Notes to Accounts of Star Health and Allied Insurance Company Ltd.

Mar 31, 2025

4.16 Provisions and Contingent Liabilities and Contingent Assets

In accordance with Accounting Standard 29 - Provisions, Contingent Liabilities and Contingent Assets prescribed by Companies
(Accounting Standard) Rules 2021, to the extent applicable to the company, provisions are created in respect of obligations as a result
of past events and it is probable that an outflow of resources will be required to settle the obligations, in respect of which a reliable
estimate can be made. Provisions are not discounted to their present value and are determined based on management estimate required
to settle the obligation at the Balance Sheet date. These will be reviewed at each Balance Sheet date and adjusted to reflect the current
management estimates.

Contingent losses arising from claims other than insurance claims, litigation, assessment, fines, penalties, etc. are recorded when it is
probable that a liability has been incurred and the amount can be reasonably estimated.

A disclosure for a contingent liability other than those under policies is made when there is a possible obligation or a present obligation
that may, but probably will not require an outflow of resources.

Show Cause Notices issued by various Government Authorities are not considered as Obligation. When the demand notices are raised
against such show cause notices and are disputed by the Company, these are classified as disputed obligations under contingent liability.

When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote or cannot
be ascertained, no provision or disclosure is made.

Contingent Assets are neither recognised nor disclosed in the Financial Statements.

4.17 Borrowing Cost:

Borrowing costs are charged to Profit and Loss Account in the period in which they are incurred.

4.18 Receipts and Payments Account (Cash flow statement):

(i) Receipts and Payments Account is prepared and reported using the Direct Method, in conformity with Para 2.2 of the Master Circular
on Preparation of Financial Statements - General Insurance Business dated October 5, 2012, issued by the IRDAI.

(ii) Cash and cash equivalents comprises cash on hand and demand deposits with Banks. Cash equivalents are short-term balances
(with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible
into known amounts of cash and which are subject to insignificant risk of changes in value.

4.19 Transfer of amounts to Senior Citizen Welfare Fund

In accordance with the requirement of the Notification no G.S.R 380(E), issued by the Ministry of Finance,

dated April 11,2017 read with IRDAI Circular No. IRDA/F&A/CIR/MISC/173/07/2017 dated July 25, 2017 the Company transfers amounts
outstanding for a period of more than 10 years in Unclaimed Amount of Policyholders to the Senior Citizen Welfare Fund (SCWF) on or
before March 1^st of each financial year.

Note :

a) The Company has disputed the demand raised by Goods and Service Tax Authorities for various years and denial of refund
claim amounting to '' 28,813 Lakhs (previous year: '' 28,444 Lakhs). The demand orders majorly pertain to non-payment of
GST on industry vide issues such as ITC denial on marketing expense, GST on insurance premium for the policies issued to SEZ
and other miscellaneous issues like mismatch in GSTR3B vs GSTR2A, GST credit claimed under reverse charge mechanism. The
department has issued demand order on suo-moto basis without giving reasonable opportunity to be heard.

b) The Company has no demand raised by Income Tax Authorities to be classified as contingent liability (previous year : '' 106
Lakhs).

In the view of the Company, and as advised by the counsel, the decisions are expected to be in favour of the Company, based
on the facts of the case and taxation law.

Other Matters:

Income Tax:

A. The Company had challenged, by way of Writ Petitions before the Hon''ble High Court of Madras, the Income Tax Assessment
Orders for Assessment Years 2009-10, 2010-11 and 2011-12 with demands aggregating to '' 6,268 Lakhs (previous year: '' 6,268
Lakhs) on account of applying the provisions of Section 115 JB of Income Tax Act, 1961. The Hon''ble High Court of Madras,
accepting the pleas of the Company set aside the impugned orders with the directions that the Income tax department could
pass appropriate orders after the Hon''ble Supreme Court gives its direction on the Special Leave petition pending with the
Hon''ble Supreme court.

The company has received an order from the Joint Commissioner of Income tax (OSD) on August 16, 2021 for the Assessment
Year 2009-2010, granting a refund of '' 2,224 Lakhs. As per above mentioned order the company is not liable to pay tax under

provision of section 115JB and Income tax demand of '' 2,458 Lakhs is nullified. The company has already received a sum of
'' 781 Lakhs out of '' 2,224 Lakhs refund sanctioned as per order and is taking steps to obtain the balance due. As there are no
subsisting demands as on date, no provision is considered necessary in the books.

The principal commissioner of income tax, Chennai has initiated the revision proceedings under section 263 of the Income
tax Act. The department has mentioned that the order passed by Joint commissioner of income tax (OSD) dated August 16,
2021 is erroneous and not in line the high court judgement. The Company has filed writ appeal on April 12, 2023.

The Principal Commissioner of Income Tax, Chennai has set aside the order passed by the AO. The Company has challenged
the order and filed an appeal in ITAT on January 4, 2024.The ITAT remanded back the order to AO. The AO on further scrutiny
has confirmed that the refund issued to the Company is genuine and for the balance refund the same will be passed once
appropriate orders of the Honorable Supreme Court gives its direction on the Special Leave petition pending with the
Honorable Supreme Court.

B. The Company has received an order dated December 27, 2019 for the Assessment year 2014-15 from the Office of Assistant
Commissioner of Income tax raising a demand of '' 4,244 Lakhs towards Income tax and Interest payable towards amount of
unexpired risk reserve not being appropriated in the Profit and Loss account. The Company has challenged the order before
Commissioner of income tax (Appeals), while having taken a stay for the demand from Hon''ble High Court of Madras subject
to payment of 10% tax amounting to '' 251 Lakhs. In the opinion of the company, both on law and facts, the said demands are
not sustainable and hence no provision is considered necessary in the books.

C. For Assessment Year 2021-22, The Company received the refund claimed in the original return.

Payment of Bonus Act:

The Payment of Bonus Act was amended with retrospective effect and resulted in increasing the bonus liabilities. The additional
liability on account of retrospective amendment is '' 148 Lakhs (previous year: '' 148 Lakhs). The retrospective amendment is
being challenged by various parties in the High Court and based on the final outcome on determination of the court cases
would be accounted for on that date.

5.1.2 The assets of the Company are free from all encumbrances except for deposits of '' 1,926 Lakhs (previous year: '' 813 Lakhs) with the
courts against disputed claims. Pending disposal of the case, in the opinion of the Company the said amount is considered good
and recoverable.

5.1.9Allocation of expenses

The company has allocated expenses of management as per the policy approved by the Board of Directors.

Directly allocable expenses:

Expenses which are directly allocated to specific segments are recorded and disclosed under the respective segments. lt includes
commission to the insurance agents, insurance intermediaries, brokerage, etc.

lndirect expenses - Apportioned

Expenses which are not directly identifiable to specific segments are apportioned among segments based on Gross written premium.
lt includes employees'' remuneration, advertisement and publicity, depreciation, information technology expenses, communication
expenses, operational expenses, other administrative expenses, net of transfer of claims cost, incentive payable to field staff etc.

