jm financial credit solutions ltd Management discussions

GLOBAL ECONOMY WADES THROUGH UNCERTAINTIES

The global economy continued to manoeuvre through uncertainties in FY 2023. Uncertainties pertaining to the likely escalation of Russia-Ukraine war, continuous disruption in global supply chain leading to inflation globally due to closing down of China were the major events that provided maximum volatility to the markets. Expectation of an imminent recession got stronger as major central banks continued to tighten monetary conditions. However, on a positive note in mid FY 2023, notable improvement in supply chains led to easing inflationary pressures and entire commodity prices moderated, Brent crude prices peaked in FY 2023 and moderated approximately 35% by year end. Global growth projections were lowered to 2.9% for 2023 by IMF from 3.4% in 2022.

INDIAN ECONOMY REMAINS RESILIENT WITH ELEVATED INFLATION

Indian economy demonstrated resilience throughout FY 2023 even as global macroeconomic environment threw challenges in the form of tight monetary policy, reduced global demand, high commodity prices especially crude. Indias prudent fiscal planning aided in meeting the fiscal deficit target of 6.4% of GDP in FY 2023, moreover a lower fiscal deficit target for FY24 (5.9% of GDP) and record high Capex allocation (10 trillion) reflected the governments strong intent to continue on its fiscal consolidation path, while carefully balancing the growth requirement of the economy. The uptick in benchmark yields (10 year Gsec) was marginal (50bps) even though the repo rates was hiked by 250 bps during this period, reflecting the confidence of the bond markets in the economy. GST collections have been consistently clocking above 1 trillion mark since last 21 months, collections reached record high of 1.6 trillion in March 2023. Indias trade deficit reached as high as USD 29.3 billion in September 2022 vs USD 15.9 billion average during FY22, which reduced significantly by the end of FY23 (USD 17.4 billion in February). The positive improvement in trade balance was on account of sharp fall in imports vs exports, decline in oil prices and resilient services exports helped cushion the Current Account Deficit. The import cover ratio averaged 9.5 times during this period.

The global uncertainties hampered Reserve Bank of India (RBIs) ability to provide a clear policy path going forward, and on the growth front RBI scaled down the GDP growth projections for FY 2023 to 6.8% from 7.2% earlier. The scale down of the inflation projection (6.5% vs 6.7% earlier) for FY 2023 reflected that the RBI expects inflation to remain elevated with shallow moderation.

STICKY INFLATION KEEPS MONETARY CONDITIONS TIGHT

The fall in pace of rate hikes (50bps in September 2022 to 25bps in February 2023) reflected RBIs comfort in growth and inflation dynamics in the country. The central bank continued to remain hawkish throughout FY 2023 as inflation hovered above the 6%-mark, systemic liquidity reduced sharply from Rs. 6.6 trillion (April 2022) to 1 trillion in March 2023, it even turned deficit during March 2023 calling for RBIs intervention. The tightening liquidity condition was evident in the steep rise in overnight call money rates (6.4% vs 3.3% in April 2022).

The repo rate at 6.5% has already reached pre-pandemic levels. The RBI like other central banks is targeting to bring down inflation decisively within the accepted tolerance band (4% plus/minus 2%).

RESILIENCE IN EXTERNAL ECONOMY AMIDST GLOBAL UNCERTAINTIES

The external sector has continued to remain resilient amidst the global uncertainties and expectations of the spill over effects due to an imminent slowdown in the developed market economies. Indias exports reached an all-time high of USD 750 billion in FY 2023 from USD 672 billion in FY 2022. The growth in merchandise exports on a FYTD basis (April-February 2023) moderated to 7% v/s 47% earlier, while imports growth moderated to 19% v/s 59% earlier, trade deficit widened to USD 251 billion v/s USD 173 billion earlier. However, robust services balance (USD 125 billion vs USD 93 billion earlier) helped cushion the Current Account Deficit (CAD) in FY 2023. Software exports constitutes majority of Indias services exports and the consistent growth in this category is not reflecting the spill over effect of growth slowdown in DM economies (approximately 90% of Indias software exports is concentrated in US and Europe). Indias forex reserves fell USD 39 billion during FY 2023, but remained at comfortable levels of USD 579 billion which comes to an import cover ratio of 9.5times.

Source: International Monetary Fund, RBI, CMIE

OVERVIEW ON NON-BANKING FINANCIAL COMPANIES (NBFCs):

The resilience of the domestic financial system is being reflected in healthy balance sheet of banks, stronger capital levels of Non-Banking Financial Companies (NBFCs).

