AAVAS Financiers Ltd Management Discussions

The world economy saw a marginal improvement in GDP growth to 3.3% in 2024, according to the International Monetary Funds (IMF) World Economic Outlook. The growth narrative varied meaningfully across geographies: while advanced economies continued to experience a slower pace of expansion, reflecting tight monetary conditions and mature market cycles. Emerging and developing markets, particularly in Asia, delivered stronger growth, underpinned by rising domestic demand and structural reforms.

The economic policy landscape and the structure of international economic engagement is being reshaped by the recent tariff measures introduced by the United States and with counteractions from key global trading partners. These policy shifts, while presenting short-term complexities, are also opening space for strategies, regional cooperation, and realignment of global value chains.

Geopolitical instability including the ongoing conflicts between Russia and Ukraine, tensions in the Middle East involving Israel and neighbouring countries, and tariff war among major economies such as the U.S. and China continues to pose risks to global economic stability. Additionally, evolving climate policies and regulatory shifts are influencing investment decisions across industries.

In 2024, the U.S. economy expanded by 2.8%, supported by a strong labour market and easing inflation. The Eurozone recorded 0.9% growth, with Germany experiencing a minor contraction. Emerging markets achieved 3.3% growth, driven by advancements in technology and infrastructure investment. Meanwhile, Chinas economy is projected to grow by 3.2% in 2025, bolstered by government policy measures and a stabilising property sector.

Global inflation continued its downward trend, cooling to 4.9% at the end of Inflation in advanced economies is 2024. projected to decline to an average 2.6% approaching target levels by late 2025 while emerging markets experienced a more gradual decline. Major central banks are anticipated to reduce interest rates until mid-2025, with a cautious approach toward subsequent easing.

Outlook

In the United States, growth is anticipated to peak at 1.8% in 2025 before easing to 1.7% in 2026, shaped by amplified policy uncertainties, ongoing tariff war between U.S and China, and a softer demand outlook amid slower-than-expected consumption growth. The Eurozone is projected to grow by 0.8% in 2025 and 1.2% in 2026, with tariffs weighing on economic activity. Overall, advanced economies are expected to stabilise around 1.2% growth during this period.

Global inflation is forecasted to decline further, reaching 4.3% in 2025 and 3.6% in 2026, as the global disinflationary trend persists. Advanced economies are anticipated to achieve their inflation targets in 2026, with stability expected thereafter.

Global economic growth is expected to moderate, with projections indicating a 2.8% expansion in 2025 before recovering to 3.0% in 2026. This outlook is heavily influenced by the direct impact of new trade measures and their indirect consequences, such as trade spillovers, increased uncertainty, and weakening business sentiment.

(Source: WEO)

India is set to maintain its position as the fastest-growing major economy in FY 2025-26, as projected by leading multilateral agencies. While economic activity experienced a temporary slowdown in the first half of FY 2024-25, high-frequency indicators suggest a sustained recovery in the second half, driven by improving industrial activity and a resurgence in both rural and urban demand. Enterprise surveys reflect growing optimism across key sectors.

The Union Budget 2025-26 strikes a prudent balance between fiscal consolidation and growth, ensuring continued economic stability. Private sector investment intentions remain firm, while listed companies report accelerated sales growth and improved operating profit margins. Headline retail inflation moderated to 3.3%, marking its lowest level since August 2019. Additionally, the Reserve Bank of Indias (RBI) recent measures including interest rate cuts, an accommodative policy stance, and liquidity-enhancing actions provide further support for sustained growth. Strong macroeconomic fundamentals, rising foreign direct investment (FDI), resilient debt inflows, and comfortable foreign exchange reserves contribute to Indias external stability.

FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 (P)

P: Projected

FY 2024-25 marked a promising milestone, with corporate earnings rising in tandem with GDP growth, with the corporate profit-to-GDP ratio (NSE500) at a 17-year peak of 4.7%. This alignment reflects a vibrant and strengthening domestic economy, setting the stage for continued business momentum and long-term growth opportunities.