During the year, the company has transferred from Operating Expenses (Ref: Schedule 4 of the Financial Statements under "Others
- In House Claims Processing Cost") to Claims cost an amount of '' 16,137 Lakhs (previous year: '' 15,168 Lakhs) being 1% of the
gross premium (excluding co-insurance inward and policies/claims processed by outsourced Third Party Administrators (TPAs))
pertaining to Health & Personal Accident (PA) segment towards In House Claims processing expenditure based on the Insurance
Regulatory and Development Authority of India (Expenses of Management of Insurers transacting General or Health Insurance
business) Regulations, 2023

C) Employee Stock Option plan (ESOP)

The Company has introduced Employee Stock Option plan (ESOP 2019) in the financial year 2019-20 effective from August 6,
2019 (date of grant). The Company has granted Stock Options to employees in compliance with the Securites and Exchange
Board of India (Share Based Employee Benefits and Sweat Equity) Regulations 2021. The ESOP Plan 2019 was modified pursuant
to the resolutions passed by the Board of Directors of the company in the meeting held on May 23, 2021, September 28, 2021
and January 25, 2022 and by the Shareholders of the Company in an extra ordinary general meeting held on July 16, 2021,
October 4, 2021 and March 03, 2022. Under the ESOP 2019, the company has given options to eligible employees to acquire
equity share in the Company. The options have been granted under various tranches.

During the year ended as at March 31,2025 the company had granted 351,679 No. of options (previous year: 576,000 Options)
which will vest over a period of 5 years in the ratio 20:20:20:20:20 starting at the end of the 1^st year from the date of grant.

Out of the ESOP 2019 options issued up-to the Year ended March 31, 2025: 654,189 Options (Net of Withdrawn Option)
(previous year: 690,989 Options), were issued for exercise price which is less than the fair value of the option. Therefore, the
corresponding compensation cost of ''15 Lakhs (previous year: ''95 Lakhs) is charged to profit and loss accounts.

5.2.19 Investor Education & Protection Fund:

For the year ended March 31,2025, the company has transferred '' NIL (previous year: '' NIL) to the Investor Education & Protection Fund.

5.2.20 As per proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 which is applicable from April 1,2023, the Company has used
accounting software for maintaining its books of account, have a feature of recording audit trail (edit log) facility and the same
has operated throughout the year for all relevant transactions recorded in the respective software. There are no instances of the
audit trail feature being tampered with. The preservation of audit trail is as per statutory requirements for record retention effective
from the financial year ended March 31,2025.

5.2.21 The Company has formed Steering committee of Department Heads to implement Indian Accounting Standards (Ind AS). The
Steering committee meets regularly to discuss and take forward the implementation of Ind AS. The Ministry of Corporate Affairs
(MCA) has issued Ind AS 117 (equivalent of IFRS 17) on August 12, 2024 but subsequently deferred its applicability vide MCA
notification dated September 28, 2024 that Ind AS 117 will be applicable once it is notified by IRDAI.

The Company has engaged the knowledge partner and technology partner for Ind AS 117 implementations. "Define 17" System
is implemented for convergence to Ind AS requirements. Data migration to Define 17 is completed. In addition to current IGAAP
Financial Statements, the Company will be publishing Ind AS Compliant Financial Statements for the year ended March 31,2025
along with previous year comparative numbers.

5.2.22 No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of
funds) by the Company to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding,
whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons
or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee,
security or the like on behalf of the Ultimate Beneficiaries.

5.2.23 No funds have been received by the Company from any persons or entities, including foreign entities ("Funding Parties"), with the
understanding, whether recorded in writing or otherwise, that the Company shall, whether directly or indirectly, lend or invest in
other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or
provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

For and On Behalf of Board of Directors

Anand Roy Deepak Ramineedi

Managing Director & Chief Executive Officer Director

DIN: 08602245 DIN: 07631768

Nilesh Kambli Jayashree Sethuraman

Chief Financial Officer Company Secretary

As Per Our Report of Even Date attached

For M/s M S K A & Associates., For M/s T R Chadha & Co LLP.,

Chartered Accountants Chartered Accountants

Firm Reg No.: 105047W Firm Reg No.: 006711N/N500028

Vaibhav Naik Sheshu Samudrala

Partner Partner

M.No.: 138302 M.No.: 235031

Place: Chennai
Date: April 29, 2025

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Mar 31, 2024

4.16 Provisions and Contingent Liabilities and Contingent Assets

I n accordance with Accounting Standard 29 - Provisions, Contingent Liabilities and Contingent Assets prescribed by Companies (Accounting Standard) Rules 2021, to the extent applicable to the company, provisions are created in respect of obligations as a result of past events and it is probable that an outflow of resources will be required to settle the obligations, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on management estimate required to settle the obligation at the Balance Sheet date. These will be reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.

Contingent losses arising from claims other than insurance claims, litigation, assessment, fines, penalties, etc. are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated.

A disclosure for a contingent liability other than those under policies is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources.

Show Cause Notices issued by various Government Authorities are not considered as Obligation. When the demand notices are raised against such show cause notices and are disputed by the Company, these are classified as disputed obligations under contingent liability

Contingent Assets are neither recognised nor disclosed in the Financial Statements.

4.17 Borrowing Cost:

Borrowing costs are charged to Profit and Loss Account in the period in which they are incurred.

4.18 Receipts and Payments Account (Cash flow statement):

(i) Receipts and Payments Account is prepared and reported using the Direct Method, in conformity with Para 2.2 of the Master Circular on Preparation of Financial Statements - General Insurance Business dated October 5, 2012, issued by the IRDAI.

(ii) Cash and cash equivalents comprises cash on hand and demand deposits with Banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

4.19 Transfer of amounts to Senior Citizen Welfare Fund

In accordance with the requirement of the Notification no G.S.R 380(E), issued by the Ministry of Finance, dated April 11,2017 read with IRDAI Circular No. IRDA/F&A/CIR/MISC/173/07/2017 dated July 25, 2017 the Company transfers amounts outstanding for a period of more than 10 years in Unclaimed Amount of Policyholders to the Senior Citizen Welfare Fund (SCWF) on or before March 1^st of each financial year.

Note :

a) The Company has disputed the demand raised by Goods and Service Tax Authorities for various years and denial of refund claim amounting to '' 28,44,358 thousands (Previous Year: March 2023 : '' 39,122 thousands). The alleged demand orders majorly pertain to non-payment of GST on industry vide issues such as re-insurance commission, co-insurance premium and other miscellaneous issues like mismatch in GSTR3B vs GSTR2A, GST credit claimed under reverse charge mechanism. The department has issued demand order on suo-moto basis without giving reasonable opportunity to be heard and a fixed mind-set.

b) The Company has disputed the demand raised by Income Tax Authorities of '' 10,615 thousands (Previous Year : '' 2,35,609 thousands).

In the view of the Company, as and advised by the counsel, the decisions are expected to be in favour of the Company, based on the facts of the case and taxation law.

Other Matters:

Income Tax:

A. The Company had challenged, by way of Writ Petitions before the Hon''ble High Court of Madras, the Income Tax Assessment

Orders for Assessment Years 2009-10, 2010-11 and 2011-12 with demands aggregating to '' 6,26,758 thousand (Year Ended Mar 31, 2021: '' 6,26,758 thousands) on account of applying the provisions of Section 115 JB of Income Tax Act, 1961. The Hon''ble High Court of Madras, accepting the pleas of the Company set aside the impugned orders with the directions that the Income tax department could pass appropriate orders after the Hon''ble Supreme Court gives its direction on the Special Leave petition pending with the Hon''ble Supreme court.

