chokhani securities ltd Directors report

TO THE MEMBERS,

The Board of Directors of UGRO Capital Limited have great pleasure in presenting the Annual Report together with the Audited Balance Sheet as on 31^st March, 2023, Statement of Profit and Loss and Cash Flow Statement for the financial year ended 31^st March, 2023.

FINANCIAL HIGHLIGHTS

The key highlights of the audited standalone financial statements of your Company for the financial year ended 31^st March, 2023 and comparison with the previous financial year ended 31^st March, 2022 are summarized below:

(Rs. in Lakhs)

Particulars	Year ended 31st March, 2023	Year ended 31st March, 2022
Total Income	68,376.28	31,211.21
Total Expenditure	59,993.44	29,193.43
Profit before Tax and exceptional items	8,382.84	2,017.78
Exceptional items	-	-
Profit before tax	8,382.84	2,017.78
Provision for Tax	4,405.20	562.72
Profit after tax	3,977.64	1,455.06
Other comprehensive income	15.10	24.58
Profit available for appropriation	3,992.74	1,479.64
Appropriations:
Transfer to Reserve Fund under Section 45-IC of the RBI Act, 1934	795.53	291.01
Balance carried forward to Balance Sheet	3,197.21	1,188.63

DIVIDEND

The Board of Directors have not recommended any dividend for the financial year 2022-23.

Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") the Board of Directors of the Company have adopted a Dividend Policy (Policy). The Policy is available on the website of the Company under the Investor Relations section at website of the Company at https://www.ugrocapital. com/corporate-governance#subcategorv-policies

REVIEW OF OPERATIONS

During the year under review, your Companys total revenue, amounted to Rs. 68,376.28 lakhs compared to Rs. 31,211.21 lakhs in the previous year.

Profit before tax was Rs. 8,382.84 lakhs compared to Rs. 2,017.78 lakhs for the previous year. Profit after tax stood at Rs. 3,977.64 lakhs compared to Rs. 1,455.06 lakhs in the previous year.

Over FY23 your Company has established itself as one of the leading NBFCs in "Lending as a Service" business model and has successfully operationalized and scaled Co-lending

partnerships with 10+ partners including large PSU Banks, as a result Companys Off-book Asset Under Management proportion increased to 40% as on March 2023 vis a vis 16% as on March 2022. Strong Asset Under Management growth momentum continued in FY23 on the back of our large distribution infrastructure (98 branches, 1,200+ GRO partners, 105+ Anchors and original equipment manufacturers and 1,200+ employees), AUM as on March 2023 stood at Rs. 6,081 Crores registering a 105% year on year growth. Your Company has upgraded its proprietary scoring model to GRO Score 3.0 thereby automating the data tripod of Banking, Bureau and GST. The Company continues to focus on maintaining the credit quality of our portfolio, our Gross NPA and Net NPA as on March 2023 stood at 1.60% and 0.90% respectively whereas our provision coverage ratio improved to 48.6% as on March 2023 as compared to 26.9% as on March 2022. The Company maintains disbursement to login ratio at 30% despite high pace of overall AUM growth. Your Company continues to focus on shifting its AUM mix towards high yield products and as a result the portfolio weighted average yield improved from 16.4% as on March 2022 to 17.3% as on March 2023. Your Company strengthened its liability franchise by adding 11 new lenders and our overall liabilities stood at Rs. 3,149 Crores with a leverage of 3.2 times. Our overall profitability improved with increasing operating leverage and our cost to net total income ratio decreased from 72% in FY22 to 62% in FY23.

SUBSIDIARY COMPANIES

As on 31^st March 2023, your Company has no subsidiaries. There are no associate companies or joint venture companies within the meaning of Section 2(6) of the Companies Act, 2013 ("the Act").

RESERVES

The amounts, if any, proposed to be transferred to statutory reserve and ESOS reserve are mentioned in financial statements.