India now ranks as the worlds 4th largest economy by nominal GDP and 3rd largest by Purchasing Power Parity (PPP). The government has set ambitious targets, aiming for a US$ 5 trillion economy by FY 2027-28 and US$ 30 trillion by 2047, with infrastructure development, policy reforms, and technological advancements serving as key drivers.

Consumer Price Index (CPI) headlineinflation declined by a cumulative 1.6% during FY 2024-25, reaching 3.3% in March 2025. A strong seasonal correction in vegetable prices contributed to food inflation dropping to 2.9% in February, the lowest since November 2021. The fuel sector continued to experience deflation, while core inflation edged up to 4.1% in March 2025.

Outlook

Indias positive outlook is supported by its demographic dividend, sustained rural demand, and an anticipated revival in urban consumption. A recovery in fixed capital formation, backed by increased government capital expenditure, higher capacity utilisation, and strong corporate and banking sector balance sheets, is expected to further bolster economic momentum. While merchandise exports may face headwinds due to evolving global uncertainties, services exports are likely to maintain their resilience.

The outlook for food inflation has turned decisively positive. There has been a substantial and broad-based seasonal correction in vegetable prices. Sharp decline in inflation expectations for three months and one year ahead period would help anchor inflation expectations going ahead. Furthermore, the fall in crude oil prices augurs well for the inflation outlook. Taking all these factors into consideration, and assuming a normal monsoon, CPI inflation for the FY 2025-26 is projected at 4.0%.

India is projected to grow at 6.5% in FY 2025-26, according to the Reserve Bank of India (RBI), reinforcing its position as one of the worlds fastest-growing major economies. The country remains on track to become the worlds third-largest economy by 2030, driven by substantial infrastructure investments, rising private capital expenditure, and the expansion of financial services. Ongoing structural reforms continue to strengthen long-term growth prospects.

(Source: MoSPI, RBI)

Union Budget 2025-26

The Union Budget 2025-26 presents a balanced and growth-oriented financial framework aimed at addressing immediate and long-term economic priorities. By enhancing disposable income, prioritising infrastructure development, and promoting domestic manufacturing, the budget lays a solid foundation for sustained economic growth while ensuring fiscal prudence.

A standout feature is the increase in the income limit to avail rebate under the new tax regimeto s and extensive reach HFCs possess, offering Rs. 12lakhannually,significantly boosting disposable income for middle-class households. This reform is expected to enhance consumption and savings, directly benefiting salaried individuals and driving economic growth. The focus on infrastructure, identified as a key driver of development, includes substantial investments in roads, railways, and urban facilities, which will improve connectivity and create jobs, stimulating demand in allied sectors.

Additionally, the budget supports the Production Linked Incentive (PLI) scheme, targeting sectors such as electronics and textiles, and aligns with the "Make in India" initiative to position India as a global manufacturing hub. The transformation of India Post into a catalyst for the rural economy will enhance logistics and financial inclusion, further integrating rural areas into the broader economic framework.

With a reduced fiscal deficit target of 4.4% of GDP for FY 2025-26 down from 4.8%, the government is reinforcing its commitment to fiscal prudence while staying firmly on the path of growth oriented reform. This balanced approach is complemented by continued support for clean mobility and renewable energy, including extended incentives under the FAME India Phase II scheme and fresh investments in EV charging infrastructure, reflecting a clear push toward a greener, more sustainable economy.

Indias housing finance sector has seen a substantial growth in FY 2024-25, driven by positive economic conditions, supportive government policies, and rising urbanisation.

Housing Finance Sector Review

The total outstanding Individual Housing Loan (IHL) portfolio of Primary Lending Institutions recorded a strong growth of 13.2% in FY 2024-25, with Housing Finance Companies (HFCs) growth trailing marginally at 12.7%. Leveraging the specialised they have product consistently sustained an 18-19% share within the housing loan segment a trend expected to remain steady in the medium term.