The company has received an order from the Joint Commissioner of Income tax (OSD) on 16.08.2021 for the Assessment Year 2009-2010, granting a refund of '' 2,22,411 thousand. As per above mentioned order the company is not liable to pay tax under provision of section 115JB and Income tax demand of '' 2,45,820 thousand is nullified. The company has already received a sum of '' 78,097 thousand out of ''2,22,411 thousands refund sanctioned as per order and is taking steps to obtain the balance due. As there are no subsisting demands as on date, no provision is considered necessary in the books.

The principal commissioner of income tax, Chennai has initiated the revision proceedings under section 263 of the Income tax Act. The department has mentioned that the order passed by Joint commissioner of income tax (OSD) dated 16.08.2021 is erroneous and not in line the high court judgement. The Company has filed writ appeal on 12^th April 23.

B. The Company has received an order dated December 27, 2019 for the Assessment year 2014 - 15 from the Office of Assistant Commissioner of Income tax raising a demand of '' 4,24,355 thousand towards Income tax and Interest payable towards amount of unexpired risk reserve not being appropriated in the Profit and Loss account. The Company has challenged the order before Commissioner of income tax (Appeals), while having taken a stay for the demand from Hon''ble High Court of Madras subject to payment of 10% tax amounting to '' 25,110 thousand. In the opinion of the company, both on law and facts, the said demands are not sustainable and hence no provision is considered necessary in the books.

C. The Company filed its return of income on 4^th March 2022 for Assessment Year 2021-22 opting for benefit of lower tax rate at 22% under section 115BAA of the Income Tax Act. In the income tax return the option for claiming the lower rate was opted by the company. However as per section 115BAA, there is a requirement to file Form 10-IC for claiming the lower tax benefit, which was inadvertently not filed. The department processed company''s return with the normal rate of tax at 34.94% which resulted in a higher tax liability and short refund to the extent of ''2,35,609 Thousands. The company had filed with CBDT, the application under section 119(2)(b) of Income Tax Act, for Condonation of delay in filing of Form 10-IC. The company has also filed an appeal with Commissioner of Income tax (Appeals) on 1^st October,2022 against the intimation order rejecting the option for lower rate of tax.

The Company is in receipt of rectification order u/s 154 of the Income Tax Act, 1961 dated 22/02/2024 favouring the claim and allowing the actual refund claimed in the original return. Hence, the Company is expected to receive the balance refund of '' 2,40,321 thousand (including interest) in due course.

Goods and Service Tax:

The company had a show cause notice of '' 2,39,944 thousands from the Directorate General of GST Intelligence pertaining to the period July 2017 to March 2022 and the Company paid '' 80,000 thousands under protest. The company has filed a

detailed reply with the Additional Commissioner, Central Taxes, Chennai against the show cause notice and attended the personal hearing. Considering the facts, the Company has been advised by its legal counsel that the liability may not arise.

Payment of Bonus Act:

The Payment of Bonus Act was amended with retrospective effect and resulted in increasing the bonus liabilities. The additional liability on account of retrospective amendment is '' 14,831 thousands (Year Ended Mar 31, 2023: '' 14,831 thousands). The retrospective amendment is being challenged by various parties in the High Court and based on the final outcome on determination of the court cases would be accounted for on that date.

5.1.2 The assets of the Company are free from all encumbrances except for deposits of '' 81,295 thousand (Year Ended Mar 31,2023: '' 44,898 thousands) with the courts against disputed claims. Pending disposal of the case, in the opinion of the Company the said amount is considered good and recoverable.

Claims outstanding data excludes IBNR. The claims were outstanding predominantly due to non-submission of essential documents by the insured/Hospitals. Claims settled and remaining unpaid for more than six months is '' Nil (Year Ended Mar 31,2023 '' Nil).

iii. Claims where the claim payment period exceeds four years:

As per circular F&A/CIR/017/May-04, the claims made in respect of contracts where claims payment period exceeds four years, are required to be recognised on actuarial basis. Accordingly, the Appointed Actuary has certified assuming ''NIL'' discount rate.

5.1.5 Premium

All premiums, net of Re-insurance are written and received in India.

No premium income is recognized on varying risk pattern.

C) Employee Stock Option plan (ESOP)

The Company has introduced Employee Stock Option plan (ESOP 2019) in the financial year 2019-20 effective from August 6, 2019 (date of grant). The Company has granted Stock Options to employees in compliance with the Securities and Exchange Board of India ( Share Based Employee Benefits and Sweat Equity) Regulations 2021. The ESOP Plan 2019 was modified pursuant to the resolutions passed by the Board of Directors of the company in the meeting held on May 23, 2021, September 28, 2021 and January 25, 2022 and by the Shareholders of the Company in an extra ordinary general meeting held on July 16, 2021 , October 4, 2021 and March 03, 2022. Under the ESOP 2019, the company has given options to eligible employees to acquire equity share in the Company. The options have been granted under various tranches.

During the year ended as at March 31,2024 the company had granted 5,76,000 No. of options (Year Ended March 31,2023: 21,20,104 Options) which will vest over a period of 5 years in the ratio 20:20:20:20:20 starting at the end of the 1^st year from the date of grant.

Out of the ESOP 2019 options issued up-to the Year ended March 31,2024: 6,90,989 No. of Options (Net of Withdrawn Option) (Year Ended March 31, 2023: 7,40,389 Options), were issued for exercise price which is less than the fair value of the option. Therefore, the corresponding compensation cost of ''9,509 thousands (Year Ended March 31,2023: ''12,710 thousands) is charged to profit and loss accounts.

5.2 Other disclosures:

5.2.1 Pursuant to IRDAI regulation of Asset, Liabilities, and Solvency margin of General Insurance Business Regulations 2016 (IRDAI/ Reg/7/119/2016 dated April 7, 2016); claim reserves are determined as the aggregate amount of Outstanding Claim Reserve and Incurred but Not Reported (IBNR) claim reserve for the lines of business as applicable to the company.

5.2.2 Provision for Free Look period

The provision for Free Look period of '' 4,500 thousands (Year Ended March 31, 2023: '' 3,500 thousands) is duly certified by the Appointed Actuary.

5.2.3 Operating Lease

Lease of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments debited to the revenue account during the year ended March 31,2024 amounts to '' 8,31,995 thousands (Year ended March 31,2023: 6,48,042 thousands).

5.2.18 Investor Education & Protection Fund:

For the year ended March 31,2024, the company has transferred '' NIL (previous year '' NIL) to the Investor Education & Protection Fund.

5.2.18 The Indian Parliament had approved the Code on Social Security, 2020 which could impact the contributions by the Company towards Provident Fund and Gratuity. The Company will complete its evaluation once the Rules are notified and will give appropriate impact in the financial statements in the period in which the Code and related Rules becomes effective.