NBFCs are the key pillar of the Indian financial ecosystem, along with public sector banks, private banks and financial institutions. It forms one of the key constituents of the credit ecosystem of the Indian financial sector. They serve as an alternative channel of credit flow to the commercial sector, cater to diverse financial needs of borrowers including millions of small firms as well as individuals.

During the FY 2022-23, the NBFC sector maintained robust credit growth during supported by the broad-based revival in economic activity and targeted policy initiatives with asset quality showing a continuous improvement and rise in lending activities. The sector strengthened its financial soundness during the year through robust capital buffers, improved asset quality and consolidation of balance sheet. The borrowings constituted the largest source of funds for NBFCs and their dependence on banks for funds had grown during the H1: 2022-23. A scale based regulatory framework was implemented for NBFCs during 2022-23.

IMPORTANT REGULATORY FRAMEWORK PASSED BY THE RESERVE BANK OF INDIA & SECURITIES AND EXCHANGE Board OF INDIA

As part of the overall objective of aligning the regulatory/ supervisory framework with global best practices, important strides in the areas of risk management, various regulatory compliance and enforcement, were issued during the year. The guidelines inter-alia pertained to classification of the NBFCs under scale-based regulation (SBR), digital lending, large exposure framework for the upper layer NBFCs under the SBR, establishment of digital banking units (DBUs), and a revised regulatory framework for UCBs. A brief summary of the important guidelines is given below:

• Scale Based Regulation: A revised regulatory framework for NBFCs

RBI issued Scale Based Regulation (SBR) covering capital requirements, governance standards, prudential regulation, etc., for NBFCs. These SBR guidelines were made effective from October 1, 2022.

In continuation to the aforesaid SBR, RBI subsequently issued detailed guidelines on the following:

- Compliance Function and Role of Chief Compliance Officer (CCO) – NBFCs;

- Loans and Advances – Regulatory Restrictions by NBFCs basis their categorization as per SBR;

- Disclosure in financial statements;

- Capital requirements for NBFCs – Upper Layer;

- Guidelines on Compensation of Key Managerial Personnel (KMP) and Senior Management in NBFCs;

- Multiple NBFCs in a Group: Classification in Middle Layer.

• Master Direction on Outsourcing of Information Technology Services

RBI vide its circular dated April 10, 2023 has issued RBI (Outsourcing of Information Technology Services) Directions, 2023 to ensure effective management of attendant risks associated with IT outsourcing. The guidelines include chapters on preliminary information, the role of the regulated entity, regulatory and supervisory requirements, comprehensive assessment of need for outsourcing and attendant risks, and other related topics. These guidelines are effective from October 1, 2023.

Apart from these, RBI has also issued draft Master Direction on Information Technology Governance, Risk, Controls and Assurance Practices and Draft Circular on Fair Lending Practice - Penal Charges in Loan Accounts

• Guidelines on Digital Lending:

In order to address concerns arising out of unbridled engagement of third parties, misselling, breach of data privacy, unfair business conduct, charging of exorbitant interest rates, and unethical recovery practices, the ‘guidelines on digital lending were issued on September 2, 2022. The guidelines are based on the principle that lending business can be carried out only by entities that are either regulated by the RBI or are permitted to do so under any other law. The guidelines aim to make the lending process transparent and fair by, inter alia, (i) mandating flow of funds between lenders and borrowers only through their bank accounts without any pass-through account/pool account of any third party; (ii) ensuring that lending service providers do not collect any fee/charges directly from the customer; (iii) transparent disclosure of the key facts of the borrowing arrangement, including the all-inclusive cost to a borrower; (iv) ensuring needbased collection of data with audit trails backed by explicit customer consent; and (v) putting in place an appropriate privacy policy with regard to customer data.

• Circular issued by National Financial Reporting Authority (NFRA) on instances of non-compliance with Ind AS:

In order to ensure adherence to high-quality Indian Accounting Standards (Ind AS) Reporting Framework, which is substantially aligned with globally accepted IFRS Standards, NFRA, has highlighted the instance of non-compliance with the Ind AS by the entities in the critical areas of Revenue Recognition and Measurement, and Initial Measurement of corresponding Trade Receivables.

ABOUT JM FINANCIAL CREDIT SOLUTIONS LIMITED

JM Financial Credit Solutions Limited (the Company) is one of the leading NBFC of the JM Financial Group and is registered with the RBI as a Systemically Important Non-Deposit Taking Middle Layer NBFC.

