Cholamandalam Financial Holdings Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS

MACRO ECONOMIC ENVIRONMENT

The global economy in 2025 demonstrated resilience, albeit a tenuous one, amid heightened uncertainty, shaped by the after effects of earlier monetary tightening, elevated geopolitical risks, and shifts in trade and industrial policies. As per IMF, global growth remained moderate of around 3.0%~3.2% for 2025, reflecting weak momentum in advanced economies and uneven recovery across regions. Advanced economies experienced subdued growth, constrained by tight financial conditions, slowing household demand, and weak manufacturing activity. Emerging markets and developing economies continued to outperform advanced economies, supported by domestic demand, services exports, and fiscal spending, although performance varied significantly across countries. Geopolitical and trade-related uncertainties persisted, characterised by selective tariff actions, industrial policy interventions, and ongoing geopolitical conflicts, contributing to market volatility and cautious business investment sentiment. Overall, the year 2025 was characterised by moderate growth, easing but uneven inflation, and elevated downside risks, with economic outcomes remaining highly sensitive to policy clarity and geopolitical developments.

Despite uncertain global economic conditions, the Indian economy continued to demonstrate strong resilience during FY 26, supported by sustained public capital expenditure, improving private investment, and steady domestic consumption. Inflation is expected to remain largely within the policy tolerance band, aided by calibrated monetary measures and easing supply-side pressures. While global economic uncertainties continue to pose external headwinds, Indias services exports and robust domestic demand provide stability. Ongoing structural reforms and a continued focus on infrastructure and manufacturing are expected to strengthen the countrys medium-term growth prospects.

Indias real GDP growth for FY 26 is likely to be in the range of 7.3% ~ 7.6%. Upside risks to growth include stronger than anticipated domestic demand, improved investment sentiment, favourable monetary policy transmission and renewed capital inflows. Conversely downside risks stem from heightened geopolitical tensions, volatility in global financial markets, energy and commodity price shocks, and a sharper than expected slowdown in global growth, which could adversely affect inflation, external balances and financing conditions.

COMPANY OVERVIEW

Cholamandalam Financial Holdings Limited (CFHL) is registered as a Core Investment Company (CIC) with the Reserve Bank of India (RBI) and holds a Certificate of Registration dated January 6, 2020, under Section 45-IA of the Reserve Bank of India Act, 1934. Pursuant to the Scale Based Regulatory Framework for NBFCs notified by RBI, the Company being a CIC falls under the category of Middle Layer NBFC (NBFC-ML).

The Company holds substantial investments in the following financial services/risk management companies of the Murugappa Group (hereinafter collectively referred to as the group companies).

• Cholamandalam Investment and Finance Company Limited(CIFCL), a non-banking finance company engaged in lending business, offers vehicle finance, home loans, loan against property, SME loans, secured business and personal loans, consumer & small enterprises loans, consumer durable loans, gold loans and a variety of other financial services to customers;

• Cholamandalam MS General Insurance Company Limited(CMSGICL), engaged in general insurance business, offers a wide range of insurance products that include Motor, Health, Property, Accident, Engineering, Liability, Marine, Travel and Crop insurance for individuals and corporates;

• Cholamandalam MS Risk Services Limited(CMSRSL) offers comprehensive Risk Management and Engineering solutions.

SHARE CAPITAL

The paid-up equity share capital of CFHL as of March 31, 2026, was 18.78 Crore.

APPROPRIATIONS

The Company has transferred a sum of 14.09 Crore (previous year: 12.89 Crore) to Statutory Reserve under section 45-IC of the Reserve Bank of India Act, 1934 for the year ended March 31, 2026.

DIVIDEND

The Board of Directors have recommended a final dividend at the rate of 130% i.e. 1.30/- (previous year: 1.30/- per share) per equity share of face value of 1/- each for the year ended March 31, 2026.

BUSINESS ENVIRONMENT

CFHL earns revenue primarily by way of dividend income from investments held in group companies.

An overview of the financial services sector in which the Company operates along with a business update of group companies in FY 26 is summarised in the following paragraphs.

STANDALONE FINANCIAL RESULTS

Particulars	2025-26	2024-25
Total Income	89.79	86.20
Total Expenses	3.89	3.63
Profit Before Tax	85.90	82.57
Tax Expense	15.49	18.17
Profit for the year	70.41	64.40
Other Comprehensive Income	2.36	9.74
Total Comprehensive Income	72.77	74.14

NBFC INDUSTRY & BUSINESS UPDATE

During the year under review, the Indian NBFC sector demonstrated steady growth and resilience, supported by improving liquidity conditions and calibrated regulatory easing. Credit growth for NBFCs continued to outpace that of banks, driven by diversified and retail focused lenders, while asset quality remained largely stable due to disciplined underwriting and improved collection efficiencies. Regulatory oversight through the implementation of RBIs Scale Based Regulatory Framework will continue to further enhance governance, transparency, and risk management standards across the sector.

Looking ahead, the NBFC sector is expected to sustain measured growth, supported by improving liquidity conditions, a stable interest rate environment, and continued demand for retail and MSME credit. While regulatory vigilance remains high, the strengthened framework is expected to enhance stakeholder confidence and long term sectoral stability.

Cholamandalam Investment and Finance Company Limited(CIFCL), an associate company of CFHL, was incorporated in the year 1978 as the financial services arm of the Murugappa Group. The Company is registered as an NBFC Investment and Credit Company (NBFC-ICC) and continues to be classified as an NBFC Upper Layer ( NBFC-UL) under the RBIs Scale-Based Regulatory Framework. CIFCL continues to be one of the leading comprehensive financial service providers.

Vehicle Finance(VF)

Industry

The Indian automobile industry sustained its growth momentum in FY 26, supported by a combination of cyclical recovery and structural tailwinds. The Commercial Vehicle (CV) segment emerged as a key growth driver, registering a robust 13% expansion and achieving peak volumes, reflecting strong underlying economic activity. Segment-wise, growth remained broad-based. Heavy Commercial Vehicles (HCVs) and Light Commercial Vehicles (LCVs) grew by 10% and 17%, respectively, driven by an infrastructure investments, rising industrial activity, and e-commerce-led logistics demand. Growth in Small Commercial Vehicles (SCVs), however remained comparatively subdued at 6%, indicating a gradual recovery following a two- year downturn.