5.2.20 The Company has formed Steering committee of Department Heads to implement Indian Accounting Standards (Ind AS). The Steering committee meets regularly to discuss and take forward the implementation of Ind AS. The impact assessment was completed in August 2023, to ascertain the approaches as required by the Standard. The exposure draft of Ind AS 117 is available in the public domain for suggestions and comments. The Company has engaged the knowledge partner and technology partner for Ind AS 117 implementations.

5.2.21 As per proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 which is applicable from April 1, 2023, the Company has used accounting software for maintaining its books of account, have a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the respective software. There are no instances of the audit trail feature being tampered with. The preservation of audit trail is as per statutory requirements for record retention effective from the financial year March 31,2024.

For And On Behalf of Board of Directors

Anand Roy Deepak Ramineedi

Managing Director & Chief Executive Officer Director

DIN:08602245 DIN:07631768

Nilesh Kambli Jayashree Sethuraman

Chief Financial Officer Company Secretary

As Per Our Report of Even Date attached

For M/s. Brahmayya & Co., For M/s. V. Sankar Aiyar & Co.,

Chartered Accountants Chartered Accountants

Fi rm Reg No.: 000511S Fi rm Reg No.: 109208W

Jitendra Kumar K V. Balaji

Partner Partner

M.No.: 201825 M.No.: 211765

Place: Chennai Date: April 30, 2024

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Mar 31, 2023

5.1.1 Contingent Liabilities		(Rs''000)
Particulars	As at March 31, 2023	As at March 31, 2022
Partly paid investments	NIL	NIL
Underwriting commitments outstanding	NIL	NIL
Claims, other than those under policies, not acknowledged as debt	NIL	NIL
Guarantees given by or on behalf of the Company	NIL	6,95,000
Statutory demands/liabilities in dispute, not provided for	2,75,131	39,522
Reinsurance obligations to the extent not provided for in accounts	NIL	NIL

Income Tax: A. The Company had challenged, by way of Writ Petitions before the Hon''ble High Court of Madras, the Income Tax Assessment Orders for Assessment Years 2009-10, 2010-11 and 2011-12 with demands aggregating to Rs. 6,26,758 thousand (Year Ended Mar 31,2021: Rs. 6,26,758 thousands) on account of applying the provisions of Sec 115 JB of Income Tax Act, 1961. The Hon''ble High Court of Madras, accepting the pleas of the Company set aside the impugned orders with the directions that the Income tax department could pass appropriate orders after the Hon''ble Supreme Court gives its direction on the Special Leave petition pending with the Hon''ble Supreme court. The company has received an order from the Joint Commissioner of Income tax (OSD) on 16.08.2021 for the Assessment Year 20092010, granting a refund of Rs. 2,22,411 thousand. As per above mentioned order the company is not liable to pay tax under provision of section 115JB and Income tax demand of Rs. 2,45,820 thousand is nullified. The company has already received a sum of Rs. 78,097 thousand out of Rs 2,22,411 thousands refund sanctioned as per order and is taking steps to obtain the balance due. As there are no subsisting demands as on date, no provision is considered necessary in the books. The principal commissioner of income tax, Chennai has initiated the revision proceedings under section 263 of the Income tax Act. The department has mentioned that the order passed by Joint commissioner of income tax (OSD) dated 16.08.2021 is erroneous and not in line the high court judgement. The Company has filed writ appeal on 12th April 23.

Assessment Year Amount (Rs.''000) 2009- 10 2,45,820 2010- 11 1,33,724 2011- 12 2,47,214 Total 6,26,758

B. The Company has received an order dated December 27, 2019 for the Assessment year 2014 - 15 from the Office of Assistant Commissioner of Income tax raising a demand of Rs. 4,24,355 thousand towards Income tax and Interest payable towards amount of unexpired risk reserve not being appropriated in the Profit and Loss account. The Company has challenged the order before Commissioner of income tax (Appeals), while having taken a stay for the demand from Hon''ble High Court of Madras subject to payment of 10% tax amounting to Rs. 25,110 thousand. In the opinion of the company, both on law and facts, the said demands are not sustainable and hence no provision is considered necessary in the books.

C. The Company filed its return of income on 4th March 2022 for Assessment Year 2021-22 opting for benefit of lower tax rate at 22% under section 115BAA of the Income Tax Act. In the income tax return the option for claiming the lower rate was opted by the company. However as per section 115BAA, there is a requirement to file Form 10-IC for claiming the lower tax benefit, which was inadvertently not filed. The department processed company''s return with the normal rate of tax at 34.94% which resulted in a higher tax liablity and short refund to the extent of Rs 2,35,609 Thousands. The company had filed with CBDT, the application under section 119(2)(b) of Income Tax Act, for Condonation of delay in filing of Form 10-IC. The company has also filed an appeal with Commissioner of Income tax (Appeals) on 1st October,2022 against the intimation order rejecting the option for lower rate of tax.

Goods and Service Tax (GST):

D. The Company received on 23rd March 2022, GST Audit Report from Uttar Pradesh GST department for the financial year 2017-2018 on 23rd March 2022 and intimated liability of Rs. 39,122 thousand along with Interest and penalty for excess input availed and short payment of output tax liability by the company. The department had issued demand order on suo moto basis without giving opportunity to be heard to company. The company has submitted a detailed reply to the Joint commissioner audit stating that there is no excess input availed and there is no short payment of tax. In the view of the Company, as advised by the counsel, the decision is expected to be in favor of the Company.

E. The Company paid Rs. 80,000 thousand under protest pursuant to GST proceedings on account of alleged ineligible input tax credit claim during the period July 2017 to March 2022. The Company has been advised that it would not be liable to pay the said amounts. Accordingly, the Company has treated the amount already paid as deposit under "Advances and Other Assets" as at March 31,2023. On April 06, 2023 the company has received intimation of liability under section 74(5) amounting to Rs. 2,39,943 thousands. The Company has responded to this intimation on April 15, 2023.

Show Cause Notice:

The Payment of Bonus Act was amended with retrospective effect and resulted in increasing the bonus liabilities. The Company is of the view that retrospective payment of Bonus is not appropriate and accordingly for bonus computation such retrospective amendment has not been taken in consideration. The additional liability on account of retrospective amendment is Rs. 14,831 thousands (Year Ended Mar 31, 2022: Rs. 14,831 thousands). The retrospective amendment is being challenged by various parties in the High Court and based on the final outcome on determination of the court cases would be accounted for on that date.

5.1.2 The assets of the Company are free from all encumbrances except for deposits of Rs. 44,898 thousand (Year Ended Mar 31, 2022: Rs. 20,657 thousands) with the courts against disputed claims. Pending disposal of the case, in the opinion of the Company the said amount is considered good and recoverable.

Claims outstanding data excludes IBNR. The claims were outstanding predominantly due to non-submission of essential documents by the insured/Hospitals. Claims settled and remaining unpaid for more than six months is Rs. Nil (Year Ended Mar 31,2022 Rs. Nil).

Claims where the claim payment period exceeds four years:

As per circular F&A/CIR/017/May-04, the claims made in respect of contracts where claims payment period exceeds four years, are required to be recognised on actuarial basis. Accordingly, the Appointed Actuary has certified assuming ''NIL'' discount rate.