The Company is focused on offering solution based approach to the clients in real estate sector by catering to their various financing requirements and by keeping in mind the typical nature of the industry. We consider our clients as partners and aspire to have significant mind share of our clients when it comes to financing requirements/solutions.

• Project Loans: Our wholesale mortgage financing business is primarily focused on providing project specific funding for ongoing residential and commercial projects which have received key regulatory approvals.

• Projects at Early Stage Loan: This is offered for projects that are expected to be launched in the near-term. These projects are typically in the approval stage and may be raising funds for development and/or for seeking relevant approvals. These loans are typically advanced in part as a portion of a refinancing of existing loans and in part, as project related funding. Repayment of the loan is expected from project cash flows that will accrue during the loan tenure.

• Loan against Property: These loans are advanced against fully constructed residential and/ or commercial units that have been granted an occupation certificate. Repayment of the loan is expected from sale of the units.

• Loan against Securities: Clients may be granted these loan against a pledge of listed/unlisted securities of their companies to bridge the gap in the event the inventory of the developer is not being sold as expected, thereby offering cash flow to the developer until completion of the project. These loans are advanced to select borrower-groups with strong credit history in few cities. These loans are mainly provided for funding the clients group activities and repayment of existing loans (secured and unsecured).

The real estate sector over the last few years has witnessed very strong sales cycle resulting into a lot of cash inflows for the developers. On account of the high cash inflows, the utilisation of construction finance by developers is lower. These trends have impacted our ability to grow faster.

ANALYSIS ON FINANCIAL PERFORMANCE

The total assets of the Company stood at 10,618.25 Crore as on March 31, 2023 as against 9,113.19 Crore as on March 31, 2022. The loan book increased to 9,579.70 Crore (out of which 93.17 % loans were secured loans) as of FY 2022-23 as compared to 7,823.31 Crore (out of which 98.29 % loans were secured loans) as of FY 2021-22.

The Borrowing stood at 6,282.88 Crore as of March 31, 2023 compared to 5,102.57 Crore as of March 31, 2022. The Companys funding requirements are met through credit facilities from banks and issuance of redeemable NCDs. The Company has access to funds from multiple classes of credit providers, including public sector banks, private commercial banks, non-institutional, high net worth investors and mutual funds. Borrowing from long term sources comprised 100% of total borrowing during FY 2022-23 as compared to 93.07% of total borrowing during FY 2021-22.

The total income of the Company during the year under review stood at 1,172.54 Crore as compared to 1,136.10 Crore during FY2021-22. Finance costs stood at 499.36 Crore as of FY2022-23 compared to 455.43 Crore for the year ended March 31, 2022. The increase in finance cost was primarily due to increase in average borrowing during the year under review. The total expenses (excluding finance costs and impairment of financial instruments) of the Company increased to 83.48 Crore in FY 2022-23 as compared to 63.39 Crore FY 2021-22 primarily due to increase in employee benefit expenses and other operating expenses. The Company reported pre-provisioning profit of 589.70 Crore as of FY2022-23 as against 617.28 Crore in the previous financial year. The impairment of financial instruments during the FY2022-23 was 136.87 Crore as compared to 224.56 Crore for the FY 2021-22. The Company reported profit before tax of 452.83 Crore as against 392.72 Crore in previous financial year. The profit after tax for FY2022-23 stood at 334.75 Crore as against 289.06 Crore for FY2021-22. As on March 31, 2023, the Company reported gross non-performing assets of 483.56 Crore as compared to 416.01 Crore as of March 31, 2022.

The provision for expected credit loss on financial assets as on March 31, 2023 aggregated to 382.17 Crore (as on March 31, 2022 - 475.44 Crore).

Risk Management

Risk is an integral part of any business and almost every business decision requires the management to balance risk and reward. The ability to manage risks across geographies, products, customer segments and functional departments is of paramount importance for the hindrance free growth of every organisation.

Due to increasing globalization, integration of world markets, newer and more complex products and transactions and an increasingly stringent regulatory framework, the financial services industry is subject to continuously evolving legislative and regulatory environment.

The Company provides a wide range of financing under various verticals and is exposed to various risks. In order to ensure that the impact of risks is minimal, the Company lays utmost importance on scanning the external macroeconomic environment, market conditions and governmental policies regularly. The Company has built robust systems and processes to address the risks associated with its business.

A Risk Event Update report is periodically placed before the Board of Directors of the Company. The Risk Event Update report includes, inter alia, the risk identification, risk classification, assessment of impact, risk mitigation/remedial action and risk status.

