During the year, the Company has opted to avail, the benefits under the Vivad se Vishwas (VSV) Scheme 2024, introduced by the Government of India as a one-time dispute resolution initiative aimed at reducing pending tax Litigation. The scheme aLLows taxpayers to settLe disputed tax Liabilities by paying the agreed amount without incurring interest or penalties, thereby promoting ease of compliance and efficient tax administration.

The Company has eLected to settLe various ongoing tax disputes covering AY 2003-04, AY 2004-05, AY 2005-06, AY 2008-09, AY 2012-13 under the VSV Scheme, for a cumulative period of five years. As a result, a totaL tax provision of ' 7.43 crore has been recognized in the financial statements for the year, representing the fuLL and finaL settlement of the reLated tax demands for these years.

This decision is aLigned with the Company's strategic objective of de-risking its operations from prolonged tax Litigations and achieving greater certainty in tax positions. The management beLieves that opting for the scheme wiLL result in substantial savings in terms of time, cost, and resources otherwise associated with tax-reLated LegaL proceedings. Further, it is expected to contribute positively to the overaLL financial health and governance framework of the Company.

Micro, Small and Medium Enterprises:

Based on and to the extent of the information received by the Company from the suppliers during the year regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), the total, outstanding dues of Micro and Small enterprises, which are outstanding for more than the stipulated period and other disclosures as per the Micro, SmaLL and Medium Enterprises Development Act, 2006 (hereinafter referred to as "the MSMED Act”) are given below :

The rates mentioned above are the appLicabLe rates as at the year end date Linked to MCLR (MarginaL Cost of funds based Lending Rate), RBI PoLicy Repo Rate, Mibor, and Treasury biLLs pLus spread.

Disclosure of information related to borrowings from banks or financial institutions on the basis of security of current assets

The quarterly returns or statements comprising (book debt statements and other stipulated financial information) filed by the Company with such banks are in agreement with the books of account of the Company except for certain differences which has been duly reconciled and presented here below.

The Company has used the borrowings from banks and financial, institutions as per note numbers 16 to 18 for the specific purpose for which these were availed.

In respect of all the borrowings, there is no default in payment of either principal or interest.

The Company has not been decLared as wiLfuL defaulter by any bank or financial Institution or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.

d) Terms / rights attached to equity shares :

The Company has only one cLass of equity shares having a par value of '2/- per share. Each hoLder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors and approved by the shareholders in the annual general meeting is paid in Indian rupees. In the event of liquidation of the Company, the holders of equity shares wiLL be entitled to receive remaining assets of the Company, after distribution of aLL preferential amounts. The distribution wiLL be in proportion to the number of equity shares held by the shareholders.

Other Equity

Description of the nature and purpose of Other Equity (refer Statement of Changes in Equity) :

Statutory reserve as per Section 45-IC of the RBI Act, 1934

Statutory reserve represents reserve fund created pursuant to Section 45-IC of the RBI Act, 1934 through transfer of specified percentage of net profit every year before any dividend is decLared. The reserve fund can be utiLized onLy for Limited purposes as specified by RBI from time to time and every such utilization shaLL be reported to the RBI within specified period of time from the date of such utiLization.

Capital redemption reserve (CRR)

Capital redemption reserve represents reserve created pursuant to Section 55 (2) (c) of the Companies Act, 2013 by transfer of an amount equivaLent to nominaL vaLue of the Preference shares redeemed. The CRR may be utiLized by the Company, in paying up unissued shares of the Company to be issued to the members of the Company as fuUy paid bonus shares in accordance with the provisions of the Companies Act, 2013.

Securities premium

Securities premium is used to record the premium on issue of shares. The reserve can be utiLized onLy for Limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.

General reserve

GeneraL reserve is created through annuaL transfer of profits at a specified percentage in accordance with applicable regulations under the erstwhile Companies Act, 1956. Consequent to introduction of the Companies Act, 2013, the requirement to mandatoriLy transfer specified percentage of net profits to GeneraL reserve has been withdrawn. However, the amount previousLy transferred to the GeneraL reserve can be utiLized onLy in accordance with the specific requirements of the Companies Act, 2013.

Employee stock options outstanding

The EmpLoyee Stock Options outstanding represents amount of reserve created by recognition of compensation cost at grant date fair value on stock options vested but not exercised by employees and unvested stock options in the Statement of profit and Loss in respect of equity-settLed share options granted to the eLigibLe employees of the Company and its subsidiaries in pursuance of the Employee Stock Option Plan.

Retained earnings

Retained earnings or accumuLated surpLus represents totaL of aLL profits retained since Company's inception. Retained earnings are credited with current year profits, reduced by Losses, if any, dividend pay-outs, transfers to GeneraL reserve or any such other appropriations to specific reserve.

33 Earning Per Share (EPS)

Basic EPS is caLcuLated in accordance with Ind AS 33 'Earnings Per Share' by dividing the net profit for the year attributable to equity hoLders of the Company by the weighted average number of equity shares outstanding during the year. Diluted EPS is calculated by dividing the net profit attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of aLL the dilutive potential equity shares into equity shares of the Company.

34 Employee Stock Option Plan (ESOP)

The Company had allotted 48,45,025 Equity shares (face value of '2/- each) (adjusted for stock-split in the ratio of 5:1 in February 2013) under Employee Stock Option Scheme 2010 at par on 3^rd February 2011 to Mahindra and Mahindra Financial Services Limited Employees' Stock Option Trust ("the Trust") set up by the Company. The Trust holds these shares for the benefit of employees and aUots equity shares to eligible employees on exercise of stock options as per the terms and conditions of ESOP scheme granted as per the recommendation of the Compensation Committee.

Pursuant to the Rights issue of one equity share for every equity share held as on record date, at an issue price of '50 per Equity Share (including a premium of ' 48 per Equity Share), made by the Company, 20,63,662 equity shares have been aLLotted to the Trust in respect of its rights entitlement on 17^th August 2020. All the option holders (beneficiaries) under existing grants have automatically became entitled to additional options at '50/- per option as rights adjustment and accordingly, the number of outstanding options stand augmented in the same ratio as the rights issue. all the terms and conditions applicable to these additional options issued under rights issue have remained same as originaL grant.

Upon exercise of stock options, incLuding additional options issued as per Rights issue, under the scheme by eLigibLe empLoyees, the Trust had issued 70,25,425 equity shares to empLoyees up to 31^st March 2025 (31^st March 2024: 65,50,154 equity shares), of which 4,75,271 equity shares (31^st March 2024: 7,87,641 equity shares) were issued during the current year. This has resulted in an increase in equity share capital by ' 0.10 crore for the year ended 31^st March 2025 (31^st March 2024 : ' 0.16 crore).

b) Options granted during the year:i) Employee Stock Option Scheme 2010

After formulation of new scheme - MMFSL RSU PLAN 2023, no further stock options can be granted under the oLd scheme - Employees' Stock Option Scheme 2010. However, Live options aLready vested can be exercised within the validity period as per the terms and conditions of the scheme.

ii) MMFSL RSU PLAN 2023

During the year ended 31^st March 2025, the Company has granted 6,49,326 stock options (31^st March 2024 : 2,83,171) to eligible employees under the newly formulated employee stock option plan, namely, MMFSL RSU PLAN 2023, in accordance with the Securities and Exchange Board of India (Share Based EmpLoyee Benefits & Sweat Equity) Regulations, 2021, which was approved by the Board of Directors in their meeting held on 28^th April 2023.

f) Determination of expected volatility

The measure of voLatiLity used in the BLack-SchoLes option pricing model, is the annuaLized standard deviation of the continuously compounded rates of return on the stock over a period of time.