CHANGE IN SHARE CAPITAL

The issued, subscribed and paid-up Equity Share Capital as on 31^st March, 2023 was Rs. 70,55,93,190/- consisting of 7,05,59,319 Equity Shares of the face value of Rs. 10/- each, fully paid-up.

There was no change in Share Capital during the year under review.

Further, during the financial year the Company implemented new ESOS Scheme viz. UGRO Employee Stock Option Scheme 2022 under which an Employee Benefit Trust ("Trust") has been constituted. The objective of the Trust is to distribute shares to employees under the employee benefit program. The Trust is responsible for the purchase of shares of the Company from the secondary market for the purpose of this program. The Trust is treated as an extension of the Company, hence the shares held by the Trust are treated as treasury shares. Own equity instruments so reacquired (treasury shares) are recognised at face value and deducted from Equity Share Capital to the tune of Rs. 123.83 lakhs. The amount received in excess of the face value is deducted from the Securities Premium Account.

As on 31^st March, 2023, there are no outstanding instruments convertible into equity shares of the Company.

FUND RAISING

Your Company being a Non-Banking Financial Company is required to raise funds for its business requirements. During the year under review, your Company has borrowed funds through diverse methods viz. term loans, commercial papers, market linked debentures, non convertible debentures, co-lending/co- origination of loans, assignment of portfolio, external commercial borrowing etc. from various private and public Banks/ Financial Institutions/ Development Financial Institutions/ through External Commercial Borrowings. Your Company has further augmented its capital base by raising Rs. 340.50 crores through a combination of Preferential Issue and Qualified Institutions Placement in April/May 2023.

CREDIT RATING

The Company has availed credit ratings from Crisil Ratings Limited, India Ratings & Research Private Limited and Acuite Ratings & Research Limited with respect to the financial facilities availed/instruments issued by the Company from time to time. The details of ratings granted to the Company have been given in the Corporate Governance Report for information of the shareholders.

CAPITAL ADEQUACY RATIO

Your Companys Capital Adequacy Ratio as of 31^st March 2023, stood at 20.23% of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is well above the regulatory minimum of 15% and out of total CRAR the Tier 1 capital stood at 19.63% and Tier II Capital at 0.60%.

PUBLIC DEPOSITS

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)

The Nomination and Remuneration Committee (NRC) engages with the Board to determine the appropriate characteristics, skills and experience for the Board as a whole as well as for its individual members with the objective of having a Board with diverse background and experience in business, finance, governance and public service. Thereafter, the NRC recommends to the Board the selection of new Directors. Characteristics expected of all Directors include independence, integrity, high personal and professional ethics, sound business judgement, ability to participate constructively in deliberations and willingness to exercise authority in a collective manner. The Company has in place a Policy on appointment & removal of Directors viz. Nomination and Remuneration Policy.

Board of Directors:

The Board of your Company comprised of eminent persons with proven competence and integrity. Besides the experience, strong financial acumen, strategic astuteness and leadership qualities, they have a significant degree of commitment towards the Company and devote adequate time to the meetings and preparations. In terms of requirement of the SEBI Listing Regulations the Board has identified core skills, expertise and competencies of the Directors in the context of the Companys businesses for effective functioning, which are detailed in the Corporate Governance Report.

As on 31^st March 2023, your Company has 11 (Eleven) Directors on the Board, out of which 7 (Seven) are Independent Directors including one Woman Director, 1 (one) Executive Director and 3 (Three) Non-Executive Directors. The Board composition is in compliance with the requirements of the the Act and the SEBI Listing Regulations.

In accordance with the provisions of the Act and the Articles of Association of the Company, Mr. Chetan Kulbhushan Gupta (DIN: 07704601), Non-Executive Director, retires by rotation and being eligible has offered himself for re-appointment. The Board recommends the same for the approval of the shareholders.