The Board and the Risk Management Committee of the Board reviews these reports along with the course of action taken or to be taken to manage and mitigate the risks. A team of experienced and competent professionals identify and monitor these risks on an on-going basis and evolve processes/ systems to monitor and control the same to keep the risks to minimum levels. On-going monitoring by our officials helps in identifying the risks at an early stage. There is a continuous focus on the maker-checker processes. Detailed regulatory as well as regular inspections also help test our processes and compliances.

As an NBFC, the Company is exposed to both external risks and internal risks. Some of our key risks, their likely impact on our business and our risk mitigation strategy is described below:

Key Risk	Description/Impact of Risk	Risk Mitigation/Strategy
Credit Risk	The risk associated with the failure of the borrower to meet financial obligations to the lender in accordance with the agreed terms is known as Credit Risk. Failure by our borrower to discharge their obligation towards us can cause us a financial loss.	A comprehensive review exercise is conducted for credit approvals, ensuring proper documentation, carrying out extensive credit appraisal, conducting periodic reviews etc., as a part of credit risk mitigation. Various norms for customer identification and evaluation procedure for prospective credit proposals have been stipulated as a part of risk mitigation.
	We are in the business of lending against mortgages and providing securities backed loans. Any material unexpected credit losses or failure of the borrowers to repay debt on time, may have an adverse and negative effect on our business.	Regular portfolio risk analysis is done on various financial and policy parameters, for making required changes in the credit policy as a proactive approach to risk management.
Market Risk	Market risk is the risk of losses arising from the movements in market price of various securities, which may impact our earnings and capital. The risk may pertain to interest bearing securities (interest rate risk), equities (equity price risk) and property that we hold as security against loans.	Our portfolios and collaterals/ securities are continuously monitored to minimize the impact of market risk.
	We are exposed to potential changes in the value of financial instruments held by us caused by fluctuations in interest rates, equity and property prices and/or other risks. Any decline in the price of our investments in quoted securities may affect our financial performance and position.
Liquidity Risk	Liquidity risk is the risk arising due to unavailability of adequate funds at appropriate prices or tenure. It also refers to the risk that arises from the difficulty of selling an asset without a high impact cost.	We have a strong financial position and our business is adequately capitalised, have good credit rating and appropriate credit lines are set up to address liquidity risks. We also maintain a part of our capital in liquid assets to manage any sudden liquidity needs.
	Our liquidity is mainly dependent upon our timely access to, and costs associated with raising funds. Any lack of liquidity in the market could adversely affect our ability to access funds at competitive rates.	Our current ratio was 1.93 times as on March 31, 2023
	Our liquidity shall be affected due to severe liquidity crunch in the market or due to market disruptions where we cannot access public funds. Our clients may, due to certain circumstances not honour their commitments which would indirectly lead to our inability to meet the obligations.	Further, the Company had High Quality Liquid Assets (HQLA) of Rs. 136.35 Crore and Liquidity Coverage Ratio of 669.90% as on March 31, 2023.
Operational Risk	Operational risks can result from a variety of factors, including failure to obtain proper internal authorizations, improperly documented transactions, failure of operational and information security procedures, computer systems, software or equipment, fraud, inadequate training and employee errors.	Well defined policies, operational processes and systems have been devised for operations. Regular audit are done by internal auditors to monitor the adherence of policies and processes. We also get systems audit carried out periodically by competent external audit firms.
	Our business is dependent on people and processes. Shortcomings or failure in internal processes or systems may have material adverse impact on the financial position as well as affect its operation.	Maker/Checker mechanism has been put in place to ensure compliance with laid down systems and procedures in all areas of functioning of the Company.
		Also, the Companys key management team consists of professionals of high level of commitment. They have a good understanding of all the Companys business helping it to grow in a compliant manner.
Reputation Risk	Reputation Risk is the current or prospective risk to business, earnings and capital arising from adverse perception of the organisation on the part of customers, counterparties, shareholders, investors or regulators.	We conduct our business with diligence keeping in mind the stakeholders and their needs.
	Reputation risk is a very high risk and can cause long term and sometime irreparable loss of business/ revenue.	Adequate training is provided to employees to conduct their activities with utmost care and diligence keeping in mind the first class reputation and status enjoyed by the Company.
Regulatory and	Most of our businesses as well as the	We have a team of experienced professionals
Compliance Risk	Company itself operates in strongly regulated business segments.	which takes care of compliance with applicable laws, rules, regulations and guidelines affecting our businesses.
	The risk arises out of a change in laws and regulation governing our business. It could also arise on account of inadequate addressal of regulatory requirements or differences in interpretation of regulations vis-a-vis the regulators. This risk is heightened in setting up global offices as familiarisation with global regulations and practices can take time as well as lead to risk of inadequate understanding.	We also take external advice and appoint well qualified professionals in respective functions, as and when required. All the new guidelines, circulars, notifications are complied with. Formulation of the policies as well as its implementation is taken due care of.
	In recent times, these risks have spread to tax laws and unexpected demands being raised by various tax authorities.	Internal audit is carried out by external professional firms to monitor compliance with best practices, approved policies and applicable regulations.
	New laws or regulations or changes in the enforcement of existing laws and regulations may adversely affect the business/revenue/profits.	Pursuant to the RBI notification the Company has appointed Head of Internal Audit and Chief Risk Officer.
	Non-compliance with regulations may invite strictures, penalties and even punitive action from the Regulators.	Our business team is strongly supported by our Corporate Functions team to quickly calibrate our actions in event of change in regulatory environment.
Competition Risk	The industry in which the Company operates is growing at a rapid pace and is exposed to tremendous competition at the national as well as international level. Strong growth prospects combined with liberalization of financial services sector have prompted the entry of newer foreign and domestic financial services companies.	Diversified and innovative product and services are offered to keep the customers and other stakeholders intact as well as continuous research and development helps in mitigating the competition risk.
	We operate in a highly competitive market and face significant competition from other players in the financial services industry and from companies seeking to attract our customers financial assets. Entry of new players has increased the competition faced by us. It may also lead to attrition of our key personnel.	Fair and transparent practices helps the entity gain competitive advantage over other entities.
		Our human resource policies and a healthy positive work environment help us attract and retain best talent on a continuous basis.
Business Continuity Risk	In the event of disruption in the conduct of business due to incidents like fire, natural calamity, breakdown of infrastructure, acts of terrorism etc. We are exposed to the risk of loss of data, clients and/or business that can adversely affect our financial results.	We have in place Business Continuity Plan (BCP) to mitigate the impact of any such exigencies. We continuously test check the processes laid out under the BCP and review the same. The records with respect to confidential data are preserved and are secured.
Cyber Risk	Cyber risks include risks which could emanate from the failure or compromise of cyber resources / information technology. Cyber threats include phishing attacks, malware attacks, ransomware attacks etc. and can result in to loss of data, control over information systems and could result into adverse impact on the operations.	We have adopted measures to mitigate the cyber security risks including through appropriate firewalls, providing regular advisories, providing training to users, review of the information technology assets.