The determination of expected voLatiLity is based on historicaL voLatiLity of the stock over the most recent period that is generaLLy commensurate with the expected Life of the option being vaLued. The period considered for voLatiLity is adequate to represent a consistent trend in the price movements and the movements due to abnormal events are evened out.

Accordingly, since each vest has been considered as a separate grant, the model considers the volatility for periods, corresponding to the expected Lives of different vests, prior to the grant date. VoLatiLity has been calculated based on the daily dosing market price of the Company's stock price on NSE over these years. Similar approach was foLLowed in determination of expected volatility based on historical volatility for aLL the grants under the scheme.

In respect of stock options granted under EmpLoyee Stock Option Scheme 2010 and MMFSL RSU PLAN 2023, the accounting is done as per the requirements of Ind AS 102 - Share-based payment. Consequently, '7.25 crore (31^st March 2024: '4.49 crore) has been incLuded under 'EmpLoyee Benefits Expense' as 'Share-based payment to empLoyees' based on respective grant date fair vaLue, after adjusting for reversaLs on account of options forfeited. The amount incLudes cost reimbursements (net of recoveries of ' 0.21 crore) to the hoLding company of '1.68 crore (31^st March 2024: ' 1.69 crore) in respect of options granted to empLoyees of the Company and excLudes net recovery of '0.09 crore (31^st March 2024: '0.01 crore) from its subsidiaries for options granted to their empLoyees.

35 Employee benefitsGeneral description of defined benefit plansGratuity

The Company provides for the gratuity, a defined benefit retirement pLan covering quaLifying empLoyees . The pLan provides for Lump sum payments to empLoyees upon death whiLe in empLoyment or on separation from empLoyment after serving for the stipuLated period mentioned under The Payment of Gratuity Act, 1972. The Company makes annuaL contribution to the Gratuity scheme administered by the Life Insurance Corporation of India, HDFC Life and Kotak Life insurance through its Gratuity fund.

Post retirement medical cover

The Company provides for post retirement medicaL cover to seLect grade of empLoyees to cover the retiring empLoyee and their spouse up to a specified age through MedicLaim poLicy on which the premiums are paid by the Company. The eLigibiLity of the empLoyee for the benefit as weLL as the amount of medicaL cover purchased is determined by the grade of the empLoyee at the time of retirement.

Through its defined benefit pLans the Company is exposed to a number of risks, the most significant of which are detaiLed beLow:

Investment risk -

The pLan LiabiLities are caLcuLated using a discount rate set with references to government bond yieLds; if pLan assets underperform compared to this yieLd, this wiLL create or increase a deficit. CurrentLy, for the pLan in India, it has a reLativeLy baLanced mix of investments in government securities, and other debt instruments

Interest rate risk -

A decrease in government bond yieLds wiLL increase pLan LiabiLities, although this is expected to be partiaLLy offset by an increase in the vaLue of the pLan's investment in debt instruments.

Variability in withdrawal rates -

If actuaL withdrawaL rates are higher than assumed withdrawaL rate assumption then the gratuity benefits wiLL be paid earLier than expected. The impact of this wiLL depend on whether the benefits are vested as at the resignation date.

Regulatory Risk -

Gratuity Benefit must compLy with the requirements of the Payment of Gratuity Act, 1972 (as amended up-to-date). There is a risk of change in the reguLations requiring higher gratuity payments (e.g. raising the present ceiLing of ' 20,00,000, raising accruaL rate from 15/26 etc.).

Inflation risk -

The present vaLue of some of the defined benefit pLan obLigations are caLcuLated with reference to the future saLaries of pLan participants. As such, an increase in the saLary of the pLan participants wiLL increase the pLan's LiabiLity. The post retirement medicaL benefit obLigation is sensitive to medicaL inflation and accordingLy, an increase in medicaL inflation rate wouLd increase the pLan's LiabiLity

Salary Risk -

The present vaLue of the defined benefit pLan LiabiLity is caLcuLated by reference to the future saLaries of members. As such, an increase in the saLary of the members more than assumed LeveL wiLL increase the pLan's LiabiLity.

Asset Liability Matching Risk -

The pLan faces the ALM risk as to the matching cash flow. Since the pLan is invested in Lines of RuLe 101 of Income Tax RuLes, 1962, this generaLLy reduces ALM risk.

Concentration Risk -

PLan is having a concentration risk as all the assets are invested with the insurance company and a default wiLL wipe out a! the assets. Although probability of this is very Low.

Life expectancy -

The present vaLue of defined benefit pLan obligation is caLcuLated by reference to the best estimate of the mortality of plan participants, both during and after the employment. An increase in the life expectancy of the plan participants wiU increase the plan's liability.

If actual mortality rates are higher than assumed mortality rate assumption then the gratuity benefits wiLL be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cashflow wiLL lead to an actuarial Loss or gain depending on the relative values of the assumed salary growth and discount rate.

The estimate of future saLary increases, considered in actuarial, valuation, considers inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The pLan assets have been primariLy invested in government securities and corporate bonds.

The cost of the defined benefit plans and other long term benefits are determined using actuarial valuations. Actuarial valuations involve making various assumptions that may differ from actual developments in the future. These includes the determination of the discount rate, future salary increases and mortality rate. Due to these complexity involved in the valuation it is highly sensitive to the changes in these assumptions. ALL assumptions are reviewed at each reporting date. The present value of the defined benefit obligation and the related current service cost and planned service cost were measured using the projected unit cost method.

The Company's contribution to provident fund, superannuation fund and national pension scheme aggregating to ' 80.67 crore (31^st March 2024: '78.39 crore) has been recognized in the Statement of profit and Loss under the head Employee benefits expense.

36 Additional disclosures

i)    During the financial, years ended 31^st March 2025 and 31^st March 2024, the Company has not granted any Loans or advances in the nature of Loans to promoters, Directors, KMPs and the reLated parties (as defined under the Companies Act, 2013), either severaLLy or jointly with any other person (a) repayable on demand or (b) without specifying any terms or period of repayment.

ii)    There is no Benami Property held by the Company and there is no proceeding initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

iii)    Disclosure of transactions with the companies struck off under section 248 of Companies Act, 2013 or section 560 of Companies Act, 1956

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

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

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

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

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

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

viii) There are no transactions which have not been recorded in the books of accounts and has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961. ALso, there are no previously unrecorded income and related assets.

ix)    All the secured non-convertible debentures of the Company including those issued during the year ended 31^st March 2025 are fully secured by pari-passu charge on Aurangabad office (wherever applicable) and / or excLusive charge on present and/or future receivabLes under Loan contracts/Hire Purchase/Lease, owned Assets and book debts. Further, the Company in respect of secured Listed non-convertibLe debt securities maintains 100% security cover or higher security cover as per the terms of Term Sheet/ Offer document/Information Memorandum and/or Debenture Trust Deed, sufficient to discharge the principal amount and the interest thereon.

The Company determines the amount of capital required on the basis of operations, capital expenditure and strategic investment plans. The capital structure is monitored on the basis of net debt to equity and maturity profile of overall debt portfolio.

The Company is subject to the capital adequacy requirements of the Reserve Bank of India (RBI). Under RBI's capitaL adequacy guidelines, the Company is required to maintain a capitaL adequacy ratio consisting of Tier I and Tier II Capital. The total of Tier II Capital at any point of time, shall not exceed 100 percent of Tier I Capital. The minimum capital ratio as prescribed by RBI guidelines and applicable to the Company, consisting of Tier I and Tier II capitaL, shaLL not be Less than 15 percent of its aggregate risk weighted assets on-baLance sheet and of risk adjusted value of off-balance sheet.

The Company has complied with all regulatory requirements related to capital and capital adequacy ratios as prescribed by RBI.