The necessary resolution for re-appointment of Mr. Chetan Kulbhushan Gupta forms part of the Notice convening the Annual General Meeting. The profile and particulars of experience that qualify Mr. Gupta for Board membership, are disclosed in the said Notice.

Pursuant to requirements of Regulation 17 (1) (C) of SEBI Listing Regulations, the shareholders vide special resolutions passed through postal ballot on 5^th May 2022, regularized appointment of Mr. Karnam Sekar and Mr. Hemant Bhargava as Independent Directors w.e.f. 8^th February 2022 and Mrs. Smita Aggarwal as Independent Director w.e.f. 31^st March 2022.

Key Managerial Personnel:

During the year, Ms. Namrata Sajnani was appointed as the Company Secretary and Compliance Officer of the Company w.e.f. 22^nd July 2022, in place of Mr. Aniket Karandikar who resigned as Company Secretary w.e.f. 13^th June 2022 and Mr. Kishore Lodha was appointed as the Chief Financial Officer of the Company with effect from 15^th September 2022, in place of Mr. Amit Gupta who resigned as Chief Financial Officer w.e.f. 1 ^st September 2022.

The details of key managerial personnel of the Company during the year is given below:

Key Managerial Personnel	Designation
Mr. Shachindra Nath	Vice Chairman and Managing Director
Mr. Amit Gupta*	Chief Financial Officer
Mr. Kishore Lodha**	Chief Financial Officer
Mr. Aniket Karandikar#	Company Secretary
Ms. Namrata Sajnani##	Company Secretary and Compliance Officer

COMPLIANCE OF RBI REGULATIONS/GUIDELINES

The Company continues to comply with all the applicable regulations/guidelines/directions prescribed by the Reserve Bank of India ("RBI"), from time to time.

REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS

Your Company has adopted Corporate Governance Code which lays down in detail governance guidelines and practices that are required to be followed while taking decision on various matters. We consider it our inherent responsibility to disclose timely and accurate information regarding the operations and performance, leadership and governance of the Company.

Pursuant to the SEBI Listing Regulations, Management Discussion and Analysis and Corporate Governance Report forms part of this Annual Report. The Certificates from M/s Pankaj Nigam and Associates, Practicing Company Secretaries, regarding compliance of the conditions of Corporate Governance as stipulated by the SEBI Listing Regulations are attached to this report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

Pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations, the Business Responsibility and Sustainability Report of the Company for FY 2022-23 forms part of the Annual Report.

FAMILIARISATION PROGRAMME FOR DIRECTORS

The Company has established a Familiarisation Programme for Independent Directors. The framework together with the details of the Familiarisation Programme imparted during the financial year under review has been uploaded on the website of the Company.

Periodic presentations were made at the Board meetings apprising the Board Members about the finer aspects of the Companys businesses, the challenges posed and an overview of future business plans including:

1) Macro-economic view of the industry in which the Company operates;

2) Budgets, operations and performance of the businesses and relevant regulatory/legal updates in the statutes applicable to the Company;

3) Business model of the Company, risks and opportunities for the businesses and the growth levers for them;

4) Strategic future outlook and the way forward

CRITERIA FOR DETERMINING QUALIFICATIONS. POSITIVE ATTRIBUTES AND INDEPENDENCE OF A DIRECTOR

In terms of the provisions of Section 178(3) of the Act and Regulation 19 of the SEBI Listing Regulations, the Nomination and Remuneration Committee has formulated the criteria for determining qualifications, positive attributes and independence of Directors, the key features of which are as follows:

• Qualifications - The Board nomination process encourages diversity of thought, experience, knowledge, age and gender. It also ensures that the Board has an appropriate blend of functional and industry expertise.

• Positive Attributes - Apart from the duties of Directors as prescribed in the Act, the Directors are expected to demonstrate high standards of ethical behavior, communication skills, and independent judgment. The Directors are also expected to abide by the respective Code of Conduct as applicable to them.

• Independence - A Director will be considered independent if he/she meets the criteria laid down in Section 149(6) of the Act, the Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations, as amended from time to time.