Regulatory developments have played a crucial role in shaping the sector. The RBI has been proactive and significantly strengthened housing finance by enhancing risk management, transparency, and compliance under its regulatory framework. Additionally, the expansion of priority sector lending (PSL) eligibility, open market operations and NHBs refinancing schemes have supported liquidity access for housing finance companies. The governments flagship Pradhan Mantri Awas Yojana (PMAY) and interest subsidies have also increased demand.

The growth of the housing finance market is driven by structural factors, including improved affordability, accelerating urbanisation, the rise of nuclear families, increasing preference for premium housing, and impactful government initiatives such as "Housing for All". Fortified by these favourable dynamics, the sector is forecasted to grow at a robust CAGR of 15-16% between FY 2024-25 and FY 2029-30, boosting its long-term potential.

(Source: Care Edge; NHB)

Affordable Housing Finance Sector Review

According to guidelines and regulations from NHB and RBI, housing loans with a ticket size of less than Rs. 2.5 million come under the category of Affordable Housing Loans. The overall size of the affordable housing financemarket in terms of loan outstanding was Rs. 12.9 trillion in FY 2024-25, comprising 33% of overall housing credit. Affordable HFCs accounted for 20% of the market (Outstanding loans of Rs. 1.4 trillion as of FY 2024-25).

Between FY 2018-19 and FY 2024-25, the growth in the affordable housing loans had remained subdued, with the segment having witnessed a CAGR of 8.32% as compared to overall housing loans, which has grown by 11.6% during the same time. To address the slowdown in the credit growth, in a recent amendment to the PSL guidelines, the RBI enhanced the limit of Housing loan considered under Priority sector providing a boost to the credit for the segment.

ICRA expects the industry to pick up steam gradually and the affordable housing segment to touch Rs. 20 trillionbyFY2027-28translatinginto dable Housing: an 20%+ CAGR between 2025-26 and FY 2027-28.

(Source: ICRA, RBI)

Government Initiatives companies Government support for affordable housing is clear through initiatives like the Pradhan Mantri Awas Yojana (PMAY). The Ministry of Housing and Urban Affairs received a budget of Rs. 96,777 crore in the Union Budget 2025-26, clocking 18% rise over the previous years Rs. 82,576 crore. This funding supports various urban development programmes, including PMAY-Urban. As of March 2025, PMAY-Urban has sanctioned 1.18 crore houses and over 92 lakh houses have already been constructed and delivered to beneficiaries. These allocations and results show the governments continued focus on affordable housing and urban development.

Growth Drivers include Key drivers of the housing finance favourable demographics, regulatory reforms, and a shift towards formal credit channels. Mortgage penetration in Indian is estimated at 16% in 2024-25, compared to ~15.3% in FY 2019-20. Despite this growth, Indias mortgage market remains underpenetrated relative to other emerging economies, ting the housing financehighlighting substantial opportunities for housing finance companies to expand their reach andservices.Asdemandfor ting the housing finance homeownership continues to rise, the sector is well-positioned for further development.

Along with this, several factors are expected to drive growth in the housing finance sector:

Increased Urbanisation and Housing Demand: Rapid urbanisation and rising aspirations of the middle class have ofthemiddleclasshavefuelled demandforhousingloans.Indiasurbanpopulationisexpected fuelled demand for housing loans. Indias urban population to reach600millionby2031,drivingtheneedforaffordableand is expected to reach 600 million by 2031, driving the need for mid-segmenthousing.Thehousingfinancesectorcapitalisedon affordable and mid-segment housing. The housing finance thistrend,withaffordablehousingloansaccountingforaround sector capitalised on this trend, with affordable housing 35%ofthetotalhousingloandisbursementsinFY2024-25. loans accounting for around 35% of the total housing loan

(Source:KnightFrankIndiaReport, 2024) disbursements in FY 2024-25. (Source: Knight Frank India Report, 2024)

