information related to payment obligations for listed debenture, BSE Limited has imposed a monetary penalty of ''4,000/- for noncompliance with Regulation 50(1) and Regulation 57(1) of SEBI Listing Regulations, respectively.

The Company has paid the aforementioned penalties and particulars of the same forms part of Corporate Governance Report.

â¢ As per paragraph 6(A) of the SEBI circular no. CIR/CFD/CMD1/114/29 ("SEBI Circular") dated October 18, 2019 under the SEBI Act, 1992 and the SEBI Listing Regulations, if the auditor of a listed entity resigns after 45 (forty-five) days from the end of a quarter of a financial year, then the auditor shall, before such resignation, issue the limited review/ audit report for such quarter as well as the next quarter. Further, if the auditor has signed the limited review/ audit report for the first 3 (three) quarters of a financial year, then the auditor shall, before such resignation, issue the limited review/ audit report for the last quarter of such financial year as well as the audit report for such financial year.

On April 27, 2021, the RBI issued a notification no. DoS.CO.ARG/SEC.01/08.91.001/2021-22 laying down the guidelines for appointment of statutory auditors inter alia in NBFCs ("RBI Notification"). As per paragraph 8 of the RBI Notification, the tenure of a statutory auditor of an NBFC is limited to 3 (three) years and a statutory auditor cannot act as an auditor for more than 8 (eight) NBFCs at a time. The RBI Notification has been applicable to an NBFC from October 01, 2021.

On December 22, 2021, the Company had received directions from the RBI vide its email dated December 22, 2021 ("RBI Directions"), on the application submitted by the Company seeking exemption from the RBI Notification. In order to comply with RBI Directions S.R. Batliboi & Co. LLP has tendered their resignation with effect from January 28, 2022 and the Company appointed Walker Chandiok & Co. LLP, Chartered Accountants (Firm Registration No. 001076N/ N500013), to act as the Statutory Auditors of the Company.

Compliance with the RBI Directions resulted in contravention of the abovementioned SEBI Circular and the SEBI Listing Regulations. Hence, in order of comply, your Company made settlement application with SEBI on February 3, 2022 under the SEBI Settlement Regulations, 2018 to settle and resolve proceedings and final order was passed by SEBI on October 25, 2022 upon payment of ''25,00,000/-(Rupees Twenty Five Lakhs only) as settlement fee.

42. MATERIAL CHANGES AND COMMITMENTS:

No material changes or commitments have occurred after the close of the year till the date of this Report except as mentioned herein below:

â¢ Mr. Bharat Dhirajlal Shah (DIN:00136969) who was the Non-Executive Independent Director of the Company, retired as Director of the Company, upon completion of his term of office, at the close of business hours on April 12, 2023.

â¢ Mr. Vinayak Prasad (DIN:05310658) was appointed as Independent Director for a period of 5 (five) years effective from May 02, 2023, subject to approval of the Members of the Company in the forthcoming 20^th Annual General Meeting.

â¢ Mr. Dipali Hemant Sheth (DIN:07556685) was appointed as Additional Director in the capacity of Independent Director for a period of 5 (five) years effective from May 02, 2023, subject to approval of the Members of the Company in the forthcoming 20^th Annual General Meeting.

43. GRATITUDE AND ACKNOWLEDGEMENT:

The Board expresses its deep sense of gratitude to the Government of India, Reserve Bank of India, Stock Exchanges, Depositories and other regulators for the valuable guidance and support the Company has received from them during the year. The Board would also like to express its sincere appreciation of the co-operation and assistance received from its stakeholders, Members, Bankers, Service Providers and other Business Constituents during the year under review. The Board places on record its appreciation of the dedicated services and contributions made by the employees for the overall performance of the Company.

For & on behalf of the Board of Directors

Sd/- Sd/-

Abanti Mitra Shalabh Saxena

Chairperson and Managing Director and

Independent Director Chief Executive Officer

DIN: 02305893 DIN: 08908237

Date: May 02, 2023 Date: May 02, 2023

Place: Mumbai Place: Mumbai

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