DECLARATION OF INDEPENDENCE

The Company has received the declarations from all the Independent Directors as per the Section 149(7) of the Act and Regulation 16 (1) (b) of the SEBI Listing Regulations and the Board is satisfied that all the Independent Directors meet the criteria of independence as mentioned in Section 149(6) of the Act and Regulation 16 (1) (b) of the SEBI Listing Regulations. Further, declaration on compliance with Rule 6(3) of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended by Ministry of Corporate Affairs ("MCA") vide its Notification dated October 22, 2019, regarding the requirement relating to enrollment in the data bank created by MCA for Independent Directors, had been received from all Independent Directors.

In the opinion of the Board, there has been no change in the circumstances which may affect their status as independent directors of the Company and the Board is satisfied of the integrity, expertise and experience (including proficiency in terms of Section 150(1) of the Act and applicable rules thereunder) of all Independent Directors on the Board. Further, in terms of Section 150 read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, Independent Directors of the Company have included their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs.

ANNUAL EVALUATION BY THE BOARD OF DIRECTORS

The Board evaluated the effectiveness of its functioning of the Committees and of individual Directors, pursuant to the provisions of the Act and the SEBI Listing Regulations. The Board sought the feedback of Directors on various parameters including:

• existence of sufficient skill, experience, time and resources to undertake their duties.

• understanding the risks associated with the business, ability to proactively contribute in development of risk management strategy.

• understanding of governance, regulatory, financial, fiduciary and ethical requirements of the Board / Committee.

• demonstration of level of integrity including maintaining utmost confidentiality and identifying, disclosing and managing conflicts of interest.

• devotion of time to determining the emerging issues that could affect the organization in future.

The above criteria are broadly based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017.

In a separate meeting of the Independent Directors, the performance of the Non-Independent Directors, the Board as a whole and Chairman and Vice Chairman and Managing Director of the Company were evaluated taking into account the views of other Non-Executive Directors. The NRC reviewed the performance of the individual directors and the Board as a whole. In the subsequent Board meeting after the meeting of the Independent Directors and the meeting of the NRC, the performance of the Board, its Committees and individual directors were discussed.

Meeting of the Independent Directors pursuant to Schedule IV of the Act: the Independent Directors met on 24^th February, 2023 without the presence of Non-Independent Directors and Members of the Management. The meeting of Independent Directors was chaired by Mr. Hemant Bhargava. The Independent Directors, inter alia, evaluated the performance of the Non-Independent Directors, the Board of Directors as a whole, evaluated the performance of the Chairman and Vice Chairman and Managing Director of the Board after taking into account the views of NonExecutive Directors and discussed aspects relating to the quality, quantity and timeliness of the flow of information between the Company, the Management and the Board.

CODE OF CONDUCT

Your Company has formulated a Code of Business Conduct and Ethics for Board of Directors and Senior Managerial Personnel.

The confirmation of compliance of the same is obtained from all concerned on an annual basis. All Board Members and

Senior Managerial Personnel have given their confirmation of compliance. A declaration duly signed by the Vice Chairman and Managing Director is given under Corporate Governance Report as a separate section in this Annual Report. The Code of Business Conduct and Ethics for Board of Directors and Senior Managerial Personnel is also posted on the website of the Company.

BOARD MEETINGS HELD DURING THE FINANCIAL YEAR

The Board meets at regular intervals to discuss and decide on the Companys business policy and strategy apart from other Board businesses. The Board exhibits strong operational oversight with regular presentations in quarterly meetings. The Board / Committee meetings are pre-scheduled well in advance to help them plan their schedule and ensure meaningful participation in the meetings. Only in case of special and urgent business, if the need arises, the Boards or Committees approval is taken by passing resolutions through circulation or by calling the Board/ Committee meetings at short notice, as permitted by law. The agenda for the Board and Committee meetings includes detailed notes on the items to be discussed to enable the Directors to make an informed decision.

