Directors Report of Five-Star Business Finance Ltd.

Mar 31, 2025

Your Directors take pleasure in presenting the 41st Annual Report together with the audited financial statements of the Company for the financial year
ended March 31, 2025.

Financial Highlights INR in crores

Particulars	FY 2024 - 25	FY 2023 -24
Total Revenue from Operations	2,866.02	2,195.10
Less: Total Expenses	1,435.43	1,079.16
Profit before tax	1,430.59	1,115.94
Tax expense	358.10	280.01
Profit after tax	1,072.49	835.92
Other comprehensive income	(2.90)	(1.77)
Total comprehensive income	1,069.59	834.15
Asset under management	11,877.04	9,640.59

Your Company has adopted Indian Accounting Standards (IND AS) notified
under Section 133 of the Companies Act, 2013 read with Companies
(Indian Accounting Standards) Rules 2015.

Industry Outlook

During the financial year 2024-25, the financial services industry had
to navigate a challenging environment marked by regulatory tightening
measures, particularly in response to concerns over overleveraging in
retail finance. Additionally, the rising cost of capital, resulting out of
tight liquidity conditions, posed further constraints. However, the tax
proposals announced in the Union Budget coupled with the interest rate
cuts by the Reserve Bank of India towards the end of the fiscal year are
expected to stimulate consumption and enhance credit flow, particularly
in sectors such as mortgage and vehicle financing. The Reserve Bank of
India, in its Monetary Policy Committee (MPC) meeting held in April 2025,
has also changed its stance from "neutral" to "accommodative" which
effectively means that going forward, absent any shocks, the MPC would
only consider two options - status quo or a rate cut. This is expected to
augur well for the economy as a whole with a spur towards investment and
consumption, and more specifically to the financial services sector since
the interest rates would continue to drop, which will be beneficial from the
perspectives of growth and profitability.

The overleveraging concerns, which initially impacted the unsecured
lending segment, have also had some impact on secured lending businesses
towards the later part of the financial year, prompting a cautious approach
across the industry. In response, NBFCs are strategically recalibrating
their business expansion plans to optimize risk-adjusted profitability and
maintain financial stability over the medium term.

State of the Company''s Affairs/Overview
Company Overview

Your Company is a non-deposit taking Non-Banking Finance Company
(NBFC) registered with the Reserve Bank of India and is a NBFC -
Investment and Credit Company (NBFC-ICC). Your Company has been
classified as a NBFC in Middle Layer under the Reserve Bank of India
(Non- Banking Financial Company - Scale Based Regulation) Directions
dated October 19, 2023, as amended from time to time.

Your Company has been listed on the National Stock Exchange of India
Limited and BSE Limited since November 21, 2022.

Review of Operations

Your Company provides secured financial solutions to individuals carrying
on small businesses and self-employed individuals who often lack access
to formal credit channels and rely on informal sources for their financial
needs. To bridge this gap, your Company has developed a proprietary
underwriting model that effectively assesses borrowers'' cash flows,
supported by rigorous monitoring and robust recovery mechanisms. This
approach enables your Company to cater to their credit requirements
while ensuring responsible lending practices.

By extending access to financial services, your Company facilitates the
transition of underserved borrowers into the formal financial ecosystem,
thereby helping them access structured credit, potentially lower interest
rates and flexible repayment options.

Your Company remains committed to fair and transparent lending and
collection practices, fostering long-term partnerships that empower
borrowers to achieve financial stability.

The detailed financial and operational performance of your Company is
comprehensively discussed in the Management Discussion and Analysis
Report, which forms part of this Annual Report.

Operational Metrics
Disbursements

During the financial year ended March 31, 2025, your Company disbursed
INR 4,969.66 crores as compared to INR 4,881.41 crores in the previous
financial year, reflecting a year-on-year (YOY) growth of approximately
1.81%. This reduction in disbursements was a conscious strategy adopted
by your Company to moderate its growth for the current financial year
primarily on account of the overleveraging concerns affecting the industry
coupled with regulatory guidance provided by the Reserve Bank of India
to all the lending institutions.

As of March 31, 2025, the average ticket size for disbursals stood at INR
3.58 lakh, compared to INR 3.42 lakh in the previous financial year.

Branch Metrics

Your Company operates across 10 states and 1 union territory, namely
Tamil Nadu, Puducherry, Karnataka, Andhra Pradesh, Telangana,
Maharashtra, Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Rajasthan,
and Gujarat. During the financial year ended March 31, 2025, your

Company expanded its branch network to 748 branches, up from 520
branches in the previous year. This includes the establishment of the first
branch in Gujarat, contributing to the total number of newly added and
split branches.

This financial year has seen your Company strengthening its split branch
strategy wherein bigger branches with higher number of borrowers or
larger AUM are split into multiple branches in order to ensure strong risk
oversight. Out of the 228 Branches opened by your Company during the
year, 80 are fresh branches and 148 are branches added consequent to
the split branch strategy highlighted above.

To support future growth, your Company has strengthened its workforce,
ensuring a well-equipped team to meet rising demand. The strategic
implementation of the split-branch model has led to a stronger risk
management framework.

Your Company follows a well-defined branch expansion strategy, carefully
evaluating various risk parameters before establishing new locations.

The branch network details as of March 31, 2025, along with a comparative
analysis of the previous financial year, are provided below:

States	No. of Branches March 31, 2025 March 31, 2024
Tamil Nadu (including Pondicherry)	206		128
Andhra Pradesh	234		172
Telangana	115		92
Karnataka	59		41
Madhya Pradesh	94		63
Maharashtra	25		13
Chhattisgarh	3		3
Uttar Pradesh	6		4
Rajasthan	5		4
Gujarat	1		0
Total	748		520

Financial Metrics

As of March 31, 2025, your Company reported Assets Under Management
(AUM) of INR 11,877.04 Crores, compared to INR 9,640.59 Crores in
the previous financial year, reflecting a year-on-year growth of 23.20%.
Revenue from operations stood at INR 2,866.02 crores, marking a Y-o-Y
growth of 30.56% compared to INR 2195.10 crores in FY 2024. The
average ticket size of loans ranged between INR 3-5 lakh.

Your Company seeks to be a responsible lender and in line with this
vision, during the Financial year ended March 31, 2025, your Company
also dropped its interest rates on incremental loans onboarded from
November 1, 2024. Interest rate on loans given for a 7-year tenure was
reduced from 24.5% to 21.5% - 22.50% depending upon the risk profile
of the borrower, as clearly outlined in the Interest Rate model approved by
the Board. Your Company would continue to keep a tab on the cost of its
borrowings and would accordingly decide the incremental lending rates in
the years to come.

To further enhance risk management and pricing efficiency, your Company
implemented risk-based pricing model during the year. This approach
considers multiple factors, including:

• Credit score of the primary applicant

• Customer leverage, as reflected in credit bureau reports

• Loan purpose, given its impact on risk weight

• Eligibility for priority sector benefits on borrowings

• Vintage of the collateral property offered

This structured approach ensures optimized risk-adjusted returns while
supporting credit access for deserving borrowers.

Asset Quality

Your Company maintains a robust collection and proactive recovery
management system, ensuring strong asset quality for the financial year
ended March 31, 2025. Despite some impact of the overleverage crisis on
secured loan lenders, your Company has ensured a strong asset quality,
with the Gross Stage 3 Assets at 1.79% which will be one of the lowest
among peers operating in this customer segment.

Your Company classifies assets into different stages based on expected
performance, following all applicable regulatory guidelines. Exposure at
Default (EAD) represents the total outstanding amount, including accrued
interest, as of the reporting date. For the financial year ended March 31,
2025, your Company reported Gross Stage 3 Assets and Net Stage 3
Assets (under the revised Income Recognition and Asset Classification
norms) at 1.79% and 0.88% respectively, compared to 1.38% and 0.63%
in the previous financial year.

While there is an uptick in the delinquency rate including NPA numbers,
it needs to be looked at from a contexual perspective. The trickling effect
of the overleverage crisis to secured lenders, especially during the second
half of the year, led to some increase in delinquency rates. However,
these numbers are significantly lower as compared to both secured and
unsecured lenders, and stand testimony to the robust underwriting model
and strong collections focus.

Prospects

The Indian credit market continues to offer significant growth
opportunities, particularly in lending to micro-entrepreneurs and self¬
employed individuals, who often face barriers in accessing formal financial
institutions. CRISIL estimates peg small ticket size secured (SORP -
Self Occupied Residential Property) MSME lending market potential at

''22 trillion. The number of players operating in this segment is less
lending to a lot of headroom available for lenders to grow in this segment.

As of March 31, 2025, your Company''s Assets Under Management (AUM)
stood at INR 11,877.04 Crores, compared to INR 9,640.59 Crores in the
previous financial year, reflecting a year-on-year growth of 23.20%. While
the growth rate was slightly muted during the financial year ended March
31, 2025, it was primarily on account of other issues plaguing the industry
such as overleverage, etc and not on account of lack of market demand.

Resource Mobilization

Your Company maintains a well-diversified borrowing structure, leveraging
multiple funding sources including capital market borrowings, borrowings
from financial institutions (domestic and international) and banks.

At the shareholders'' meeting held on September 13, 2024, a special
resolution under Section 180(1)(c) of the Companies Act, 2013, was
passed, authorizing the Board of Directors to raise borrowings exceeding
the aggregate of paid-up share capital and free paid-up share capital and
free reserves and securities premium, up to INR 10,000 Crores.

As of March 31, 2025, your Company''s total outstanding borrowings stood
at INR 7,922 Crores, with the weighted average tenure of fresh loans
raised during the year being approximately 60 months

Your Company follows a prudent Asset-Liability Management (ALM)
strategy, ensuring optimal funding mix, loan tenures, and borrowing
timing to minimize financing costs and maintain liquidity.

New lenders and developments during the Financial Year 2024-25:
Total Borrowings and Term loan composition: During the financial year,
your Company raised fresh borrowings aggregating to INR 3,545 Crores,
including fresh term loans from banks and financial institutions amounting
to INR 2,795 Crores. As of March 31, 2025, total outstanding borrowings
stood at INR 7,922 Crores, with the weighted average tenure of fresh
loans at ~60 months.

During the year, your Company onboarded new lenders such as CSB Bank
Ltd., International Finance Corporation, SIDBI, HDFC Mutual Fund, HSBC
Mutual Fund, Kotak Mutual Fund and Nippon Mutual Fund. leading to a
well-diversified borrowing profile. The liability profile of your Company

has been structured in a way to support the business growth in the
forthcoming years.

Securitization: Your Company actively leveraged the Securitization (PTC)
market, enhancing liquidity, reducing the cost of funds and mitigating
asset-liability mismatches.

During the year, your Company securitized receivables worth INR 852.32
Crores, realizing a sale consideration of INR 750 Crores. All securitization
transactions complied with the RBI guidelines on the Securitization
of Standard Assets and were accounted for in accordance with Indian
Accounting Standards (Ind AS).

Debentures: Your Company issued fresh debentures aggregating to INR
500 Crores via private placement during the year. Further, your Company
has maintained timely servicing of interest and principal obligations for
the financial year ended March 31, 2025, ensuring full compliance with
the disclosure requirements under SEBI (LODR) Regulations, 2015.

Commercial Paper (CP)

Your Company did not issue any Commercial Papers or other short-term
instruments during the financial year ended March 31, 2025.

Statutory and Regulatory Compliances

Your Company remains committed to full compliance with all applicable
regulatory provisions, including those set forth by the Reserve Bank
of India (RBI), SEBI (LODR) Regulations, 2015, Companies Act, 2013,
Foreign Exchange Management Act (FEMA), 1999, Income Tax Act, 1961
and the rules and regulations framed thereunder.

Additionally, your Company has adhered to the applicable provisions of
Secretarial Standards issued by the Institute of Company Secretaries of
India (ICSI) for Board and General meetings held during the FY 2024-25.

Credit Rating

During the financial year, your Company''s credit ratings were reaffirmed at
AA- (Double A Minus) with Stable outlook by ICRA, CARE Ratings Limited
and India Ratings & Research (Fitch Group).

As of March 31, 2025, your Company''s borrowings hold the following
ratings:

Rating Agency	Instrument	Rating
ICRA	Bank Facilities	ICRA AA- (Stable)
	Non-Convertible Debentures	ICRA AA- (Stable)
	Securitization	ICRA AAA (SO) / AA (SO) / AA (SO)
India Ratings & Research	Bank Facilities	IND AA-/Stable
	Non-Convertible Debentures	IND AA-/Stable
CARE	Long term Bank Facilities	CARE AA-; Stable
	Long term/Short term Bank facilities	CARE AA-; Stable / CARE A1
	Commercial Paper	CARE A1

Change in Nature of Business

There has been no change in the existing nature of business of your
Company during the financial year ended March 31, 2025.

Dividend

The Board of Directors at its meeting held on April 29, 2025 has
recommended a final dividend of INR 2/- per equity share (200% of face

value of INR 1/- per equity share and translating to a dividend payout ratio
of 5.5%) for the financial year ended March 31, 2025 to the shareholders
of the Company for approval at the ensuing 41st Annual General Meeting.

Dividend Distribution Policy

Your Company has adopted a Dividend Distribution Policy, which
provides a structured approach for determining dividend payouts. The

policy considers various internal and external factors, including financial
performance, growth strategy, regulatory requirements and prevailing
market conditions as evaluated by the Board of Directors. The policy is
available on our website at https://fivestargroup.in/investors/.

Transfer to Reserves

In compliance with the requirements under the Reserve Bank of India Act,
1934, your Company has transferred a sum of INR 214.5 Crores to the
statutory reserves during the financial year ended March 31, 2025.

Deposits

Your Company operates as a non-deposit taking entity and has not
accepted any public deposits during the financial year ended March 31,
2025, In accordance with applicable regulatory requirements.

Capital Adequacy Ratio

As of March 31, 2025, your Company''s Capital Adequacy Ratio stood
at 50.10%, well above the minimum regulatory requirement of 15% as
stipulated by the Reserve Bank of India (RBI).

Additionally, your Company has carried out an Internal Capital Adequacy
and Assessment Process (ICAAP), confirming that it remains adequately
capitalized to support its business objectives and risk profile.

Share Capital
Authorised Capital

During the financial year, there has been no change in the Authorised
Capital of the Company. The Company has only one class of equity shares
and the authorised share capital of the Company as on March 31, 2025,
was INR 55,00,00,000 divided into 55,00,00,000 equity shares of INR 1
each.

Issued, Subscribed and Paid-up Share Capital

During the financial year under review, your Company has allotted
19,77,880 fully paid-up equity shares under various ASOP schemes.
4,060 fully paid -up equity shares under Five-Star Associate Stock Option
Scheme 2015 and 19,73,820 fully paid -up equity shares under Five-Star
Associate Stock Option Scheme 2018 were allotted during the financial
year under review.

