Challani Capital Ltd Directors Report

To the Members,

The Directors have great pleasure in presenting their 35 th Annual Report along with the audited financial statements for the financial year ended 31 st March, 2025.

FINANCIAL RESULTS

The Financial Results of the Company forthe year ended 31 st March, 2025 are summarized below:

SI.No. Particulars	Current FY ended31st March, 2025	Previous FY ended31 st March, 2024
	INR in Lakhs	INR in Lakhs
(i) Revenue from operations (net)	250.60	119.33
(ii) Other Income	23.8	-
(iii) Total Income	274.35	119.33
(iv) Operating Expenditure	88.58	68.67
(v) Profit before Interest, Depreciation and Amortization and Tax	186.18	51.06
(Vi) Finance Costs (net)	-	-
(vii) Depreciation and Amortization	0.40	0.40
(viii) Profit / (Loss) before exceptional items and tax	185.78	50.66
(ix) Exceptional items	-	-
(X) Profit before Taxes	185.78	50.66
(xi) Tax Expenses
a) Current Tax	-	-
b) Deferred Tax	-	-
(xii) Net Profit (or) Loss for the Year	185.78	50.66
(xiii) Transferred to RBI Reserve Fund	37.16	32.35
(xiv) Net amount transferred to retained earnings	148.62	18.31
(xiii) Balance Brought Forward from Previous Year	(1290.08)	(1308.39)
(e) Balance carried to Balance Sheet	(1141.46)	(1290.08)

PERFORMANCE OF THE COMPANY

During the year, your Company registered a total income of ^274.40 Lakhs against that of the previous year ^ 119.33 Lakhs. Your Company registered a Net Profit after Tax of ^ 185.77 Lakhs as compared to previous year Net profit of ^ 50.66 Lakhs.

DIVIDEND

The Directors have not recommended any Dividend forthe period ended 31.03.2025.

TRANSFER TO RESERVES

The Company has not transferred any amount to General Reserve during the Financial Year.

CAPITAL STRUCTURE

There was no change in the Authorized Share Capital of the Company during the year.

The Authorized Share Capital of the Company is Rs. 15,51,00,000/- (Rupees Fifteen Crores and Fifty One Lakh only) divided into 1,55,10,000 (One Crore Fifty Five Lakh and Ten Thousand Only) Equity Shares of Rs. 10/- (Rupee Ten)each.

DEPOSITS

Your Company is a Category B, i.e. Non-Deposit accepting Company in accordance with the RBI regulations and hence does not accept deposits.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND

PROTECTION FUND:

The provisions of Section 125(2) of the Companies Act, 2013 do not apply as there was no dividend declared and paid last year.

REVIEW OF BUSINESS OPERATIONS AND FUTURE PROSPECTS

Your directors wish to present the details of Business operations done during the year under review:

a. Business Operations and Profitability: The Company is a Non-Banking Finance Company listed on BSE Ltd. The Company was able to maintain its revenue targets.

b. Sales of Services: The company is covered under the category of Loan Company within the broad category of Non Deposit accepting Non-Banking Finance Company. The target sector of the Company is Small business and middle class households. Accordingly main products offered by the company are Secured Loan against property, Commercial Vehicle and Gold Loans besides sales and purchase factoring.

c. Marketing and Market environment: The Company is carrying on its business activities on medium scale and therefore huge and extensive marketing strategies are not adopted by the company. The company has adopted small scale business marketing strategies. The company is carrying on business of providing finance and there is huge competition in the market in this type of business sector.

d. Future Prospects including constraints affecting due to Government policies: The Company is putting in extensive efforts to enhance its customer base. The company is expectingmore revenue in upcoming years. There are no specific industrial or Government policies which restrict the business or growth of the company.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAS OCCURRED SINCE 31.03.2025 TILL THE DATE OF THIS REPORT

No material changes and commitments affecting the financial position of the Company occurred betweenthe end of the financial year to which these financial statements relate on the date of this report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The provisions of Section 134(m) of the Companies Act, 2013 do not apply to our Company. There was no foreign exchange inflow or Outflow during the year under review.

DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The provisions of Section 135 of the Companies Act, 2013 do not apply to our Company. Hence the company has not developed and implemented any CSR initiatives.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SEC. 186

The company did not give any Loan or Guarantee or provided any security or make investment in violation of Section 186 of the Companies Act, 2013 during the year.

AUDITORS Statutory Auditors

During the year, M/s. RSM & Associates, Chartered Accountants (FRN 002813S) were appointed as the statutory auditors of the company effective from financial year 2024-2025 to 2028-2029. The statutory auditors are appointed for a period of 5 years from the AGM of 2024 till the conclusion of the AGM to be held in 2029 for the financial year ending 31 st March 2029 as per the terms mutually and as agreed and approved by the members.

Secretarial Auditor:

Mr. R. Alagar Practicing Company Secretary having COP: 3913 was appointed to conduct the Secretarial audit of the Company for the financial year 31 st March, 2025, as required under Section 204 of the Companies Act, 2013 and Rules there under. The Secretarial Audit Report for the Financial Year 2024-25 forms part of the Annual Report and is enclosed in Annexure -1.

STATUTORY AUDITOR REPORT

The Statutory Auditors report is self-explanatory in nature. There is no audit qualification, reservation or adverse remarks for the year under review.

SECRETARIAL AUDITOR REPORT

Observations:

a) 99.76% of promoters shareholding is in dematerialization form and still 0.24% of the shares are in physical form.

b) During the year under review, due to an inter se transfer within the promoter group and an erroneous transfer recorded in place of a pledge of shares, the number of shareholders in the promoter category was reduced. However, there was no change in the total promoter shareholding percentage or quantity. The Company has intimated the Stock Exchange that a revised shareholding pattern will be filed after rectification of the error and confirmation by the depository. The matter is presently under process.

c) The Bombay Stock Exchange (BSE) has levied a penalty of ^4,05,920 for delayed submission of the Annual Report for the year ended 31.03.2023. The Company has disputed the said penalty and has sought detailed clarification from BSE along with a request for substantial reduction of the amount.

Reply to the Observation

a) Only 0.24% amounting to 26,800 shares from the total of 52,13,460 Promoters shares are not dematerialized due to some procedural reasons and the same is in progress.

b) As regard the above discrepancy, we are informed that one of the promoter shareholders, erroneously submitted form for an off-market transfer of shares instead of creating a inter-se pledge in favour of the other promoter shareholder. Due to this, the promoters shareholdings changed in the depository records. The concerned shareholder has brought the mistake to the notice of the DP and has taken steps to rectify the same. This has also been duly explained to the Bombay Stock Exchange(BSE) and necessary revised shareholding pattern reflecting the correction has also been submitted to the BSE.

c) The Company has paid the penalty levied by BSE related to the delayed submission of the Annual Report for the year ended 31.03.2023 amounting to INR. 394,120/- in July 2025, as the submissions for the reduction of penalty was not accepted by BSE. Going forward, the company will ensure that such delays are not committed.

COMPANYS POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES

The Companys Policy relating to appointment of Directors, payment of Managerial remuneration, Directors qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 is furnished and is available on the website of the Company at https://www.challanicapital.com/

EXTRACT OF ANNUAL RETURN

The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 is available on the website of the Company at https://www.challanicapital.com/

RELATED PARTY TRANSACTIONS

Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee and the particulars of contracts entered during the year as per Form AOC-2 is

NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW

The Company has held 05 Board meetings during the financial year under review.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of Section 134 (5) of the Companies Act, 2013, the directors would like to state that:

i. In the preparation of the annual accounts, the applicable accounting standards have beenfollowed.

i. The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of theCompany for the year under review.

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

iv. The directors have prepared the annual accounts on a going concern basis.

v. The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

vi. The directors had devised proper system to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating efficiently.

NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THEYEAR

No companies have become or ceased to be its subsidiaries, joint ventures or associate companies duringthe year. DEPOSITS

Our company is a Non deposit accepting Non-Banking Financial Company. During the year under reviewthe Company has neither accepted nor renewed any deposit during the year under review.

DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

1. Mr. Padam J Challani was re-appointed as Managing Director of the Company with effect from l.Apr.2025.

2. Resignation of Mr. Radhakrishnan Premkumar as independent director wef 09.Aug.2024.

3. Appointment of Mr. Selvamani Gowrishankaran as independent director wef 09.Aug.2024.

4. Resignation of Mr. V. Sundar as Company Secretary and Compliance Officer of the Company w.e.f 17.Jan.2025.

5. Appointment of Mr. Ramachandran Parameswaran as Company Secretary and Compliance Officer and Chief Financial Officer of the company w.e.f 10. Feb.2025.

Apart from this, there are no changes in the composition of Board of Directors or key managerial personnel during the financial year2024-25.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declarations from each Independent Director under Section 149(7) of the Companies Act, 2013 that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

PARTICULARS OF EMPLOYEES:

The information required under Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are given below

a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the Financial Year.

Name of the Director	Ratio of median remuneration
NIL

b. The percentage increase in remuneration of each Director, Chief Executive Officer, Chief FinancialOfficer and Company Secretary in the financial year: NIL

c. Median remuneration of all the employees of the Company for the Financial Year 2025:0

d. Percentage increase in the median remuneration of employees in the financial year ended on31.03.2025:

There was an increase of nil in the median remuneration of employees in the financial year ended on31.03.2025. There were 4 permanent employees on the rolls of Company as on 31.3.2025.

e. Average percentile increases already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there areany exceptional circumstances for increase in the managerial remuneration:

Average percentile increases in the salaries of employees other than the managerial personnel: NIL Average percentile increases in the salaries of the managerial personnel: NA

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

It is hereby affirmed that the remuneration paid to the managing/whole-time Directors and other executives/employees of the Company is as per the remuneration policy of the Company.

None of the other employee is in respect of remuneration exceeding INR. 850,000/- P.M or INR. 1,02,00,000/- P.A as prescribed under sub-rule 2 of Rule 5 of Companies (Appointment and Remuneration) Rules, 2014

EVALUATION OF BOARD, COMMITTEE AND DIRECTORS

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, an annual performance evaluation of the performance of the Board, the Directors individually as well as the evaluation of the working of the Board Committees was carried out based on the criteria and framework adopted by the Board.

The Independent Directors evaluation was done with main focus on their adherence to the Corporate Governance practices and their efficiency in monitoring the same. They are also being evaluated on various parameters viz., active participation in strategic planning, fiduciary responsibilities, participation in Board and Committee meetings, etc. The performance evaluation of the Non-Independent Directors was carried out by the entire Board of Directors (excluding the Director being evaluated) and they have expressed their satisfaction with the evaluation process which considered their commitment and the exercise of their responsibilities in the best interest of the Company. The Board approved the evaluation results as collated by the Nomination and Remuneration committee.

WHISTLEBLOWER POLICY

The Board has adopted whistleblower mechanism in the company. The policy adopted by the companyis available on the website of the Company at https://www.challanicapital.com/

BOARD MEETINGS HELD DURING THE FINANCIAL YEAR

During the period from 01 st April, 2024 to 31 st March, 2025 - Five Board Meetings were convened and held, the details of which are given below.