The Board of Directors of the Company met 7 (Seven) times during the financial year 2022-23. The details of the Board meetings and the attendance of the Directors are given in Corporate Governance Report, which forms part of this Annual Report.

COMMITTEES OF THE BOARD

As required under the Act, the SEBI Listing Regulations and RBI Master Directions, the Company has constituted the following statutory committees: 1) Audit Committee 2) Nomination and Remuneration Committee 3) Stakeholders Relationship Committee 4) Risk Management Committee 5) Corporate Social Responsibility Committee 6) Asset Liability Committee and 7) IT Strategy Committee. The Company also has non mandatory committees viz. Securities Allotment and Transfer Committee, Investment and Borrowing Committee and Compliance Committee. In addition to the above, the Company has an Executive Committee to review specific business, operational matters and other items that the Board may decide to delegate. Details of all the statutory committees such as terms of reference, composition and meetings held during the year under review are provided in the Report on Corporate Governance, a part of this Annual Report.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Board has adopted policies and procedures for the governance of orderly and efficient conduct of its business, including adherence to the Companys policies, safeguarding its assets, prevention and detection of frauds and errors, accuracy

and completeness of the accounting records and timely preparation of reliable financial disclosures. The Companys internal control systems are commensurate with the nature of its business, the size and complexity of its operations. The internal control system is supplemented by extensive internal audits, regular reviews by the management and standard policies and guidelines, which ensure reliability of financial and all other records. The Management periodically reviews the framework, efficacy and operating effectiveness of the Internal Financial Controls of the Company. Internal Audit Reports are discussed with the Management, and they undertake corrective action, if any, in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board. The Company has, in material respect, an adequate internal financial control over financial reporting and such controls are operating effectively.

DIRECTOR?S RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(3)(c) read with Section 134(5) of the Act, and based on the information provided by the Management, the Board of Directors report that:

a) in the preparation of the annual accounts for the financial year ended 31^st March 2023 the applicable accounting standards had been followed along with proper explanations relating to material departure;

b) they 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 as at 31^st March 2023 and of the profit of the Company for that year;

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

d) the financial statements of the Company had been prepared on a going concern basis;

e) they have laid down internal financial controls to be followed by the Company which are adequate and were operating effectively; and

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

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF COMPANIES ACT 2013

Details of loan, guarantee and investments covered, if any, are provided in the notes to the Financial Statements.

PARTICULARS OF CONTRACTS OR

ARRANGEMENTS MADE WITH RELATED PARTIES

In terms of the provisions of the Act, the SEBI Listing Regulations and the RBI Directions, the Board of Directors adopted Related Party Transaction Policy to ensure obtaining of proper approvals and reporting of transactions with related parties.

In terms of Section 177 of the Act and Regulation 23 of the SEBI Listing Regulations read with the Related Party Transaction Policy of the Company, transactions with related parties were placed before the Audit Committee for its approval and omnibus approval of the Audit Committee was obtained for related party transactions of repetitive nature, within the limits prescribed by the Board of Directors. The Audit Committee is periodically updated with respect to related party transactions executed under omnibus approval. All contracts/arrangements/ transactions entered into by the Company during the financial year with related parties were in the ordinary course of business and on an arms length basis.

During the year under review, no material related party transactions as prescribed in Section 188 of the Act read with Companies (Meetings of the Board and its Powers) Rules, 2014, were entered by your Company. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable to the Company. Further, during the year under review, the Company had not entered into transactions with related parties which could be considered to be material in accordance with the Related Party Transaction Policy of the Company. All other transactions with related parties, during the year under review, were in compliance with the Related Party Transaction Policy of the Company.

Further, the Company has not entered into transactions requiring disclosures in terms of Regulation 53(f) of the SEBI Listing Regulations.

Disclosure of the related party transactions as required under IndAS - 24 are reported in Notes of the audited financial statements of the Company for the financial year ended 31^st March 2023.