INTERNAL CONTROL SYSTEMS, INFORMATION SYSTEM AUDIT AND THEIR ADEQUACY

The Company has adequate internal control systems in place, commensurate with its size and the industry in which it operates for ensuring:

• orderly and efficient conduct of business;

• adherence to Companys policies and procedures;

• safeguarding of all our assets against loss from unauthorised use or disposal;

• prevention and detection of frauds and errors;

• accuracy and completeness of accounting records;

• timely preparation of reliable financial information; and

• compliance with applicable laws and regulations.

Policies, guidelines and procedures are in place to ensure that all transactions are authorised, recorded and reported correctly as well as provide for adequate checks and balances.

Adherence to these processes is ensured through frequent internal audits. The internal control system is supplemented by an extensive program of internal audit and reviews by the senior management. We have appointed independent internal audit firm for the Company to assess and improve the effectiveness of risk management, control and operations and processes. To ensure independence, the internal audit function has a reporting line to the Audit Committee of the Board. Internal audit team is inter alia empowered to examine the adequacy and compliance with policies, plans and statutory requirements. Internal audit team is empowered to examine the adequacy of and compliance with policies, plans and statutory requirements. Pursuant to the RBI notification, the Company has appointed Head of Internal Audit, and Chief Risk Officer.

Pursuant to the requirement of the Companies Act, 2013, the Company also conducts secretarial audit by a Practicing Company Secretary every year. The Secretarial Audit Report for the financial year ended on March 31, 2023 does not contain any qualifications, reservations or adverse remarks or disclaimers.

Additionally, as per the provisions of Paragraph 5 of the Master Direction on Information Technology Framework for NBFCs dated June 8, 2017 issued by RBI, NBFCs having asset size of 500 Crore or more, were required to conduct Information System (IS) Audit, at least once in a year. Accordingly, ANB Solutions Private Limited (ANB Solutions) had conducted the detailed IS Audit of IT infrastructure, network, security and applications for the financial year ended March 31, 2023. The findings/observations and recommendations made by ANB Solutions were discussed and deliberated at the meeting(s) of the IT Strategy Committee as well as Audit Committee of the Board.