The Passenger Vehicle (PV) segment continued its structural growth trajectory, expanding by 8% in FY 26 and recording its fourth consecutive year of peak sales. This growth reflects evolving consumer preferences, including increasing urbanisation, rising disposable incomes, and a marked shift toward SUVs and premium variants.

The two-wheeler segment recorded strong growth of 11% in FY 26, driven by a recovery in rural demand, improved access to financing, and enhancing affordability. Demand from Tier 3 and Tier 4 markets, along with increasing participation by women riders, has structurally expanded the consumer base.

The Construction Equipment (CE) industry experienced a contraction of 8% in FY 26, primarily due to the high base of the previous year and a temporary slowdown in project execution during certain periods. The tractor industry recorded exceptional growth of 23% in FY 26, achieving peak sales levels on the back of favourable monsoon conditions, strong rural liquidity, and higher agricultural output.

Business Analysis

CIFCLs Vehicle Finance business comprising a diversified portfolio of Commercial Vehicles, Passenger Vehicles, Two wheelers, Three Wheelers, Used Vehicles, Tractors and Construction Equipment, continues to be the largest segment contributing 53% of its business Assets under Management (AUM) as of March 31, 2026.

Vehicle Finance (VF) disbursements during the year stood at 62,123 Crore, as against 53,922 Crore in the previous year, registering a robust growth of 15% and profit before tax (PBT) for the year was 3,145 Crore as against 2,824 Crore in the previous year, reflecting a healthy growth of 11%, supported by improved business volumes and operational efficiencies. This growth was primarily driven by strong momentum across key segments. New commercial vehicles recorded a 20% year-on- year increase, the new passenger vehicle segment grew by 15%, while the two-wheeler segment witnessed a significant surge of 34%, reflecting improving demand dynamics and market recovery.

The VF business will continue to maintain a calibrated mix of new and used vehicle financing, with a focus on sustaining higher yields and margins. Given its predominantly fixed-rate lending model, the stabilisation of interest rates is expected to support expansion in net interest margins (NIMs), thereby strengthening overall profitability. The division continues to invest in strengthening its credit architecture through data- driven underwriting frameworks with no-touch and low-touch swim lanes, leveraging alternate data sources and analytics led decision making. This enhanced credit ecosystem is aimed at improving risk segmentation, enabling sharper credit filters at micro-market levels, and reducing delinquencies while improving portfolio quality.

Tech-powered centralized lead generation, score based preapproved loan offers for wallet deepening, hyper-personalized marketing campaigns along with conversational D2C loans are expected to enhance engagement with the existing customer base driving repeat and cross-sell opportunities aimed at strengthening customer lifetime value.

Technology will remain a core enabler, with increased adoption of digital tools and GenAI-led solutions across the value chain including underwriting, customer engagement, and collections. Personalized, data-driven collection strategies are expected to enhance recovery efficiencies and optimize operating costs, further strengthening the resilience and scalability of the VF business.

Loan against Property (LAP)

Industry

The NBFC Loan Against Property (LAP) portfolio is expected to register moderate growth of 19-21% in FY 27, driven by rising property ownership, sustained demand from MSMEs, increasing reliance on secured credit for business expansion, and steady sourcing from non-metro markets and self-employed customer segments. However, the ongoing geopolitical tensions in West Asia present incremental downside risks through elevated inflation, supply chain disruptions and a moderation in economic activity, which could impact borrower cash flows and asset quality, particularly within MSME-linked segments. While the secured nature of LAP provides relative resilience, portfolio performance and growth momentum remain sensitive to evolving macroeconomic conditions and the interest rate trajectory.

Business Analysis

LAP business of CIFCL delivered a strong performance in FY 26, with disbursements rising to 20,459 Crore, reflecting a growth of 14% over FY 25 and a five-year CAGR of 41% (FY 21-FY 26). Assets Under Management (AUM) increased by 26% year on year to 52,295 Crore in FY 26 up from 41,439 Crore in FY 25, translating into a 29% CAGR over FY 21 to FY 26.

Growth was driven by strategic expansion into non-metro markets, supported by scaling up of distribution capabilities, a diversified channel ecosystem, and a continued focus on retail ticket LAP. The business has also initiated deployment of AI- enabled tools to enhance underwriting processes and KYC verification, thereby improving efficiency. LAP continues to remain a key contributor to MSME growth in India by supporting business expansion and working capital requirements, with 97% of FY 26 disbursements directed towards the Self-Employed Non-Professional (SENP) segment, reinforcing the companys focus on underserved borrower segments.

During the year under review, the business further strengthened its focus on early-bucket delinquency management through predelinquency interventions, early risk identification, analytics- driven prioritisation frameworks, and enhanced digital collection capabilities, resulting in a significant improvement in customer reach engagement and collection effectiveness.

Home Loans (HL)

Industry

The housing finance services industry is expected to report a double-digit growth in revenues supported by continued healthy demand for housing, particularly affordable housing. The industry is likely to grow at a healthy pace on the back of a revival in demand for affordable housing and increasing in demand for mid-segment and premium housing. Delinquencies remained stable during FY 26 following a marginal uptick in first quarter due to portfolio seasoning for entities that sourced significant portfolios in recent years.

Business Analysis

As of March 31, 2026, CIFCLs HL business had over 1.68 lakh live accounts (20% growth YoY) with an AUM of 22,688 Crore (23% growth YoY). The portfolio is predominantly sourced from Tier II, III, IV cities and towns. The disbursements for FY 26 stands at 7,363 Crore. The target customer segment continues to be the lower middle income group. Nearly 88% of the portfolio comprises business owners with semi-formal income and significant business vintage while the remaining portfolio consists of customers who are first time borrowers.