38    Transactions in the nature of change in ownership in group entities

During the previous year, the Company has compLeted the acquisition of 20,61,856 Equity shares of '10 each of MIBL, at a price of ' 1001 per share on 22^nd September 2023 invoLving a pay-out of '206.39 crore which has resulted in an increase in equity investment of an equivalent amount. Consequent to this acquisition, MIBL has become a wholly owned subsidiary of the Company effective from 22^nd September 2023.

39    Capital management

The Company's capital management strategy is to effectively determine, raise and deploy capital so as to create value for its shareholders. The same is done through a mix of either equity and/or convertible and/or combination of short term /Long term debt as may be appropriate.

"Tier I Capital"means owned fund as reduced by investment in shares of other non-banking financial companies and in shares, debentures, bonds, outstanding loans and advances including hire purchase and lease finance made to and deposits with subsidiaries and companies in the same group exceeding, in aggregate, ten per cent of the owned fund.

"owned fund" means paid up equity capitaL, preference shares which are compuLsoriLy convertible into equity, free reserves, baLance in share premium account and capitaL reserves representing surpLus arising out of saLe proceeds of asset, excluding reserves created by revaluation of asset, as reduced by accumulated Loss baLance, book vaLue of intangibLe assets and deferred revenue expenditure, if any.

"Tier II capital" includes the following -

(a)    preference shares other than those which are compuLsoriLy convertible into equity;

(b)    revaluation reserves at discounted rate of fifty five percent;

(c)    GeneraL provisions (including that for Standard Assets) and Loss reserves to the extent these are not attributable to actual diminution in value or identifiable potential loss in any specific asset and are available to meet unexpected Losses, to the extent of one and one fourth percent of risk weighted assets. 12 month expected credit loss (ECL) allowances for financial instruments i.e. where the credit risk has not increased significantly since initial recognition, shall be included under general provisions and loss reserves in Tier II capital within the limits specified by extant regulations. Lifetime ECL shall not be reckoned for reguLatory capitaL (numerator) whiLe it shaLL be reduced from the risk weighted assets.

(d)    hybrid debt capitaL instruments; and

(e)    subordinated debt to the extent the aggregate does not exceed Tier I capitaL.

II) In the cases where assets are given on operating lease (as lessor) -

Key terms of the Lease are as beLow :

i)    Both New and Used vehicLes are offered on Lease for a tenure ranging from 24 to 60 months.

ii)    Customised Leasing soLutions are offered with vaLue-added services Like FLeet Management with regards to vehicLe maintenance, Insurance management incLuding cLaim settlement, pick-up and drop, replacement vehicLe etc

iii)    The consideration payabLe is the monthLy Lease rentaL which varies based on the make / modeL of the vehicLe and tenure Leased.

RentaL income arising from these operating Leases is accounted for on a straight-Line basis over the Lease tenure and is incLuded in rentaL income in the Statement of profit and Loss. Costs, incLuding depreciation, incurred in earning the Lease income are recognized as an expense.

BeLow are the List of risk mitigation strategy adopted by the Company for the underlying assets as per provisions of Ind AS 116

-    ALL the Leased assets are insured.

-    Hypothecation of assets in the name of company.

-    Asset confirmations is obtained from Lessee's on quarterLy basis.

-    Security deposit obtained to reduce the exposure on a case to case basis based on Customer profiLe.

-    VariabLe Lease payments based on usage of vehicLes.

41    Operating segments

There is no separate reportable segment as per Ind AS 108 on 'Operating Segments' in respect of the Company.

The Company operates in single segment only. There are no operations outside India and hence there is no external, revenue or assets which require disclosure.

No revenue from transactions with a single external, customer amounted to 10% or more of the Company's total, revenue in year ended 31^st March 2025 or 31^st March 2024.

The Company is engaged primarily in the business of financing in India. During the current fiscal., the Company has started the activities as Corporate Agent (Composite) for providing insurance solutions. 'Fees, charges and commission income' incLude fees / commission income from insurance agency business amounting to ' 211.25 crore for the year ended 31^st March 2025.

42    Frauds reported during the year

There were 208 cases (31^st March 2024: 160 cases) of frauds amounting to '6.33 crore (31^st March 2024: '142.63 crore) reported during the year. Out of the fraud cases reported during the current year, the Company has recovered an amount of '2.26 crore (31^st March 2024: '5.34 crore) and has initiated appropriate LegaL actions against the individuals invoLved. The cLaims for the un-recovered Losses have been Lodged with the insurance companies on merit basis.

The Company's pending Litigations comprise of cLaims against the Company primarily by the customers and proceedings pending with Income Tax, service tax, saLes tax / VAT, Goods and Services Tax and other authorities. The Company has reviewed aLL its pending Litigations and proceedings and has adequateLy provided for where provisions are required and discLosed the contingent LiabiLities where appLicabLe, in its financiaL statements. The amount of provisions / contingent LiabiLities is based on management's estimate, and no significant LiabiLity is expected to arise out of the same.

The Company does not expect the outcome of these proceedings to have a materiaLLy adverse effect on its financiaL performance and financiaL position regarding the amounts discLosed above, it is not practicabLe to discLose information on the possibility of any reimbursements as it is determinabLe only on the occurrence of uncertain future events."

44 Transfer of financial assetsa) Transferred financial assets that are not derecognized in their entirety - Securitization transactions

The Company has transferred certain pooLs of fixed rate Loan receivabLes backed by underLying assets in the form of tractors, vehicLes, equipments etc. by entering in to securitization transactions with the SpeciaL Purpose VehicLe Trusts ("SPV Trust") sponsored by CommerciaL banks for consideration received in cash at the inception of the transaction.

The Company, being Originator of these Loan receivabLes, aLso acts as Servicer with a responsibiLity of coLLection of receivabLes from its borrowers and depositing the same in CoLLection and Pay-out Account maintained by the SPV Trust for making scheduLed pay-outs to the investors in Pass Though Certificates (PTCs) issued by the SPV Trust. These securitization transactions aLso requires the Company to provide for first Loss credit enhancement in various forms, such as corporate guarantee, cash coLLateraL, subscription to subordinated PTCs. as credit support in the event of shortfaLL in coLLections from underLying Loan contracts. By virtue of existence of credit enhancement, the Company is exposed to credit risk, being the expected Losses that wiLL be incurred on the transferred Loan receivabLes to the extent of the credit enhancement provided.

I n view of the above, the Company has retained substantiaLLy aLL the risks and rewards of ownership of the financiaL asset and thereby does not meet the de-recognition criteria as set out in Ind AS 109. Consideration received in this transaction is presented as "Associated LiabiLity reLated to Securitization transactions" under Note no.17.

b) Transferred financial assets that are not derecognized in their entirety - Assignment Deals

During the year ended 31^st March 2025, the Company had soLd Loans and advances measured at amortized cost as per assignment deaLs undertaken by the Company. As per the terms of these deaLs, since substantial risk and reward related to these assets were transferred to the buyer, the assets have been derecognized from the Company's balance sheet to the extent of share of assignee.

The management has evaluated the impact of assignment deals done during the year for its business model. Based on the future business plans, the Company's business model remains to hold the assets for cokecting contractual cash flows.

The Company has assigned loans (earlier measured at amortised cost) by way of direct assignment. As per the terms of these deals, since substantial risk and rewards related to these assets were transferred to the extent of 80% to the buyer, the assets have been de-recognised from the Company's Balance Sheet. The fokowing table provide a summary of the carrying amount of the derecognised financial assets:

reviews the sectors/activities from time to time and make additions/ deletions/ clarifications to the above sectors/activities.

During the year ended 31^st March 2025, the Company has incurred an expenditure of ' 34.10 crore (31^st March 2024: ' 24 crore) towards CSR activities which includes contribution / donations made to the trusts which are engaged in activities prescribed under section 135 of the Companies Act, 2013 read with Schedule VII to the said Act and expense of ' 0.51 crore (31^st March 2024: ' 1.23 crore) towards the CSR activities undertaken by the Company.