Issue and allotment of convertible warrants

Pursuant to the applicable provisions of the Companies Act 2013, SEBI
(Issue of Capital and Disclosure Requirements), Regulations, 2018
and SEBI (Listing Obligations and Disclosure Requirements), 2015,
the Board of Directors at its meeting held on August 17, 2024 and the
Shareholders at the Annual General Meeting held on September 13, 2024
had approved the issuance of up to 410,000 convertible Share Warrants
of INR 1.00 each at a premium of INR 769.00 on Preferential basis to
Mr. Lakshmipathy Deenadayalan, Promoter and Chairman & Managing
Director, Mr. Rangarajan Krishnan, Joint Managing Director & CEO and Mr.
Srikanth Gopalakrishnan, Joint Managing Director & CFO ("Allotees") . The
Company had received the in-principle approval from BSE and NSE in this
regard.

The Company has received upfront consideration of 25% of the issue
proceeds and the Board had accordingly approved the allotment of Share
warrants on Preferential basis to Allotees on October 24, 2024.

Subsidiaries, Joint Ventures, Associate Companies

Your Company does not have any Subsidiary/Associate/ Joint Venture
Company. Also, during the financial year, your Company has not formed/
incorporated/become/ceased to be a Subsidiary/Associate/Joint Venture
Company.

Related Party Transactions

Your Company has in place a policy on related party transactions, as
approved by the Board, which is available on the website of the Company
at https://fivestargroup.in/investors/.

During the financial year, all related party transactions were entered
into at arm''s length and in the ordinary course of business. There were
no materially significant transactions with Promoters, Directors, Key
Managerial Personnel (KMP) or other designated persons that could have
potential conflicts of interest with the Company.

Further, no contracts or arrangements were entered into with related
parties that require disclosure in Form AOC - 2 under Section 188 (1) and
134 (3) (b) of the Companies Act, 2013.

All proposed transactions with the related partes were pre-approved by
the Audit Committee at the beginning of each financial year/quarter and
subsequently reviewed on a quarterly basis.

Employee Stock Option Schemes

Your Company has adopted ASOP schemes in compliance with the
Securities and Exchange Board of India (Share Based Employee Benefits
and Sweat Equity) Regulations, 2021 (SEBI (SBEB) Regulations) and the
Companies Act, 2013.

Currently, your Company has formulated following ASOP schemes:

1. Five-Star Associate Stock Option Scheme 2015 (ASOP 2015)

2. Five-Star Associate Stock Option Scheme 2018 (ASOP 2018) and

3. Five Star Associate Stock Option Scheme 2023 (ASOP 2023)

Approval and Implementation

• ASOP 2015 : Approved by the Board of Directors on September 18,
2015 and by the shareholders at the Extraordinary General Meeting
(EGM) on April 12, 2016 and later ratified in the Annual General Meeting
held on September 16, 2023.

• ASOP 2018: Approved by the Board of Directors on February 28, 2018
and by the shareholders at the Extraordinary General Meeting held on
March 26, 2018. It was subsequently ratified at the Annual General
Meeting held on September 16, 2023.

• ASOP 2023: Approved by the Board of Directors on August 16, 2023 and
by the shareholders at the Annual General Meeting held on September
16, 2023.

There have been no material changes to these schemes during the
financial year ended March 31, 2025.

A certificate from secretarial auditor M/s S Sandeep & Associates,
Practicing Company Secretaries confirming the implementation of ASOP
schemes in accordance with SEBI (SBEB) Regulations and shareholders
resolutions, will be available for inspection of shareholders at the ensuing
annual general meeting.

In compliance with Regulation 14 of SEBI (SBEB) Regulations, disclosures
regarding ASOP 2015, ASOP 2018 and ASOP 2023 have been provided on
the website of the Company at www.fivestargroup.in.

Annual Return

The Annual Return in form MGT 7 referred to in Section 134(3)(a)
and Section 92(3) of the Companies Act, 2013 read with Companies
(Management and Administration) Rules, 2014 and Regulation 62(1)(k)
of the SEBI (LODR) Regulations, 2015 is available on the website of the
Company at https://fivestargroup.in/investors/.

Particulars of Loans, Guarantees or Investments

The Company being an NBFC, the disclosures regarding particulars of
loans given, guarantees given and security provided is exempted under
Section 186(11) of the Companies Act, 2013. With regard to Investments
made by the Company, the details are provided in note no.7 of the financial
statements.

Material Changes Affecting the Financial Position of the Company

There are no material changes and commitments having an adverse
bearing on the financial position of the Company between March 31,
2025, and the date of this report.

Information as per Section 134(3)(m) of the Companies Act, 2013

The provisions related to and technology absorption under Section
134(3)(m) of the Companies Act, 2013 do not apply to our Company as
your Company is not a manufacturing entity. However, Your Company is
committed to increasing the use of information technology and promoting
resource conservation in its operations.

During the financial year ended March 31, 2025, the Company incurred
foreign currency expenditure of INR 4.58 crores with no foreign currency
earnings.

Information as per clauses (xi) and (xii) of Rule 8(5) of the Companies
(Accounts) Rules, 2014

There was no application made or any proceeding pending under the
Insolvency and Bankruptcy Code, 2016 during the financial year ended
March 31, 2025.

The Company has not entered into any one-time settlement with its
lenders during the financial year ended March 31, 2025, and therefore
the requirements of clause (xii) of Rule 8(5) of the Companies (Accounts)
Rules, 2014 are not applicable.

Significant and Material Orders passed by the Regulators or Courts
or Tribunals

There are no significant and material orders passed by the Regulators or
Courts or Tribunals impacting the going concern status of your Company''s
and its future operations.

Agreements binding on listed entities

There are no agreements between shareholders, promoters, related
parties, Directors, or employees, either amongst themselves or with the
Company, impacting management control, restrictions or liabilities that
require disclosure to Stock Exchanges. This includes agreements with the
listed entity, holding companies, subsidiaries, or associates.

Risk Management

Your Company has established a comprehensive Risk Management
Framework designed to identify, assess, and mitigate risks associated with
its operations. This framework is supported by a Risk Management Policy,
which outlines the governance structure, risk classification, mitigation
strategies, and the role of the Chief Risk Officer (CRO) in overseeing risk-
related functions.

The Risk Management Committee (RMC) is responsible for monitoring
and reviewing the Company''s risk management initiatives. In compliance
with the Reserve Bank of India (RBI) Master Directions and SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015, the RMC
regularly evaluates key risks and ensures the effective implementation of
risk-mitigation strategies.

The adequacy of internal financial controls concerning financial statements
has been assessed, and details are provided in the Management Discussion
and Analysis section of this Report.

Risk Management Approach

Your Company acknowledges that a well-defined risk management
approach is essential for sustainable growth. Accordingly, robust policies,
systems, and processes have been implemented to manage various risk
categories, including credit risk, operational risk, market risk (interest rate
and liquidity), and reputational risk.

Key Risk Mitigation Measures
Credit Risk Management:

• A muiti-iayered underwriting process that includes comprehensive
credit bureau checks, field investigations and adherence to the "3 Cs"
framework-verification of Character, Cash Flow and Collateral, before
the sanction of a loan.

• Stringent verification procedures, prudent ioan-to-vaiue (LTV) ratios
and a conservative debt service capacity analysis to ensure borrower
creditworthiness.

• Legal due diligence and robust documentation to safeguard lending
practices.

Risk Oversight & Governance:

The Risk Management Committee (RMC) ensures continuous monitoring
of credit risk, portfolio performance and operational risks, providing
strategic direction to mitigate potential threats.

A dedicated Chief Risk Officer (CRO) oversees risk identification,
measurement, and control, ensuring timely risk reporting to the RMC,
Board and the management.

Market & Liquidity Risk Management:

The Asset Liabiiity Committee (ALCO) activeiy manages iiquidity risk and
interest rate exposures to maintain financiai stabiiity.

A weii-diversified funding strategy ensures optimal liquidity planning.

Fraud Risk Management:

In accordance with RBI Master Directions, a Committee of Executives
for monitoring and follow up of fraud cases (Fraud Risk Management
Committee) has been constituted to proactively identify, monitor, and
mitigate fraud risks by reviewing early warning signals and strengthening
preventive mechanisms.

Your Company remains committed to enhancing its risk management
framework to adapt to evolving business dynamics and regulatory
landscapes. A continuous review mechanism ensures that risks are
effectively mitigated while maintaining a resilient operational model

Human Resource Development

Your Company firmly believes that its employees are the cornerstone of
its success. A dynamic and highly skilled workforce is critical to achieving
business excellence and therefore, your Company remains committed to
attracting, developing and retaining top talent through strategic initiatives,
robust training programs and a competitive compensation structure.

Talent Acquisition & Retention

Your Company places a strong emphasis on building a high-performing
workforce by continuously identifying and onboarding skilled professionals
across business verticals. A weii-defined talent retention strategy
ensures that employees are offered growth opportunities, competitive

pay packages with an appropriate mix of fixed and variable components,
career progression pathways and an engaging work environment that
fosters long-term commitment.

Optimizing Workforce Efficiency

To enhance operational efficiency, your Company undertook a detailed
workforce assessment, aligning staffing levels with business expansion,
customer acquisition strategies and market demands. This data-driven
approach ensures that every function—from frontline sales and credit
assessment to collection and customer service— is optimally staffed while
maintaining a lean and agile organizational structure.

Employee Development & Skill Enhancement

Your Company remains deeply invested in employee capability-building
initiatives, offering a blend of classroom training (as deemed appropriate),
on-the-job learning and specialized certification programs. Training
modules are tailored to strengthen customer engagement, credit
evaluation, risk assessment, regulatory compliance (including KYC &
Fair Practices Code certifications) and leadership development. Digital
learning platforms and structured mentorship programs further reinforce
the Company''s commitment to nurturing future leaders.

During the financial year under review, your Company also launched
an Employee Learning Platform, which is designed to empower the
employees with knowledge and skills that would enhance their work
experience and career growth. This platform would be enhanced with
learning modules from various functions which will help employees get an
all-round experience of the various functional areas within the Company.

Competitive Compensation & Rewards

To attract and retain top-tier professionals, your Company continuously
benchmarks its compensation and benefits structure against industry
standards. A well-structured performance-linked incentive framework
motivates employees to excel, while initiatives focused on work-life
balance, career advancement and employee well-being enhance overall
job satisfaction.

As of March 31, 2025, your Company had 11,934 employees across its
branches, regional offices and corporate headquarters, each playing a
pivotal role in driving the Company''s growth trajectory.

Your Company remains committed to fostering a culture of collaboration,
innovation and excellence, ensuring that its people continue to be the
driving force behind its sustained success.

Board of Directors

Your Company maintains a well-balanced and diverse Board in
compliance with Section 149 of the Companies Act, 2013 and Regulation
17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015. The Board comprises an optimal mix of executive, non-executive
and Independent Directors, including a Woman Independent Director,
ensuring a broad spectrum of expertise, strategic insight, and corporate
governance best practices.

The Board members bring extensive industry experience, leadership
acumen and a commitment to upholding the highest standards of integrity
and governance. Their collective expertise spans diverse domains,
enabling well-informed decision-making that aligns with the Company''s
long-term vision and stakeholder interests.

To facilitate seamless participation, the Company provides video
conferencing and other audio-visual means for Board meetings, in
accordance with Section 173(2) of the Companies Act, 2013, read with
Rule 3 of the Companies (Meetings of Board and its Powers) Rules, 2014.
This ensures that Directors can actively contribute to discussions and
deliberations, even when unable to attend meetings in person.

Your Company remains committed to fostering an engaged, forward¬
thinking and highly effective Board that drives sustainable growth and
governance excellence.

The Board of Directors comprises 8 (eight) Directors, including 4 (four)
Independent Directors (one of whom is a woman), [1 (one)] Non-Executive
Director, and 3 (three) Executive Directors (Chairman & Managing Director,
Joint Manging Director &CEO and Joint Managing Director & CFO), as of
March 31, 2025. Details on the Board composition are provided below:

Name of the Director	Designation	DIN
Lakshmipathy Deenadayalan	Chairman & Managing Director	01723269
Anand Raghavan	Independent Director	00243485
T T Srinivasaraghavan	Independent Director	00018247
Bhama Krishnamurthy	Independent Director	02196839
Ramkumar Ramamoorthy	Independent Director	07936844
Thirulokchand Vasan	Non-Executive Director	07679930
Rangarajan Krishnan	Joint Managing Director & CEO	07289972
Srikanth Gopalakrishnan	Joint Managing Director & CFO	10636810

Changes in Board during the Financial Year

The following changes took place in the composition of the Board of
Directors during the Financial Year 2024-25 under review.

New Appointments

Based on recommendation of Nomination and Remuneration Committee,
Mr Rangarajan Krishnan (DIN: 07289972) has been appointed as
an additional Director in the category of Joint Managing Director of
the Company by the Board at its meeting held on August 17, 2024.
Subsequently the shareholders of the Company at the Annual General
Meeting held on September 13, 2024 approved the appointment as Joint

Managing Director for a period 5 years effective from August 17, 2024.
Further Mr. Rangarajan Krishnan was re-designated as Joint Managing
Director & CEO.

Based on recommendation of Nomination and Remuneration Committee,
Mr Srikanth Gopalakrishnan (DIN:10636810) has been appointed as
an additional Director in the category of Joint Managing Director of
the Company by the Board at its meeting held on August 17, 2024.
Subsequently the shareholders of the Company at the Annual General
Meeting held on September 13, 2024 approved the appointment as Joint
Managing Director for a period of 5 years effective from August 17, 2024.

Further Mr. Srikanth Gopalakrishnan was re-designated as Joint Managing
Director & CFO

Details relating to their appointments are available on the website of the
Company www.fivestargroup.in and stock exchanges viz www.bseindia.
com and www.nseindia.com.

Resignations

Mr Vikram Vaidyanathan (DIN: 06764019), non-executive Director
representing Matrix Partners India Investment Holdings II, LLC had
stepped down from the Directorship with effect from the close of the
business hours of April 30, 2024. There are no other material reasons
other than what has been stated in his resignation letter.

During the financial year under review, Mr G V Ravishankar (DIN:
02604007), non-executive director representing Peak XV Partners
Investments V had stepped down from the Directorship with effect from
the close of the business hours of April 30, 2024. There are no other
material reasons other than what has been stated in his resignation letter.

Details relating to their resignations are available on the website of the
Company www.fivestargroup.in and stock exchanges viz www.bseindia.
com and www.nseindia.com.

There was no changes in the Composition of Board between the end of
Financial Year 2024-25 and the date of this report.

Changes in Board after the Financial Year
Director Retiring by Rotation

In accordance with Section 152(6) of the Companies Act, 2013 and the
Articles of Association of the Company, at least one-third of the Directors,
excluding Independent Directors, are required to retire by rotation at
every Annual General Meeting (AGM).

Pursuant to said provision , Mr Thirulokchand Vasan (DIN: 07679930)
is liable to retire at the 41st Annual General Meeting (AGM) and being
eligible, has offered himself for reappointment. The Board recommends
his reappointment for the approval of the shareholders.

Key Managerial Personnel

During the financial year under review, Ms Shalini Baskaran had resigned
as Head-Compliance & Company Secretary and Compliance Officer of the
Company, with effect from the close of business hours of February 26,
2025 and Mr Vigneshkumar SM was appointed as the Company Secretary
and Compliance Officer with effect from February 27, 2025. There are no
other material reasons other than what has been stated in her resignation
letter.