5.1.5 Premium

All premiums, net of Re-insurance are written and received in India.

No premium income is recognized on varying risk pattern.

5.1.9 Allocation of expenses

The company has allocated expenses of management as per the policy approved by the Board of Directors. Expenses such as Commission payable to Agents, Brokerage, etc. which are based on premium procurement for different segments are directly allocated to each segment on actual incurred basis. Other Administrative expenses, net of transfer to claims cost and incentive payable to field staff which cannot be directly attributed and allocated to any segment are apportioned on the basis of Gross Premium written for each segment.

During the year, the company has transferred from Operating Expenses (Ref: Schedule 4 of the Financial Statements under "Others - In House Claims Processing Cost") to Claims cost an amount of Rs. 12,93,912 thousands (Year Ended March 31, 2022: Rs. 11,43,258 thousands) being 1% of the gross premium (excluding co-insurance inward) pertaining to Health & Personal Accident (PA) segment towards In House Claims processing expenditure based on the Insurance Regulatory and Development Authority of India (Expenses of Management of Insurers transacting General or Health Insurance business) Regulations, 2016.

C) Defined Benefit Plan - Employee Goodwill Gesture scheme

The Company has introduced new other long term employee benefits - Goodwill gesture scheme payable to employee above certain grade which will enable them to draw a lump sum amount in particular time period and balance when they leave the Company at retirement. The Scheme is purely a Goodwill Gesture from the Company and it cannot be claimed as a matter of right by an employee. The Company has absolute discretion to alter, amend or withdraw the scheme at any time without notice. The Company has determined the liability on the basis of Actuarial valuation.

D) Employee Stock Option plan (ESOP)

The Company has introduced Employee Stock Option plan (ESOP 2019) in the financial year 2019-20 effective from August 6, 2019(date of grant). The Company has granted Stock Options to employees in compliance with the Securites and Exchange Board of India ( Share Based Employee Benefits and Sweat Equity) Regulations 2021. The ESOP Plan 2019 was modified pursuant to the resolutions passed by the Board of Directors of the company in the meeting held on May 23, 2021, September 28, 2021 and January 25, 2022 and by the Shareholders of the Company in an extra ordinary general meeting held on July 16, 2021 , October 4, 2021 and March 03, 2022. Under the ESOP 2019, the company has given options to eligible employees to acquire equity share in the Company. The options have been granted under various tranches.

During the year ended as at March 31, 2023 the company had granted 21,20,104 No. of options (Year Ended March 31, 2022: 41,39,713 Options) which will vest over a period of 5 years in the ratio 20:20:20:20:20 starting at the end of one 1 year from the date of grant.

During the financial year 2020-21, the Company has obtained approval from IRDA via Ref 75/IRDAI/HLT/A&R/SHAI and introduced Employee Stock Option plan, 2021 (ESOP 2021) from December 02, 2021 pursuant to the resolution passed by the Board of director in the meeting held on November 11,2021 and by shareholder of the company in Extra ordinary general meeting held on November 11,2021 . Under the ESOP Plan 2021, the company had granted 25,00,000 Numbers of Option to Mr. Jaganathan, Chairman and Chief Executive Officer which will vest at the end of 1 year from the date of grant.

The Company has adopted intrinsic value method for computing the compensation cost of options granted. Where ever the exercise price is equal to the fair value of share on the date of grant, the value of options is Nil and hence no compensation cost is recognized in the books.

Out of the ESOP 2019 options issued up-to the Year ended March 31,2023: 7,40,389 No. of Options (Net of Withdrawn Option) (Year Ended March 31,2022: 7,95,189 Options), were issued for exercise price which is less than the fair value of the option. Therefore, the corresponding compensation cost of Rs. 12,710 thousands (Year Ended March 31,2022: Rs 22,357 thousands) is charged to profit and loss accounts.

Out of the ESOP 2021 options issued up-to the Year ended March 31, 2023: Nil (Net of Withdrawn Option) (Year Ended March 31,2022: 25,00,000 Options), were issued for exercise price which is less than the fair value of the option. Therefore, the corresponding compensation cost of Rs 14,93,493 thousands (Year Ended March 31,2022: Rs 7,31,507 thousands) is charged to profit and loss accounts.

The managerial remuneration to Managing Directors includes Rs. 9,669 thousands (PY : Rs. 26,597) being incremental remuneration, which has been approved by Board, for which approval by IRDAI is under process.

During the Year ended March 31,2022, 25,00,000 shares were issued as ESOP to Chairman & CEO at face value of Rs. 10 per share to be vested over a period of 12 months. As per Initial public offer issue price, fair value was Rs. 900/- per share and the issue price was Rs. 10. The difference value of Rs 22,25,000 was accounted on a proporationate basisfor the Year ended March 31,2023, of Rs 14,93,493 thousands ( PY : Rs 7,31,507 thousands) as ''Compensation Cost'' in the Profit & Loss account.

5.1.15 Summary of Financial Statements for five years & Ratio Analysis:

A. A summary of Financial Statements and Accounting Ratios as per the formats prescribed by the IRDAI in its circular dated April 29, 2003 is provided in Annexure 2 and Annexure 3

The income tax refund receivable of Rs.2,35,609 thousands (refer note no. 5.1.1 C) has been considered as part of eligible assets for the purpose of the calculation of Available Solvency Margin (ASM) for the Year Ended March 31, 2023.

5.2 Other disclosures:

5.2.1 Basis used by the Actuary for determining provision required for IBNR (including IBNER) liability as at March 31,2023 for all lines of business has been estimated by the Appointed Actuary in compliance with the guidelines issued by IRDAI from time to time and the applicable provisions of the Guidance Note 21 issued by the Institute of Actuaries of India.

Pursuant to IRDAI regulation of Asset, Liabilities, and Solvency margin of General Insurance Business Regulations 2016 (IRDAI/Reg/7/119/2016 dated April 7, 2016); claim reserves are determined as the aggregate amount of Outstanding Claim Reserve and Incurred but Not Reported (IBNR) claim reserve for the lines of business as applicable to the company.

5.2.2 Provision for Free Look period

The provision for Free Look period of Rs. 3,500 thousands (Year Ended March 31,2022: Rs. 3,500 thousands) is duly certified by the Appointed Actuary.

5.2.10 Terms of Borrowings

Non- Convertible debentures

The Company had issued Non-convertible debentures for Rs. 2,500,000 thousands on private placement basis during the financial year 2017-18 in two tranches of Rs. 2000,000 thousands and Rs. 5,00,000 thousands at an interest rate of 10.25% and 10.20% respectively payable annually and redeemable in 7 years. These Non-convertible debentures had a Call option after 5 years. These Non-Convertible debentures have been redeemed during the Financial Year 2022-23 with due approval of the regulatory authority.

As on September 29, 2021, the Company had issued Listed Non-convertible debentures for Rs. 4,000,000 thousands on private placement basis at an interest rate of 8.75% payable annually and redeemable in 7 years.

As on October 28, 2021, the Company had issued Listed Non-convertible debentures for Rs. 700,000 thousands on private placement basis at an interest rate of 8.75% payable annually and redeemable in 7 years.