Date of Board Meeting	Names of Directors who attended the meeting
25 th May, 2024	Padam J Challani, Radhakrishnan Premkumar, Rameshkumar Mallela, Swapna P Kochar
9 th August, 2024	Padam J Challani, Radhakrishnan Premkumar, Rameshkumar Mallela, Swapna P Kochar
1 st November, 2024	Padam J Challani, Selvamani Gowrishankaran, Rameshkumar Mallela, Swapna P Kochar
10 th February, 2025	Padam J Challani, Selvamani Gowrishankaran, Rameshkumar Mallela, Swapna P Kochar
31 st March, 2025	Padam J Challani, Selvamani Gowrishankaran, Rameshkumar Mallela, Swapna P Kochar

DETAILS OF COMMITTEES AND THEIR MEETINGS

The Board has three primary committees namely, Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee. The Composition of the primary Committees and their meeting dates are given below:

Name of the Committee	Composition	Details of Meetings held during the year
Audit Committee	Premkumar Radhakrishnan(Chairperson)until resignation, Rameshkumar Mallela(Chairman), Selvamani Gowrishankaran(Member), Padam J Challani(Member)	4 meetings were held during the period on thefollowing dates:- 25 th May, 2024 9 th August, 2024 1 th November, 2024 10 th February, 2025
Stakeholders Relationship Committee	Premkumar Radhakrishnan (Chairperson) until resignation, Rameshkumar Mallela(Chairman), Selvamani Gowrishankaran(Member), Padam J Challani(Member), Swapna P Kochar(Member)	1 Meeting were held during the period on thefollowing date:- 9 th August 2024
Nomination and Remuneration Committee	Premkumar Radhakrishnan(Chairperson) until resignation, Rameshkumar Mallela (Chairman)Selvamani Gowrishankaran(Member), Padam J Challani (Member)	3 Meetings were held during the period on thefollowing dates:- 26 th May, 2024 9 th August, 2024 1 st November, 2024

SHARES

a. BUY BACK OF SECURITIES

The Company has not bought back any of its securities during the year under review.

b. SWEAT EQUITY

The Company has not issued any Sweat Equity Shares during the year under review.

C. BONUS SHARES

No Bonus Shares were issued during the year under review, d. EMPLOYEES STOCK OPTION PLAN

The Company has not provided any Stock Option Scheme to the employees.

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

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. The Company has no such cases of sexual harassment at workplacefor the FY 2024-25.

CASH FLOW STATEMENT

In conformity with the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations,2015 and requirements of Companies Act, 2013, the Cash flow Statement for the financial year ended 31.03.2025 is annexed here to as a part of the Financial Statements.

DISCLOSURE OF MAINTENANCE OF COST RECORDS

Maintenance of Cost records as specified by the Central Government under subsection (1) of section 148of the Companies Act, 2013 is not applicable to the Company.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE: NIL

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board and to the Managing Director. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

CORPORATE GOVERNANCE REPORT

In accordance with Schedule V of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 Corporate Governance Report forms part of this Annual Report and attached Annexure III.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report is enclosed as a part of this report as Annexure IV. CORPORATE GOVERNANCE CERTIFICATE

The certificate from the auditors regarding compliance of conditions of corporate governance as stipulated in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached in Annexure VI to the report.

ENVIRONMENT PROTECTION AND POLLUTION CONTROL

The Company has always been a socially conscious corporate and has always carried forward all its operations and procedures for environment friendly norms with all necessary clearances.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and General Meetings. As required in terms of Secretarial Standard (SS)-4, it is hereby confirmed that there is no corporate insolvency resolution process initiated under the Insolvency and Bankruptcy Code, 2016.

RISK MANAGEMENT POLICY

The Board of Directors of your Company has adopted a Risk Management Policy which details the procedures to be followed by the Company with regard to risk management. The Board evaluates and reviews the risk factors associated with the operations of the Company and recommend to the Board the methods to mitigate the risk and advise from time to time various measures to minimizing the risk and monitor the risk management for the Company.

ACKNOWLEDGEMENTS

The Directors wish to convey their appreciation to business associates for their support and contribution during the year. The Directors would also like to thank the employees, members, customers, bankers, and associates for the continued support given by them to the Company and their confidence reposed in the management.

	For and on behalf of the Board
Place: Chennai	Padam J Challani	Swapna Pawan Kochar
Date: 14.08.2025	Managing Director	Director
	DIN:00052216	DIN:02262562