GovernmentSupport The Governments

Governmentfocusonaffordablehousingcontinuedtobeakeydriver. Under Support for Affordable Housing: The Governments focus on affordable housing continued to be a thePradhanMantriAwasYojana(PMAY),over12millionhouses key driver. Under the Pradhan Mantri Awas Yojana (PMAY), over hadbeensanctionedbyDecember2024,withmanybeneficiaries funding.Additionally, relying 12 million houses had been sanctioned by December 2024, with housingfinance many beneficiaries relyingonhousingfinancecompanies for the Credit Linked Subsidy Scheme (CLSS) provided interest subsidiesofupto funding. Additionally, Interest Subsidy Scheme (ISS) provided Rs. 1.80lakhpereligibleborrower,makinghome interest subsidies of up toloansmoreaccessible. Rs. 1.80 lakh per eligible borrower, making housing loans more accessible.(Source: MinistryofHousingandUrbanAffairs) (Source: Ministry of Housing and Urban Affairs)

Rise in Disposable Income: The per capita net national income inIndia hasincreasedfrom Rise in Disposable Income: Rs. 1,00,163inFY2023-24to The per capita net national incomeRs. 1,08,786 in India has increased fromFY2024-25(at2011-12prices),therebypositivelyimpacting Rs. 1,00,163 in FY 2023-24 to Rs. 1,08,786 in FY 2024-25 (at 2011-12 prices), thereby positively impacting thebuyingpowerofthemasses. the buying power of the masses.(Source:MoSPI) (Source: MoSPI)

Technological Advancements and Digital Lending Platforms:

Technological Advancements and Digital Lending Platforms: Theadoptionoftechnologyinthehousingfinancesector,including The adoption of technology in the housing finance sector, digitallendingplatformsandAI-basedcreditassessmenttools, includinghasstreamlinedtheloandisbursement process.InFY2024-25, digital lending platforms and AI-based credit assessment tools, has streamlined the loan disbursement nearly40%of home loanswereinitiatedthroughonlineplatforms, process. In FY 2024-25, nearly 40% of home loans were reducing turnaroundtimes significantly. (Source:CRISILHousingFinanceReport,2024) initiated through online platforms, reducing turnaround times significantly.

Increased Infrastructure Development: (Source: CRISIL Housing Finance Report, 2024) Infrastructure growth, including urban development and metro rail expansion, has Increased Infrastructure Development: boostedhousingdemand inTierIIandTierIIIcities.Forinstance, Infrastructure growth, including urban development and metro rail expansion, has metroexpansionsincitieslikeLucknow,Ahmedabad,andPune boosted housing demand in Tier II and Tier III cities. For instance, haveledtoa20%-25%increaseinhousingdemandinperipheral . metro expansions in cities like Lucknow, Ahmedabad, and Pune areas,directly (Source:JLL IndiaInfrastructureReport,2024) have led to a 20%-25% increase in housing demand in peripheral . areas,directly

Rising Investments in Real Estate: (Source: JLL India Infrastructure Report, 2024) Real estate investments increased steadily in FY 2024-25, crossing $7 billion, with a significantportiondirectedat residentialprojects.Thissignificant Rising Investments in Real Estate: Real estate investments investment increased steadily in FY 2024-25, crossing US$ 7 billion, with activity provided a strong pipeline of new homes, furthercatalysingthedemandforhousingloans. a significant portion directed at residential projects. This (Source:JLLIndiaRealEstateInvestmentReport,2024) significant investment activity provided a strong pipeline of new homes, further catalysing the demand for housing loans.

(Source: JLL India Real Estate Investment Report, 2024)

Aavas Financiers Ltd. (Aavas), a leading Indian housing finance company, focusses on providing affordable housing loans to low- and middle-income groups in semi-urban and rural areas. Aavas specialises in serving underserved rural and semi-urban markets across 14 states. As of March 31, 2025, the Company operates through a widespread network of 397 branches and manages assets worth Rs. 20,420 crore.