The HL business leverages CIFCLs strengths in reaching and underwriting lower and middle-income borrowers across the country, extending its presence to even the smallest villages and towns through prudent underwriting, careful risk segmentation and a balanced portfolio mix. CIFCL offers loans for selfconstruction, purchase of new flats/independent houses, purchase of pre-owned flats/independent houses, balance transfer from other financiers, mortgage of existing houses for business use and shop loans and also facilitates purchase of plot.

The business has been strengthening its channel partner network to reach larger customer base. CIFCL continues to build a strong ecosystem of channel partners, complimented by its digital offerings for customer on boarding and service delivery, making it a trustworthy choice for customers pan-India.

Small and Medium Enterprises(SME)

Industry

The MSME sector continues to be a cornerstone of Indias economic growth, contributing significantly to employment, manufacturing, and exports. In recent years, the sector has demonstrated remarkable resilience, with its share in Indias Gross Value Added (GVA) increasing from 29.6% in FY 22 to 30.1% in FY 23 & FY 24, highlighting its growing contribution to the countrys economic output. This sector plays a vital role in both economic and social development by fostering entrepreneurship and generating substantial employment opportunities at comparatively lower capital cost. The formalization of the MSME sector particularly within the micro and small enterprises segment has gained significant momentum through the increasing adoption of Udyam Registration and Udyam Assist Portal.

Business Analysis

SME business disbursements during the year stood at 7,312 Crore in FY 26. AUM grew by 41% to 9,338 Crore in FY 26 as compared to 6,628 Crore in FY 25. Profits before tax for the year stood at 165 Crore as against 111 Crore in the previous year with growth of 49%.

The SME business has expanded its footprint across the country, covering 22 regions with over 120 branches serving approximately 12,200 MSME customers. The business has established strategic partnerships with over 40 OEMs across key segments such as Industrial equipment, Gensets, Medical Equipment and Solar finance to drive greater financial inclusion in the market.

With the continued growth of the SME ecosystem, CIFCLs SME loans business division offers a comprehensive bouquet of products to meet the requirements of working capital and capital expenditure requirements of SMEs. The portfolio includes multiple products like term loan, micro term loan, equipment finance, supply chain finance and Leasing. Further, subproducts offered under equipment finance are industrial equipment finance, genset finance, medical equipment finance, working capital finance and lease rental discounting.

During the financial year, solar funding was launched as the companys first Green Finance offering aimed at funding commercial and industrial Roof top installations. Under the leasing segment, the business also commenced financing of corporate car leases, commercial vehicles and Equipment leasing.

Consumer Durables Loan (CD)

Industry

According to industry reports by IBEF, Indias consumer electronics and appliances sector is witnessing strong structural growth and is expected to emerge as one of the largest markets globally. By FY 27, India is projected to become the fourth-largest consumer durables market in the world, with the sector growing at an estimated ~11% CAGR, driven by rising disposable incomes, urbanisation, increasing household penetration, and a shift toward smart, energy-efficient, and premium appliances. The market size is expected to reach ~3 lakh crore by FY 29, supported by favourable demographics and technology-led consumption trends.

The industry recorded double-digit growth during FY 25 & FY 26, driven by strong demand for premium, feature-rich, and connected products, including large-screen televisions, AI-enabled laptops, and smart appliances. Premiumisation is becoming increasingly evident across product categories, reflecting rising aspirational consumption across urban as well as Tier II and Tier III markets. On the supply side, government initiatives such as the Production Linked Incentive (PLI) scheme for electronics and white goods have strengthened domestic manufacturing capabilities and localisation. Overall, the sector is entering a phase where structural growth drivers such as improved credit access and expansion of distribution networks, remain strong, while cyclical headwinds including inflation pressures, pricing challenges and geopolitical uncertainties may temporarily moderate growth momentum.

Business Analysis

FY 26 was a year of strong expansion for CIFCLs Consumer Durables (CD) lending business, with disbursement growth of 50% from last FY. This growth was supported by the addition of several leading brands - Vivo, Oppo, Realme, Xiaomi, Haier, Whirlpool, Havells-Lloyd, Tecno, Infinix, TCL, IFB, and Amstrad - significantly strengthening the product and dealer ecosystem. The brand network is expected to be further expanded in FY 27.

The year also marked an important milestone in strengthening CIFCLs in-house digital and sourcing capabilities. FY 26 also witnessed significant enhancements to digital processes aimed at improving efficiency, turnaround times, and portfolio quality. These capabilities are expected to be leveraged more extensively in FY 27 to drive higher operating efficiency, sharper portfolio monitoring, and more scalable execution.

Consumer & Small Enterprise Loan (CSEL)

The CSEL division witnessed a strong resurgence in FY 26. Despite challenges in the MSME sector, the division implemented multiple technological and analytical interventions, achieving a disbursement of 7,137 Crore with AUM growing by 13% YOY to 12,362 Crore. With a live customer base of over 1.8 lakh and presence across 500+ locations, the division delivered a profit before tax of 147 Crore.

Secured Business and Personal Loan (SBPL)

Industry

Indias lending landscape continues to exhibit a structural credit gap, with a large segment of borrowers remaining underserved despite having both collateral and repayment capacity. This segment-distinct from traditional Loan Against Property (LAP) customers—is often excluded from formal credit channels due to rigid underwriting norms, limited documentation, and nonstandard income profiles. The challenge is more pronounced in rural and semi-urban regions, where access to formal banking remains limited. Despite improvements in financial inclusion, barriers such as low financial literacy, informal income streams, and high servicing costs persist. As a result, many households continue to rely on informal credit sources, including moneylenders, highlighting a significant unmet demand.

SBPL addresses this gap by offering collateral-backed business and personal loans tailored to this underserved segment. Its approach combines cash flow-based credit assessment with prudent loan-to-value (LTV) ratios, enabling access to smaller ticket-size loans aligned with customer needs. By leveraging property as collateral while evaluating repayment capacity beyond traditional metrics, SBPL expands access to formal credit in underpenetrated markets while maintaining a disciplined risk management framework.