Pursuant to the provisions of Section 203 of the Companies Act, 2013
read with the rules made there under, the following employees are the
whole- time key managerial personnel of the Company as on March 31,
2025:

a) Mr Lakshmipathy Deenadayalan, Chairman and Managing Director
(DIN: 01723269)

b) Mr Rangarajan Krishnan, Joint Managing Director and Chief Executive
Officer (DIN: 07289972)

c) Mr Srikanth Gopalakrishnan, Joint Managing Director and Chief
Financial Officer (DIN: 10636810)

d) Mr. Vigneshkumar SM, Company Secretary and Compliance Officer
There was no changes in the composition of Key Managerial Personnel (KMP)
between the end of Financial Year 2024-25 and the date of this report.

Declaration from Independent Directors

Pursuant to Section 149(7) of the Companies Act, 2013 read along with
Rule 6 of the Companies (Appointment and Qualifications of Directors)
Rules, 2014 of the Companies Act, 2013 and Regulation 25(8) of the
SEBI (LODR) Regulations, 2015, the Company has received necessary
declarations/ disclosures from each of the Independent Directors of
the Company stating that he/she meets the criteria of independence as
required under Section 149(6) of the Companies Act, 2013 and that he/
she has a valid certificate of registration for his/her enrollment into the
data bank for Independent Directors.

In the opinion of the Board of Directors, the Independent Directors of
your Company satisfy the necessary attributes as to integrity, experience
(including proficiency) and high levels of skill and expertise.

Compliance with Secretarial Standards

During the Financial year under review, the Company has complied with
all applicable Secretarial Standards issued by The Institute of Company
Secretaries of India and adopted under the Act.

Formal Annual Evaluation

In compliance with the Companies Act, 2013, SEBI (LODR) Regulations,
2015 and the Company''s Directors Appointment, Remuneration and
Evaluation Policy, the Board carried out a formal annual evaluation of
its own performance as well as the performance of individual Directors,
including the Chairman and its various Committees.

This structured assessment was carried out based on the predefined
evaluation criteria set forth in the Directors Appointment, Remuneration
and Evaluation Policy. The said policy is available on the website of the
Company at https://fivestargroup.in/investors/.

Additionally, the performance evaluation of Independent Directors was
carried out by the entire Board. The Independent Directors in a separate
meeting held during the year, reviewed the performance of Non¬
Independent Directors (including Chairman) and assessed the overall
effectiveness of the Board. Key areas of evaluation included the quality,
timelines and adequacy of information exchange between Management
and the Board. The evaluation process was conducted through a secure
digital platform, ensuring transparency and confidentiality.

Internal Financial Controls

Your Company maintains a comprehensive Internal Financial Control
(IFC) framework , supported by well-defined policies and processes to
uphold the highest standards of integrity, transparency and corporate
governance. These controls are designed to :

• Facilitate efficient business operations and policy compliance.

• Safeguard corporate assets against misuse or unauthorized access.

• Prevent and detect fraud and Financial irregularities.

• Ensure accurate and complete financial records.

• Ensure timely preparation of reliable financial information.

To strengthen its control environment, the Company has established clear
delegations of authority, standard operating procedures (SOPs) and risk
control matrices. These measures are regularly reviewed at multiple
levels. Independent testing of control measures is conducted periodically
to ensure continued compliance with regulatory and operational
requirements.

An independent consulting firm provides ongoing support in updating risk
control metrics, test plans and independent assessment procedures. The

findings and recommendations from these evaluations are periodically
presented to the Audit Committee for review and necessary action.

Additionally, the Company has built a robust Internal Audit mechanism,
with regular audits conducted by both in- house Internal Audit team and
External Internal Auditors. The Audit Committee closely monitors financial
controls, risk management, compliance and operational procedures,
reviews audit findings and ensures implementation of corrective actions
wherever necessary.

Auditors and Auditor''s report
Statutory Auditors

During the financial year under review, the tenure of M/s S R BatLiboi &
Associates LLP as Statutory Auditor of the Company concluded at the 40th
Annual General meeting (AGM) held on September 13, 2024.

In compliance with the Reserve Bank of India''s Guidelines on appointment
of Statutory Auditor by Non-Banking Financial Company vide Circular
RBI/ 2021-22/25 Ref. No. DoS. CD.ARG/ SEC.01/ 08.91.001/ 2021-22
dated 27th April, 2021 and pursuant to Section 139 of the Act and the
Companies (Audit and Auditors) Rules, 2014, the shareholders approved
the appointment of M/s Deloitte Haskins & Sells, Chartered Accountants
(FRN:008072S) as the new Statutory Auditors at the AGM held on
September 13, 2024 for a term of three consecutive financial years viz.
2024-25, 2025-26 and 2026-27 (i.e from the conclusion of the 40th AGM
till the conclusion of the 43rd AGM). The appointment remains subject to
the satisfaction of eligibility criteria on annual basis.

Statutory Auditors Report on Financial Statements

The statutory audit report is annexed with the financial statements and
forms a part of this report. The report indicates a clean audit with no
qualifications, reservations, adverse remarks, or disclaimers.

Fraud Reported by Auditors

There were no instances of frauds reported by the Statutory Auditors
during the financiaL year ended March 31, 2025 under Section 143(12) of
the Companies Act, 2013.

Audit Trail

Effective April 1, 2023, Sections 128 and 143(3)(j) of the Companies
Act, 2013 rule 3(1) of Companies (Accounts) Rules, 2014 and rule 11(g)
of Companies (Audit and Auditors) RuLes, 2011 require the auditor of a
Company to report whether the accounting software used by the Company
to maintain books of account has an audit trail feature.

An audit trail is a chronological, date, and time-stamped record of a
specific transaction from the time its entry is made in the accounting
software through various changes to it.

Your Company has 2 software in respect of which audit trail reporting
becomes applicable - the accounting software and the customer loan
management software.

Your Company uses Oracle Fusion as its accounting software and Finnone
Neo as its Customer Loan Management software. Both these are very
well acclaimed software; Oracle Fusion is used by many players for their
General Ledger requirements, both in the financial services industry and
outside. Finnone Neo is an LMS that is used by large NBFCs and banks
to manage their loan portfolios. These software come with lots of inbuilt
controls to ensure that the transactions made reflect the financial and
loan positions accurately.

Both these software have an in-built audit trail feature which had been
enabled both application and database level for the financial year ended
March 31, 2025. There was a brief period i.e. from April 1, 2024 to May
23, 2024 when the audit trail in respect of accounting software was not
enabled at the database level. There was no issue with respect to the
enablement of audit trail for the accounting software at an application
level and that was enabled and operated effectively throughout the year.

This has also been brought out by the Statutory Auditor in their Auditors''
report of the financiaL statements.

Notwithstanding the above, the Auditors Report does not contain any
qualifications, and they have also confirmed adequacy of Internal
Financial Controls in your Company.

Internal Auditor

To ensure the effectiveness of internal control systems, your Company
maintains a robust internal audit system, combining an external audit
firm viz. M/s Sundaram & Srinivasan, Chartered Accountants with an in¬
house team. This comprehensive approach ensures thorough review of all
operations of the Company regularly. The audit teams regularly assess the
adequacy of control measures and recommend improvements as needed.
The Audit Committee oversees the internal audit functions, scope of
internal audit and reviews its effectiveness.

Secretarial Auditor

M/s S Sandeep & Associates, Practicing Company Secretaries were
appointed to conduct the secretarial audit of the Company for the
financiaL year 2024-25, as required under Section 204 of the Companies
Act, 2013 and rules made thereunder and Regulation 24A of SEBI (LODR)
Regulations, 2015. The secretarial audit report for the financial year
ended March 31, 2025, forms part of this report as Annexure A and does
not contain any qualification, reservation or adverse remarks.

Further, pursuant to Regulation 24A of SEBI (LODR) Regulations 2015, the
Board of Directors, based on recommendation of the Audit Committee, has
recommended to the shareholders for approval, the appointment of M/s
S Sandeep & Associates, Practicing Company Secretaries, as Secretarial
Auditors of the Company for a term of 5 (five) consecutive years from FY
2025-26 to FY 2029-30. The resolution seeking approval of Members
forms part of the Notice of AGM.

Cost Records and Cost Audit

The provisions for maintaining cost records and undergoing a cost audit,
as per Section 148(1) of the Companies Act, 2013 are not applicable to
your Company''s business activities.

Information Technology

Technology plays a vital role in every Company''s business strategy and
operations. In line with this, your Company has implemented a robust
IT framework that supports seamless business processes across all
functions—from sourcing, underwriting, loan approvals, disbursements,
coLLections and back-office operations, providing a unique experience to
all stakeholders along with high levels of security and privacy

Your Company has made significant investments in technology and is
committed to ongoing investments in technology, enabling higher levels
of efficiency, effectiveness, regulatory compliance, competitive advantage
and innovation. This includes deploying world-class software for all core
operations of the Company and for frictionless scaling, leveraging third

party API infrastructure for digitization and interoperability, using data
analytics and machine learning for underwriting and portfolio analysis in
addition to building a robust credit scoring model, and investing in tools
for appropriate business continuity and security. These initiatives have
enabled us in making faster and more effective decisions, improved our
customer engagement and shortened turnaround times.

Further, as of the financial year ended March 31, 2025, your Company
has implemented state of the art systems for Loan Origination and
Underwriting, Accounting and General Ledger, Human Resources, Treasury
and Compliance. These systems bring in enhanced operational efficiency,
sophisticated financial reporting framework, completely automated
compliance structure, strong HR Management systems, and have brought
in system-based controls & efficiencies to treasury operations. Your
Company would continue to constantly evaluate these systems and their
appropriateness to the Company''s operations. Necessary enhancements
and upgrades would be done periodically to ensure that these systems
remain robust enough to take care of the fast paced changes taking place
in the technology domain.

As stated above, your Company would continue to make necessary
investments in technology towards the following areas:

• Deploying the most appropriate software and applications to drive
higher automation and operational efficiencies, digitization of the value
chain and enhanced user experience.

• Leveraging data of high quality and integrity for analysing patterns and
aiding strategic and operational decision making

• Using newer digital technologies, including Machine Learning, AI and
language models for customer scoring which will all aid in better risk
management.

More details have been provided in the Management Discussion and
Analysis report.

On the infrastructure part, the IT Strategy Committee of the Company
has established comprehensive policies related to IT governance, asset
management, business continuity, outsourcing, information security
and cybersecurity, and incident management, among others. Given
the heterogenous footprint of technologies and IT systems as well as
integration of systems with external partners, the IT Strategy Committee
periodically reviews the enterprise architecture for dependencies and
interoperability and conducts regular vulnerability assessments and
penetration testing to identify and minimize any internal or external
threats. An independent information systems audit was also conducted
during the year, the findings of which are elaborately discussed, and
actions are taken within defined timelines.

Corporate Social Responsibility (CSR)

Your Company is committed to fulfilling its social responsibility obligations.
Your Company has adopted a CSR Policy as mandated by the Companies
Act, 2013 read with the Companies (Corporate Social Responsibility
Policy) Rules, 2014. The policy is available on the on the ''website of the
Company at https://fivestargroup.in/investors/.

As per aforesaid provisions of the Companies Act, 2013, your Company
was required to spend INR 17.03 crores towards CSR initiatives,
representing 2% of the average net profits of the Company from the
past three financial years. Your Company has exceeded this requirement
by contributing INR 17.04 crores towards CSR during the financial year
ended March 31, 2025.

The Annual Report on CSR activities for the financial year ended March 31,
2025, is attached as Annexure B to this Report.

Nomination and Remuneration Policy

The Company has in place the Appointment, Remuneration & Evaluation
Policy that is recommended by the Nomination and Remuneration
Committee and approved by the Board. The salient features of the
policy include a) role of Nomination and Remuneration Committee b)
Appointment and removal of Director, Key Managerial Personnel and Senior
Management c) Remuneration of Executive/Non-Executive Directors and
Key Managerial Personnels and Senior Management d) Principles of pay
structures and e) malus and claw back provisions. The policy is being
reviewed and approved by the Nomination and Remuneration Committee
and the Board of Directors annually. The policy is available on the website
of the Company at https://fivestargroup.in/investors/.

Whistle Blower Policy and Vigil Mechanism

As per the provisions of Section 177(9) of the Companies Act, 2013, and
Regulation 22 of the SEBI (LODR) Regulations, 2015, your Company has
established a Vigil Mechanism and has adopted a Whistle Blower Policy
for Directors and employees to report their genuine concerns. The Whistle
Blower Policy has been formulated with a view to providing a mechanism
for employees and Directors to approach the Audit Committee of the
Company. The said policy is available on the website of the Company at
https://fivestargroup.in/investors/.

The Vigil mechanism of the Company is overseen by the Audit Committee
and provides adequate safeguard against victimization of employees and
Directors and also provides direct access to the Chairperson of the Audit
Committee in exceptional circumstances.

During the financial year, no complaints were received by the Company
and no complaints are outstanding as on March 31, 2025

Board and its Committees

During the financial year ended March 31, 2025, 7 (Seven) Board Meetings
were held on April 30, 2024, July 31, 2024, August 17, 2024, October 29,
2024, December 24, 2024, January 31, 2025, and March 17, 2025, and
not more than 120 days elapsed between any two meetings.

The details of the composition of the Board and its Committees, terms of
reference of the Committees and the details of meetings held during the
financial year are furnished in the Corporate Governance Report.

Management Discussion and Analysis

The Management Discussion and Analysis (MDA) Report, providing
a comprehensive overview of the Company''s business performance,
industry trends, opportunities and risks , is attached as Annexure C and
forms an integral part of this report.

Corporate Governance

Your Company remains steadfast in its commitment to upholding the
highest standards of Corporate Governance, ensuring adherence to all
applicable laws and regulations. A detailed Corporate Governance report
is enclosed as Annexure D and forms part of this report.

As required under Regulation 17 (8) of SEBI (LODR) Regulations, 2015,
the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) have
submitted a compliance certificate to the Board, confirming the accuracy
of financial statements and compliance with regulatory requirements.

Additionally, a Certificate from a Practicing Company Secretary, affirming
the compliance with Corporate Governance norms under SEBI (LODR)
Regulations, 2015, is annexed to the Corporate Governance report.

Business Responsibility and Sustainability Reporting

As per Regulation 34(2)(f) of SEBI (LODR) Regulations, 2015, the top
1,000 (one thousand) listed entities based on market capitalization
shall attach a Business Responsibility and Sustainability Report (BRSR)
as part of their Annual Report, describing the environmental, social and
governance initiatives undertaken by the listed entities.

In line with this regulation, your Company has put together a BRSR report
(along with an Environmental, Social & Governance (ESG) report) which
outline the initiatives undertaken by your Company across these 3 key
parameters. The BRSR report also forms part of this report as Annexure E.

As per the applicable criteria, BRSR Core & Assurance is not applicable to
your Company for FY 2025.

Disclosures under POSH Act, 2013

The Company has in place a policy for Prevention of Sexual Harassment
at the workplace in accordance with the Sexual Harassment of Women
at the Workplace (Prevention, Prohibition and Redressal) Act, 2013
(POSH Act). This policy is available on the website of the Company at
https://fivestargroup.in/investors/.