The senior management regularly reviews the findings and recommendations of the internal auditors, secretarial auditors and auditors conducting information systems audit so as to continuously monitor and improve internal controls to match the organizations pace of growth and increasing complexity of operations as well as to meet the changes in statutory and accounting requirements.

The Audit Committee of the Board reviews the performance of the internal audit and the adequacy of internal control systems and compliance with regulatory guidelines. Significant deviations, if any, are brought to the notice of the Audit Committee of the Board and corrective measures are recommended for implementation. The Audit Committee of Board provides necessary oversight and directions to the internal audit function. This system enables us to achieve efficiency and effectiveness of operations, reliability and completeness of financial and management information and compliance with applicable laws and regulations.

ASSET LIABILITY MANAGEMENT COMMITTEE:

In line with the requirement of RBI, the Board of Directors has set up Asset Liability Management Committee (ALM Committee).

The terms of reference of ALM Committee include:

a. reviewing the asset-liability profile of the Company with a view to manage the market exposure assumed by the Company;

b. safeguarding the recovery positions at any point of time;

c. reviewing risk monitoring system, ensure payment of liability on its due dates, liquidity risk management, funding and capital planning, profit planning and growth projections, forecasting and analyzing different scenarios and preparation of contingency plans.

Additionally, as per the provisions of Guidelines on Liquidity Risk Management Framework issued by RBI on November 4, 2019, the Board of Directors of the Company has constituted an Asset Liability Management (ALM) Support Group. The members of ALM Support Group include Chief Financial Officer, Company Secretary, Members of Borrowing / Controllers Controller team.

The terms of reference of ALM Support Group inter alia, include to analyse, monitor and report the liquidity risk profile to the Asset Liability Management Committee.

Furthermore, in order to ensure a sound and robust liquidity risk management system and pursuant to the aforesaid guidelines, the Board of Directors of the Company has also adopted Liquidity Risk Management Framework.

CORPORATE SOCIAL RESPONSIBILITY (CSR) AND PHILANTHROPIC GIVING

The Company as part of the JM Financial Group scaled new heights in its efforts to catalyse transformation in the areas of health, education, sports, agriculture and women empowerment.

The Groups CSR arm – JM Financial Foundation (JMFF), set up in 2001, invested itself intensively in some of the most deprived communities in an increased number of villages in the aspirational district of Jamui in Bihar and in the tribal district of Palghar in Maharashtra. These interventions progressed concurrently with our extensive impact on the education of children, beyond the boundaries of the said two states.

Our CSR initiatives, budgets and expenditures are administered by JM Financial Foundation as outlined in the CSR Policy, adopted by the Company.

In conformity with our CSR Policy and considering the applicable provisions of the Companies Act, 2013 and the amendments made thereafter, the CSR Committee of the Company have approved and allocated a total amount of 11.99 Crore. The amount has been utilised as allocated, towards the CSR Project Shri Vardhman Netralaya, renamed as Maitri Karuna Netralaya, during the year.

The subsequent sections highlight CSR inputs and progression in the interventions undertaken for Project Maitri Karuna Netralaya as per the annual action plan adopted by the Company during the financial year 2022-23:

Maitri Karuna Netralaya

(multi-year project supported under Annual Action Plan 2022-23)

JMFF has been organizing annual eye-camps in some of the most remote villages of Jamui district, Bihar, since 2018. Till 2022, the Foundation had screened 2,512 patients for visual impairment, primarily including cataract, refraction, glaucoma infections among others. These camps were followed by facilitating cataract surgeries, spectacles and some referral services. However, our reach was limited, owing to lack of eyecare facilities accessible to the community in the region. Given this evident need, we committed ourselves to set up a hospital in Jamui, that would ensure providing timely eye-care services, to diagnose and treat preventable blindness, and cure patients to the last mile.

Maitri Karuna Netralaya – our eyecare facility in Gidhaur block of Jamui district, Bihar, opened its doors to OPD patients on January 23, 2023 after close to 10 months of reconstruction and renovation work spanning an area of 9,423.54 sq. ft. The new Netralaya has four wings containing two Operation Theatres, OPD and pharmacy facilities and 10 beds, among other clinical and surgical facilities. A total of 32 clinical and non-clinical personnel inclusive of two ophthalmology surgeons, form the exclusive team of the Netralaya.