Business Analysis

As of 31^st March, 2026, the SBPL business of CIFCL had crossed over 89,000 live accounts with an AUM of 3,537 Crore. The average ticket size is around 4.49 lakh with an average tenure of 6 years. SBPL vertical is currently being distributed across 400+ touchpoint locations spanning 11 states.

Key differentiators include a high-touch, on-ground engagement model that brings services directly to customers, a proprietary income assessment framework tailored to informal business profiles, and a seamless digital journey that ensures speed and transparency. The offering is further strengthened by customised solutions designed to meet the needs of first-time borrowers entering the formal credit ecosystem.

Gold Loans

Industry

The gold loan industry has emerged as one of the fastest-growing retail credit segments over the past year. The portfolio stood at approximately 16 lakh crore as of December 2025, growing by over 40% year-on-year. This rapid expansion was strongly supported by an unprecedented rally in gold prices. In recent months, gold prices experienced short-term volatility owing to heightened geopolitical tensions, which triggered sharp twoway movements as safe-haven demand and oil-driven inflation concerns pulled prices in opposite directions.

The growing scale of the gold loan market has attracted increased regulatory attention, signalling a systemic shift in what was traditionally an unorganised sector. Despite its significant growth, the gold loan industry remains substantially underpenetrated indicating considerable potential for further expansion.

Business Analysis

As on 31 March 2026, CIFCL has built a Gold Loans AUM of 1,804 Crore from over 26,000 customers across ~119 branches in South and East India, with an average AUM of over 15 Crore per branch. The average ticket size stands at around 2 lakh, with a portfolio of over 1,800 kg of gold as underlying security. This has been possible due to its key differentiators in the gold loan industry including 100% paperless customer journey, more than 10 security measures in every branch, rigorous appraisal and risk assessment, deep micro-market understanding and customer experience at the core of our offering. The business plans to deepen its footprint in the coming years.

Digital / Technology Initiatives

CIFCL has been on a rapid journey transforming a company that leverages technology to digitize its business processes into one that is fundamentally driven by digital innovation. At the heart of this transformation will be the tech-enabled and intelligence- led experience, where speed, convenience and relevance are paramount. Customers today expect significantly improved Turnaround Times (TAT) along with timely and appropriate product offers tailored to their specific needs. Platforms like Chola One deliver this by providing a seamless, end-to-end digital journey—from origination to servicing. Simultaneously, ecosystem partners such as dealers, brokers, and OEMs will continue to be empowered by platforms like Gaadi Bazaar, which integrate vehicle trading, auctions, and trade advances into a unified digital workflow, creating a cohesive and highly efficient value chain for all stakeholders. The foundation for delivering a delightful experience for our customers will be based on continuous optimization of internal IT operations through the increasing adoption of Artificial Intelligence (AI). Generative AI is transforming the entire software development lifecycle and IT operations landscape. From AI-assisted code generation and automated testing to intelligent support and proactive operations, AI is helping accelerate delivery timelines while enhancing system resilience. This deep integration ensures that the technology backbone remains as agile and responsive as the market demands. By balancing aggressive digital innovation with robust cybersecurity and risk management practices, the company intends to build enduring customer trust while establishing a platform that seamlessly blends innovation and customer-centricity as key driver of sustainable business growth.

Outlook

The outlook for FY 27 remains stable, underpinned by resilient domestic demand, sustained infrastructure investment, and continued expansion in formal credit penetration, even as growth normalises after a strong base. Consumption and credit- led segments including automobiles, mortgages and consumer lending are expected to exhibit healthy and more calibrated growth, supported by improving origination quality, better risk selection, and digital underwriting. In unsecured lending, recent moderation and regulatory actions have strengthened portfolio resilience, with improving performance of newer cohorts supporting a gradual recovery in growth momentum. Against this backdrop, CIFCL remains well positioned to pursue disciplined growth, safeguard asset quality, and drive long-term value creation through prudent capital allocation, strong risk management practices and robust governance.

GENERAL INSURANCE INDUSTRY & BUSINESS UPDATE

Industry

The industry for multi-line players underwent a transitionary year, with growth in H1 at 5.3% and H2 growth at 10.6% to attain an annual growth of about 8%. The truncated growth in H1 arose from lower automobile sales, loss of crop premium and the effect of 1/n* reporting (As per IRDAI mandate, effective October 2024, premium collected upfront for long-term policies shall be recognised as Gross Written Premium (GWP) evenly over the policy period on a 1/n basis, where "n" represents the total policy duration, with recognition on a yearly basis from the commencement of risk). The strong growth observed in the second half year was supported by GST relief on health insurance and the moderation of GST rates for automobiles.

The industry is witnessing a decline in property premiums arising from steep discounts. The continuance of high discounts in motor own damage premiums coupled with the absence of revision in motor third-party premiums is leading to a situation of elevated combined ratios in the motor line of business. Competition remains intense, with private insurers using differentiated strategies that drive higher acquisition costs, while public sector players pursue aggressive pricing.

The Gross Direct Premium of multi-line non-life insurers (excluding Standalone Health & Specialized insurers) was reported at around 2,78,600 Crore, registering a growth of around 8% over the previous year. The market share of public sector companies was 36.8% with the private sector companies share at 63.2%. The standalone health insurance (SAHI) companies grew by 19.4% to 45,900 Crore. Amongst the various lines of businesses, motor insurance segment registered a growth of 9.2% and fire line registered a growth of 13.4%. The growth in the health and personal accident lines for general insurers was placed at 13.4% and 37.9% respectively.

Underwriting results for the industry deteriorated with combined ratios climbing up (partly due to the upfront absorption of costs on long term premium sourcing). The industry faces pressure from medical inflation, discounting pressure and the regulatory direction to keep health premium pricing increases capped at 10% for the senior citizen section of the population which impairs economic viability for the long term. Investment income continues to act as a stabilizing force for profitability, supported by resilient equity markets. With insurers stepping up the equity portfolio composition of the investment corpus, the investment returns have remained steady.