During the year ended on March 31, 2023 the Company has incurred interest on non-convertible debentures to the extent of Rs. 5,30,454 thousands (Year Ended March 31,2022: 4,56,620 thousands)

Amortization of premium pertaining to revenue a/c and the profit & loss a/c have been adjusted against Interest, Dividend & Rent credited to the respective accounts.

5.2.12 During the financial year under review, in respect of Expenses of Management, the company has not exceeded the sub segment limits prescribed under section 40C of The Insurance Act 1938, read with Insurance Regulatory and Development Authority of India (Expenses of Management of Insurers transacting General or Health Insurance business) Regulations, 2016.

5.2.18 Investor Education & Protection Fund:

For the year ended March 31,2023, the company has transfered Rs. NIL (previous year Rs. NIL) to the Investor Education & Protection Fund.

5.2.19 The Indian Parliament had approved the Code on Social Security, 2020 which could impact the contributions by the Company towards Provident Fund and Gratuity. The Company will complete its evaluation once the Rules are notified and will give appropriate impact in the financial statements in the period in which the Code and related Rules becomes effective.

5.2.20 The Company has formed Steering committee of Department Heads to implement Indian Accounting Standards (Ind AS). The Steering committee meets regularly to discuss and take forward the implementation of Ind AS. The Company has appointed a Chartered Accountancy firm to assist in completing the impact analysis of various IND AS applicable to insurance companies. Senior Employees of the Company have attended training program on Ind AS 117 - Insurance Contracts conducted by Institute of Actuaries of India and Institute of Chartered Accountants of India

---

Mar 31, 2022

5.1 Statutory disclosures as required by IRDAI 5.1.1 Contingent Liabilities

(H ''000)
Particulars	As at March 31, 2022	As at March 31, 2021
Partly paid investments	NIL	NIL
Underwriting commitments outstanding	NIL	NIL
Claims, other than those under policies, not acknowledged as debt	NIL	NIL
Guarantees given by or on behalf of the Company	H 6,95,000	NIL
Statutory demands/liabilities in dispute, not provided for	H 39,522	NIL
Reinsurance obligations to the extent not provided for in accounts	NIL	NIL
Others	NIL	NIL

A. The Company had challenged, by way of Writ Petitions before the Hon''ble High Court of Madras, the Income Tax Assessment Orders for Assessment Years 2009-10, 2010-11 & 2011-12 with demands aggregating to H6,26,758 thousand (Year Ended Mar 31,2021: H6,26,758 thousands) on account of applying the provisions of Sec 115 JB of Income Tax Act, 1961. The Hon''ble High Court of Madras, accepting the pleas of the Company set aside the impugned orders with the directions that the Income tax department could pass appropriate orders after the Hon''ble Supreme Court gives its direction on the Special Leave petition pending with the Hon''ble Supreme court. The company has received an order from the Joint Commissioner of Income tax (OSD) on 16.08.2021 for the Assessment Year 2009-2010, granting a refund of H2,22,411 thousands (during the year an interest of H55,736 thousands has been accounted as income based on a assessment order received for the Assessment year 2009-10). As per above mentioned order the company is not liable to pay tax under provision of section 115JB and Income tax demand of H2,45,820 thousand is nullified, however the said order is subject to the decision by the Honourable supreme court on SLP filed by the Income tax department in another similar case. The company has received H78,097 thousand during the financial year 2021-22 out of H2,22,411 thousands refund sanctioned as per the order and is taking steps to obtain the balance due. As there are no subsisting demands as on date, no provision is considered necessary in the books.

Assessment Year	Amount - J
2009-10*	2,45,820
2010-11	1,33,724
2011-12	2,47,214
Total	6,26,758

* Giving effect order received

B. The Company has received an order dated December 27, 2019 for the Assessment year 2014 - 15 from the Office of Assistant Commissioner of Income tax raising a demand of H4,24,355 thousand towards Income tax and Interest payable towards amount of unexpired risk reserve not being appropriated in the Profit and Loss account. The Company has challenged the order before Commissioner of income tax (Appeals), while having taken a stay for the demand from Hon''ble High Court of Madras subject to payment of 10% tax amounting to H25,110 thousand. In the opinion of the company, both on law and facts, the said demands are not sustainable and hence no provision is considered necessary in the books.

C. The Company had received GST Audit Report from Uttar Pradesh GST department for the financial year 2017-2018 on 23rd March 2022 and intimated liability of H39,122 thousand along with Interest and penalty for excess input availed and short payment of output tax liability by the company. The department had issued demand order on suo moto basis without giving opportunity to be heard to company. Company did not avail excess input and short payment of output tax liability. Company will submit a suitable reply against the contention made in the audit report and also submit all relevant documents to prove that no excess credit was availed and short payment of tax liability

Show Cause Notice:

A. Against the refund claim of Service Tax, the Company received refund vide order dated December 10, 2020. Further on March 19, 2021 the Company has received intimation from tax authority that Service tax refund order has been taken up for review by the Principal Commissioner, Chennai North Commissionerate, who contemplates filing an appeal with Commissioner (Appeals) for H3,787 thousand. The Commissioner (Appeals) has set aside the review appeal filed and remanded the case to the original adjudicating authority. The Assistant Commissioner also had issued a protective Show Cause Notice, asking the company to show cause as to why the refund sanctioned to them to the extent of H3,787 thousands should not be demanded/recovered along with interests. Company has submitted its reply to Service tax department in September 2021.

B. The Company had received a Show cause notice(SCN) No.99/2021-Audit-1 dated 28.05.2021 from the Office of the Principal Commissioner of CGST and Central Excise, alleging taking of excess CENVAT credit of service tax paid on the input''s services to the extent of H55,377 thousand for the year 2016-2017 and 2017-2018. It appears that the notice was issued based on the GST Audit team findings of certain discrepancy between the amount of credit declared in the ST 3 returns filed and the amount entered in the books of accounts maintained during the relevant period. Company had submitted a suitable reply against the contention made in the show cause notice and also submitted all relevant documents to prove that no excess credit was availed. The adjudication process has started and awaiting the final order.

C. The Payment of Bonus Act was amended with retrospective effect and resulted in increasing the bonus liabilities. The Company is of the view that retrospective payment of Bonus is not appropriate and accordingly for bonus computation

such retrospective amendment has not been taken in consideration. The additional liability on account of retrospective amendment is H14,831 thousands (Year Ended Mar 31,2021: H14,831 thousands). The retrospective amendment is being challenged by various parties in the High Court and based on the final outcome on determination of the court cases woulds be accounted for on that date.

5.1.2 The assets of the Company are free from all encumbrances except for

(a) a fixed deposit of H6,95,000 thousand (previous year: H NIL) placed with Axis Bank Limited (Included in short term deposit account in Schedule - 11) for issuing bank guarantee in favour of National stock Exchange Limited as part of listing obligation.

(b) Deposits of H20,657 thousand ( Year Ended Mar 31, 2021: H17,311 thousands) with the courts against disputed claims. Pending disposal of the case, in the Opinion of the Company the said amount is considered good and recoverable

Claims outstanding data excludes IBNR. The claims were outstanding predominantly due to non-submission of essential documents by the insured/Hospitals. Claims settled and remaining unpaid for more than six months is H Nil (Year Ended Mar 31,2021 H Nil).