Aavas promotes financial inclusion as a key player in the affordable housing segment, offering diverse housing finance products, including loans for construction, purchase, and renovation. Leveraging technology and a customer-centric approach, Aavas ensures efficientservice and a seamless borrowing experience.

Its strong presence in underserved markets, combined with a focus on asset quality, has enabled consistent financial performance. Aavas is well-positioned to capitalise on Indias growing affordable housing demand, driven by government initiatives and increasing urbanisation.

Strengths

• Specialised Market Knowledge – The companys expertise in catering to underserved semi-urban and rural geographies provides a strategic advantage in penetrating untapped markets.

• Underwriting Intelligence Institutionalised – Aavas has built expertise in the underwriting non-documented, cash-flow based income assessment to better understand the eligibility of customers.

• Robust Capital Adequacy A strong Capital Risk (Weighted) Assets Ratio (CRAR) ensures financial stability and supports sustainable growth.

• Direct Sourcing and Vertical Organisation Structure

Focussing on direct sourcing of customer, allows for a better hook on the customer understanding the intent of the applicant. Further, the vertical organisation structure makes assessment of the application quick and independent mitigating risk of any collusive activities.

• Technological Transformation – The company completed a technology transformation achieving compliance and transparency of a Bank with the adoption of Oracle Flexcube a Core banking solution along with upgrading the Loan origination, Management and CRM platform to Salesforce. This allows the firm better abilities to function at a much larger scale. al solutions.

• Prudent Asset-Liability Management (ALM)

A well-structured liability profile with minimal reliance on short-term borrowings alleviates asset-liability risks.

• Experienced Leadership and Management – A highly competent leadership team, complemented by a seasoned management having 250+ yrs / 7,00,000 hrs of experience cumulatively among themselves, facilitates effective operational and strategic execution.

Challenges

• Changing Interest Rate Scenario – Sensitivity to changing interest rate cycles and market conditions.

• Macroeconomic Influences – Exposure to broader economic fluctuations, including inflation and diminishing purchasing power, could affect loan demand.

Opportunities

• Expansion into Southern Markets – Aavas has commenced its journey to foray in southern India. Leveraging the experience gained from business in Karnataka, the company will follow contiguous expansion in southern states.

• Government Support – Programmes such as PMAY 2.0, Interest Subsidy Scheme (ISS), PM Surya Ghar Yojana, and revised Priority Sector Lending (PSL) norms drive increased demand for housing finance.

• Accelerated Urbanisation The aspirations of first-time homebuyers in Tier II and III cities create significant growth momentum.

• Digital Innovation – Adoption of digital platforms and artificial intelligence (AI) can enhance operational efficiency and customer engagement.

• Affordable Housing Demand Heightened interest from private developers and government initiatives fosters opportunitiesfortailored

Threats

• Intensifying Competition Growing competitive pressures from banks and other housing finance companies may impact margins.

• Economic Volatility Potential economic downturns or slowdowns could adversely affect loan disbursement volumes and asset quality.

• Regulatory Dynamics Frequent policy changes and evolving compliance requirements may introduce operational complexities.

• Portfolio Exposure Risks – Increased lending to economically vulnerable segments may pose challenges in maintaining asset quality.

Financial Performance

	FY 2024-25	FY 2023-24
Particulars
	( in crore)	(	in crore)
Total Income	2,358.42		2,020.30
Total Expense	1,625.83		1,395.80
Profit Before Tax	732.59		624.44
Profit After Tax	574.11		490.68
Earnings Per Share
• Basic ()	72.54		62.03
• Diluted ()	71.97		61.93

Assets under Management

Assets under Management (AuM) of the company has crossed milestone of Rs. 20,000 crore this year. In FY 2024-25, our AUM grew by 18% YoY at Rs. 20,420 crore.