Detail of amount spent towards CSR activities :

a)    Gross amount required to be spent by the Company during the year is '34.58 crore (31^st March 2024: ' 29.96 crore).

b) Amount approved by the Board to be spent during the year : '34.58 crore (31^st March 2024: ' 29.96 crore).

c)    Amount spent by the Company during the year on :

45 Corporate Social Responsibility (CSR)

As per Section 135 of the the Companies Act, 2013, the Company is required to spend 2% of its average Net Profit of the immediately three preceding financial years on CSR.

The Company's CSR mission aims to actively contribute to the socio-economic development of communities, enabling individuals to partake in and derive benefits from the ongoing socio-economic progress. The Company is dedicated to integrating economically, physicaky, and sociaUy chakenged groups into mainstream society through its CSR initiatives.

The CSR activities of the Company shak include, but not limited to any or afl of the sectors/activities as may be prescribed by Schedule VII of the Companies Act, 2013 amended from time to time. Further, the Company

e)    Nature of CSR activities: Contributions / donations made to the trusts which are engaged in activities prescribed under section 135 of the Companies Act, 2013 read with Schedule VII to the said Act and CSR activities undertaken by the Company.

f)    Provision made with respect to a liability already incurred by entering into a contractual obligation : Nil

46 There was no Scheme of Arrangements approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013 during the year.

a)    Pricing Risk

The Company's Investments in Commercial Papers, Certificate of Deposits with Banks and Mutual Funds are exposed to pricing risk. A 5 percent increase in market price would increase profit before tax by approximately ' 150.11 crore (31^st March 2024 : ' 88.90 crore). A similar percentage decrease would have resulted equivalent opposite impact.

b)    Currency Risk

Currency Risk is the risk that the value of a financial instrument wiU. fluctuate due to changes in foreign exchange rates. Foreign currency risk arise majofly on account of foreign currency borrowings. The Company's foreign currency exposures are managed in accordance with its derivative Risk Management Policy which has been approved by its Board of Directors. The Company manages its foreign currency risk by entering into forward contract, cross currency swaps, principal and interest rate swaps. Other derivative Instruments may be used if deemed appropriate.

49 Financial Risk Management Framework

In the course of its business, the Company is exposed to certain financial risks namely credit risk, interest risk, currency risk & liquidity risk. The Company's primary focus is to achieve better predictability of financial markets and seek to minimize potential adverse effects on its financial performance.

The financial risks are managed in accordance with the Company's risk management policy which has been approved by its Board of Directors.

Board of Directors of the Company have established Asset and Liability Management Committee (ALCO), which is responsible for developing and monitoring risk management policies for its business. The Company's financial services business is exposed to high credit risk given the unbanked rural customer base and diminishing value of collateral The credit risk is managed through credit norms established based on historical experience.

49.1 Market Risk

Market risk is the risk that the fair value or future cash flows of financial instruments wil fluctuate due to changes in market variables such as interest rates, foreign exchange rates, etc. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while maximizing the return.

Hedge Accounting - Forwards & Swaps

Contracts that meet the requirements for hedge accounting are accounted as per the hedge accounting requirements of Ind AS 109 -Financial Instruments. Hedge effectiveness is determined at the inception of the hedge relationship and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The Company enters into hedge relationships where the critical terms of the hedging instrument match with the terms of the hedged item, and so a qualitative and quantitative assessment of effectiveness is performed. Hedge effectiveness for afl hedges are 100%.

The sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.

c) Interest Rate Risk

The Company uses a mix of cash and borrowings to manage the Liquidity & fund requirements of its day-to-day operations. Further, certain interest bearing Liabilities carry variabLe interest rates.

Interest Rate risk on variable rate borrowings is managed by way of interest rate swaps, wherever necessary.

Interest Rate sensitivity

The sensitivity analysis below have been determined based on exposure to interest rate for both derivative and non-derivative instruments at the end of reporting period. For floating rate liabilities, analysis is prepared assuming the amount of liability outstanding at the end of the reporting period was outstanding for the whole year.

The foLLowing table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With aLL other variables held constant, the Company's profit before tax is affected through the impact on floating rate borrowings, as foLLows:

49.2 Credit Risk Management

Credit risk is the risk that the Company wik incur a Loss because its customers fail to discharge their contractual obligations. The Company has a comprehensive framework for monitoring credit quaLity of aLL its portfolios under respective business verticaLs based on Days past due. The customer repayment and portfoLio is tracked regularly and required steps for recovery are taken through foU.ow ups and legal recourse.

i) Credit Quality of Financial Assets

The foLLowing tabLe sets out information about credit quaLity of Loans and investments measured at amortized cost primariLy based on days past due information. The amount represents gross carrying amount.

The Credit quaLity of the Loans is monitored concurrently. Since the Company is primariLy into retaiL Lending business, there is no significant credit risk of any individual customer that may impact the Company adverseLy, and hence the Company has caLcuLated its ECL aLLowances on a coLLective basis.

ii) Inputs considered in the ECL model

In assessing the impairment of financiaL Loans under Expected Credit Loss (ECL) ModeL, the assets have been classified into three stages. The three stages reflect the generaL pattern of credit deterioration of a financiaL instrument. The differences in accounting between stages, reLate to the recognition of expected credit Losses and the measurement of interest income.

The Company categorizes Loan assets (except Trade advances) into stages primariLy based on the Days Past Due status.

Stage 1 : 0-30 days past due Stage 2 : 31- 90 days past due Stage 3 : More than 90 days

The Company categorizes Trade advances into stages primariLy based on the Days Past Due status. Stage 1 : 0-60 days past due Stage 2 : 61- 90 days past due Stage 3 : More than 90 days

The ECL estimates are forward Looking and incLude probability weighted outcomes. A macroeconomic overLay is appLied to the observed default rate (ODR) considering portfoLio specific macroeconomic factors that affect the Probability of Default (PD) due to underlying economic conditions of the country.

The Company has computed expected credit Losses for Trade Advance PortfoLio based on historical movement data, capturing transitions between stages and Loss on historicaLLy written off unrecovered amounts from deaLers.

For Leasing portfoLio comprising of Operating and Finance Lease, the Company uses ECL coverage of Industry Peers in simiLar business Line, considering Limited history of coLLection and Loss data for the compLeted Life cycLe for these portfolios which is needed for determining PD and LGD parameters for computation of ECL aLLowance.

iii)    Definition of default

The Company considers a financiaL asset to be in "default" and therefore Stage 3 (credit impaired) for ECL caLcuLations when the borrower account becomes more than 90 days past due on its contractual payments.

Since the Company's portfoLio predominantly incLudes retaiL vehicLe Loan portfoLio with around 3 miLLion Loan accounts making it difficult to define default at an individual Loan account, the Company has considered the event of default when overdue is more than 90 days past due. The same is aLso in Line with the regulator's definition of default, when overdue is more than 90 days past due.

iv)    Exposure at default

Exposure at Default" (EAD) represents the gross exposure baLance when default had occurred. EAD is subject to impairment caLcuLation for Stage 3 assets. Future Expected Cash flows (Principal and Interest) for future years has been used as exposure for Stage 2.

v)    Estimations and assumptions considered in the ECL model

The Company has made the foLLowing assumptions in the ECL ModeL:

a) Loss Given Default (LGD):

-    LGD represents expected Losses on the EAD given the event of default, taking into account the time vaLue of cash flows from the date of default, discounted on effective interest rate (EIR). It is an estimate of the Loss from a transaction given that a default occurred.

GeneraLLy, common LGD is appLied on the exposures in all the three stages.

WhiLe, the generaL approach / methodoLogy remains the same, the measurement of ECL on retaiL vehicLe Loans is done on a sLightly differentiated approach as mentioned here beLow.