Claims where the claim payment period exceeds four years:

As per circular F&A/CIR/017/May-04, the claims made in respect of contracts where claims payment period exceeds four years, are required to be recognised on actuarial basis. Accordingly, the Appointed Actuary has certified assuming ''NIL'' discount rate.

5.1.5 Premium

All premiums, net of Re-insurance are written and received in India.

No premium income is recognized on varying risk pattern.

* For the year ended as at March 31,2022 the company has valued the investment at fair value .As at March 31, 2021 Investment in Infrastructure investment trusts of H2,60,000 thousand is not determined on the basis of NAV in absence of information from the Trust as it was not traded for the last 6 months. Consequently, the same is valued at cost.

C) All investments are made in accordance with Insurance Act, 1938 and Insurance Regulatory and Development Authority of India (Investment) Regulations, 2016 and are performing investments.

D) Allocation of investment income:

Investment income has been allocated on the basis of the ratio of average policyholder''s Funds to average shareholder''s Funds, average being the balance at the beginning of the year and at the end of the reporting period.

5.1.9 Allocation of expenses

The company has allocated expenses of management as per the policy approved by the Board of Directors. Expenses such as Commission payable to Agents, Brokerage, etc. which are based on premium procurement for different segments are directly allocated to each segment on actual incurred basis. Other Administrative expenses, net of transfer to claims cost and incentive payable to field staff which cannot be directly attributed and allocated to any segment are apportioned on the basis of Gross Premium written for each segment.

During the year, the company has transferred from Operating Expenses (Ref: Schedule 4 of the Financial Statements under "Others - In House Claims Processing Cost") to Claims cost an amount of H11,43,258 thousands (Year Ended March 31, 2021: H28,08,375 thousands) being 1% of the gross premium (3% of the gross premium for year ended March 31, 2021) (excluding co-insurance inward) pertaining to Health & Personal Accident (PA) segment towards In House Claims processing expenditure based on the Insurance Regulatory and Development Authority of India (Expenses of Management of Insurers transacting General or Health Insurance business) Regulations, 2016.

C) Defined Benefit Plan - Employee Goodwill Gesture scheme

The Company has introduced new other long term employee benefits - Goodwill gesture scheme payable to employee above certain grade which will enable them to draw a lump sum amount in particular time period and balance when they leave the Company at retirement. The Scheme is purely a Goodwill Gesture from the Company and it cannot be claimed as a matter of right by an employee. The Company has absolute discretion to alter, amend or withdraw the scheme at any time without notice. The Company has determined the liability on the basis of Actuarial valuation.

D) Employee Stock Option plan (ESOP)

The Company has introduced Employee Stock Option plan (ESOP 2019) in the financial year 2019-20 effective from August 6, 2019(date of grant). The Company has granted Stock Options to employees in compliance with the Securites and Exchange Board of INDIA ( Share Based Employee Benefits and Sweat Equity) Regulations 2021. The ESOP Plan 2019 was modified pursuant to the resolutions passed by the Board of Directors of the company in the meeting held on May 23, 2021, September 28, 2021 and January 25, 2022 and by the Shareholders of the Company in an extra ordinary general meeting held on July 16, 2021 , October 4, 2021 and March 03,2022. Under the ESOP 2019, the company has given options to eligible employees to acquire equity share in the Company. The options have been granted under various tranches.

During the year ended as at March 31, 2022 the company had granted 41,39,713 No. of options (Year Ended March 31, 2021: 12,68,005 Options) which will vest over a period of 5 years in the ratio 20:20:20:20:20 starting at the end of one 1 year from the date of grant.

During the financial year 2020-21, the Company has obtained approval from IRDA via Ref 75/IRDAI/HLT/A&R/SHAI and introduced Employee Stock Option plan, 2021 (ESOP 2021) from December 02, 2021 pursuant to the resolution passed by the Board of director in the meeting held on November 11, 2021 and by shareholder of the company in Extra ordinary general meeting held on November 11,2021 . Under the ESOP Plan 2021, the company had granted 25,00,000 Numbers of Option to Mr. Jaganathan, Chairman and Chief Executive Officer which will vest at the end of 1 year from the date of grant.

The Company has adopted intrinsic value method for computing the compensation cost of options granted. Where ever the exercise price is equal to the fair value of share on the date of grant, the value of options is Nil and hence no compensation cost is recognized in the books.

Out of the ESOP 2019 options issued up-to the Year ended March 31,2022: 7,95,189 No. of Options (Net of Withdrawn Option) (Year Ended March 31,2021: 9,70,776 Options), were issued for exercise price which is less than the fair value of the option. Therefore, the corresponding compensation cost of H22,357 thousands (Year Ended March 31,2021: H2,929 thousands) is charged to profit and loss accounts. Out of the ESOP 2021 options issued up-to the Year ended March 31, 2022: 25,00,000 No. of Options (Net of Withdrawn Option) (Year Ended March 31, 2021: Nil Options), were issued for exercise price which is less than the fair value of the option. Therefore, the corresponding compensation cost of H7,31,507 thousands (Year Ended March 31,2021: HNil thousands) is charged to profit and loss accounts.

The managerial remuneration to Managing Directors includes H26,597 thousands (PY : H Nil) being incremental remuneration, which has been approved by Board, for which approval by IRDAI is under process.

During the Year ended March 31,2022, 25,00,000 shares were issued as ESOP to Chairman & CEO at face value of H10 per share to be vested over a period of 12 months. As per Initial public offer issue price, fair value is H900/- per share and the issue price is H10 and the difference value of H22,25,000 thousands is accounted on a proporationate basis till March 31, 2022, of H7,31,507 thousands as ''Compensation Cost'' in the Profit & Loss account and remaning balance will be charges to Profit and loss Account in the subsequent period.

The company has not issued any sweat equity share for the Year Ended March 31,2022. During the Year ended March 31,2021,2,453,190 shares were issued as sweat equity to Chairman & CEO at face value of H10 per share. As per valuation report, fair value is H182/- per share. The difference between the fair value and the issue price of H4,21,949 thousands (Year Ended March 31, 2022: H Nil ) is accounted as Compensation Cost in the Profit & Loss account and credited to Share premium in Schedule 6 - Reserves and Surplus. The said difference is taxable as perquisites in the hands of the Chairman and as authorised by the Shareholders, the income tax paid thereon of H1,81,395 thousands have been accounted as Compensation Cost in the Profit & Loss account.

Managerial remuneration upto H15,000 thousand, for each Managerial personnel, is disclosed under Schedule 4 " Operating Expenses" and H8,44,197 being in excess of H15,000 thousands, for each Managerial personnel, is disclosed under the Shareholder''s Profit and Loss Account under the head "Key management Personnel Remuneration".

Note: The managerial remuneration mentioned above does not include the perquisite value as per Income Tax Act, 1961 for the employee stock options exercised and the actuarially valued employee benefits that are accounted as per Accounting Standard (AS) 15 (Revised), "Employee Benefits" which is determined on an overall Company basis.