Income and Profits

Total income of the Company for the year ended March 31, 2025, was Rs. 2,358.42 crore compared to Rs. 2,020.30 crore in the previous year, growing 16.7% YoY.

Statement of Profit and Loss

Key highlights of the Statement of Profit and Loss for the year ended March 31, 2025, were:

• Total Profit after tax (PAT) increased by 17% to Rs. 574.11 crore in the current year from Rs. 490.68 crore in the previous year.

• The spread and Net Interest Margin (%) for the year stood at 4.89% and 7.64% respectively.

• Total Net Income stood at Rs. 1,342.6 crore, growth of 13.4%.

• Total expenses increased 16.5% during the year under review.

• The Companys Operating Expenses Ratio (to average total assets) stood at 3.32% for the year ended March 31, 2025.

• The Companys Return on Average Total Assets (ROA) stood at 3.27% for the year ended March 31, 2025.

• Return on average Net Worth was 14.12% compared to 13.94% in the previous year.

• The Operating Leverage (Average Total Asset to Average Equity) stood at 4.3x for FY 2024-25.

Operational Performance

Aavas is a retail affordable housing finance company, dedicated to empowering low-and middle-income individuals and families by providing accessible housing loans for home purchases, construction, and renovations. Through its MSME-focussed business loans, Aavas also supports small entrepreneurs playing a vital role in advancing financial inclusion and fostering grassroot economic growth.

A significant portion of the loan book belong to borrower to purchase / construction of Single-unit Self-occupied residential homes. Many of Aavas customers lack access to traditional bank credit for mortgage loans.

Loan products

The Company provides housing loans for purchasing / building residential homes, as well as extending and repairing existing ones. These home loans represent 68% of the total loan assets. In addition to house loans, Aavas provided mortgage-backed loans for property and MSME loans, accounting for 32% of total loan assets as of March 31, 2025.

During the same period, 53% of our total loan assets were from customers in the economically weaker section (EWS) and low-income group (LIG), earning less than Rs. 50,000 per month. As of March 31, 2025, the EWS and LIG segments accounted for 17% and 36% of total assets under management, respectively.

Disbursements

During the year, the company disbursed Rs. 6,123 crore in mortgage loans, an 10% increase over Rs. 5,582 crore the year before. As of March 31, 2025, the total amount of loans disbursed since inception is Rs. 34,087 crore.

Assets under Management (AUM)

As of March 31, 2025, the Companys Assets Under Management (AUM) reached Rs. 20,420 crore, reflecting a 18% increase compared to Rs. 17,313 crore in the previous financial year. average loan sanctioned during this period was Rs. 9.7 lakhs as of March 31, 2025.

Spread on loans

As of March 31, 2025, the average yield on loan assets stood at 13.13% per annum. The cost of funds during the same period was 8.24% per annum, compared to 8.07% as of March 31, 2024. This resulted in a spread on loans of 4.89% as of March 31, 2025.

Non-performing assets (NPA)

Aavas has the best-in-class asset quality with 1+DPD at 3.39% lowest among peers. As of March 31, 2025, the Companys Gross NPAs stood at Rs. 176 crore (1.08% of loan assets) as compared to Rs. 132 crore (0.94%) as of March 31, 2024. The Company maintains a strong system for managing loan delinquency, encompassing regular portfolio reviews and a well-definedpolicy for addressing delinquencies and ensuring timely collections.

This proactive approach has resulted in a Gross NPA ratio of 1.08% and a Net NPA ratio of 0.73% as of March 31, 2025, compared to 0.94% and 0.67% respectively as of March 31, 2024. The credit cost for FY 2024-25 stood at 15 bps improving 1 bp over FY 2023-24 reinforcing our underwriting strength.

Capital adequacy ratio (CAR)

The Company maintained a strong Capital Adequacy Ratio of 44.50% as on March 31, 2025 compared to 43.99% as on March 31, 2024, and significantly exceeding the regulatory minimum of 15%.