-    For Stage 3 assets with an ageing more than 18 months (540 DPD) (stressed portfoLio), provision is caLcuLated by appLying LGD at higher rate. Higher LGD rate is determined based on the historical Loss that has occurred during the tenor of individual assets forming part of specific portfoLio of contracts with an ageing of more than 18 months (540 DPD) at the historical period end date (i.e. 42 months from the reset /reporting date) based on the average Life of the portfoLio and is considered as modeL provision for ECL caLcuLation instead of separate classification as overLay provision;

-    For Stage 3 assets with an ageing up to 18 months (540 DPD), provision is caLcuLated by appLying the Composite LGD rate#;

-    For Stage 1 and Stage 2 assets, continue to derive and appLy Composite LGD rate in caLcuLation of Loss aLLowances.

# Composite LGD rate : It is an estimate of the Loss from a transaction given that a default occurs. It is based on the historical Loss on the portfoLio that has occurred during the tenor of the individual assets forming part of the portfoLio. For caLcuLating LGD, the Company takes into consideration the Stage 2 assets that have reached 90+ DPD in the past and Stage 3 cases of historical period end date (i.e. 42 months from the reset /reporting date) based on the average Life of the portfoLio. ActuaL cash flows pertaining to this portfoLio from the first default date to current reset/reporting date are then discounted at Loan EIR rate for arriving at this Loss rate.

b) Probability of Default (PD):

-    It is an estimate of LikeLihood of default occurring over a particular time horizon.

-    For Stage    1 assets, 12 months PD is caLcuLated .

-    For Stage    2 assets , life time PD is calculated for which a PD term structure is built.

-    PD is applied on Stage 1 and Stage 2 assets on a portfolio basis;

-    For Stage    3 assets, PD is always at 100% as these are impaired assets.

The underlying methodology of Historical PD calculation remains the same for both Stage 1 and Stage 2 assets.

(vi) Measurement of ECL

The assessment of credit risk and estimation of ECL are unbiased and probability weighted.

It incorporates al information that is relevant including information about past events, current conditions and reasonable forecasts of future events and economic conditions at the reporting date. In addition, the estimation of ECL takes into account the time value of money. Forward looking economic scenarios determined with reference to external forecasts of economic parameters that have demonstrated a linkage to the performance of respective portfolios over a period of time have been applied to determine impact of macroeconomic factors.

ECL aUowance (or provision) on Stage 1 and Stage 2 assets is measured using portfolio approach, whereas impairment provisions on Stage 3 assets is measured at each individual asset / instrument level.

-    Financial assets that are not credit impaired at the reporting date:

ECL for Stage 1 : Gross exposure is multiplied by PD and Composite LGD percentage to arrive at the ECL allowance;

-    Financial assets that have had a significant increase in credit risk (SICR) since initial recognition (unless they have low credit risk at the reporting date) but that do not have objective evidence of impairment:

ECL for Stage 2 : Future Expected Cash flows (Principal and Interest) for respective future years is multiplied by respective years Marginal PDs and Composite LGD percentage and thus arrived ECL aUowance is then discounted with the respective loan EIR to calculate the present value of ECL alowance. In addition, in case of Bils discounting and Channel finance, as the average lifetime is of 90 days, a time to maturity factor of 0.25 is used in the ECL computation.

-    Financial assets that are credit impaired at the reporting date:

ECL for Stage 3: Difference between the gross exposure at reporting date and computed carrying amount considering EAD net of LGD and PV of actual cash flows til reporting date including compounded interest at loan EIR on net carrying value.

For Stage 3 assets in retail portfolio, ECL alowance is calculated separately as folows:

-    Stage 3 assets with ageing up to 18 months (< =540 DPD)

ECL alowance = (Gross exposure on reporting date less Required Carrying value-A)

Required Carrying value-A ={EAD less ECL alowance at Composite LGD rate less PV of actual cashflows til reporting date plus interest compounded @ loan EIR]

- Stage 3 assets with ageing more than 18 months (>540 DPD)

ECL alowance = (Gross exposure on reporting date less Required Carrying value-B)

Required Carrying value-B ={EAD less ECL alowance at Higher LGD rate less PV of actual cashflows til reporting date plus interest compounded @ loan EIR]

Undrawn loan commitments:

ECL on undrawn loan commitments is calculated basis the Stage in which that particular customer already exists.

ECL on Small and Medium Enterprise (SME) portfolio:

For loans provided under SME vertical, the general approach / methodology remains similar to the retail vehicle loans.

The Business Enterprise and Retail Enterprise Portfolio has been further segregated into secured and unsecured portfolio.

A distinct PD specific to secured loans, including LAP, has been derived based on historical performance.

A separate PD has been calculated for unsecured loans, reflecting their higher risk profile.

Segmenting PD by secured and unsecured loans improves precision in risk measurement and aligns with the portfolio composition.

The portfolio's Observed Default Rate (ODR) is modeled using historical data (secured and unsecured loans considered together), leveraging an approach similar to Wheels Business incorporating a three variable regression model.

The LGD approach focuses exclusively on cases where loans have defaulted, and al associated colections have been fuly realized.

ECL on Lease business portfolio:

The customer segment catered under leasing business consist of employees of corporates (Employee Lease Programs) and B2B segment which includes business entities, firms, trusts and societies, fleet operators, commercial vehicles, construction equipment etc.

Since the Lease business comprising Operating and Finance lease is relatively a new line of business, there is limited history of colection and Loss data for the completed life cycle for these portfolios which is needed for determining PD and LGD parameters for computation of ECL alowance.

In view of the above, the Company has adopted Industry level benchmark, i.e. ECL coverage rate, for estimating ECL alowance on operating and finance lease portfolio considering the similarities in products offered, customer segments catered and average tenure of lease contracts.

ECL on Trade Advance portfolio:

The portfolio comprises of short-term advance to M&M and Non M&M dealers.

The Interest-Free Trade Advance (IFTA) period generaly ranges between 15 days to 75 days for Trade Advance (TA) facilities offered to dealers.

SICR is assumed at 60 days past the lending date, considering the due date logic instead of Days Past Due (DPD) logic.

The Company has computed Through the Cycle (TTC) PDs based on month-on-month transition matrix of historical movement data, capturing transitions between stages. These transition probabilities are used as input to caLcuLate TTC PDs. Given the short tenure of the faciLity, management beLieves that the impact of macro economic factors may not impact the PD of the portfolio in the short span.

The company has historically written off unrecovered amounts from dealers in adherence to the Technical Write off policy. The portfolio's own historical experience provides a reliable LGD estimate which is considered for ECL computation.

ECL on Investments:

The company applies a structured and comprehensive ECL approach to three critical investment categories: Investments in Government Securities (G-Secs), Bonds, Commercial Papers (CPs), and Certificates of Deposit (CDs), Liquidity Pools for Short-Term Requirements, and Pass-Through Certificates (PTCs) from securitisation transactions.

i.    Investments in G-Secs, Bonds, CP, and CD

Investments in G-Secs, Bonds, CP, and CD are measured at fair value through profit and loss (FVTPL) or other comprehensive income (FVOCI).

Periodic revaluations ensure that market fluctuations and credit risks are accurately captured.

Fluctuations in fair value are recorded in the profit and loss account or other comprehensive income, depending on the classification of the asset.

ii.    Liquidity Pool Investments

Liquidity pool investments are categorized as financial assets measured at fair value through profit or loss (FVTPL) or other comprehensive income (FVOCI) as per Ind AS 109.

Regular revaluations align their valuation with prevailing market conditions.

Fluctuations in the fair value are recorded directly in the profit and loss account or other comprehensive income, depending on the classification.