The Company has constituted Internal Complaints Committees (ICC) as
mandated by the POSH Act to address and resolve any complaints related
to workplace harassment.

During the financial year, no complaints were received and no outstanding
complaints as on March 31, 2025.

Particulars of Employees and Related Disclosures

In accordance with Section 197(12) of the Companies Act, 2013, read
with Rule 5(1) of the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014, disclosures related to the
remuneration of Directors, Key Managerial Personnel and employees are
provided in Annexure F of this report.

Further, details of employees as required in terms of Section 197 of the
Act read with Rule 5(2) and Rule 5(3) of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014, are available for
inspection at the Registered Office of the Company during working hours
for a period of 21 days prior to the Annual General Meeting. In accordance
with Section 136 of the Act read with the said Rule, this statement is
not included in the Directors'' Report sent to the shareholders. However,
members interested in obtaining a copy may request for the same by
e-mailing the Company secretary.

Investor Relations

Your Company remains committed to transparent communication and
proactive engagement with investors, analysts and stakeholders. By
fostering an open and informed dialogue, your Company ensures clarity
and accessibility in financial and operational disclosures.

Key investor engagement initiatives include:

• Website Disclosures: AH relevant investor-related information are
promptly published on the Company''s website to ensure easy and
unrestricted access.

• Stock Exchange Notifications: Timely and proactive disclosures
to stock exchanges regarding earnings calls, quarterly and annual
financial results and material developments that could impact the value
of securities.

• Investor and Analyst Meetings: The Company regularly discloses
to stock exchanges details of scheduled interactions with investors
and analysts who wish to engage with the management team of the
Company.

Your Company strongly believes that informed investors contribute to
a well-functioning capital market and remains dedicated to equipping
stakeholders with the information needed to make sound investment
decisions.

Directors'' Responsibility Statement

The Board of Directors have instituted / put in place a framework of
internal financial controls and compliance systems, which is reviewed by
the management and the relevant Board Committees, including the Audit
Committee and independently reviewed by the auditors.

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of
Directors, confirm that:

a) in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating
to material departures;

b) the Directors have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for that period;

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

d) the Directors have prepared the annual accounts on a going concern
basis;

e) the Directors have laid down internal financial controls, which are
adequate and operating effectively and

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

Acknowledgement

Your Directors wish to thank the shareholders, customers, employees,
bankers, non-bank lenders, mutual funds, financial institutions, debenture
trustees, R&T agents, credit rating agencies and auditors for their co¬
operation and continued support to the Company. The Directors also
thank the employees for their contribution during the financial year ended
March 31, 2025.

For and on behalf of the Board of Directors

Lakshmipathy Deenadayalan

Place: Chennai Chairman & Managing Director

Date: April 29, 2025 DIN: 01723269

---

Mar 31, 2024

Your directors have the pleasure in presenting the 40^th Annual Report together with the audited financial statements of the Company for the financial year ended March 31, 2024. The summarised financial results of the Company are presented hereunder:

INR in crores
Particulars	FY 2023 - 24	FY 2022 -23
Total Revenue from Operations	2,195.10	1,528.93
Less: Total Expenses	1,079.16	724.19
Profit before tax	1,115.94	804.73
Tax expense	280.01	201.24
Profit after tax	835.92	603.50
Other comprehensive income	(1.77)	(2.21)
Total comprehensive income	834.15	601.29
Asset under management"	9,640.59	6,914.83
" Loan portfolio on gross basis

Your Company has adopted Indian Accounting Standards (IND AS) notified under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules 2015.

Company Overview

Your Company is a non-deposit taking Non-Banking Finance Company (NBFC) registered with the Reserve Bank of India and is a NBFC - Investment and Credit Company (NBFC-ICC). Your Company has been classified as a NBFC in Middle Layer under the Reserve Bank of India (Non- Banking Financial Company - Scale Based Regulation) Directions dated October 19, 2023, as amended from time to time.

Your Company has been listed on the National Stock Exchange of India Limited and BSE Limited since November 21, 2022.

Review of Operations

Your Company provides secured financial solutions to a vital yet often overlooked segment: micro-entrepreneurs, small business owners, and self-employed individuals. Most of these borrowers often lack access to formal financial institutions and rely on informal lenders, friends, or family for their business and personal needs.

Recognizing the challenges of evaluating income for these borrowers, your Company has developed a proprietary underwriting model. This model assesses cash flow backed by robust monitoring and strong recovery mechanisms, enabling the Company to meet the credit needs of the borrowers effectively.

By providing access to financial services, your Company empowers these borrowers to graduate into the formal financial ecosystem. This transition allows them to benefit from potentially lower interest rates and manage repayments over convenient loan terms.

Your Company is committed to fair and transparent lending and collection practices and focussing on long-term partnerships with the borrowers, enabling them to repay their loans successfully.

The operating and financial performance of your Company has been covered in detail in the Management Discussion and Analysis report, which forms a part of this report. This year, your Company has achieved impressive results across key metrics, which are laid down below.

Operational Metrics Disbursements

Your Company saw a strong growth in disbursements during the financial year ended March 31, 2024 marking a disbursement figure of INR 4,881.4 crores of loans as against INR 3,391.4 crores, registering a year-on-year (YoY) growth of 43.93%. The average ticket size as on March 31, 2024, stood at INR 3.42 lakhs as against average ticket size of INR 3.03 for the disbursals during year ended March 31, 2023. This growth is driven by branch expansion, increased demand, and a larger average ticket size.

Branch Metrics

Your Company follows a contiguous branch expansion strategy, which was continued in the current financial year as well. During the financial year ended March 31, 2024, your Company has added 147 new branches resulting in the branch network increasing to 520 from 373 during the previous financial year.

Your Company now operates in the states of Tamil Nadu, Andhra Pradesh, Karnataka, Telangana, Madhya Pradesh, Maharashtra, Chhattisgarh, Uttar Pradesh and Rajasthan.

The details of branch network as of March 31, 2024 and compared against the previous financial year are given below:

_ No. of Branches

States

March 31, 2024 March 31, 2023

Tamil Nadu (including Pondicherry) 128 106

Andhra Pradesh 172 121

Telangana 92 59

Karnataka 41 33

Madhya Pradesh 63 44

Maharashtra 13 6

Chhattisgarh 3 3

Uttar Pradesh 4 1

Rajasthan 4 0

Total 520 373

Financial Metrics

During the financial year, your Company has reported a total revenue from operations of INR 2,195.10 crores, as against INR 1,528.93 crores with a growth of 43.57% over previous financial year. Profit before tax was at INR 1,115.94 crores as against INR 804.73 crores with a growth of 38.67% over the previous financial year. Profit after Tax was at INR 835.92 crores as against INR 603.50 crores with a growth of 38.51% over the previous financial year. The Company''s net worth stood at INR 5,196.15 crores as on March 31, 2024 (INR 4,339.53 crores as of March 31, 2023).

The total loan assets under management as at March 31, 2024, increased to INR 9,640.59 crores from INR 6,914.83 crores during the previous financial year registering a growth of 39.42%.

Asset Quality

Your Company has a strong collection and proactive recovery management system that led to robust asset quality for the financial year ended March 31, 2024, with Gross Stage 3 Assets of 1.38%, which is one of the best amongst companies operating in this customer segment. The strong asset quality is a testimony to your Company''s business model, rigorous underwriting norms, strong execution capability and the never-say-no attitude of an amazing team. The Company is in compliance with daily DPD recognition and revised upgradation norms issued by RBI vide their circulars on Prudential Norms on Income recognition and Asset classification dated November 12, 2021 and February 15, 2022.

Your Company''s assets have been classified into various stages based on expected performance, after taking all applicable regulatory guidelines into account. Exposure at Default (EAD) is the total amount outstanding including accrued interest as on the reporting date. For the year ended March 31, 2024, your Company reported Gross Stage 3 Assets and Net Stage 3 Assets (under the revised Income Recognition and Asset Classification norms) of 1.38% and 0.63% respectively as against 1.36% and

0.69% respectively in the previous financial year.

Prospects

The Indian credit market holds immense potential, particularly for lending to micro-entrepreneurs and self-employed individuals who lack access to formal financial channels. The CRISIL report on market potential, available as part of the Offer documents of your Company, pegs this demand at 22 trillion.

Your directors are confident that the knowledge/experience gained so far in this segment will augur well towards building a robust portfolio.

A more detailed industry and Company outlook, along with other operational aspects, can be found in the Management Discussion and Analysis report forming part of this Annual Report.

Resource Mobilization

Your Company''s overall borrowing is guided by a policy duly approved by the Board of Directors. Your Company has vide special resolution passed on September 16, 2023, under Section 180 (1)(c) of the Act, authorized the Board of Directors to borrow money upon such terms and conditions as the Board may think fit in excess of the aggregate of paid up share capital and free reserves of the Company up to an amount of INR 8,000 crores.

Your Company manages its borrowings structure through a prudent Asset - Liability Management. This approach includes diversifying funding sources, optimising loan tenors and strategically planning borrowing timings to maintain optimal borrowing costs.

During the financial year, your Company continued to broaden its funding base by securing term loans from banks, carrying out Securitisation transactions and also issuing Secured NonConvertible Debentures through private placement. Your Company has also successfully added four new lenders to our funding network. All these were done with the twin objectives of achieving diversification in funding sources and maintaining an optimal cost.

Your Company''s approach towards borrowings (outlined above) has yielded positive results. The weighted average cost on the overall borrowing book (including securitization transactions) decreased to 9.71% as of March 31, 2024, compared to 10.12% in the previous financial year. As of the same date, your Company''s funding sources consisted primarily of term loans from banks and financial institutions (77%), followed by Securitization (17%), Non-Convertible Debentures (5%) and External Commercial Borrowings (1%).

Term Loans: During the financial year, your Company has availed fresh borrowings aggregating to INR 3,929.12 crores, including

fresh Term Loans from Banks and Financial Institutions of INR 3,139.95 crores. The outstanding total borrowings as at March 31, 2024 were INR 6,315.84 crores. The weighted average tenure of fresh loans raised during the financial year under review was around 62 months.

Securitization: Your Company has actively tapped the Securitization (PTC) market, which has enabled it to create liquidity, reduce cost of funds and minimize asset liability mismatches.

During the year, your Company has securitised receivables worth INR 656.49 crores for a sale consideration of INR 584.17 crores. These Securitisation transactions were carried out in line with RBI guidelines on Securitization of Standard Assets and accounted in line with Indian Accounting Standards.

Debentures: During the financial year, your Company has made fresh issuance of Debentures amounting to INR 205 crores. Further, Your Company has been very prompt in payment of its interest and principal obligations for the financial year ended March 31, 2024, and has complied with all the disclosure requirements stipulated under SEBI (LODR) Regulations, 2015.

Commercial Paper (CP): Your Company has not issued any Commercial Paper and Short-Term Instruments during the financial year ended March 31, 2024.

Statutory and Regulatory Compliances

Your Company is committed to adhering and complying with all applicable directions, regulations, provisions, guidelines and prudential norms set forth by the Reserve Bank of India, SEBI (LODR) Regulations, 2015, Companies Act, 2013, Foreign Exchange Management Act (FEMA), 1999, Income Tax Act, 1961 and the rules and regulations framed thereunder.

Your Company has complied with all the applicable provisions of Secretarial Standards issued by Institute of Company Secretaries of India in respect of meetings of the board of directors and general meetings held during the financial year ended March 31, 2024.

Credit Rating

During the financial year, credit rating of your Company has been upgraded to AA- (Double A Minus) with Stable outlook by CARE Ratings Limited. ICRA and India Ratings & Research Private Limited had already upgraded their credit ratings to AA-(Double A Minus) towards the end of the previous financial year.

As of March 31, 2024, your Company''s borrowings enjoy the following ratings from ICRA, CARE, India Ratings & Research and CRISIL.

Rating Agency	Instrument	Rating
ICRA	Bank Facilities Non-Convertible Debentures Securitization	ICRA AA- (Stable) ICRA AA- (Stable) ICRA AAA (SO) / AA (SO) / AA (SO)
India Ratings & Research	Bank Facilities Non-Convertible Debentures	IND AA-/Stable IND AA-/Stable
CARE	Long term Bank Facilities Long term/Short term Bank facilities Commercial Paper	CARE AA-; Stable CARE AA-; Stable / CARE A1 CARE A1
CRISIL	DA under PCG Scheme of GoI	CRISIL AAA (SO)

Change in Nature of Business

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

Dividend

Your Directors have decided not to recommend any dividend for the financial year ended March 31, 2024, and the profit for the year will be ploughed back into the business.

Dividend Distribution Policy

Your Company has adopted a Dividend Distribution Policy outlining the framework for considering dividend payouts to shareholders of the Company. This policy considers various internal and external factors evaluated by the Board. The policy is available on our website at https://fivestargroup.in/investors/.

Transfer to Reserves

Your Company transferred a sum of INR 167.18 crores to the statutory reserve as required under the Reserve Bank of India Act, 1934.

Deposits

Your Company is a non-deposit taking Company. The Company has not accepted any public deposits during the financial year ended March 31, 2024.

Capital Adequacy Ratio

Capital Adequacy Ratio of your Company as at March 31, 2024 stood at 50.50%, as against the minimum requirement of 15% stipulated by Reserve Bank of India.

Your Company has carried out an Internal Capital Adequacy and Assessment Process (ICAAP) and is adequately capitalized as per the assessment.

Share Capital

During the financial year, your Company has allotted 64,060 fully paid -up equity shares under Five-Star Associate Stock Option Scheme 2015 and 10,19,040 fully paid -up equity shares under Five-Star Associate Stock Option Scheme 2018.

The Company has only one class of equity shares and the authorised share capital of the Company as on March 31, 2024, was INR 55,00,00,000 divided into 55,00,00,000 equity shares of INR 1 each. The subscribed, issued and paid-up capital as on said date is 29,24,49,220 equity shares of INR 1 each.

Subsidiaries, Joint Ventures, Associate Companies

Your Company does not have any Subsidiary/Associate/ Joint Venture Company. Also, during the financial year, your Company has not formed/incorporated/become a Subsidiary/Associate/ Joint Venture Company.

Related Party Transactions

Your Company has in place a policy on related party transactions as approved by the board and the same is available on the website of the Company at https://fivestargroup.in/investors/.

All transactions with related parties that were entered into during the financial year were on arm''s length basis and in ordinary course of business. There were no materially significant transactions made by the Company with promoters, directors, key managerial personnel or other designated persons which may have a potential conflict with the interest of the Company. There were no contracts or arrangements entered into with related parties during the year to be disclosed under sections 188(1) and 134(3)(h) of the Companies Act, 2013 in form AOC 2. All proposed transactions with related parties were placed before the audit committee for prior approval at the beginning of the financial year/quarter. The details of transactions so entered with related parties were placed before the audit committee for review on a quarterly basis.