Business Analysis

Cholamandalam MS General Insurance Company Limited (CMSGICL) the insurance subsidiary of CFHL, is registered with the Insurance Regulatory and Development Authority of India (IRDA) to carry on general insurance business. CMSGICL offers a wide range of insurance coverage including motor, travel, health, accident, home and other types of insurance for individual and corporate customers. The company ended the year with gross direct premium (under 1/n method) of 7,762 Crore with a degrowth of 4.45% arising from loss of Crop business of over 590 Crore (figures under IGAAP (Indian Generally Accepted Accounting Principles)).

CMSGICLs market share improved in the second half of the year, following a subdued first half impacted by the loss of crop business. It continued to maintain a cautious stance in the group health (employer-employee) portfolio, while making progress in expanding its presence and improving volumes across Gram Panchayats. While achieving growth in topline, CMSGICL also rationalized its management expenses. During the year, the company renewed all its bancassurance arrangements and entered into several new tie ups across banks, NBFCs and OEM (Original Equipment Manufacturer) programs, while further strengthening its individual agency network.

Motor Insurance

The Motor Line of business registered a growth of around 4.7% during the year as compared to the industry growth of 9.2%. The composition of the motor portfolio comprises of Cars at 49.3%, Commercial vehicles (including tractors) at 40.1% and Two wheelers at. 10.7%.

The premium pricing in motor own damage witnessed severe pressure with discounts across vehicle categories staying at higher levels. However, through active portfolio management by strategic pricing adjustments, commission, choice of geography, product segments and varied penetration, CMSGICL was successful in securing growth and maintaining efficiencies. In the third-party segment, the pricing remained static even as the industry witnessed inflation in medical costs as well with continuous increase of the minimum wage levels across all states in the country.

Property and Casualty Insurance

In the fire line of business, CMSGICL registered a growth of 1.6% as against industry growth of 13.4% impacted by the 1/n reporting in the first half of the year. Premium pricing was stable in Q1 and witnessed deterioration from Q2. Marine line of businesses witnessed improved performance with increase in the levels of economic activity and focused sourcing.

The company continues to follow disciplined underwriting and prudent risk selection in the highly demanding environment. A higher proportion of business sourced from the Preferred risk category, coupled with a well-diversified geographic distribution of exposures, disciplined line-size management, and prudent accumulation controls, has ensured that the company maintains robust risk management processes.

Health, Accident and Travel Insurance

CMSGICLs overall health, accident and travel volumes grew by 2.7% during the year with stronger growth in Group health. Pricing of health indemnity products was revised within the regulatory framework.

Reinsurance (RI)

Globally, reinsurers had a better year and operated in a situation of surplus capacity. In India, the impact of natural catastrophe events was low and its impact on companys retention & reinsurers shares remained limited. During the year, the companys proportional and non-proportional reinsurance arrangements performed well, generating underwriting surpluses for reinsurers. The company entered into new reinsurance arrangements in the areas of surety bonds, commercial cyber and liability lines of business.

Based on the underlying portfolio performance and risk profile, the company further strengthened its reinsurance arrangements by restructuring its program to increase capacity and enhance the scope of coverage across key treaties. The reinsurance placements were supported by strong reinsurer participation, reflecting continued confidence in the companys underwriting discipline, portfolio quality, and risk management framework.

Claims function

Claims settlement improved in all lines of business. Settlement of motor TP claims crossed 24,000 with compromise settlement of

70%. Motor OD team disposed of over 5 Lakh claims during the year resulting in reduction of outstanding claims. The severity was on higher side mainly due to increase in part & labor costs and drop in salvage realization levels. Health claim settlement at over 1.62 Lakh claims for the year were strong. 74% of the total claims paid were on a cashless basis as compared to 65% in the previous year. Overall, the loss ratio in the commercial insurance lines was stable in the absence of any major catastrophic event during the year.

CMSGICL continues to focus on harnessing efficiencies for severity control across all lines, automation for speed and operational controls, and a proactive approach to servicing for building transparency and enhancing satisfaction levels of customers.

Outlook

The general insurance industry is poised to grow against the backdrop of sustained economic momentum in India and continued policy thrust from the Government of India and the Regulator towards improving insurance penetration and financial inclusion, aligned with the vision of "Insurance for All by 2047". Looking ahead, the operating environment is expected to remain challenging, shaped by a combination of regulatory, competitive, and macro-economic factors. Several significant regulatory initiatives are slated for implementation during the year ahead, including the transition to Ind-AS, anticipated changes in the EoM regulations, new regulations arising from amendments to the Insurance Act, the proposed revisions to the PMFBY Crop Insurance Scheme etc. Interest rates are expected to trend upwards during the year ahead. While higher yields on incremental investments are expected to support investment income over the medium term, volatility in equity markets, driven by geopolitical developments, may moderate overall investment returns. While industry growth is anticipated to improve, it is likely to continue to be influenced by aggressive pricing behaviour. Structural tailwinds include steady credit offtake, growth in the auto sector, and persistently low levels of insurance penetration.

Digital/Technology Initiatives

Technology has become a key driver in connecting people across various walks of life. As digital and technology advancements evolve, the Digital Personal Data Protection (DPDP) Act ensures that data democratization is balanced with stringent privacy and consent frameworks. Aligned with the trend, digital transformation continues to be the focus area for the group. Various initiatives and technology tools have been deployed for automation of repetitive activities across functions wherever opportunity exists. Digital/Technology initiatives implemented by CMSGICL during the year include - Transition to Cloud architecture, Workflow systems in Motor OD, developing a SuperApp for use by channel partners and employees, implementing a Data Lake that serves as the reservoir for all business data which is used for external data integration requirements. Several other operating measures were put in place relating to the operational aspects of information security and running awareness campaigns for employees.