The policy on Related Party Transactions is available on the Companys website https://www.ugrocapital.com/ corporate-governance#subcategorv-policies.

PARTICULARS OF EMPLOYEES AND REMUNERATION:

A. Information as per Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

a) The ratio of remuneration of each director to median remuneration of the employees of the Company for the financial year:

Name of Director	Ratio to median
	remuneration
Mr. Shachindra Nath	48.84

b) The percentage of increase in remuneration of each Director, Chief Financial Officer, Company Secretary

in the financial year: Except the Vice Chairman

and Managing Director, none of the Directors drew any remuneration and during the year, there was no increase in remuneration of the Vice Chairman and Managing Director.

Further, since the Company Secretary and Chief Financial Officer were appointed during FY 2022-23, increase in remuneration is not applicable to them.

c) Percentage of increase in the median remuneration of employees during the financial year ended 31^st March, 2023: 42.38%

d) Number of permanent employees on the rolls of the Company as on 31^st March, 2023: 1261 employees

e) Average percentage increase made in the salaries of employee other than the Managerial Personnel in the financial year was 18.90% whereas the increase in the managerial remuneration for FY 2023 was Nil.

f) Affirmation that the remuneration is as per remuneration policy of the Company: Yes

B. Information as per Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

The statement containing particulars of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, will be made available during 21 days before the Annual General Meeting in electronic mode to any Shareholder upon request sent at the Email ID: cs@ugrocapital.com

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY OCCURRED AFTER 31^st MARCH. 2023

There are no material changes and commitments affecting the financial position of the Company subsequent to the close of the FY 2022-23 till the date of this report.

Further, after closure of the financial year 2022-23, the Company has raised funds to the tune of Rs. 340.50 crores through qualified institutional placement (QIP) and preferential allotment. Marquee domestic investors viz. SBI Life, GoDigit and SBI General etc. participated in the QIP and equity shares were allotted to them and Danish Sustainable Development Goals Investment Fund K/S (IFU), represented by Investment Fund for Developing Countries, an investment fund incorporated under the laws of Kingdom of Denmark was allotted shares through preferential issue.

Foreign exchange earnings and Outgo-	(Rs. in lakhs)
	Year ended	Year ended
	31st March,	31st March,
	2023	2022
Other Expenses	533.81	79.49
Exchange earned	-	-

REMUNERATION POLICY OF THE COMPANY

The remuneration policy of the Company comprising of the appointment and remuneration of the Directors, Key Managerial Personnel and Senior Managerial Personnel of the Company including criteria for determining qualifications, positive attributes, independence of a Director and other related matters have been provided in the Corporate Governance Report which is which forms part of the Annual Report and is also available on Companys website at https://www.ugrocapital.com/ corporate-governance

VIGIL MECHANISM / WHISTLE BLOWER POLICY

Pursuant to the Section 177(9) and 177(10) of the Act and Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 22 of the SEBI Listing Regulations, the Board of Directors have approved the Policy on Vigil Mechanism / Whistle Blower and the same has been hosted on the website of the Company at https://www.ugrocapital.com/ corporate-governance#subcategorv-policies

This Policy, inter alia, provides a direct access to the Chairman of the Audit Committee. Your Company hereby affirms that no Director / employee has been denied access to the Chairman of the Audit Committee. During FY23, 2(two) complaints were received by Company and which were investigated and as per the Companys Policy resolved by the Company. As on 31^st March, 2023 no complaint is pending.

PREVENTION OF INSIDER TRADING

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company.

The Company has also taken software containing structural digital database for maintaining names of persons with whom unpublished price sensitive information is shared. The software contains details of information shared and the names of such persons with whom information is shared under this regulation along with the Permanent Account Number.