Employee Stock Option Schemes

During the financial year, the Company has framed a new ASOP scheme viz. Five Star Associate Stock Option Scheme 2023 (ASOP 2023) pursuant to the approval of Shareholders at the Annual General Meeting held on September 16, 2023. Presently, Company has the following ASOP schemes:

1. Five-Star Associate Stock Option Scheme 2015 (ASOP 2015)

2. Five-Star Associate Stock Option Scheme 2018 (ASOP 2018) and

3. Five Star Associate Stock Option Scheme 2023 (ASOP 2023)

The Company has not made any material changes to the aforesaid schemes during the financial year ended March 31, 2024. Pursuant to Regulation 12(1) of Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, the ASOP 2015 and ASOP 2018 Schemes were ratified at the shareholders meeting of the Company held on September 16, 2023.

The ASOP schemes are in compliance with Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (SEBI (SBEB) Regulations) and the Companies Act, 2013.

A certificate from secretarial auditor M/s Sandeep & Associates, Practicing Company Secretaries confirming implementation of ASOP schemes in accordance with SEBI (SBEB) Regulations and shareholders resolutions obtained, will be placed before the shareholders at the Annual General Meeting.

In terms of Regulation 14 of SEBI (SBEB) Regulations, the disclosures with respect to ASOP 2015, ASOP 2018 and ASOP 2023 have been provided on the website of the Company at https://fivestargroup.in/investors/.

Annual Return

The Annual Return in form MGT 7 referred to in Section 134(3)(a) and Section 92(3) of the Companies Act, 2013 read with Companies (Management and Administration) Rules,

2014 and Regulation 62(1)(K) of the SEBI (LODR) Regulations,

2015 is available on the website of the Company at https://fivestargroup.in/investors/.

Particulars of Loans, Guarantees or Investments The Company being an NBFC, the disclosures regarding particulars of loans given, guarantees given and security provided is exempted under Section 186(11) of the Companies Act, 2013. With regard to Investments made by the Company, the details are provided in note no. 7 of the financial statements.

Material Changes Affecting the Financial Position of the Company

There are no material changes and commitments having an adverse bearing on the financial position of the Company between March 31, 2024, and the date of this report.

Information as per Section 134(3)(m) of the Companies Act, 2013

The provisions related to conservation of energy and technology absorption under Section 134(3)(m) of the Companies Act, 2013 do not apply to our Company as your Company is not a manufacturing entity. However, Your Company is committed to increasing the use of information technology and promoting resource conservation in its operations.

During the financial year ended March 31, 2024, the Company incurred foreign currency expenditure of INR 385.65 crores with no foreign currency earnings.

Information as per clauses (xi) and (xii) of Rule 8(5) of the Companies (Accounts) Rules, 2014

There was no application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the financial year ended March 31, 2024.

The Company has not entered into any one-time settlement with its lenders during the financial year ended March 31, 2024, and therefore the requirements of clause (xii) of Rule 8(5) of the Companies (Accounts) Rules, 2014 are not applicable.

Significant and Material Orders passed by the Regulators or Courts or Tribunals

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of your Company''s and its future operations.

Agreements binding on listed entities

There are no agreements between shareholders, promoters, related parties, directors, or employees, either amongst themselves or with the Company, impacting management control, restrictions or liabilities that require disclosure to Stock Exchanges. This includes agreements with the listed entity, holding companies, subsidiaries, or associates.

Risk Management

Your Company understands the importance of effective risk management. Your Company has implemented robust risk management policies, systems, and processes to manage credit, operational, market (interest rate and liquidity), and reputational risks. This includes:

Underwriting Measures: Your Company utilizes various measures during the underwriting process to assess risk, such as requiring multiple applicants/co-applicants, credit bureau checks, field investigations using the "3 Cs" approach

i.e. assessing the Character, Cashflow, Collateral, multiple verification layers, prudent loan-to-value ratios, conservative debt service capacity analysis, and thorough legal document reviews. All these processes help your Company assess both the intention and the ability of the borrower(s) to repay.

Risk Management Committee (RMC): The RMC oversees risk assessment and minimization procedures, ensuring that the executive management controls risk through a defined framework. The RMC also reviews credit and portfolio risk management and operational and process risk management. Your Company has a Chief Risk Officer responsible for identifying, measuring, and mitigating risks, as well as informing the Board, committees, and management of potential risks.

Asset Liability Committee (ALCO): The ALCO ensures liquidity and interest rate risks are managed within established limits.

Continuous Improvement: Your Company''s risk management framework is dynamic and adapts to evolving risk perceptions.

Human Resource Development

Attracting and Retaining Top Performers: Your Company''s success hinges on the quality and expertise of its workforce. Attracting, retaining, and fairly compensating talented professionals are core elements of your Company''s business strategy. Your Company leverages a strong Management team with deep industry expertise, complemented by an enthusiastic execution team at the branch level who consistently deliver exceptional results.

Optimizing Staff Strength for Growth: Your Company meticulously studied customer acquisition, credit delivery, collection processes, and staff strength of similar NBFCs to optimize our staffing levels. This analysis considered differences in business models and resulted in streamlined regional and branch staffing, adding personnel in critical functional areas as needed.

Investing in People: Your Company invests heavily in employee development through training programs for frontline sales, marketing, credit, and other staff, including KYC and FPC certifications. Your Company also offer a mix of on-the-job and off-the-job training opportunities.

Competitive Compensation and Benefits: Your Company has benchmarked its compensation packages against market standards to attract and retain the talent needed to propel its future growth. This focus ensures securing high-calibre professionals for both middle and senior management positions, as well as branch personnel. As of March 31, 2024, your Company had 9,327 employees across branches, regional offices, and the head office.

Board of Directors

Your Company boasts a well-diversified Board in terms of experience and expertise. The Board members are accomplished individuals with a proven track record of competence and integrity. They are highly committed to your Company and dedicate ample time to Board meetings and preparation.

The Board of Directors comprises 8 (eight) directors, including 4 (four) Independent Directors (one of whom is a woman), 3 (three) Non-Executive Directors, and 1 (one) Executive Director (Chairman & Managing Director), as of March 31, 2024. Details on the Board composition are provided below:

Name of the Director	Designation	DIN
Lakshmipathy Deenadayalan	Chairman & Managing Director	01723269
Anand Raghavan	Independent Director	00243485
T T Srinivasaraghavan	Independent Director	00018247
Bhama Krishnamurthy	Independent Director	02196839
Ramkumar Ramamoorthy	Independent Director	07936844
G V Ravishankar	Non-Executive Director	02604007
Vikram Vaidyanathan	Non-Executive Director	06764019
Thirulokchand Vasan	Non-Executive Director	07679930

In the opinion of the Board of Directors, the Independent Directors of your Company satisfy the necessary attributes as to integrity, experience (including proficiency) and high levels of skill and expertise.

Formal Annual Evaluation

As per the provisions of the Companies Act, 2013, SEBI (LODR) Regulations, 2015 and Directors Appointment, Remuneration and Evaluation Policy, the Board carried out an annual evaluation of its own performance, performance of all the directors individually including the Chairman and the performance of its committees.

A structured exercise was carried out based on the criteria for evaluation forming part of the Directors Appointment, Remuneration and Evaluation Policy. The said policy is available on the website of the Company at https://fivestargroup.in/investors/. The performance

evaluation of the Independent Directors was carried out by the entire Board. The Independent Directors at their separate meeting held during the year have evaluated and reviewed the performance of the Non- Independent Directors as well as the Board''s overall performance in terms of the quantity, quality, and timeliness of information exchanged between the Management and the Board. The board evaluation process was conducted in a secured digital mode.

Internal Financial Controls

Your Company has a robust internal financial control framework with clear policies and procedures to ensure the highest standards of integrity, transparency, and corporate governance. Internal Financial Controls of your Company are designed to:

• Ensure orderly and efficient business conduct, including adherence to policies.

• Safeguard assets.

• Prevent and detect fraud and errors.

• Maintain accurate and complete accounting records.

• Ensure timely preparation of reliable financial information.

The Company has established clear delegations of authority and standard operating procedures across all functions. These controls are reviewed periodically at all levels. Risk and control matrices are also regularly reviewed, and control measures are tested and documented. These practices ensure the adequacy of our internal financial controls in relation to the scale of operations of the Company.

An independent consulting firm assists the Company in developing and periodically updating risk control metrics, test plans and independent testing procedures to evaluate the effectiveness of the controls. The findings of the consulting firm are presented to the Audit Committee.

Your Company has also built a strong Internal Audit mechanism, where audits are done on regular basis by both in house Internal Audit team and External Internal Auditors of the Company.

The Audit Committee of the Company regularly reviews and monitors systems, internal controls, risk management

Changes in Board during the Financial Year

During the financial year, Mr Thirulokchand Vasan, NonExecutive Director (DIN 07679930), retired by rotation and being eligible offered himself for reappointment in the last Annual General meeting of the Company held on September 16, 2023.

There were no appointment/resignation or change in designation of directorships during the financial year ended March 31, 2024.

Changes in Board after the Financial Year

Mr Vikram Vaidyanathan (DIN: 06764019), non-executive Director representing Matrix Partners India Investment Holdings II, LLC and Mr G V Ravishankar (DIN: 02604007), non-executive director representing Peak XV Partners Investments V stepped down from their Directorship w.e.f April 30, 2024. Details relating to their resignations are available on the website of the Company https://fivestargroup.in/investors/ and stock exchanges viz www.bseindia.com and www.nseindia.com.

Director Retiring by Rotation

In terms of Section 152(6) of the Act read with the Articles of Association of the Company, not less than one-third of the total number of retiring directors should retire by rotation, at every Annual General Meeting. For the purpose of this section, the total number of directors to retire by rotation shall not include Independent Directors.

As per provisions of Section 152(6) of the Companies Act 2013, Mr Thirulokchand Vasan (DIN: 07679930) would retire by rotation and being eligible offered himself for re-appointment at the 40th Annual General Meeting of the Company.

Key Managerial Personnel

Pursuant to the provisions of Section 203 of the Companies Act, 2013 read with the rules made there under, the following employees are the whole- time key managerial personnel of the Company as on March 31, 2024:

a. Mr Lakshmipathy Deenadayalan, Chairman and Managing Director (DIN: 01723269)

b. Mr Rangarajan Krishnan, Chief Executive Officer

c. Mr Srikanth Gopalakrishnan, Chief Financial Officer

d. Ms Shalini Baskaran, Company Secretary

There are no changes in the composition of Key Managerial Personnel between the financial year end date and the date of this report.

Declaration from Independent Directors

Pursuant to Section 149(7) of the Companies Act, 2013 read along with Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 of the Companies Act, 2013 and Regulation 25(8) of the SEBI (LODR) Regulations, 2015, the Company has received necessary declarations/ disclosures from each of the Independent Directors of the Company stating that he/she meets the criteria of independence as required under Section 149(6) of the Companies Act, 2013 and that he/she has a valid certificate of registration for his/her enrollment into the data bank for Independent Directors.

measures, accounting procedures, financial management and operations of the Company and also the findings and recommendations presented by the Internal Audit team and External Internal Auditors as part of their periodic reports.

Auditors and Auditor’s report Statutory Auditors

M/s S R Batliboi & Associates LLP, Chartered Accountants, were appointed as the Statutory Auditors of the Company for a period of three consecutive financial years at the Extraordinary General Meeting held on March 11, 2022 till the conclusion of the 40th Annual General Meeting. The term of M/s S R Batliboi & Associates LLP will expire in the forthcoming 40th Annual General Meeting.

Pursuant to Section 139 of the Companies Act, 2013 read with guidelines on appointment of Statutory Auditors issued by Reserve Bank of India dated April 27, 2021, the Board of Directors have proposed to appoint M/s Deloitte Haskins & Sells, Chartered Accountants, as the Statutory Auditors of the Company for a period of three consecutive financial years viz. 2024-25, 2025-26, and 2026-27 (i.e from the conclusion of the 40th AGM till the conclusion of the 43rd AGM) and recommended the same to the shareholders for approval. The Company has received a confirmation letter from the M/s Deloitte Haskins & Sells that they are not disqualified and are eligible to hold the office as Auditors of the Company, if appointed.

Statutory Auditors Report on Financial Statements

The statutory audit report is annexed with the financial statements and forms a part of this report. The report indicates a clean audit with no qualifications, reservations, adverse remarks, or disclaimers.

Fraud Reported by Auditors

There were no instances of frauds reported by the auditors during the financial year ended March 31, 2024 under Section 143(12) of the Companies Act, 2013.

Audit Trail Reporting

Effective April 1, 2023, Sections 128 and 143(3)(j) of the Companies Act, 2013 rule 3(1) of Companies (Accounts) Rules, 2014 and rule 11(g) of Companies (Audit and Auditors) Rules, 2011 require the auditor of a Company to report whether the accounting software used by the Company to maintain books of account has an audit trail feature. The auditors report shall report on 4 aspects:

1. Whether the accounting software used by a Company has a feature of recording audit trail (edit log) facility

2. Whether the same has been operated throughout the year for all transactions recorded in the software

3. Whether the audit trail feature has not been tampered with

4. Whether the audit trail has been preserved by the Company as per the statutory requirements for record retention (this is effective from April 1, 2024)

An audit trail is a chronological, date, and time-stamped record of a specific transaction from the time its entry is made in the accounting software through various changes to it.

Your Company has 2 software in respect of which audit trail reporting becomes applicable - the accounting software and the customer loan management software.

Your Company uses Oracle Fusion as its accounting software and Finnone Neo as its Customer Loan Management software. Both these are very well acclaimed software; Oracle Fusion is used by many players for their General Ledger requirements, both in the financial services industry and outside. Finnone Neo is an LMS that is used by large NBFCs and banks to manage their loan portfolios. These software come with lots of inbuilt controls to ensure that the transactions made reflect the financial and loan positions accurately.

This is the first year when we have implemented Oracle Fusion, and this is managed by a third-party software service provider. As stated in the Auditors Report, the accounting software used for maintaining books of account has a feature of recording audit trail (edit log) facility and this has operated throughout the year for all relevant transactions recorded in the software. The Auditors have also not noted any instances of the audit trail feature having been tampered with at the application level. Further, the accounting software is operated on a SaaS (Software as a Service) model and hence it is completely managed by a third-party vendor. The database for this application is managed by Oracle and any change to the database can be done only using a service request to third party vendor support team, and no such requests were made by your Company employees during the year. So, neither do they have any option to edit the database in any manner nor have they raised any request for editing the same; however, the Service Organisation Controls report provided by the third-party service provider did not comment specifically on the audit trail feature being enabled at a database level. Due to this, the auditors have stated that they are unable to comment on the enablement and non-tampering of audit trail feature at a database level. The Management is in discussion with the third-party service provider to clearly report on the audit trail feature for the database in their Service Organisation Controls report going forward.

In respect of the customer loan management software, while the software currently does not support the audit trail feature, the software contains the trail data of all the transactions carried out by individual users. Moreover, alternate controls such as no access to edit the database in any manner, restricted access to application masters, specific role-based access, maker-checker mechanism etc are also available to ensure no tampering of the system or data. Your Company shall ensure that we get the necessary features built into the loan management system so as to make it compliant from an audit trail perspective.

Notwithstanding the above, the Auditors Report does not contain any qualifications and they have also confirmed adequacy of Internal Financial Controls in your Company. As stated above, in line with maintaining high standards of compliance, your Company shall take steps to ensure that all the software used would meet the requirements of the guidelines in the forthcoming financial year.