Per our annual practice, JMFF scheduled eye-camps in January 2023, in the most distant villages of tribal Khaira block in Jamui, with the comfort of taking screened patients to our own Netralaya. The camps screened 1,172 patients from across the block. These formed the first set of Netralaya patients. From January 23 to March 31, 2023, the Netralaya has consulted 2,306 OPDs for vision ailments such as cataract, refraction and pterygium, among others. Notably, the Netralaya has successfully conducted 106 cataract surgeries (majorly with Phacoemulsi_cation technology) and restored the patients eyesight, in a period of 36 days up to March 31, 2023.

HUMAN RESOURCES

We at JM Financial, are driven by the success of our employees. Our Human Resources department plays a crucial role in ensuring that we attract, develop and retain the talent needed to achieve our strategic goals.

Our team always will work tirelessly to support our employees in the face of unprecedented challenges. We ensure to support our business objectives in order to attract and retain top talent, ensure compliance with employment laws and regulations, and promote a workplace culture that fosters collaboration, innovation and excellence.

HR Promise - The Human Resources Tagline

We believe that the credibility and reputation of the Firm is shaped by the collective conduct of individual employees and the tagline affirms these three beliefs at its foundation to supplement the Group values.

Pragmatic

Professional

Progressive

Engagement Surveys – Great Place to Work

As part of our endeavor to rank as an employer of choice and also identify our developmental areas, we internally conducted a dipstick study to understand our employees - what motivates them to go the extra mile, what drives loyalty and what genuinely makes and keeps them happy.

The findings of the survey reiterated our belief that our strongest attributes are our value systems, our open-door culture, innovative practices, transparency, a sense of belonging, spirit of teamwork and the respect and credibility we hold in the industry.

This year, five entities - JM Financial Limited (representing Institutional Businesses), JM Financial Services Limited, JM Financial Asset Management Limited, JM Financial Products Limited (Dwello) and JM Financial Home Loans Limited participated in the Great Place to Work survey.

JM Financial Group has been accredited as Great Place to Work-Certified™ by the Great Place to Work Institute for all five participating entities for the period Feb 2023 – Feb 2024.

Talent Management

At JM Financial, we believe that talent management is essential to our success. We are responsible for managing the entire employee lifecycle, from recruitment to development and retention, to ensure that we have the right talent in place to achieve our strategic goals.

We aim at improving the recruitment process, enhancing the onBoarding experience, investing in the training and development as well as creating career development plans or succession plan.

We believe that investing in our employees is critical to our long-term success and we will continue to prioritize talent management in years to come focusing on creating a highly engaged and motivated workforce.

Workforce Diversity

Diversity and inclusion continue to be a key priority for our organization. Our efforts to create a diverse and inclusive workforce are guided by a solid foundation to provide equal employment opportunities to all individuals.

Our HR team is actively working to create a stated policy and initiatives to attract diverse pool of candidates and create equal opportunity to all employees. This policy will act as a guideline for the organization to understand the responsibilities of the employees and employers.

Moving forward, we will continue to prioritize diversity and inclusion in our HR activities and work to ensure that all employees feel valued and respected in our workplace.

Campus Hiring

For the whole Group, a Centralized Campus team has been created to manage campus hiring. The team plays a key role in forging a solid connection with the Institutes - Institutes – B Schools, CAs, Law schools and Schools specializing in Social Studies.

The team is also responsible for coming up with hiring strategies and making sure the organisation has a positive influence on the Institutes and the students.

The campus team constantly engages with the Institutes for live projects, internships, and final placements after getting the hiring requirements from the businesses.

Some of the campuses visited this year for internship include Management Institutes (SP Jain) while for the final placement,

Institutes visited include SP Jain, JBIMS, IIM Lucknow, IITs, TISS, Symbiosis Law School and Plaksha University for Companys business and other Group businesses like Digital Broking, Institutional Equity Research, Investment Banking Division.

Leaders from various businesses participate in the hiring process in order to provide a positive candidate experience.

Rewards and Recognition

Rewards and Recognition (R&R) plays a vital role in any work environment wherein the employees are recognized and rewarded for their contributions towards achieving organizational goals. The timely and fair recognition awards motivate employees and at JM Financial we provide these boosters at intervals and at each business level.

We use iCheer at group level to share appreciations wherein the employees can appreciate each other using the specially designed templates. This system generated mail is shared with concerned employee and their immediate supervisor. Apart from this, we organize business wide Annual Business Meets which provides a platform to the respective business wing to recognize and reward their high performers.