RISK MANAGEMENT SERVICES - BUSINESS UPDATE

Cholamandalam MS Risk Services Limited (CMSRSL), is a joint venture entity of the Murugappa Group and Mitsui Sumitomo Insurance Company Limited, Japan. Established in the year 1994, CMSRSL provides risk management and engineering solutions in the areas of safety, health and environment. CMSRSL is part of the Inogen Alliance. Inogen Alliance is a global network of environment, health, safety and sustainability consulting companies working together to provide one point of contact to guide multinational organizations to meet their global commitments locally.

FY 2025-26 was a landmark year for the company, with record- high revenue and profitability reflecting sustained business momentum and focused execution. The company continued to advance its strategic service offerings through the delivery of long-term projects in Cultural Transformation, Behaviour- Based Safety, and sustainability. It further strengthened its ecosystem of strategic partnerships with organizations such as Inogen, EIC Dubai, and BPC, while deepening engagement with its joint venture partner, Mitsui Sumitomo Insurance Company (MSI). These initiatives contributed to expanding the companys capabilities, reinforcing client relationships, and supporting its long-term growth objectives.

During the year, more than 530 assignments in process safety, around 200 in electrical safety, and over 80 in environmental services were executed. Additionally, the company continues to operate more than 88 Driver Management Centers, providing monthly counselling to over 40,000 drivers, and manages 8+ Contractor Incubation Centers, driving over 25,000 monthly safety observations and interventions to improve safety behaviour among contract workers. CMSRSL actively participated in various industry forums by presenting technical papers and contributing to panel discussions, thereby strengthening brand presence and demonstrating technical excellence. On the market and brand front, focused efforts were pursued to strengthen visibility and client engagement, including over 400 interactive sessions and the initiation of Customer Advisory Council discussions.

CMSRSL continues to support Cholamandalam MS General Insurance Company Limited and its clients through value-added services such as Thermography, Safety Audits, Cargo Loss Minimization Studies, and BRSR reporting. The Joint Venture Partner, Mitsui Sumitomo Insurance Company Limited, Japan, continues to support the company by facilitating engagement with Japanese companies in India for risk management services.

The company enters FY 27 with a strong executable order book providing revenue visibility and stability for the year ahead. The continued strength of long-term contract engagements for sharper operational focus, and the engagement of consultants to stabilize the Project Management Office are expected to further strengthen execution discipline and support the companys growth and profitability objectives. CMSRSL remains committed to strengthening its organizational capabilities through structured, forward-looking skill development initiatives thereby positioning the organization for sustained and scalable growth.

CONSOLIDATED FINANCIAL RESULTS

Particulars	2025-26	2024-25
Total Income	39,575.77	33,459.92
Total Expenses	32,249.85	27,060.36
Profit Before Tax	7,325.92	6,399.56
Tax expense	1,848.00	1,665.58
Profit after tax and before share of profit from Associates and Joint venture	5,477.92	4,733.98
Share of profit after tax from Associates and Joint Venture	7.26	5.90
Profit for the year	5,485.18	4,739.88
Minority Interest	3,043.89	2,566.22
Profit for the year attributable to the owners of the Company	2,441.29	2,173.66

A report on the performance and financial position of each of the group companies in compliance with section 129(3) of the Act read with the Companies (Accounts) Rules, 2014, in the prescribed form AOC-1 is annexed to this Report as Annexure I. The consolidated financial statements of the Company prepared in accordance with the Companies Act, 2013(the Act) and the relevant Accounting Standards, forms part of the annual report.

The annual report containing standalone and consolidated financial statements will be uploaded on the Companys website, www.cholafhl.com. Annual accounts of the group companies will also be uploaded on the Companys website and be made available for inspection by shareholders through electronic mode until the date of the Annual General Meeting (AGM).

FINANCIAL REVIEW

CFHL earned an income of 89.79 Crore (previous year: 86.20 Crore) and profit before tax was 85.90 Crore (previous year: 82.57 Crore) for the financial year ended March 31, 2026. Aggregate investments stood at 1,293.46 Crore (previous year: 1,290.72 Crore) as on March 31, 2026. There has been no change in nature of business of the company and the group companies during the year.

Associate Company: Cholamandalam Investment and Finance Company Limited (CIFCL)

The Company holds 43.8% in the paid-up equity share capital of CIFCL as on March 31, 2026, and is deemed to have de-facto control as per the principles of Ind AS 110. Accordingly, CIFCL is treated as a subsidiary for the purpose of consolidation of financial statements. The securities of CIFCL are listed and traded on the National Stock Exchange of India Limited (NSE) and the BSE Limited (BSE).

CIFCLs Assets under Management(AUM) grew by 21% to 2,42,630 Crore as of March 31, 2026 (previous year: 1,99,876 Crore). Loan disbursements aggregated to 1,11,642 Crore (previous year: 1,00,869 Crore) registering a growth of 11% during the year. Profit after tax grew by 23% to 5,220 Crore (previous year: 4,259 Crore). Investment portfolio of CIFCL at the close of FY 26 was 6,638 Crore including investments in government securities aggregating to 4,152 Crore.

CIFCL raised funds from banks, financial institutions and money markets to support the growth of its businesses at competitive interest rates without compromising the right mix of long and short-term borrowings, thereby maintaining a healthy asset liability position. In FY 26, the company raised commercial papers(CP) of 20,715 Crore of which 9,650 Crore were repaid in FY 26. CP outstanding as at the end of the year was 11,065 Crore. Medium and long-term secured NCDs to the tune of 9,602 Crore by private placement were mobilised at competitive rates. As of March 31, 2026, outstanding NCDs stood at 28,228 Crore (24,454 Crore Private Placement and 3,774 Crore public placement) and CCD at 630 Crore.

The Tier II borrowings raised during the year were 100 Crore of perpetual debt and 2,502 Crore of sub debt. As of March 31, 2026, Tier II borrowings were 13,223 Crore. CIFCLs capital adequacy ratio stood at 19.21% as on March 31, 2026, as against the minimum regulatory requirement of 15%.

CIFCL paid an interim dividend of 1.30 (65%) per equity share of face value of 2/- each for FY 26. The Board of CIFCL has recommended a final dividend of 0.70 (35%) per equity share for FY 26, subject to their shareholders approval.