Branch network

Aavas expanded its branch network through contiguous on ground expansion across key regions. As of March 31, 2025, Company operated through 397 branches spanning 14 States, with a significant presence in Rajasthan, Gujarat, Maharashtra, and Madhya Pradesh. The Companys registered office is in Jaipur, Rajasthan. During FY 2024-25, the Company added new branches to its network.

Outlook

Aavas is well-positioned for long-term success, with a focus on sustainable and profitable growth, disciplined cost management, and expanding its footprint across geographies. The company continues to diversify its loan portfolio while leveraging digital platforms and new technology stack to boost operational efficiency and improve the customer experience. The investments in technology are expected to optimise processes, shorten turnaround times, and raise the bar for service excellence.

With a clear vision for the future, Aavas aims to grow its AuM at a rate of 20-25%. Accelerating growth when economic conditions align to higher growth. The company remains confident ability to achieve this guidance backed by a dedicated team and well-defined strategic initiatives.

Aavas continues to maintain a robust financial base, emphasising cost-effective funding strategies, diversification of funding sources, and preservation of healthy asset quality. Its comprehensive risk management framework and disciplined credit underwriting practices effectively mitigate potential challenges regulatory developments and market competition.

ENVIRONMENTAL, SOCIAL & GOVERNANCE

Aavas focusses on Environmental, Social, and Governance (ESG) practices in its operations. The Company aligns its ESG initiatives with international standards such as CDP, GRI, and UN SDGs, partnering with Churchgate Partners for reviews and mapping. Aavas shares its ESG disclosures on its website and includes the Business Responsibility and Sustainability Report (BRSR) in its Annual Report, following SEBI regulations. It received a Strong rating from CRISIL and a medium score from SES, ranking well among its peers. Aavas has also created a CSR & ESG Committee to oversee its ESG efforts and voluntarily adopted the BRSR Core Assurance.

Aavas promotes diversity and inclusion through programmes like the Udaan Leadership Development Program and training for women employees. It also offers monthly menstrual leave and self-defence training. In sustainability, Aavas works with the International Finance Corporation (IFC) on self-built green housing, achieving 300 EDGE-certifiedGreen Homes and earning recognition from ASSOCHAM. Additionally, its Project Gati initiative improves loan processing and customer service by reducing paperwork. These actions highlight Aavas dedication to sustainability and responsible business practices.

For a detailed review, please refer to the chapter titled Value created for Environment in this Annual Report on pages 40-43.

HUMAN RESOURCE

Aavas workforce is a key asset. Drawing on a team with diverse specialisations and domain knowledge to support its operations. The companys approach emphasises employee development and work-life balance, encouraging a culture that adapts to evolving workplace expectations. As of March 31, 2025, Aavas had 7,233 permanent employees.

For a detailed review, please refer to the chapter titled Value created for employees in this Annual Report on pages 44-49.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has a comprehensive internal financial control system for financial reporting, designed to ensure reliable and GAAP-compliant financial statements. This system comprises detailed policies and procedures that provide reasonable assurance regarding the integrity of financial information. This includes maintaining accurate and complete records of all transactions and asset dispositions, ensuring transactions are appropriately recorded and aligned with authorised directives, and protecting assets to prevent or promptly detect unauthorised acquisition, use, or disposal.

An internal audit programme, overseen by an independent assurance function and supported by external specialists as needed, conducts risk-based assessments of compliance with established policies and procedures. The Audit Committee approves the audit plan and receives reports on audit findings and recommendations, which are then monitored and addressed as necessary.

CAUTIONARY STATEMENT

This section contains forward-looking statements regarding the Companys objectives, projections, expectations, and estimates. These statements are based on certain assumptions and expectations about future events, but the Company cannot guarantee their accuracy or realisation. Actual results may differ due to external factors beyond the Companys control. The Company assumes no obligation to publicly update or revise any forward-looking statements based on subsequent developments.