Exemption from Impairment Testing:

Since these assets are measured at fair value, additional impairment testing is not required under Ind AS 109. The fair value inherently reflects:

a.    Market Volatility: Adjustments for prevailing economic and market conditions.

b.    Credit Risk: Assessment of the issuer's creditworthiness.

c.    Governance Practices: Regular compliance reviews ensure alignment with regulatory guidelines. Transparent reporting of valuation methodologies enhances stakeholder confidence.

iii.    Pass through Certificates (PTCs):

The creditworthiness of the underlying loan pool is assessed using historical performance data, default rates, and recovery trends.

Insights from these evaluations guide the classification and risk provisioning of PTC investments.

Stage Classification:

Stage 1: Investments with Low credit risk, requiring computation of 12-month ECL.

Stage 2: Investments with a significant increase in credit risk, necessitating lifetime ECL.

Stage 3: Defaulted investments, for which Lifetime ECL is caLcuLated with eLevated provisioning requirements.

ECL Estimation Metrics:

Probability of Default (PD): Based on historical data and forward-Looking macroeconomic factors. Loss Given Default (LGD): Reflecting recovery rates and collateral quality.

Exposure at Default (EAD): The total value exposed to credit risk.

Time Value Adjustment: Future ECL amounts are discounted to present value using the effective interest rate, ensuring accurate reflection of economic impacts.

ECL on Other Financial Assets:

MMFSL has Simplified Approach to Expected Credit Loss (ECL) under Ind AS 109 for other financial assets that involve credit risk. This approach is considered suitable for as receivables portfolios as ageing and historical recovery trends are the primary drivers of credit risk assessment. These assets incLude receivabLes, Insurance CLaims, Professional Charges, Interest ReceivabLes (Interest accrued but not yet received), Brokerage etc.

The calculation of lifetime ECL is based on historical coverage rates which incorporates Probability of Default (PD) and Loss Given Default (LGD). The coverage rate is used to estimate the credit Loss for each ageing bucket, avoiding the need to compute PD and LGD separately.

Receivables Outstanding < 90 DPD: A specific coverage rate is applied based on historical recovery patterns from wheels portfolio which is the largest portfolio for MMFSL and reflects Long term trends.

ReceivabLes Outstanding > 90 DPD: A 100% coverage rate is appLied, assuming aLL receivabLes aged beyond 90 days are fuLLy uncoLLectibLe based on historical trends.

(vii)    Forward Looking adjustments

The Historical PDs are converted into forward looking Point-in-Time PDs using statistical model incorporating the forward Looking economic outLook, as required by Ind AS 109.

The macroeconomic variables considered by the Company are robust reflections of the state of economy which result into systematic risk for the respective product categories.

Additionally, three different scenarios have been considered for ECL calculation. Along with the actual numbers (considered for Base case scenario and worst case scenario), best case scenarios has not been provided weightage to take care of the forward Looking economic outLook.

(viii)    Assessment of significant increase in credit risk

When determining whether the credit risk has increased significantly since initial recognition, the Company considers both quantitative and qualitative information and anaLysis based on the Company's historical experience, including forward-Looking information. As per Ind AS 109, Loans are required to be moved from Stage 1 to Stage 2 if and only if they have been the subject of a SICR. A SICR occurs when there has been a significant increase in the risk of a default occurring over the expected life of a financial instrument. In line with Basel guidance on ECL, the definition of default and the convention for counting days past due adopted for accounting purposes will be guided by the definition used for regulatory purposes The Company considers reasonable and supportabLe information that is reLevant and avaiLabLe without undue cost and effort. The Company's accounting policy is not to use the practical expedient that the financial

assets with 'Low' credit risk at the reporting date are deemed not to have had a significant increase in credit risk (SICR). As a result, the Company monitors aLL financiaL assets and Loan commitments that are subject to impairment for SICR.

As a part of the qualitative assessment of whether a customer is in default, the Company also considers a variety of instances that may indicate unLikeLiness to pay. In such instances, the Company treats the customer at default and therefore assesses such loans as Stage 3 for ECL calculations. Such qualitative factors include:

i.    A Stage 3 customer having other loans which are in Stage 1 or 2.

ii.    Not to consider Uncleared cheques as on reporting date for outstanding DPD calculation for retail vehicle loans

iii.    Retail vehicle loans, where asset has been repossessed.

iv.    Cases where Company suspects fraud and legal proceedings are initiated.

v.    SME loans where the Company has resorted to its rights under the SARFAESI Act.

vi.    Exposure of co -applicant is considered for provision in Stage 3.

Further, the Company classifies certain category of exposures in to Stage 3 and makes acceLerated provision up to 100% based on qualitative assessment impLying the significant deterioration in asset quality or increase in credit risk on selective basis.

The Company reguLarLy reviews it's ECL modeL based on actuaL Loss experience and update the parameters used for ECL calculations.

(ix)    Policy for write off of Loan Assets

The gross carrying amount of a financiaL asset is written off when there is no reaListic prospect of further recovery. This is generaLLy the case when the Company determines that the debtor does not have assets or sources of income that couLd generate sufficient cash flows to repay the amounts subject to the writeoff. However, financiaL assets that are written off couLd stiLL be subject to enforcement activities under the Company's recovery procedures, taking into account legal advice where appropriate. Any recoveries made from written off assets are netted off against the amount of financiaL assets written off during the year under "Bad debts and write offs" forming part of "Impairment on financiaL instruments" in Statement of profit and Loss.

(x)    Inputs to the model

a.    Observed Default Rates (ODRs) over past 60 months for each product category

b.    Macro economic variables provided by Economist Intelligence Unit (EIU)# for the past 5 years

c.    Macro economic variables projected by EIU for the next 5 years

# The Economist Intelligence Unit (EIU) is the research and analysis division of the Economist Group, providing forecasting, macro-economic analysis and advisory services through research and analysis, such as monthly country reports, five-year country economic forecasts, country risk service reports, and industry reports.

A. Model process

a.    Macro economic historical variables are tested for statistical robustness and filtered

b.    These are converted into quarterly numbers appLying cubic spLine technique

c.    Variables that are acceptable are regressed with historical ODRs, considering 3 variables at a time.

d.    These combinations are further tested for statistical robustness.

e.    Those that pass the test are sorted on R squared (fitness) and the best fit is seLected.

f This combination is passed through the Vasicek modeL to derive scaLars that are used to project future PDs.

B.    I n the selection of macro-economic variables, the management considers best combination of variables for its respective product categories based on statistically tested model output representing higher level of correlation and as well as those which have business relevance as per management assessment.

C.    I n the selection of macro-economic variables for the best combination, the following parameters are considered:

The contractual amount outstanding for trade advance that has been written off by the Company during the year ended 31^st March 2025 and that were stilt subject to enforcement activity was ' 1.60 crore (31^st March 2024: ' 3.36 crore).

Level of Assessment - Aggregation Criteria

The Company recognizes the expected credit Losses (ECL) on a collective basis that takes into account comprehensive credit risk information.

Considering the economic and risk characteristics, pricing range, sector concentration (e.g. vehicLe Loans in unorganized sectors) the Company calculates ECL on a colective basis for a! stages - Stage 1, Stage 2 and Stage 3 assets.

The contractual amount outstanding on financial investments that has been written off by the Company during the year ended 31^st March 2025 and that were stiLL subject to enforcement activity was nil (31^st March 2024 : nil).

Significant changes in the gross carrying value that contributed to change in loss allowance

The Company mostly provide loans to retail individual customers, which is of small ticket size. Change in any single customer repayment will not impact significantly to Company's provisioning. All customers are being monitored based on past due and corrective actions are taken accordingly to limit the Company's risk.

Concentration of Credit Risk

The Company's loan portfolio is predominantly to finance retail automobile loans. The Company manages concentration of risk primarily by geographical region in India. The following tables show the geographical concentrations of loans and trade advances:

Maximum Exposure to credit Risk

The maximum exposure to credit risk of loans and investment securities is their carrying amount. The maximum exposure is before considering the effect of mitigation through collateral.