Internal Auditor

To ensure the effectiveness of internal control systems, your Company maintains a robust internal audit system, combining an external audit firm viz. M/s Sundaram & Srinivasan, Chartered Accountants with an in-house team. This comprehensive approach ensures thorough review of all operations of the Company regularly. The audit teams regularly assess the adequacy of control measures and recommend improvements as needed.

The Audit Committee oversees the internal audit functions, scope of internal audit and reviews its effectiveness.

Secretarial Auditor

M/s S Sandeep & Associates, Practicing Company Secretaries were appointed to conduct the secretarial audit of the Company for the financial year 2023-24, as required under Section 204 of the Companies Act, 2013 and rules made thereunder and Regulation 24A of SEBI (LODR) Regulations, 2015.

The secretarial audit report for the financial year ended March 31, 2024, forms part of this report as Annexure A and does not contain any qualification, reservation or adverse remarks.

Cost Records and Cost Audit

The provisions for maintaining cost records and undergoing a cost audit, as per Section 148(1) of the Companies Act, 2013 are not applicable to your Company''s business activities.

Information Technology

Technology plays a vital role in every Company''s business strategy and operations. In line with this, your Company has implemented a robust IT framework that supports seamless business processes across all functions—from sourcing, underwriting, loan approvals, disbursements, collections and back-office operations, providing a unique experience to all stakeholders along with high levels of security and privacy.

Your Company has made significant investments in technology and is committed to ongoing investments in technology, enabling higher levels of efficiency, effectiveness, regulatory compliance, competitive advantage and innovation. This includes deploying world-class software for all core operations of the Company and for frictionless scaling, leveraging third-party API infrastructure for digitization and interoperability, using data analytics and machine learning for underwriting and portfolio analysis in addition to building a robust credit scoring model, and investing in tools for appropriate business continuity and security. These initiatives have enabled us in making faster and more effective decisions, improved our customer engagement and shortened turnaround times.

Further, during the financial year ended March 31, 2024, your Company has implemented newer systems for Loan Origination and Underwriting, Accounting and General Ledger, Human Resources, Treasury and Compliance. These systems would help bring in enhanced operational efficiency, much more sophisticated financial reporting framework, automate

the compliance structure, strengthen the HR Management systems, and bring in system-based controls & efficiencies to treasury operations.

As stated above, your Company would continue to make necessary investments in technology towards the following areas:

a. Deploying the most appropriate software and applications to drive higher automation and operational efficiencies, digitization of the value chain and enhanced user experience.

b. Leveraging data of high quality and integrity for analysing patterns and aiding strategic and operational decision making

c. Using newer digital technologies, including Machine Learning, AI and language models for customer scoring which will all aid in better risk management.

On the infrastructure part, the IT Strategy Committee of the Company has established comprehensive policies related to IT governance, asset management, business continuity, outsourcing, information security and cybersecurity, and incident management, among others. Given the heterogenous footprint of technologies and IT systems as well as integration of systems with external partners, the IT Strategy Committee periodically reviews the enterprise architecture for dependencies and interoperability and conducts regular vulnerability assessments and penetration testing to identify and minimize any internal or external threats. An independent information systems audit was also conducted during the year, the findings of which are elaborately discussed, and actions are taken within defined timelines.

Corporate Social Responsibility (CSR)

Your Company is committed to fulfilling its social responsibility obligations. Your Company has adopted a CSR Policy as mandated by the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy is available on the on the ''website of the Company at https://fivestargroup.in/investors/.

As per aforesaid provisions of the Companies Act, 2013, your Company was required to spend INR 12.71 crores towards CSR initiatives, representing 2% of the average net profits of the Company from the past three financial years. Your Company has exceeded this requirement by contributing INR 12.74 crores towards CSR during the financial year ended March 31, 2024.

The Annual Report on CSR activities for the financial year ended March 31, 2024, is attached as Annexure B to this Report.

Whistle Blower Policy and Vigil Mechanism

As per the provisions of Section 177(9) of the Companies Act, 2013, and Regulation 22 of the SEBI (LODR) Regulations, 2015, your Company has established a Vigil Mechanism and has adopted a Whistle Blower Policy for directors and employees to report their genuine concerns. The Whistle Blower Policy has been formulated with a view to provide a mechanism for employees and directors to approach the Audit Committee of

the Company. The said policy is available on the website of the Company at https://fivestargroup.in/investors/.

The Vigil mechanism of the Company is overseen by the Audit Committee and provides adequate safeguard against victimization of employees and directors and also provides direct access to the Chairperson of the Audit Committee in exceptional circumstances.

During the financial year, no complaints were received by the Company and no complaints are outstanding as on March 31, 2024.

Board and its Committees

During the financial year ended March 31, 2024, 8 (Eight) Board Meetings were held on April 19, 2023, May 09, 2023, July 29, 2023, August 16, 2023, October 31, 2023, February 01, 2024, February 29, 2024 and March 16, 2024, and not more than 120 days elapsed between any two meetings.

The details of composition of the Board and its Committees, terms of reference of the Committees and the details of meetings held during the financial year are furnished in the Corporate Governance Report.

Management Discussion and Analysis

A report on the Management Discussion and Analysis (MDA), highlighting the business-wise details is attached and forms part of this report as Annexure C.

Corporate Governance

Your Company is committed to upholding the highest standards of Corporate Governance, adhering to all relevant regulations. A report on Corporate Governance is enclosed and forms part of this report as Annexure D.

The Chief Executive Officer and the Chief Financial Officer have submitted a compliance certificate to the board regarding the financial statements and other matters as required under regulation 17(8) of the SEBI (LODR) Regulations, 2015.

A Certificate from a Practicing Company Secretary affirming the compliance of Corporate Governance norms as required under SEBI (LODR) Regulations, 2015 is annexed to the Corporate Governance report.

Business Responsibility and Sustainability Reporting

As per Regulation 34(2)(f) of SEBI (LODR) Regulations, 2015, the top 1,000 (one thousand) listed entities based on market capitalization shall attach a Business Responsibility and Sustainability Report (BRSR) with the Annual Report, describing the environmental, social and governance initiatives undertaken by the listed entities.

In line with this regulation, your Company has put together a BRSR report (along with an Environmental, Social and Governance (ESG) report) which outline the initiatives undertaken by your Company across these 3 parameters. The BRSR report also forms part of this report as Annexure E.

Disclosures under POSH Act, 2013

The Company has in place a policy for Prevention of Sexual Harassment in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act) and the same is available on the website of the Company at https://fivestargroup.in/investors/. Your Company has

complied with the provisions relating to the constitution of Internal Complaints Committees (ICC) under POSH Act. ICC has been set up to redress complaints received regarding sexual harassment.

During the financial year, no complaints were received. None was pending unresolved as on March 31, 2024.

Particulars of Employees and Related Disclosures

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the disclosures with respect to the remuneration of Directors, Key Managerial Personnel and employees of the Company forms part of this report as Annexure F.

The statement containing details of employees as required in terms of Section 197 of the Act read with Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is available for inspection at the Registered Office of the Company during working hours for a period of 21 days before the date of the ensuing Annual General Meeting. In terms of the provisions of Section 136 of the Act read with the said Rule, the Directors'' Report is being sent to the shareholders excluding the said statement. If any member is interested in obtaining a copy, such member may send an e-mail to the Company secretary in this regard.

Investor Relations

Your Company prioritizes open communication and engagement with all investors, both current and potential, as well as analysts. Your Company is focused on ensuring transparency and providing timely information through periodic earnings calls, video conferences, active conference participation and one-on-one meetings.

The intent is seen as a benchmark in terms of investor outreach by fostering a culture of transparency and accessibility.

Your Company believes that informed investors are essential for a healthy market and intent achieving this by:

• Website Disclosure: Critical information is readily available on the Company''s website, ensuring easy access for all investors.

• Stock Exchange Notifications: Proactively notifying stock exchanges on upcoming events like earnings calls, quarterly and annual results announcements and any other information that might impact the share price of the Company.

• Meeting Disclosures: Disclosure to stock exchanges of any potential meetings with investors and analysts who express interest in connecting with the management team of the Company.

Through these efforts, your Company aims to equip investors with the information they need to make informed investment decisions.

Directors’ Responsibility Statement

The Board of Directors have instituted / put in place a framework of internal financial controls and compliance systems, which is reviewed by the management and the relevant board committees, including the audit committee and independently reviewed by the auditors.

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

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

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

e. the Directors have laid down internal financial controls, which are adequate and operating effectively and

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

Acknowledgement

Your Directors wish to thank the shareholders, customers, employees, bankers, non-bank lenders, mutual funds, financial institutions, debenture trustees, R&T agent, credit rating agencies and auditors for their co-operation and continued support to the Company. The directors also thank the employees for their contribution during the financial year ended March 31, 2024.

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Mar 31, 2023

Your directors have the pleasure in presenting the 39^th Annual Report together with the audited financial statements of the Company for the financial year ended March 31, 2023. The summarised financial results of the Company are presented hereunder:

Financial Results - Financial Highlights Particulars	FY 2022 - 23	''in Crores FY 2021 -22
Revenue from Operations	1,520.85	1,254.06
Other Income	8.08	2.11
Expenses	724.19	651.96
Profit before tax	804.73	604.21
Tax expenses	201.24	150.66
Profit after tax	603.50	453.54
Other comprehensive income	(2.21)	(2.23)
Total comprehensive income	601.29	451.31
Asset under management	6,914.83	5,067.07

Your Company has adopted Indian Accounting Standards (IND AS) notified under Section 133 of Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules 2015.

Material Developments Initial Public Offer

During the financial year ended March 31, 2023, your Company, has successfully completed Initial Public Offer (“IPO” or “Issue”) of the 33,512,901 equity shares of face value of INR 1 each at a price of INR 474.00 per equity share, including premium of INR 473.00 per equity share aggregating to INR 1588.51 Crores through offer for Sale of equity shares by TPG Asia VII SF Pte. Ltd, Matrix Partners India Investment Holdings II LLC, Matrix Partners India Investments II Extension LLC, SCI Investments V and Norwest Venture Partners X - Mauritius, as named in the prospectus, and the shares of the Company were listed in National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) w.e.f November 21, 2022. The Annual Listing Fees for the financial year 2023-24 has been paid by your Company to both the Stock Exchanges.

Despite the difficult market conditions under which the IPO got consummated, noteworthy investors subscribed to the issue which reflects their confidence in your Company. Your Directors wish to place on record their gratitude for the trust, faith and confidence reposed by the institutional investors, public, and other shareholders in the Company even during the challenging environment, thus making the IPO successful.

Your Directors also place on record their deep appreciation for the significant contribution and sincere efforts made in the IPO process by the Merchant Bankers, legal counsels to the offer, Registrar to the Offer, Advertising Agency, Syndicate Members, Monitoring Agency, Bankers to the Offer, the Reserve Bank of India, Registrar of Companies - Chennai, Stock Exchanges, Management Team and Employees of the Company.

Review of Operations

Your Company is registered as a Systemically Important Non-deposit taking Non-Banking Finance Company (NBFC-ND SI) with the Reserve Bank of India. Your Company provides secured financial solutions to micro

entrepreneurs, individuals involved in small businesses and self-employed individuals for their business needs, asset creation requirements and to meet the other significant economic needs of the household. Most of these borrowers are hitherto excluded from the formal financial ecosystem and their credit needs are met primarily by unorganised institutions, friends and family.

Given that these borrowers lack formal and structured evidences of their incomes, your Company has built a proprietary underwriting model to evaluate their cash flows backed by robust monitoring and strong recovery mechanisms. Your Company continues to meet the credit needs of these borrowers, helps them graduate to the formal lending ecosystem giving them access to relatively lower cost finance and enabling them to repay their loan over the stipulated tenure of their loan while indulging in fair and transparent lending and collections practices.

The operating and financial performance of your Company has been covered in detail in the Management Discussion and Analysis report (“MDA”), which forms a part of this report. During the year, your Company has achieved stellar results across operational and financial metrics, which are laid down below.

Operational Metrics Disbursements

The Company caters to the financing needs of individuals involved in small businesses and self-employed individuals who satisfy the underwriting requirements laid down by your Company based on various parameters such as customer profile, liquidity/cashflow of the borrower, credit history, debt burden ratio (DBR) and loan to value (LTV). During the financial year ended March 31, 2023, your Company has disbursed INR 3,391.44 Crores of Loans as against INR 1,756.24 Crores during the previous financial year, registering a year-on-year (YoY) growth of 93%. The average ticket size as on March 31, 2023, stood at INR 3.03 lakhs as against average ticket size of INR 2.66 lakhs for the disbursals during year ended March 31, 2022.

Branch Metrics

Your Company follows a contiguous branch expansion strategy, which was continued in the current financial year as well. During the financial year

ended March 31, 2023 your Company has added 73 new branches resulting in the branch network increasing to 373 from 300 during the previous financial year.

Your Company now operates in the states of Tamilnadu, Andhra, Karnataka, Telangana, Madhya Pradesh, Maharastra, Chhattisgarh and Uttar Pradesh.

The details of branch network as of March 31, 2023 and compared against the previous financial year are given below:
States	March 31, 2023	March 31, 2022
Tamil Nadu (including Pondicherry)	106	98
Andhra Pradesh	121	79
Telangana	59	45
Karnataka	33	33
Madhya Pradesh	44	37
Maharashtra	6	4
Chhattisgarh	3	3
Uttar Pradesh	1	1
Total	373	300

Financial Metrics

During the year under review, your Company has reported a total revenue from operations of INR 1,528.93 Crores, as against INR 1,256.17 Crores with a growth of 21.71% over previous financial year. Profit before tax was at INR 804.73 Crores as against INR 604.21 Crores with a growth of 33.19% over the previous financial year. Profit after Tax was at INR 603.50 Crores as against INR 453.54 Crores with a growth of 33.06% over the previous financial year. The Company’s net worth stood at INR 4,339.53 Crores as on March 31, 2023 (INR 3,710.35 Crores as of March 31, 2022).

The total loan assets under management as at March 31, 2023, increased to INR 6,914.83 Crores from INR 5,067.08 Crores during the previous financial year registering a growth of 36.47%.

Asset Quality

Your Company has a strong collection and proactive recovery management system leading to robust asset quality for the financial year ended March 31, 2023, when it had a Gross Stage 3 Assets of 1.36%, which is one of the best amongst companies operating in this customer segment. Despite the impact of 2 waves of COVID, your Company has managed to achieve one of the best asset qualities for the financial year, which is a testimony to your Company’s business model, rigorous underwriting norms, strong execution capability and the never-say-no attitude of an amazing team.

During the year ended March 31, 2023, your Company also implemented the daily DPD recognition and revised upgradation norms issued by RBI vide their circulars on Prudential Norms on Income recognition and Asset classification dated November 12, 2021 and February 15, 2022 (wherein implementation of upgradation norms were deferred to October 1, 2022), which are to be implemented by all Regulated Entities with effect from October 1, 2022.