The Annual Business Meets also provide an opportunity to all teams to bond in more informal setup which helps them to connect better.

We have varied award categories to acknowledge the efforts of employees at different levels, which includes long service, excellent performer, living values, team excellence, performance excellence, beyond boundaries, and support with a smile. Following the authorities and employees nominations, these prizes are given out.

We also organize a special offsite for CFG group which includes departments such as Human Resources, Compliance, Finance & Controllers, Administration, Information Technology and Corporate Communications. These teams are backbones of any businesses and we recognize efforts by them during this annual R&R function.

Employee Engagement

Employees form a critical driver for our success and achievements. Employee engagement affects just about every important aspects of the organization. This forms a strength for the teams to bond and create a lively atmosphere for the employees to work in.

We at JM Financial, engage our employees through various initiatives at Group as well as business level.

As our tradition, we celebrate all the festivals in great zest. We celebrated a lightening Diwali with Kids to work day to celebrate an integrated Diwali.

To celebrate Republic Day this year, we had an evening open session for all the Pan-India locations coming together and sharing their love for the national using songs or instruments they like. We also arranged games and fun activities.

This year a week-long employee appreciation was celebrated in the first week of March. Employees were encouraged to share appreciation through appreciation cards specially printed to write down a message and share with employees, thanking and appreciating their contribution along with a revived iCheer portal with new themes to share cheers to any employees around the business.

An evening celebrating the womens achievement and contribution, on the March 8, 2023. Senior leaders addressed the gathering in Cnergy office followed by some games and fun.

Employee Wellbeing Initiatives

At JM Financial, we are committed to providing our employees with the resources and support they need to achieve their best possible physical, mental, and emotional health.

• Doctor on Call

We have a Doctor on call for all the employees in the organization. There is one empanelled doctor who is available on designated days during the week for consultation in office. Employees are informed about the available slots via mail.

• Leave & Paid Time Off

At JM Financial we encourage Work-Life Balance, which became crucial post covid. The pandemic erased the line between personal & professional time, which is taking toll on the mental wellbeing of human beings. We introduced additional leave type as well as encouraged employees to utilize their regular leaves in order to spend quality time with their family and friends breaking away from the work pressure which the whole world faced during the pandemic.

Performance Management

We follow a comprehensive performance evaluation process for annual reviews, which was digitalized and a structured performance evaluation calendar was launched.

Employees across levels benefit from the development-oriented approach of this system.

This practice helps us identify the capabilities of employees and leverage the same. It also helps us to suggest and plan development in the identified areas through training. For this, a Training Need Analysis is captured.

Trainings were provided to new joinees, in order to help them get equipped with the appraisal process and the system.

Compensation and Benefits

Our compensation framework is structured to align the interests of our employees with the long-term interests of the Firm and its other stakeholders.

Our compensation framework is designed to retain and motivate our human capital, reward them for their performance and attract superior talent from the industry.

At JM Financial, we also offer various benefits designed to meet the needs of our employees. These benefits are an integral part of our Company and provide employees and their families valuable support, during employment with JM Financial.

Succession Planning

At JM Financial, we promote an atmosphere of inclusion, by encouraging the next level of employees to take higher responsibilities. _

Managers along with Human Resources formulate a customized grooming and orientation of high potentials, by carefully planning their work experiences. Their skills and capabilities are developed through further training and mentoring.

Learning and Development

Employee Training program or initiatives have been integral part of HR vision and long-term objectives of our firm. As the virtual era is over but still some aspects still remain in virtual era so that is why this time we conducted virtual as well as physical trainings for the employees. This mixture works well as we see the participation level on another level. Also, we conduct specific departmental trainings which completely focus on specific departments knowledge for all the new hires to get the sense of their department.

Hiring

Hiring process is both digitalized as well as in office process with online and in office interviews, pre-joining formalities, on-Boarding and induction

The total employee strength of the Company stood at 50 as on March 31, 2023.

SAFE HARBOUR

This report describing our activities, projections and expectations for the future, may contain certain ‘forward looking statements within the meaning of applicable laws and regulations. The actual results of business may differ materially from those expressed or implied due to various risk factors and uncertainties. These risk factors and uncertainties include the effect of domestic as well as global economic and political events, volatility in interest rates and in the securities market, new regulations and government policies that may impact our businesses as well as ability to implement our strategies. We are under no obligation to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent developments, information or events and assume no liability for any action taken by anyone on the basis of any information contained herein.