The Code requires pre-clearance for dealing in the Companys securities and prohibits the purchase or sale of Company securities by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the trading window is closed. The Board is responsible for implementation of the Code. The Code is available on the website of the company at https://www.ugrocapital.com/corporate-governance

DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION- PROHIBITION AND REDRESSAL) ACT, 2013

The Company follows a strict zero tolerance sexual harassment at workplace and adopted the policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules thereunder for prevention and redressal of complaints of sexual harassment at work place.

The disclosure in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 for the financial year ended 31^st March 2023 is as follows:

Number of complaints filed during the financial year	0
Number of complaints	0
disposed during the
financial year
Number of complaints	0
pending at the end of the
financial year

STATUTORY AUDITOR?S AND THEIR REPORT

M/s MSKA & Associates, Chartered Accountants (Firm Registration No. 105047W) were appointed as Statutory Auditors at the 27^th (Twenty Seventh) Annual General Meeting ("AGM") held on 18^th September, 2020 for a period of five years commencing from the conclusion of the 27^th (twenty seventh) AGM till the conclusion of the 32^nd (Thirty Second) AGM of the Company.

Further, the report of the Statutory Auditors is provided in the financial section of the Annual Report. The Statutory Auditors report does not contain any qualifications, reservations, adverse remarks or disclaimers.

In terms of the guidelines issued by RBI on 27^th April, 2021 for appointment of statutory auditors for NBFCs which was applicable from second half of financial year 2021-22 which, inter- alia, mandates tenure of statutory auditors to be for a continuous period of three years subject to satisfying the eligibility criteria each year, the term of existing Statutory Auditors will conclude at the conclusion of the 30^th AGM.

The approval of Members of the Company is sought for appointment of M/s. Sharp and Tannan, Chartered Accountant (Firm Registration No. 109983W) as the Statutory Auditors of the Company, for a period of 3 (three) consecutive years, to hold office from conclusion of the 30^th AGM till conclusion of the 33^rd AGM of the Company to be held in the year 2026.

M/s. Sharp and Tannan, Chartered Accountants have given a confirmation to the effect that they are eligible to be appointed and not disqualified from being appointed as the Statutory Auditors. Necessary resolution(s) seeking members approval for appointment of M/s. Sharp and Tannan, Chartered Accountant as statutory auditors forms part of the Notice convening the 30^th AGM.

INTERNAL AUDITORS

Your Company has in place sophisticated internal control structures, proportionate to the size, scope and complexity of operations of the Company. Further, the Company has an internal auditor and is developing the inhouse internal audit function. Internal audits are conducted on a regular basis to review and ensure that responsibilities are duly carried out efficiently. The internal audit department monitors and assesses the effectiveness and adequacy of our Companys internal control mechanisms. Internal audits are accompanied, if required, by audits performed by specialised consultants/audit firms. During the year, KKC & Associates, Chartered Accountants had been re-appointed to assist internal audit department of the Company.

SECRETARIAL AUDITOR

In terms of Section 204 of the Act and Rules made thereunder, M/s Pankaj Nigam and Associates, Company Secretaries, have been appointed as Secretarial Auditor of the Company. The report of the Secretarial Auditor for the financial year 2022-23 is enclosed as Annexure-II to this report.

The report is self-explanatory and does not contain any qualification or adverse remark. Therefore, it does not call for any further comments.

Further, the Company has received certificate of NonDisqualification of Directors from M/s Pankaj Nigam and Associates, Company Secretaries. The same is enclosed as Annexure III to this report.

CHANGE IN NATURE OF BUSINESS

There has been no change in the nature of business of the Company during the financial year ended 31^st March 2023.

DETAILS AND STATUS OF ACQUISITION. MERGER- EXPANSION AND DIVERSIFICATION

During the year, your Company has not carried out any acquisition, merger, expansion, modernization and diversification.

ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3) (a) of the Act, the Annual Return as on 31 ^st March, 2023 is available on the Companys website at https://www.ugrocapital.com/ investor-relations/annual-reports

RISK MANAGEMENT

The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan of the Company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Committee considers the risks that impact the mid-term to the long-term objectives of the business, including those reputational in nature. The Company has an elaborate risk charter and risk management policy. The Audit Committee has additional oversight in the area of financial risks and controls. The Risk Management Policy is available on the website of the Company at https://www.ugrocapital.com/ corporate-governance#subcategory-policies

EMPLOYEE STOCK OPTIONS DISCLOSURE

Your Company believes that its success and ability to achieve its objectives is largely determined by the quality of its workforce and recognises that not only good employment opportunities but also additional motivating mechanisms are needed to incentivize employees and aligning their interest with the interest of the Company. In recognition of the said objective, the Company adopted and implemented CSL Employee Stock Option Scheme 2017 ("ESOS 2017") and UGRO Employee Stock Option Scheme 2022 ("ESOS 2022") ("collectively ESOS Schemes") to attract, retain, motivate and incentivize employees of the Company.

During the year, the shareholders approved new Scheme viz. "UGRO Capital Employee Stock Option Scheme - 2022", for implementation of the Scheme, the UGRO Employee Benefit Trust ("Trust") was set up. The shareholders approved the same through postal ballot on 4^th September, 2022.

During the year, the shareholders approved amendment in ESOS 2017 by introducing new vesting conditions, which is now linked with internal rate of return (IRR) as more particularly defined in the Scheme. The shareholders approved the same though postal ballot on 5^th May 2022.

During the financial year 2022-23, the Company has granted 3,90,000 stock options under ESOS 2017 and 11,11,929 stock options under ESOS 2022.

The Board of Directors confirm that the ESOS 2017 and ESOS 2022 are in compliance with the provisions of the act and Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, as amended.

Disclosure in compliance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 is forming part of this annual report which is available on the website of the Company at the following link: https://www.ugrocapital.com/investor-relations/disclosures

CORPORATE SOCIAL RESPONSIBILITY

The objective of the Companys Corporate Social Responsibility (CSR) initiatives is to improve the quality of life of communities. The Company has in place a CSR policy which provides guidelines to conduct CSR activities of the Company. The CSR policy is available on the website of the Company at https://www. ugrocapital.com/corporate-governance#subcategory-policies

During the year, the Company has spent Rs. 52.50/- lakhs on CSR activities through agencies. A report pursuant to Section 135 of the Act & Rules made thereunder is annexed to this report (Annexure IV).

COMPLIANCE WITH SECRETARIAL STANDARDS

The Company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India.

INVESTOR EDUCATION AND PROTECTION FUND

During the year under review, there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

DETAILS OF FRAUD REPORTED BY AUDITORS

During the year under review, no frauds have been reported by the Auditor (Statutory Auditor, Secretarial Auditor) to the Audit Committee/ Board, under Section 143(12) of the Act.

MAINTENANCE OF COST RECORDS

Your Company is not required to maintain cost records in terms of Section 148(1) of the Act.

DETAILS OF SIGNIFICANT MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS / TRIBUNAL IMPACTING THE GOING CONCERN STATUS AND COMPANY?S OPERATION IN FUTURE

There are no significant material orders passed by the Regulators / Courts / Tribunal which would impact the going concern status of the Company and its future operations.

GENERAL DISCLOSURES

(i) There is no proceeding initiated/ pending against the Company under the Insolvency and Bankruptcy Code, 2016.

(ii) There was no instance of onetime settlement with any Bank or Financial Institution.

ACKNOWLEDGMENT

Your Directors would like to place on record, their gratitude for the cooperation and guidance received from all the statutory bodies, especially the RBI. Your Directors also thank the shareholders, clients, vendors, investors, banks and other stakeholders for placing their faith in the Company and contributing to its growth. We would also like to appreciate the hard work put in by all our employees, and we look forward to their continuing patronage, going forward.

sd /-

Satyananda Mishra

Non-Executive Chairman (Independent Director)

DIN-01807198