The subsidiary companies of CIFCL are Cholamandalam Securities Limited (CSEC), Cholamandalam Leasing Limited (CLL) (Formerly and Cholamandalam Home Finance Limited) and Payswiff Technologies Private Limited (Payswiff). Payswiff is treated as JV for consolidation purposes. CSEC is engaged in offering stock broking, depository and research services to retail, corporate and institutional clients and is also a distributor of financial products like mutual funds, fixed deposits and bonds. CLL is an Asset Company which will own Electric Vehicles and deploy them through structured contracts with enterprise end customers. Payswiff is engaged in the business of offline payment aggregator services and provides e-commerce solutions. Vishvakarma Payments Private Limited is the associate company of CIFCL.

CSEC achieved a gross income of 92.54 Crore (previous year: 104.44 Crore) and profit before tax of 10.80 Crore (previous year: 10.85 Crore) for the year ended March 31, 2026. CLL recorded a gross income of 2.71 Crore (previous year: 3.45 Crore) and made a profit of 0.91 Crore (previous year loss: 0.71 Crore) for the year ended March 31, 2026. Payswiff recorded a gross consolidated income of 100.24 Crore (previous year: 110.87 Crore) and made a profit before tax of 6.72 Crore (previous year: profit 6.27 Crore) for the year ended March 31, 2026.

Subsidiary Company: Cholamandalam MS General Insurance Company Limited (CMSGICL)

CMSGICL is a joint venture between the Murugappa Group and Mitsui Sumitomo Insurance Company Limited, Japan. The Company holds 60% of the paid-up equity share capital of CMSGICL. The IRDAI has deferred implementation of Ind-AS for insurance companies. Therefore, the accounts of CMSGICL have been converted as per the Ind AS for consolidation purposes and figures of CMSGICL reported in this annual report are under Ind-AS.

CMSGICL achieved a gross written premium of 9,110 Crore in FY 26 (previous year: 8,564 Crore) and profit before tax was 342 Crore (previous year: 650 Crore). The overall profitability for the year reflects the impact of several business dynamics, including the absence of crop business, higher motor claim ratios and fair value movements in equity investments. The companys investment portfolio stood at 19,013 Crore as of March 31, 2026 (previous year: 18,601 Crore). In the context of evolving interest rate conditions, returns were optimized through the redeployment of accretions and maturity proceeds into higher- yielding instruments. The investment portfolio continued to maintain a strong quality profile, with zero non-performing assets as of the balance sheet date. The solvency ratio as of March 31, 2026, was 1.96 times (minimum regulatory requirement: 1.50 times), indicating a comfortable capital position. With a focus on supporting future growth and strengthening solvency, the Board of CMSGICL has decided not to recommend dividend for FY 26.

Joint Venture: Cholamandalam MS Risk Services Limited (CMSRSL)

The Company holds 49.5% stake in CMSRSL. CMSRSL achieved an income of 98.78 Crore (previous year: 83.20 Crore) and profit before tax of 10.32 Crore (previous year: 9.53 Crore) for the year ended March 31, 2026. The Board of CMSRSL has recommended a final dividend of 50% i.e. 5/- per equity share of face value of 10/- each for FY 26.

DIRECTORS

As per the provisions of section 152 of the Act, Mr. Vellayan Subbiah (DIN: 01138759) retires by rotation at the ensuing AGM and being eligible has offered himself for re-appointment. The Board recommends the re-appointment of Mr. Vellayan as a director liable to retire by rotation and the resolution in this regard forms part of the Notice convening the 77^th AGM. Information as required to be disclosed under regulation 36(3) of the SEBI Listing Regulations for re-appointment of director is provided in the Notice convening the AGM.

INTERNAL CONTROL SYSTEM AND INTERNAL AUDIT

Internal control system of an organisation is looked at as the key to its effective functioning. The Company has internal control systems in place commensurate with the nature of business and size of its operations, to ensure compliance with internal policies, regulatory matters and to safeguard reliability of financial reporting and its disclosures. An audit of systems and processes is conducted by the internal auditor of the Company.

The internal audit is performed based on the audit plan approved by the Audit Committee annually. The internal audit report along with the observations, if any, and recommendations from the audit review are discussed and reviewed in the quarterly meetings of the Audit Committee. The Audit Committee evaluates the adequacy and effectiveness of internal controls, performance of the internal audit, recommends improvements and reviews the action taken.

FINANCE

Deposits

The Company has not accepted any fixed deposits under Chapter V of the Companies Act, 2013 and as such no amount of principal and interest were outstanding as of March 31, 2026.

Particulars of Loans, Guarantees or Investments

During the year the Company has not made any investments in group companies. The provisions of section 186 of the Act pertaining to investment is not applicable to CFHL since the Company is an NBFC whose principal business is acquisition of securities. Information regarding investments of the Company is given in the financial statements. During the year the Company has not given any loans or guarantees under the provisions of section 186 of the Act.

Internal Financial Control Systems with reference to the Financial Statements

The Company has put in place adequate internal financial controls to ensure reliability of financial and operational information and regulatory and statutory compliance. The Companys business processes are equipped with monitoring and reporting processes to ensure financial discipline and accountability. The internal financial control systems are monitored both by the internal and statutory auditors of the Company. The statutory auditors of the Company have also certified the existence and operating effectiveness of the internal financial controls as of March 31, 2026.

Financial Ratios

Key ratios relevant to the Companys operations are given in the table below:

Ratio Description	31-Mar-2026	31-Mar-2025
Return on Net Worth	5.03%	4.77%
Return on Total Assets	5.01%	4.75%
Debt Equity Ratio (No. of times)	NA	NA
Leverage Ratio (No. of times)	0.0001	0.0002
Ratio of Adjusted Net Worth (ANW) to its aggregate risk weighted assets	2,466.10%	1,999.12%

The Company being a holding investment company and not having debt obligations, ratios viz., debtors turnover, inventory turnover and interest coverage ratios are not applicable. The increase in adjusted net-worth ratio is on account of an increase in unrealised gains on investment in subsidiaries. The leverage ratio (maximum regulatory requirement: 2.5 times) and adjusted net-worth ratio (minimum regulatory requirement:30%) are computed in accordance with the RBI Master Directions for Core Investment Companies (Master Directions of RBI). There was no significant change in other key ratios applicable to the Company.