Your Company is in adherence to the provision of Ind AS with respect to computation of Gross Stage 3 Assets. Your Company’s assets have been classified into various stages based on expected performance. Exposure at Default (EAD) is the total amount outstanding including accrued interest as on the reporting date. For the year ended March 31, 2023, your Company reported Gross Stage 3 Assets and Net Stage 3 Assets (under the revised Income Recognition and Asset Classification norms) of 1.36% and 0.69% respectively as against 1.05% and 0.68% respectively in the previous financial year (loans that are more than 90 days past due as at the end of the financial year classified as Gross Stage 3 Assets).

Resource Mobilization

Your Company’s overall borrowing is guided by a policy duly approved by the Board of Directors. Your Company has vide special resolution passed on April 22, 2021, under Section 180 (1)(c) of the Act, authorized the Board of Directors to borrow money upon such terms and conditions as the Board may think fit in excess of the aggregate of paid up share capital and free reserves of the Company up to an amount of INR 7000 Crores.

Your Company manages its borrowing structure through prudent Asset-Liability Management and takes various measures, which include diversification of funding sources, tenure optimization, and prudent borrowing timing to maintain its borrowing cost at optimum level.

During the financial year under review, your Company continued to broad base its funding sources by borrowing moneys from banks in the form of term loans, issuance of Secured Non-Convertible Debentures through the private placement route, and issuance of Pass-through Certificates as part of Securitization transactions. Your Company has also further diversified its borrowing by adding 4 (Four) new lenders/Financial Partners.

The weighted average borrowing cost as at March 31, 2023 was 10.12% (including Securitization transactions) as against 10.51% in the previous financial year. As at March 31, 2023, your Company’s sources of funding were primarily term loans from banks and financial institutions (62%), followed by Securitization (24%), Non-Convertible Debentures (12%), and External Commercial Borrowings (2%).

Term Loans from Banks and Financial Institutions

During the financial year under review, your Company has availed fresh borrowings aggregating to INR 3,103.56 Crores, including fresh Term Loans from Banks and Financial Institutions of INR 2,245.00 Crores. The outstanding Total Borrowings as at March 31, 2023 were INR 4,247.28 Crores. The weighted average tenure of fresh loans raised during the financial year under review was around 59 months.

Securitization of Loan Portfolio

Your Company has actively tapped the Securitization (PTC) market, which has enabled it to create liquidity, reduce the cost of funds and minimize asset liability mismatches.

During the financial year under review, your Company has securitised receivables worth INR 901.50 Crores for a sale consideration of INR 809.56 Crores. These Securitisation transactions were carried out in line with RBI guidelines on Securitization of Standard Assets and accounted in line with Indian Accounting Standards.

Debentures

During the financial year, your Company has issued INR 49 Crores fresh Non-Convertible Debentures (NCDs). Further, your Company has been very prompt in payment of its interest and principal obligations for the financial year ended March 31, 2023, and has complied with all the disclosure requirements stipulated under SEBI (LODR) Regulations, 2015.

Commercial Paper (CP)

Your Company has not issued any Commercial Paper & Short-Term Instrument during the financial year.

Prospects

The credit business has large potential in India, particularly in respect to lending to micro-entrepreneurs and self-employed individuals, who do not have access to formal means of financing. The CRISIL report on market potential, which is part of the Offer documents of your Company, pegs this demand at 22 trillion. Your directors are confident that the knowledge/ experience gained so far in this segment will augur well towards building a robust portfolio. Further details with respect to industry and Company prospects and other aspects relating to your Company’s operations have been covered in the Management Discussion and Analysis section, which forms part of this report.

Statutory and Regulatory Compliances

Your Company is a Non Deposit Taking Systematically Important NonBanking Financial Company (NBFC-ND-SI). The Company has complied

with and continues to comply with all applicable regulations, directions and prudential norms of the Reserve Bank of India.

Your Company has complied with the applicable regulations under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI (LODR), 2015) and Foreign Exchange Management Act (FEMA), 1999, Rules and Regulations thereunder.

Your Company has also complied with the applicable provisions of the Secretarial Standards issued by the Institute of Company Secretaries of India and has complied with all applicable compliances as required under the Companies Act, 2013.

Scale Based Regulation (SBR) - Revised Regulatory Framework for NBFCs

The Reserve Bank of India issued its final directions on Scale Based Regulatory Framework, which becomes effective from October 1, 2022. Recognising contribution of NBFCs towards supporting real economic activity and their role as a supplemental channel of credit intermediation alongside banks, RBI has identified the need to align the regulatory framework for NBFCs keeping in view their changing risk profile.

The SBR framework encompasses different facets of regulation of NBFCs covering capital requirements, governance standards, prudential regulation, etc. and RBI has come out with an integrated regulatory framework for NBFCs under SBR providing a holistic view of the SBR structure, set of fresh regulations being introduced and respective timelines.

Regulatory structure for NBFCs shall comprise of four layers based on their size, activity, and perceived riskiness. Given the asset size of your Company, it falls under the Middle Layer category. Your Company has also complied with all the relevant regulations under this new regulatory framework.

Credit Rating

During the year under review, credit rating of your Company has been upgraded to AA- (Double A Minus) with Stable outlook by ICRA Limited and India Ratings & Research Private Limited for its bank loans and NCDs.

As of March 31, 2023, your Company’s borrowings / debentures enjoy the following ratings from ICRA, India Ratings & Research, CARE Ratings & CRISIL.
Rating Agency	Instrument	Rating
ICRA	Bank Facilities	ICRA AA-; Stable
	Non-Convertible Debentures	ICRA AA-; Stable
	Market Linked Debentures (MLD)	PP-MLD ICRA AAA(CE); Stable
		/PP-MLD ICRA AA-; Stable
	Securitization	ICRA AAA(SO)/AA (SO)/AA(SO)
India Ratings & Research	Bank Facilities	IND AA- / Stable
	Non-Convertible Debentures	IND AA- / Stable
CARE	Long term Bank Facilities	CARE A ; Stable
	Long term/Short term Bank facilities	CARE A ; Stable / CARE A1
	Non-Convertible Debentures	CARE A ; Stable
	Market Linked Debentures (MLD)	CARE PP-MLD A ; Stable
	Commercial Paper	CARE A1
CRISIL	DA under PCG Scheme of GoI	CRISIL AA (SO) / AA- (SO)

Change in Nature of Business

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

Dividend Distribution Policy

Your Company has formulated a Dividend Distribution Policy, with an objective to provide the dividend distribution framework to the Stakeholders of the Company. The policy sets out various internal and external factors, which shall be considered by the Board in determining the dividend pay-out. The policy is available on the website of the Company at https://fivestargroup.in/investors/.

Dividend

Your Directors have decided not to recommend any dividend for the financial year ended March 31, 2023, and the profit for the year will be deployed back into the business.

Transfer to Reserves

Your Company has transferred a sum of INR 120.70 Crores to the statutory reserve as required under the Reserve Bank of India Act, 1934.

Deposits

Your Company is a non-deposit taking Company. The Company has not accepted any public deposits during the financial year under review and has passed a Board resolution acknowledging the non-acceptance of deposits from public.

Capital Adequacy Ratio

Capital Adequacy Ratio of your Company as at March 31, 2023 under Ind-AS stood at 67.17%, as against the minimum requirement of 15% stipulated by Reserve Bank of India.

Changes in Equity Share Capital

During the financial year, your Company has:

a. Allotted 4,000 fully paid-up equity shares of INR 1 each on June 8, 2022, pursuant to Five-Star Associate Stock Option Scheme 2015

b. Allotted 19,000 fully paid-up equity shares of INR 1 each on June 8, 2022, pursuant to Five-Star Associate Stock Option Scheme 2018

The Company has only one class of equity shares and the authorised share capital of the Company as on March 31, 2023, was INR 55,00,00,000/-divided into 55,00,00,000 equity shares of INR 1 each, subscribed, issued & paid-up capital as on said date is 29,13,66,120 equity shares of INR 1 each.

Subsidiaries, Joint Ventures, Associate Companies

During the financial year ended March 31, 2023, your Company does not have a subsidiary / Associate / Joint Venture Company. Also, the Company did not become a part of any Joint Venture during the year.

Related Party Transactions

The Company has in place a policy on related party transactions as approved by the Board and the same is available on the website of the Company at https://fivestargroup.in/investors/.

All related party transactions that were entered into during the financial year were on arm’s length basis and in ordinary course of business. There were no materially significant transactions made by the Company with promoters, directors, key managerial personnel or other designated

persons which may have a potential conflict with the interest of the Company. There were no contracts or arrangements entered into with related parties during the year to be disclosed under sections 188(1) and 134(3)(h) of the Companies Act, 2013 in Form AOC 2.

Employee Stock Option Schemes

Your Company has formulated two Employees Stock Option Schemes, namely Five-Star Associate Stock Option Scheme 2015 (ASOP 2015) and Five-Star Associate Stock Option Scheme 2018 (ASOP 2018).

The Board of Directors at their meeting held on February 25, 2023, has extended Five-Star Associate Stock Option Scheme 2018 for a further period not exceeding five years. Further, the Company has not made any material changes to the aforesaid schemes during year ended March 31, 2023.

In terms of Regulation 14 of Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, the disclosures with respect to ASOP 2015 and ASOP 2018 have been provided on the website of the Company at http://www.fivestargroup.in.

The certificate from secretarial auditor M/s S Sandeep & Associates, Company Secretaries confirming implementation of ASOP 2015 and ASOP 2018 scheme in accordance with the SEBI (SBEB) Regulations and shareholders resolutions has been obtained and will be available for inspection of the shareholders at the ensuing annual general meeting (AGM).

Pursuant to Regulation 12 (1) of Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, the ASOP 2015 and ASOP 2018 Schemes are being placed before the shareholders for their ratification at the proposed 39th Annual General Meeting of the Company.

The details of Five-Star Associate Stock Option Scheme 2015 and Five-Star Associate Stock Option Scheme 2018 are enclosed as Annexure A

Annual Return

As per Section 134(3)(a) and Section 92(3) of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014, and Regulation 62(1)(k) of the SEBI (LODR) Regulations, 2015, the annual return of the Company for the financial year ended March 31, 2023 in the prescribed Form MGT-7 is available on the website of the Company at https://fivestargroup.in/investors/.

Particulars of Loans, Guarantees or Investments

Being an NBFC, the disclosures regarding particulars of loans given, guarantees given and security provided are exempted under the provisions of section 186(11) of the Act.

As regards investments made by the Company, the details are given in note no. 7 of the financial statements.

Material Changes Affecting the Financial Position of the Company

There are no material changes and commitments having an adverse bearing on the financial position of the Company between March 31, 2023, and the date of this report.

Information as per Section 134(3)(m) of the Companies Act, 2013

The provisions of Section 134(3)(m) of the Companies Act, 2013, read along with the rules made thereunder relating to conservation of energy and technology absorption do not apply to your Company as it is not a manufacturing Company. However, your Company has been increasingly using information technology in its operations and promotes conservation of resources.

During the financial year ended March 31, 2023, the foreign currency expenditure of your Company stood at INR 6.22 Crores and there were no foreign currency earnings.

Information as per clauses (xi) and (xii) of Rule 8(5) of the Companies (Accounts) Rules, 2014

There was no application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 in respect of the Company during the financial year ended March 31, 2023, and there was no such application made or any proceeding as at March 31, 2023.

The Company has not entered into any one-time settlement with its lenders during the financial year ended March 31, 2023, and therefore the requirements of clause (xii) of Rule 8(5) of the Companies (Accounts) Rules, 2014 are not applicable.

Significant and Material Orders passed by the Regulators or Courts or Tribunals

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of your Company’s and its future operations.

Risk Management

Successful lending calls for timely identification, careful assessment and effective management of the credit, operational, market (interest-rate and liquidity) and reputation risks. The Company has adopted efficient risk management policies, systems and processes that seek to strike an appropriate balance between risk and returns.

The Company has also introduced appropriate risk-management measures, such as having multiple applicants for the loan, accessing all the applicants’ credit history from credit information bureaus, field investigation of the applicants’ credentials, multiple verification layers, adoption of prudent loan to value ratio and analysis and adoption of a conservative debt-service capacity of the borrowers, thorough in-house scrutiny of legal documents, which helps to understand and assess the borrowers’ intention and ability to repay.

Your Company has constituted a Risk Management Committee (RMC) which interalia lays down the review of procedures relating to risk assessment & risk minimization to ensure that the executive management controls risk through means of a properly defined framework and review of Credit & Portfolio Risk Management and Operational & Process Risk Management. Your Company also has a Chief Risk Officer, who is responsible for identification, measurement and mitigation of risks and also sensitizing the Board, Committees and Management to any potential risks that may arise on account of Company-specific factors or macro-economic factors.

RMC reviews the credit policy and practices to ensure that all portfolio related risks are well mitigated. The Company has given high importance to prudential lending practices and has put in place suitable measures for risk mitigation.

Your Company has also constituted an Asset Liability Committee (ALCO) which ensures that the liquidity and interest-rate risks are contained within the limits laid down by the Company.

Being dynamic, the risk management framework continues to evolve in line with the emerging risk perceptions.

Human Resource Development

Your Company’s success largely depends on the quality and competence of its human capital. Attracting, remunerating and retaining talented professionals is therefore a key element of your Company’s business strategy. Your Company has a strong Management team comprising of professionals with relevant experience and expertise in their domain areas, which is supplemented by an enthusiastic execution team at the branch level, who, with their superior execution skills, are able to bring the right results.

The customer acquisition, credit delivery, collection process and manpower strength of Non-Banking Financial Companies operating in similar customer profile were studied to align our staff strength after duly factoring for the differences in the business models of other entities. Accordingly, the staff strength at the regions and branches were streamlined, keeping in mind our acquisition process and market segment, adding people across functional verticals wherever required.

This approach has been working well for your Company to achieve the right level of productivity and growth. Apart from imparting advanced training to all front-line sales and marketing, credit and other staff which included the KYC and FPC training, employees were given on-the-job and off-the-job training programs.

Your Company has also benchmarked its compensation levels with the market, thus being in a position to attract and retain necessary talent, which is essential for growing the business in the years to come.

Your Company has continued to attract high quality professionals as part of the middle and senior management team and has also been in a position to get the right resources at the branches as well. As of March 31, 2023, your Company had 7,347 employees across branches, regional offices, and head office.

Directors

Your Company has a well diversified Board in terms of experience and expertise and the members of your Company’s Board are eminent persons of proven competence and integrity. They also have a strong commitment to your Company and devote adequate time to the meetings and preparation.

The Board of Directors comprises of 8 (eight) directors, consisting of 4 (Four) Independent Directors (including 1 woman Director), 3 Non-Executive Directors and 1 Executive Director - Chairman & Managing Director, as on March 31, 2023. The composition of the Board of your Company as on March 31, 2023 is given below:

Name of the Director	Designation	DIN
Lakshmipathy Deenadayalan	Chairman & Managing Director	01723269
Anand Raghavan	Independent Director	00243485
T T Srinivasaraghavan	Independent Director	00018247
Bhama Krishnamurthy	Independent Director	02196839
Ramkumar Ramamoorthy	Independent Director	07936844
G V Ravishankar	Non-Executive Director*	02604007
Vikram Vaidyanathan	Non-Executive Director**	06764019
Thirulokchand Vasan	Non-Executive Director	07679930
* As a nominee of SCI Investments V
** As a nominee of Matrix Partners India Investment Holdings II, LLC

During the financial year under review, the following changes took place in the composition of the Board of Directors:

• Mr Ramanathan Annamalai (DIN: 02645247) has stepped down as an Independent Director w.e.f May 25, 2022 due to completion of his term as Independent Director.