Narrative Description of Collateral

Collateral primarily include vehicles purchased by retail loan customers and machinery & property in case of SME customers. The financial investments are secured by way of a first ranking pari-passu and charge created by way of hypothecation on the receivables of the other company.

Quantitative Information of Collateral

The Company monitors its exposure to loan portfolio using the Loan To Value (LTV) ratio, which is calculated as the ratio of the gross amount of the loan to the value of the collateral. The value of the collateral for Retail loans is derived by writing down the asset cost at origination by 20% p.a on reducing balance basis. And the value of the collateral of Stage 3 Retail loans is based on the Indian Blue Book value for the particular asset. The value of collateral of SME loans is based on fair market value of the collaterals held.

49.3 Liquidity Risk Management

Ultimate responsibility for Liquidity risk management rests with the Board of Directors, which has established Asset and Liability Management Committee (ALCO) for the management of the Company's short, medium and Long-term funding and Liquidity management requirements. The Company manages Liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

a) Maturity profile of non-derivative financial liabilities

The Throwing tables detail the Company's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The amount disclosed in the tables have been drawn up based on the undiscounted contractual cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows.

To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay.

Valuation methodologies of financial instruments not measured at fair value

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

Short-term financial assets and liabilities

For financial assets and financial liabilities that have a short-term maturity (less than twelve months), the carrying amounts, which are net of impairment, are a reasonable approximation of their fair vaLue. Such instruments include: cash and cash equivalent, trade receivables, balances other than cash and cash equivalents, term deposits and trade payables. Further, such financial assets and financial liabilities are disclosed at Level 1 fair value.

Loans and advances to customers

The fair values of loans and advances are estimated by discounted cash flow models based on contractual cash flows using actual yields.

Financial Investments

For Government Securities and bonds, the quoted market price as on date of reporting is considered for fair value computations. Where such price is not available, quoted market price of similar instruments as on date of reporting is considered.

Borrowings other than deposits from public

The fair value of borrowings is estimated by a discounted cash flow model incorporating interest rate estimates from market-observable data such as secondary prices for its traded debt itself.

Deposits from public

The fair value of deposits received from public is estimated by discounting the future cash flows considering the interest rate applicable on the reporting date for that class of deposits segregated by their tenure.

b)    Exchange Traded Interest Rate (IR) Derivatives

The Company is not carrying out any activity of providing Derivative cover to third parties.

c)    Disclosures on Risk Exposure in Derivatives Qualitative Disclosures -

i)    The Company undertakes the derivatives transaction to prudently hedge the risk in context of a particular borrowing or to diversify sources of borrowing and to maintain fixed and floating borrowing mix. The Company does not induLge into any derivative trading transactions. The Company reviews, the proposed transaction and outLine any considerations associated with the transaction, including identification of the benefits and potential risks (worst case scenarios); an independent analysis of potential savings from the proposed transaction. The Company evaluates afl the risks inherent in the transaction viz., counter Party risk, Market Risk, Operational Risk, Basis risk etc.

ii)    Credit risk is controLLed by restricting the counterparties that the Company deaLs with, to those who either have banking relationship with the Company or are internationally renowned or can provide sufficient information. Market/Price risk arising from the fluctuations of interest rates and foreign exchange rates or from other factors shaLL be closely monitored and controLLed. NormaUy transaction entered for hedging, wifl run tik its life, irrespective of profit or Loss. However in case of exceptions it has to be un-winded onLy with prior approvaL of M.D / CFO / Treasurer. Liquidity risk is controLLed by restricting counterparties to those who have adequate facility, sufficient information, and sizable trading capacity and capabiLity to enter into transactions in any markets around the worLd.

iii)    The respective functions of trading, confirmation and settlement should be performed by different personnel. The front office and back-office role is wefl defined and segregated. All the derivatives transactions is quarterLy monitored and reviewed by CFO and Treasurer. ALL the derivative transactions have to be reported to the Board of Directors on every quarterLy board meetings incLuding their financial positions.

b)    During the current year and the previous year, the Company has not transferred or acquired any stressed Loans.

c)    During the current year and the previous year, the Company has not acquired any loans not in default through assignment.

VI) Exposuresa)    Exposure to Real Estate Sector (refer note no. 53 (XVI) (a)b)    Exposure to Capital Market (refer note no. 53 (XVI) (b)c)    Details of financing of parent company products

Of the totaL financing activity undertaken by the Company during the financiaL year 2024-25: 44 % (31^st March 2024: 44%) of the financing was towards parent company products.

d)    Details of Single Borrower Limit (SGL) /Group Borrower Limit (GBL) exceeded by the NBFC

During the current year and the previous year, the Company has not exceeded the prudential exposure limits for Single Borrower Limit (SGL) /Group Borrower Limit (GBL).

e)    Unsecured Advances

As at 31^st March 2025, the amount of unsecured advances stood at ' 6,161.54 crore (31^st March 2024: '5,027.31 crore). There are no advances secured against intangible assets.

b)    Disclosure of Penalties and strictures imposed by RBI and other regulators

During the year under review, BSE had Levied a fine of ' 23,600 (incLuding GST) under ReguLation 60(2) of the Listing Regulations, with respect to delay in submission by 1 (one day) of the intimation of record date for two ISINs during the month of November 2024. The Company has requested for waive-off, and the matter is under consideration with BSE.

c)    Related Party Transactions

(Refer note no. 51)

d)    Rating assigned by credit rating agencies and migration of ratings during the year Credit Rating -

During the year under review, CRISIL Ratings Limited (CRISIL), has reaffirmed the credit rating of the Company's Long Term Bank Facilities, Non- Convertible Debentures, Subordinated Debt, Bank Facilities and Fixed Deposit as 'CRISIL AAA/ Stable'. The rating on the Company's Short-term Bank facilities and Commercial Paper has been reaffirmed at 'CRISIL A1+' which indicates very strong degree of safety regarding timeLy payment of financiaL obligations. Such securities carry Lowest credit risk..

During the year under review, India Ratings & Research Private Limited (IND), which is part of Fitch Group, reaffirmed the rating of Company's Long-term Debt instruments, Subordinated Debt programme, Bank Facilities and Fixed Deposit Programme as 'IND AAA/StabLe' and Principal protected market Linked debenture as IND PP-MLD AAA /StabLe. The Company's Short Term Bank Loans, Commercial Paper has been rated at IND A1+.

During the year under review, CARE Ratings, aLso reaffirmed the 'CARE AAA; StabLe' rating to Company's Long-term debt instrument and Subordinated Debt programme.

During the year under review, Brickwork Ratings India Private Limited (BWR) has, reaffirmed the 'BWR AAA/stabLe' rating of the Company's Long-term Subordinated Debt Issue.

The 'AAA' ratings denote the highest degree of safety regarding timeLy servicing of financiaL obLigations. Such instruments carry Lowest credit risk.

'A1+' ratings indicate very strong degree of safety regarding timeLy payment of financiaL obLigations. Such securities carry Lowest credit risk.

VIII)    Net Profit of Loss for the period ,prior period items and change in accounting policies

There are no such materiaL items which require discLosures in the notes to Accounts in terms of the reLevant Accounting Standard.

IX)    Revenue Recognition

Refer note no. 2.6 under Summary of MateriaL Accounting PoLicies.

X)    I ndian Accounting Standard 27 (Ind AS 27) - Consolidated and Separate Financial Statements (CFS)

ALL the subsidiaries of the Company have been consoLidated as per Ind AS 27. Refer consoLidated financiaL statements (CFS)

XIX)    Breach of covenant

During the current year and previous year there is no instances of breach of covenant of Loan avaiLed or debt securities issued.