RISK MANAGEMENT

Risk management is a process to identify and manage threats that could have an impact on the operations of the Company. Generally, this involves reviewing business operations, identifying potential threats to the Company and the likelihood of their occurrence and then taking appropriate actions to address the most likely threats. The Company adopts a systematic approach to mitigate risks associated with accomplishment of objectives, operations, revenues and regulations. The risk management framework of the Company comprises of the following key elements viz., a) Risk Assessment: study of threats and vulnerability and exposure to various risks; b) Risk Management and Monitoring: probability of risk assumption is estimated and monitored; and c) Risk Mitigation: measures adopted to mitigate risks by the Company.

The Risk Management Committee assists the Board in monitoring various risks, reviews and analyses risk exposures and mitigation plans related to the Company and its group companies. A Risk Management Policy has been approved by the Board of Directors which inter alia sets out risk strategy, approach and mitigation plans, liquidity risk management and asset liability management. During the year the Risk Management Committee of CFHL reviewed key risk exposures of the Company along with mitigation measures, asset liability management, structural liquidity management besides review of key risk exposures and mitigation measures of group companies.

Key risk exposures of the Company along with risk mitigation measures are provided in the table below. The risks furnished hereunder are not exhaustive and assessment of risk is based on management perception.

Risk Category	¦ Description Risks that have a measurable impact on P&L viz., loss of revenue/higher costs/loss of opportunity etc.,	• Risks to raise capital on a timely basis to fund business operations of its group companies;	• Monitor capital adequacy requirement on a continual basis.
			• Meeting capital requirement through own/borrowed funds;
		• Risks in meeting cash flow requirements of the company.
			• Monitor investments such that investments mature to meet anticipated cash flow requirements.
			• Investment portfolio shall include fixed deposits with Banks/financial institutions and mutual funds for improved liquidity.
Governance Risk	Risks that could arise due to in-effective governance of group companies.	• Exposure to regulators/ stakeholders;	• Monitor business operations of the group companies periodically by CFHL.
		• Impact on the consolidated financial position of CFHL and share value.	• Ensure adoption of comprehensive risk management framework by the group companies.
		• Risk of loss of Dividend Income
Market Risk	Risks on account of adverse and un- anticipated market and economic conditions which could impact market value of investments.	• Downgrade in credit rating of banks & financial institutions in which CFHL holds investments;	• Track market trends and economic forecasts by expert agencies;
			• Undertake only such transactions permissible under applicable laws including the RBI guidelines.
		• Volatility in CFHLs share price in securities market
Reputation Risk	Risks on account of negative publicity, public perception or uncontrollable events which have adverse impact on companys reputation.	• Risk of deterioration in stakeholders relationship viz., JV partners, shareholders, regulators etc.,	• Follow ethical code of conduct;
			• Root cause analysis and action;
			• Responsive to business environment.
		• Risk of loss of brand fee income.
Compliance Risk	Non-adherence to the applicable laws/regulations	Risk exposure to legal penalties, and material loss due to failure to act in accordance with statutory laws and regulations and internal policies/ procedures.	• Effective systems in place to check compliances.
			• Monitor regulatory compliance through internal audit system;

Further, risks arising out of NBFC and insurance business constitute the dominant risks of the Company on a consolidated basis. The group companies have their own risk management framework in line with their strategic business operations as appropriate to the industry in which they operate. The risk management framework of NBFC and insurance business are broadly based on clear understanding and identification of various risks, disciplined risk assessment by evaluating the probability and impact of each risk, measurement and monitoring of risks by establishing key risk indicators with thresholds for all critical risks and adequate review mechanism to monitor and control risks. The business operations of each of the group companies, the risks faced by them, and the risk mitigation tools followed by them are reviewed periodically by the Risk Management Committees and the Boards of the respective companies.

CIFCL embeds a proactive, Board-governed risk culture across all organizational layers to safeguard long-term operational stability and sustainable strategic growth. The Risk Management Committee (a committee of the Board of Directors) oversees the proactive risk management culture by setting the organizations risk appetite, by monitoring key risks and by ensuring alignment with strategic goals. The Risk Management division, under the Chief Risk Officer, develops and reviews risk management policies and establishes risk management framework across the organisation, including various metrics, indicators and other data. Risk owners across departments are responsible for implementing mitigation strategies and reporting emerging risks. Driven by robust internal controls, sound operating procedures and constant regulatory alignment, the team continually evolves to mitigate emerging market and technology vulnerabilities.

Managing risks is an integral part of the insurance business. CMSGICL manages risks in an informed and disciplined manner and within a pre-determined risk appetite and tolerance. The risk management and internal control systems are designed to ensure that these risks are managed effectively and efficiently. All risk management activities are aligned to corporate aims, objectives, organizational priorities and are designed to protect and enhance the reputation and standing of CMSGICL. CMSGICL has put in place an appropriate risk management process covering various risks that the company is exposed to, which are discussed and reviewed by the Risk Management Committee of its Board on a quarterly basis.

HUMAN RESOURCES (HR) AND PARTICULARS OF EMPLOYEES

Human Resources (HR) are the valuable assets for the group. CFHL along with its group companies has a work force of more than 54,000 employees as of March 31, 2026. The groups strong human resource practices continue to facilitate the achievement of organizational goals and business objectives. Employee safety and well-being remain key priorities. The group also focuses on effective talent planning and resourcing strategies to meet evolving business requirements and strengthen leadership capabilities for the future.

As of March 31, 2026, CFHL had two employees. The information required to be disclosed under the provisions of section 197 of the Act read with rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is appended as Annexure IV to this Report.