• Mr Ramkumar Ramamoorthy (DIN: 07936844) has been appointed as an independent Director (additional Director) for a term of 5 years by the board at its meeting held on June 8, 2022, and later his appointment as an independent Director was approved by the shareholders at the Annual General meeting held on September 2, 2022.

• Mr Lakshmipathy Deenadayalan, Chairman & Managing Director (DIN: 01723269) was re-appointed as CMD for a further period of 5 years with effect from June 01, 2022 by the Board of Directors at its meeting held on April 27, 2022, and the same was approved by the shareholders at the Annual General Meeting held on September 2, 2022

• During the last Annual General Meeting held on September 2, 2022, Mr Vikram Vaidyanathan, Non-Executive Director retired by rotation and being eligible offered himself for reappointment.

Further, following changes took place in the composition of the Board of Directors between the financial year end and the date of this report:

- In terms of Section 152 of the Companies Act, 2013, Mr Thirulokchand Vasan retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment. Based on the recommendation of the Nomination & Remuneration Committee and in the opinion of your Board, Mr Thirulokchand Vasan has requisite qualifications and experience and therefore, your directors recommend his reappointment in the ensuing Annual General Meeting.

Declaration from Independent Directors

Pursuant to Section 149(7) of the Companies Act, 2013 read along with Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 of the Companies Act, 2013 and Regulation 25(8) of the SEBI (LODR) Regulations, 2015, the Company has received necessary declarations/ disclosures from each of the Independent Director of the Company stating that he/she meets the criteria of independence as required under Section 149(6) of the Companies Act, 2013 and that he/she has a valid certificate of registration for his/her enrollment into the data bank for Independent Directors.

In the opinion of the Board of Directors, the Independent Directors of your Company satisfy the necessary attributes as to integrity, experience (including proficiency) and high levels of skill and expertise.

Formal Annual Evaluation

As per the provisions of the Companies Act, 2013, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Committees. A structured exercise was carried out based on the criteria for evaluation forming part of the Directors Appointment, Remuneration & Evaluation Policy, including framework for performance evaluation of Directors, Board & Committees, Criteria for Evaluation and the inputs received from the Directors, covering various aspects of the Board’s functioning such as adequacy of the composition of the Board and its Committee, attendance at meetings, Board culture, duties of directors, and governance. The aforesaid policy is available on the website of the Company at https://fivestargroup.in/investors/.

A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interest of the Company and its stakeholders etc. The Directors have expressed their satisfaction with the evaluation process.

Committees of the Board

Your Company has the following Board level Committees, which have been constituted in compliance with the requirements of the business and other regulatory prescriptions:

1. Audit Committee (AC)

2. Nomination & Remuneration Committee (NRC)

3. Stakeholders Relationship Committee (SRC)

4. Risk Management Committee (RMC)

5. Corporate Social Responsibility Committee (CSR)

6. IT Strategy Committee

7. Business & Resource Committee (BRC)

8. Asset Liability Committee (ALCO)

During the year under review, all recommendations made by the aforesaid Committees have been accepted by the Board.

The details of Committee composition, terms of reference, number of meetings held, etc are given in the Corporate Governance Report.

Key Managerial Personnel

Pursuant to the provisions of Section 203 of the Companies Act, 2013 read with the rules made there under, the following employees are the wholetime key managerial personnel of the Company as on March 31, 2023:

a. Mr Lakshmipathy Deenadayalan, Chairman and Managing Director (DIN: 01723269)

b. Mr Rangarajan Krishnan, Chief Executive Officer

c. Mr Srikanth Gopalakrishnan, Chief Financial Officer

d. Ms Shalini Baskaran, Company Secretary

There are no changes in the composition of Key Managerial Personnel between the financial year end date and the date of this report.

Internal Financial Controls

The Company has a well-established and adequate internal financial control framework, with appropriate policies and procedures, to ensure the highest standards of integrity and transparency in its operations and a strong corporate governance structure, while maintaining excellence in services to all its stakeholders. Appropriate controls are in place to ensure: (a) the orderly and efficient conduct of business, including adherence to policies, (b) safeguarding of assets, (c) prevention and detection of frauds/ errors, (d) accuracy and completeness of the accounting records and (e) timely preparation of reliable financial information.

Internal control framework including clear delegation of authority and standard operating procedures are established and laid out across all businesses and functions. These are reviewed periodically at all levels. The risk and control matrices are reviewed on a periodic basis and control measures are tested and documented. These measures have helped in ensuring the adequacy of internal financial controls commensurate with the scale of operations of the Company.

The Company has employed an independent consultancy firm to develop and periodically update risk control metrices, develop test plans and carry out independent testing procedures to evaluate the effectiveness of the controls. Their findings are presented to the Audit Committee, which helps the Committee to understand the strength of the controls and any improvements that may be required, as the Company keeps ramping up its operations.

Your Company has also built a strong Internal Audit mechanism, where audits are done on regular basis by in house Internal Audit team and External Internal Auditors of the Company.

The Audit Committee of the Company regularly reviews and monitors systems, internal controls, risk management measures, accounting procedures, financial management and operations of the Company and also the findings and recommendations presented by the Internal Audit team and External Internal Auditors as part of their periodic reports.

RBI, through its circular dated February 3, 2021, had introduced Risk based Internal Audit (RBIA) framework for NBFCs. NBFCs were required to put in place a RBIA framework by March 31, 2022. Your Company has complied with this circular, whereby a detailed RBIA policy, outlining the audit scope, audit framework and audit frequency, which will all be determined based on the risk inherent in each of the underlying processes, has been put in place and approved by the Audit Committee and by the Board of Directors. Your Company had also recruited a Chief Audit Officer, with significant years of audit experience in 2 of the big 4 Audit firms, who has been handling the RBIA function of your Company during the financial year under review.

Auditors

Statutory Auditors

Pursuant to Section 139 of the Companies Act, 2013 read with guidelines issued by Reserve Bank of India dated April 27, 2021, with regard to the appointment of Statutory Central Auditors (SCAs)/ Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs), M/s S R Batliboi & Associates LLP have been appointed as the Statutory Auditors of your Company for a period of three consecutive financial years viz 2021-22, 2022-23 and 2023-24 to hold office until the conclusion of the 40th Annual General Meeting, subject to their satisfaction of the eligibility criteria every year.

The Statutory Auditors have confirmed that they meet eligibility criteria prescribed under Companies Act 2013 & RBI Guidelines.

The Report of the Statutory Auditors with an unmodified opinion to the members is annexed and forms part of the financial statements and the same does not contain any qualification, reservation, adverse remark or disclaimer. There were no frauds detected or reported by the Auditors under sub-section (12) of section 143 of the Companies Act, 2013 during the financial year ended March 31, 2023.

Internal Auditor

To carry out internal audit of its operations, your Company has engaged M/s Sundaram & Srinivasan, Chartered Accountants, as its External Internal Auditors. Their audit is complemented by an In-house audit team. Between them, they cover the entire Internal Audit Scope which covers the activities carried out at Corporate Office and across branches of the Company. As a part of its efforts to evaluate the effectiveness of the internal control systems, your Company’s audit teams evaluate the adequacy of control measures on a periodic basis and recommends improvements, wherever appropriate.

The Audit Committee reviews the internal audit functions, scope of internal audit, as well as the adequacy and effectiveness of the internal systems and controls.

Secretarial Auditor

M/s S Sandeep & Associates, Practicing Company Secretaries were appointed to conduct the secretarial audit of the Company for the financial year 2022-23, as required under Section 204 of the Companies Act, 2013 and rules made thereunder & Regulation 24A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The secretarial audit report for the financial year ended March 31, 2023, forms part of this report as Annexure B and does not contain any qualification, reservation or adverse remarks.

Cost Records and Cost Audit

Maintenance of cost records and requirements of cost audit as prescribed under the provisions of section 148(1) of the Act is not applicable for the business activities carried out by your Company.

Information Technology

Over the past few years, technology has become an integral part of every Company’s business operations. In line with this, your Company has also put in place a robust technology framework, which provides for seamless business operations across the entire business value chain including sourcing, lead generation, underwriting, sanction, disbursement, collections and other back-office operations. Your Company has and will continue to make significant investments in technology to leverage the strengths of API infrastructure built by third party service providers, work towards building a robust credit scoring model and use data analytics and machine learning extensively for underwriting and portfolio analysis, which will help maintain strong asset quality. We expect these initiatives to make faster and more effective decisions and also better customer engagement and faster turnaround time.

On the security front, the IT Strategy Committee of your Company has laid down a comprehensive policy relating to Cyber Security, Business Continuity, Outsourcing and Information Security / Technology, in line with its terms of reference. In its continuous efforts to ensure a secure environment, your Company has built a robust infrastructure and carries out periodic comprehensive vulnerability assessments and penetration testing, to identify and minimize external threats. An independent Information Systems audit has been carried out during the financial year.

Corporate Social Responsibility (CSR)

Pursuant to Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, your Company has adopted a Policy on CSR which is placed on the website of the Company at https://fivestargroup.in/investors/.

As per Section 135 of the Companies Act, 2013, Your Company was required to spend an amount of INR 9.61 Crores equivalent to 2% of the average net profits of the last three (3) financial years as CSR contribution. During the FY 2022-23, your Company has spent an amount of INR 9.61 Crores as against prescribed CSR Expenditure of INR 9.61 Crores.

The Annual Report on CSR activities for the financial year ended March 31, 2023, is attached as Annexure C to this Report.

Whistle Blower Policy & Vigil Mechanism

As per the provisions of Section 177(9) of the Companies Act, 2013, and Regulation 22 of the SEBI (LODR) Regulations, 2015, your Company has established a Vigil Mechanism and has adopted a Whistle Blower Policy for directors and employees to report their genuine concerns. The Whistle Blower Policy has been formulated with a view to provide a mechanism for employees and directors to approach the Audit Committee of the Company. The said policy is available on the website of the Company at https://fivestargroup.in/investors/.

The Vigil mechanism of the Company is overseen by the Audit Committee and provides adequate safeguard against victimization of employees and directors and also provides direct access to the Chairperson of Audit Committee in exceptional circumstances.

During the year under review, no complaints were received by the Company and no complaints are outstanding as on March 31, 2023.

Board & its Committees

During the financial year ended March 31, 2023, 15 (Fifteen) Board Meetings were held on April 27, 2022, May 12, 2022, June 8, 2022, July 26, 2022, October 6, 2022, October 12, 2022, October 13, 2022, November 01, 2022, November 2, 2022, November 7, 2022, November 15, 2022, November 17, 2022, November 28, 2022, January 28, 2023 and February 25, 2023, and not more than 120 days elapsed between any two meetings.

The details of composition of the Board and its Committees, terms of reference of the Committees and the details of meetings held during the financial year are furnished in the Corporate Governance Report.

Corporate Governance

Your Company is committed to maintain the highest standards of Corporate Governance and adheres to Corporate Governance requirements set out by regulators. A report on Corporate Governance is enclosed and form part of this report as Annexure D.

The Chief Executive Officer and the Chief Financial Officer have submitted a compliance certificate to the board regarding the financial statements and other matters as required under regulation 17(8) of the SEBI (LODR) 2015.

A Certificate from Practicing Company Secretary affirming the compliance of Corporate Governance norms as required under SEBI (LODR) 2015 is annexed to the Corporate Governance report.

Management Discussion and Analysis

A report on the Management Discussion and Analysis (MDA), highlighting the business-wise details is attached and forms part of this report as Annexure E.

Business Responsibility and Sustainability Reporting

As per Regulation 34(2)(f) of SEBI LODR regulations, top 1,000 (one thousand) listed entities based on market capitalization, shall attach a Business Responsibility and Sustainability Report (BRSR) with the Annual Report, describing the environmental, social and governance initiatives undertaken by the listed entities.

In line with this regulation, your Company has put together a BRSR report (along with an Environmental, Social & Governance (ESG) report) which outline the initiatives undertaken by your Company to be a respectable lender across these 3 parameters. The BRSR report also forms part of this report as Annexure F.

Disclosures under POSH Act, 2013

The Company has in place a policy for Prevention of Sexual Harassment in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act) and the same is available on the website of the Company at https://fivestargroup.in/investors/. Your Company has complied with the provisions relating to the constitution of Internal Complaints Committees (ICC) under POSH Act. ICC has been set up to redress complaints received regarding sexual harassment.

During the year under review, no complaints were received. None was pending unresolved as on March 31, 2023.

Particulars of Employees and Related Disclosures

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, necessary disclosures are provided in the Annual Report as Annexure G.

Code of Conduct

The board has laid down a “Code of Conduct” for all the Board Members and the senior management of the Company and the same has been posted on the website of the Company.

All Board members and senior management personnel have affirmed compliance with the Company’s code of conduct for the financial year 2022-23. A declaration to this effect is included in Corporate Governance report forming part of this Annual Report.

Code for Prevention of Insider Trading

In compliance with the PIT guidelines issued by SEBI, as amended from time to time, your Company has adopted the following policies / codes of conduct:

a. Code of Conduct for Regulating, Monitoring and Reporting of Trading by Insiders

b. Company’s Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information (UPSI)

to regulate, monitor and report trading by insiders in securities of the Company. The objective of this code is to protect the interest of the shareholders at large, to prevent misuse of any price sensitive information and prevent insider trading. The board has further approved policy governing the procedure of inquiry in case of actual or suspected leak of unpublished price sensitive information. The code has also been hosted on the website of the Company.

Investor Relations

In order to ensure that your Company stays engaged with all the investors (current and potential) and analysts, your Company has put together an Internal Investor Relations team, which will ensure transparent and adequate disclosures viz. periodic earnings calls, video-conferences, conference participations and one-on-one meetings. The intent to be seen as a benchmark in terms of investor outreach.

Your Company also ensures that critical information is made available to all the investors through upload of such information on the website. Your Company also intimates Stock exchanges regarding upcoming events like earnings calls, declaration of quarterly and annual results and such other information which could potentially have a bearing on the share price of the Company. Additionally, your Company also discloses to the Stock exchanges, any potential meetings with investors / analysts who have evinced their interest to meet up with the Management team.

Directors’ Responsibility Statement

The Board of Directors have instituted / put in place a framework of internal financial controls and compliance systems, which is reviewed by the management and the relevant board committees, including the audit committee and independently reviewed by the auditors.

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

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

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

e. the Directors have laid down internal financial controls, which are adequate and operating effectively and

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

Acknowledgement

Your Directors wish to thank the shareholders, customers, employees, bankers, non-bank lenders, mutual funds, financial institutions, debenture trustee, R&T agent, credit rating agency, auditors for their co-operation and continued support to the Company during the pandemic. The directors also thank the employees for their contribution during the financial year under review.