XX)    Divergence in Asset Classification and Provisioning

DiscLosure of detaiLs of divergence, if either or both of the foLLowing conditions are satisfied:

a)    the additional provisioning requirements assessed by RBI (or National Housing Bank(NHB) in the case of Housing Finance Companies) exceeds 5 percent of the reported profits before tax and impairment Loss on financial instruments for the reference period, or

b)    the additional Gross NPAs identified by RBI/NHB exceeds 5 per cent of the reported Gross NPAs for the reference period.

As per the RBI inspection report for the reference period 31^st March 2024, the assessment of Divergence in Asset Classification and Provisioning is beLow the threshoLd as defined under a) and b) above and hence the details as required in tabular form is not presented here.

XXI)    Disclosure for NBFCs-UL

Mandatory Listed within three years of identification as NBFC-UL - Not AppLicabLe for the Company

f) Institutional set-up for liquidity risk management

The Liquidity Risk Management framework of the Company is governed by its Liquidity Risk Management PoLicy and Procedures approved by the Board. The Asset LiabiLity Committee of the Board (ALCO) and Asset LiabiLity Management Committee (ALMCO) oversee the implementation of Liquidity risk management strategy of the Company and ensure adherence to the risk toLerance/Limits set by the Board.

The Company maintains a robust funding profile with no undue concentration of funding sources. In order to ensure a diversified borrowing mix, concentration of borrowing through various sources is monitored. The Company maintains a positive cumulative mismatch in aLL buckets. As on 31^st March 2025, the Company maintained a Liquidity buffer of approximately '10,434 crore.

Definition of terms as used in the table above:a)    Significant counterparty:

A "Significant counterparty” is defined as a singLe counterparty or group of connected or affiLiated counterparties accounting in aggregate for more than 1% of the NBFC's total liabilities.

b)    Significant instrument/product:

A "Significant instrument/product" is defined as a singLe instrument/product of group of simiLar instruments/products which in aggregate amount to more than 1% of the NBFC's total liabilities.

c)    Total liabilities:

Total liabilities include aLL external liabilities (other than equity).

d)    Public funds:

"PubLic funds" incLudes funds raised either directLy or indirectLy through pubLic deposits, intercorporate deposits, bank finance and aLL funds received from outside sources such as funds raised by issue of CommerciaL Papers, Debentures etc. but excLudes funds raised by issue of instruments compuLsoriLy convertibLe into equity shares within a period not exceeding 5 years from the date of issue. It incLudes totaL borrowings outstanding under aLL types of instruments/ products.

e)    Other short-term liabilities:

ALL short-term borrowings other than CPs and NCDs with originaL maturity Less than 12 months.

1)    The average weighted and unweighted amounts are caLcuLated taking simple average based on daily observation for the respective quarter. The weightage factor applied to compute weighted average value is constant for all the quarters.

2)    Prior to introduction of LCR framework, the Company used to maintain a substantial share of its Liquidity in form of fixed deposits with banks and investment in debt mutual funds. Post the introduction of LCR framework, the Company has consciously worked towards increasing its investment in High Quality Liquid Assets (HQLA) as per the RBI guidelines in order to meet the LCR requirement.

3)    Weighted values have been calculated after the application of respective haircuts (for HQLA) and stress factors on inflow and outflow.

4)    Components of High Quality Liquid Assets (HQLA)

Since the total, impairment allowances under Ind AS 109 is higher than the total, provisioning required under IRACP (including standard asset provisioning) as at 31^st March 2025 and March 31 2024, no amount is required to be transferred to 'Impairment Reserve' for both the financial, years. The gross carrying amount of asset as per Ind AS 109 and Loss allowances (Provisions) thereon includes interest accrual, on net carrying value of stage - 3 assets as permitted under Ind AS 109. While, the provisions required as per IRACP norms does not include any such interest as interest accrual, on NPAs is not permitted under IRACP norms.

The balance in the 'Impairment Reserve' (as and when created) shall not be reckoned for regulatory capital.. Further, no withdrawals shall be permitted from this reserve without prior permission from the Department of Supervision, RBI.

ii)    As at 31^st March 2025 and March 31 2024, there were no Loan accounts that are past due beyond 90 days but not treated as impaired, i.e. all 90+ DPD ageing Loan accounts have been classified as Stage-3 and no dispensation is considered in stage-3 classification.

iii)    Policy for sales / transfers out of amortized cost business model portfolios Sale/ transfer of portfolios out of amortized cost business model:

As a short-term financing arrangement, the Company has been transferring or seLLing certain pooLs of fixed rate loan receivables backed by underlying assets in the form of tractors, vehicles, equipments etc. by entering in to securitization transactions with the SpeciaL Purpose VehicLe Trusts ("SPV Trust") sponsored by Commercial banks for consideration received in cash at the inception of the transaction. As a part of annual budgetary planning and with the objective of better liquidity and risk management, the Company, at the beginning of the year, obtains approval of Asset Liability Committee and Risk Management Committee of the Board of Directors for undertaking securitization transactions of certain vaLue of standard assets comprising the coLLateraL based loan receivables at appropriate times during the year.

These transactions are carried out after compLying with RBI guideLines on securitization of standard assets. The consideration received through such securitization transactions is utiLized for funding reguLar vehicLe Loan disbursements to customers who service their Loans through fixed instaLments over a specified period of Loan tenor. Besides using securitization as aLternate financing tooL, it is aLso being used as a effective BaLance sheet management through better liquidity and risk management by transfer of assets from risk averse to risk takers.

When the assets in the form of Loan receivabLes are soLd / transferred to an SPV/Bank through securitization transaction, then on a consolidated portfolio level, such sale/transfer does not change the Company's business objective of hoLding financiaL assets to coLLect contractuaL cash flows.

The Company remains exposed to credit risk, being the expected Losses that wiLL be incurred on the securitized loan portfolio to the extent of the credit enhancement provided. Any increase in losses as compared to the expected Loss shafl require the Company to present its credit enhancement / cash collateral to help compensate the investors. This is as per the requirement of the Reserve Bank of India. Thus, the Company as per Ind AS 109 has retained substantiaLLy aLL the risks and rewards of ownership of the financiaL asset.

The Company derecognizes a financiaL asset when the contractuaL rights to the cash flows from the financiaL asset expire, or it transfers the rights to receive the contractuaL cash flows in a transaction in which substantiaLLy aLL of the risks and rewards of ownership of the financiaL asset are transferred or in which the Company neither transfers nor retains substantially aU. of the risks and rewards of ownership and does not retain control of the financiaL asset.

If the Company enters into transactions whereby it transfers assets recognized on its baLance sheet, but retains either aU. or substantially aU. of the risks and rewards of the transferred assets, the transferred assets are not derecognized.

AccordingLy, these financiaL assets are not de-recognized by the Company from the financiaL statements prepared under Ind AS. Since the contractuaL terms of these financiaL assets give rise to cash flows, that are soLeLy payments of principaL and interest, on specified dates, these assets meet the SPPI criterion and are thus continued to be recognized in the books at amortized cost.

56    During the year ended 31^st March 2025, the Company has made a contribution of ' 21.00 crore to New Democratic ELectoraL Trust, a Trust approved by the Central. Board of Direct Taxes under ELectoraL Trust Scheme, 2013 to enabLe ELectoraL Trust to make contributions to poLiticaL party/parties duLy registered with the ELection Commission, in such manner and at such times as it may decide from time to time. This contribution was as per the provisions of section 182 of the Companies Act, 2013. There was no such contribution made during the year ended 31^st March 2024.

57    Events after the reporting date

There have been no other events after the reporting date that require discLosure in these financiaL statements.

58    Previous year figures have been regrouped /recLassified wherever necessary to conform to current year presentation.