The Company has incurred H10,09,209 thousands (net of GST) as IPO related expenses and allocated such expenses between the Company H3,35,469 thousands (net of income tax impact H2,51,038 thosuands) and selling shareholders H6,73,740 thousands. Such amounts were allocated based on agreement between the various parties and in proportion to the total proceeds in the IPO. The Company''s share of expenses of H3,35,469 thousands has been adjusted to securities premium.

5.2 Other disclosures:

5.2.1 Basis used by the Actuary for determining provision required for IBNR (including IBNER) liability as at March 31,2022 for all lines of business has been estimated by the Appointed Actuary in compliance with the guidelines issued by IRDAI from time to time and the applicable provisions of the Guidance Note 21 issued by the Institute of Actuaries of India.

Pursuant to IRDAI regulation of Asset, Liabilities, and Solvency margin of General Insurance Business Regulations 2016 (IRDAI/Reg/7/119/2016 dated April 7, 2016); claim reserves are determined as the aggregate amount of Outstanding Claim Reserve and Incurred but Not Reported (IBNR) claim reserve for the lines of business as applicable to the company.

5.2.2 Provision for Free Look period

The provision for Free Look period of H3,500 thousands (Year Ended March 31,2021: H3,500 thousands) is duly certified by the Appointed Actuary.

5.2.4 Micro and Small scale business entities

There is no Micro, Small & Medium enterprise to which the Company owes dues, which are outstanding for more than 45 days as at March 31, 2022 (Year Ended on March 31, 2021 is NIL). This information as required to be disclosed under Micro, Small and Medium Enterprises Development Act 2006, has been determined to the extent such parties have been identified on the basis of information available with the Company.

5.2.5 Segmental reporting Primary reportable segments

The Company carries on non-life insurance business in India. The Company has provided primary segmental information, in Annexure 1, as required by Accounting Standard 17 - ''Segment Reporting'' issued by ICAI, read with Accounting Regulations.

Secondary reportable segments

There are no reportable geographical segments since the Company provides services only to customers in the Indian market or Indian interests abroad and does not distinguish any reportable regions within India.

5.2.10 Terms of BorrowingsNon- Convertible debentures

The Company had issued Non-convertible debentures for H2,500,000 thousands on private placement basis during the financial year 2017-18 in two tranches of H2000,000 thousands and H5,00,000 thousands at an interest rate of 10.25% and 10.20% respectively payable annually and redeemable in 7 years.

As on September 29,, 2021, the Company had issued Listed Non-convertible debentures for H4,000,000 thousands on private placement basis at an interest rate of 8.75% payable annually and redeemable in 7 years.

As on October 28, 2021, the Company had issued Listed Non-convertible debentures for H700,000 thousands on private placement basis at an interest rate of 8.75% payable annually and redeemable in 7 years.

During the year ended on March 31,2022 the Company has incurred interest on non-convertible debentures to the extent of H4,56,620 thousands (Year Ended March 31,2021: 2,56,000 thousands)

Pursuant to IRDAI circular no. IRDA/F&A/OFC/01/2014-15/115 dated August 4, 2017, and as required by Companies (Share Capital and Debentures) Rules, 2014, read with Notification F.No. 01/04/2013-CL-V-Prt-III dated 16th August,2019 issued by the Ministry of Corporate Affairs, Company has created Debenture Redemption Reserve (DRR) of H1,50,000 thousands (Year Ended March 31,2021: 1,50,000 thousands) upto date.

a. Change in Unexpired premium reserve (UPR)

The Company was following 50% UPR method up to the financial year ended March 31,2020, and shifted to 1/365 day method of accounting UPR as on March 31,2021, for the financial year 2020-21, with the prior approval of IRDAI. In this method, the UPR is determined on the basis of the number of days from the expiry of the financial year to the expiry date of the policy. The rationale for the change in the accounting policy is that the 1/365 day method is more logical and accurate method of calculating UPR since each policy is considered on the basis of its tenure, whereas the 50% method considers all policies issued in a particular financial year on an uniform basis. In view of the accuracy of 1/365 day method in differentiating each policy on the basis of its expiry and not treating all the policies issued in a particular financial year at a similar level, it leads to uniform reporting of results and avoids effects of Seasonality in the premium income.

The change in accounting policy results in a reduction in Total Premium Earned (net) and creation of an incremental UPR Reserve by H57,61,142 thousands in financial year 2020-21 with a corresponding increase in loss before tax and reduction in Reserves and Surplus for the financial year 2020-21.

b. Impact of Discontinuance of Reinsurance - Voluntary Quota Share treaty

The company has entered into a Voluntary quota share treaty (VQST) for Health with the reinsurer - General Insurance Corporation of India (GIC), where the Company has ceded 20% of its risk to the reinsurer. The treaty has provision for clean cut as at the year end, when the Company decides to withdraw from the treaty, the settlement amount paid by the reinsurer as per the treaty terms is 90% of the outstanding reinsurance claims (excluding IBNR) and 35% of the total reinsurance premium.

In normal course, the Company enters into a reinsurance treaty portfolio as at April 1 of the subsequent year in the same portfolio proportion of premium and claims that were withdrawn on March 31 of the previous year, so that all the claims are settled by the reinsurer. The Company has decided to discontinue this reinsurance treaty (VQST) for business written under Health Insurance on a clean-cut basis with effect from April 1,2021 (i.e. w.e.f. from FY 2021-22) based on the IRDAI circular No.: IRDA/F&A/CIR/MISC/ 076/03/2020 dated March 28, 2020.

The implications of treaty discontinuance in respect of VQST are as under:

I. This will result in additional capital infusion as the computation of Required Solvency Margin (RSM) is Factor based on the Premium and Claims. This change is expected to have an impact in increasing the RSM since it is higher of the capital requirements using gross and net amounts.

II. The timing of revenue recognition may get impacted as Commission on Reinsurance is booked upfront as against premium from direct business which is credited to Revenue Account over the tenure of the policy

The impact of discontinuing the reinsurance treaty has a one-time impact on account of the portfolio withdrawal of H48,32,739 thousands in the last year of the Clean cut treaty (i.e., FY 2020-21). The Company will maintain reserves to the extent of 35% of the reinsurance premium ceded and 90% of the outstanding reinsurance claims (excluding sIBNR) in line with the reinsurance terms and conditions.

c. Change in Accounting estimate:

The Company has reassessed the cost incurred in respect of in-house claim processing expenditure, (which is classified as part of Claims incurred as per IRDAI circular) and has considered that 1% of the premium to be representative of actual cost. Based on such re-assessment, the company has revised the estimate of in -house claim processing expenditure from 3% of premium to 1% of premium with effect from April 1,2021. Such change in estimate has been considered prospectively while recording the Claims incurred. Consequent to the accounting estimates, the Operating expenses transferred to Claims Incurred for the year ended on March 31,2022 will be lower by H11,08,960 thousands.

5.2.20 Investor Education & Protection Fund:

For the year ended March 31, 2022, the company has transered H NIL (previous year H NIL) to the Investor Education & Protection Fund.

5.2.21 The Indian Parliament had approved the Code on Social Security, 2020 which could impact the contributions by the Company towards Provident Fund and Gratuity. The Company will complete its evaluation once the Rules are notified and will give appropriate impact in the financial statements in the period in which the Code and related Rules becomes effective.