Edelweiss Financial Services Ltd Management Discussions

Macro Economic Review & Outlook

Indias economic engine is roaring. A perfect storm of growth-friendly reforms, massive infrastructure spending, and a digital revolution is propelling the nation towards becoming a global economic powerhouse. Business-friendly reforms, including the Goods and Services Tax (GST) and corporate tax reductions, are fostering a fertile environment for entrepreneurial activity. Concurrently, the National Infrastructure Pipeline is meticulously laying the groundwork for a future economic juggernaut by prioritising critical infrastructural development. Beyond physical infrastructure, Indias digital revolution, spearheaded by initiatives like Aadhaar and the Unified Payments Interface (UPI), is fostering financial inclusion and streamlining economic activity across the nation. This potent combination is further amplified by Indias favourable demographics, characterised by a young and tech-savvy population with growing disposable income, fuelling a robust domestic market. This confluence of transformative policy initiatives, strategic infrastructure investments, and a burgeoning digital ecosystem is propelling Indias economic engine towards a robust and sustained growth trajectory. Consequently, India is not merely the worlds fastest-growing major economy; it is rapidly establishing itself as a pre-eminent destination for long-term investment, attracting global players seeking to capitalise on its immense potential.

The global economy navigated a complex year in 2023. While growth persisted, concerns about inflation and geopolitical tensions loomed large. Initial worries about persistent inflation eased somewhat as inflation metrics improved throughout the year. This, along with increased expectations for a soft landing for the U.S. economy amid a slowdown in monetary policy tightening, boosted market confidence. Labour markets in the U.S. and Eurozone showed surprising resilience, with the U.S. economy notably defying recession fears by achieving a robust real GDP growth rate of 2.5% in 2023. However, the year was not without significant challenges. The early months were marked by disruptions in the banking sector, including regional bank failures in the U.S. and a major merger among Switzerlands largest financial institutions, leading to volatile interest rates. Fortunately, stability returned as regional banks recovered. Geopolitical tensions continued to fuel uncertainty, with the ongoing conflict in Ukraine and strained relations between the West and China casting a long shadow. Additionally, renewed hostilities in the Middle East further heightened concerns about global stability.

For India, political stability, firm GDP growth, controlled inflation rates, and effective monetary policies from the central bank collectively paved the way for strong economic growth in FY24. Retail inflation remained steady within the target range indicating stability, while core inflation experienced a downward trajectory, supported by domestic economic expansion and favourable global commodity prices. Additionally, robust investment activity from both public and private sectors played a pivotal role in driving growth, particularly by stimulating the manufacturing and construction sectors. India has demonstrated notable resilience to global shocks since the onset of the pandemic. This resilience can be attributed, in part, to its lower current account deficit, bolstered by a growing services trade surplus, as well as a substantial foreign exchange reserves buffer. The second advance estimate of national income released by the national statistics office (NSO) on February 29, 2024, had pegged real GDP growth in FY24 to be 7.6% versus 7% (first revised estimate) in FY23. Beyond economic strides, "Brand India" celebrated a remarkable year with notable achievements that significantly enhanced its soft power and global influence. This was highlighted by the triumphant landing of Chandrayaan-3 on the Moons south pole, a historic milestone in space exploration that reaffirmed Indias leadership in the field. Additionally, hosting a successful G20 Summit further solidified Indias esteemed position on the global stage, showcasing its diplomatic capabilities and strengthening its international standing. India has strategically leveraged its soft power—encompassing cultural diplomacy, economic influence, and proactive diplomatic initiatives—not only to enhance its global image but also to strengthen its international relations. This multifaceted approach has created a web of influence that extends far beyond its geographical boundaries, enabling India to forge alliances, shape global narratives, and garner support for its positions on international platforms.

Looking ahead to 2024, the global economy is finding its footing after a period of turbulence. Growth is expected to remain steady this year, despite ongoing challenges. While geopolitical tensions and rising interest rates pose risks, there are signs of stabilisation. Inflation is on track to moderate, albeit at a slower pace than anticipated. Central banks are likely to maintain a cautious approach when it comes to easing monetary policy. However, downside risks persist. Key conflicts such as the Ukraine war, US-China relations, Arab-1 sraeli relations, and Irans foreign relations remain in a holding pattern, awaiting shifts influenced by the outcome of the U.S. election. Escalating geopolitical tensions could lead to volatile commodity prices. In the context of elevated trade policy uncertainty, further trade fragmentation risks additional disruptions to trade networks. Against this backdrop, 2024 is shaping up to be the Super Bowl of elections, with over 2 billion people across more than 50 countries participating in significant electoral events. These include Russias presidential election in March, Indias general elections in April-May, the European Unions bloc-wide elections in June, and the United States legislative and presidential elections later in the year.

Indias economic outlook for FY25 appears highly promising, marked by a robust GDP growth forecast upgraded by most rating agencies. Positioned as the fastest growing among G20 economies, Indias economy surged ahead clocking in impressive growth rates on the back of robust manufacturing activity and infrastructure spending. Growth backed by both government capex and private investment and resilient urban consumption buoyed by factors like increased vehicle and housing sales, higher air travel, and a surge in digital transactions are poised to propel the economic trajectory forward. The anticipated normal monsoon in FY25 is expected to bolster rural consumption, further driving economic momentum. High-frequency indicators suggest continued momentum, while accelerations in both manufacturing and service sectors affirm Indias status as one of the fastest growing major economies. With inflation moderating, the Reserve Bank of India maintains a cautious monetary policy stance, holding the repo rate steady in February despite solid growth dynamics. Strengthening economic, military, and political ties with the US underscore Indias geopolitical significance, attracting interest from US-based investors. Additionally, Indias inclusion in JP Morgans widely tracked Global Bond Index-Emerging Markets (GBI-EM) from June 28, 2024, facilitates easier access to its financial markets, further enhancing its appeal.

Integration of technology has been a key driver of Indias economic development, leading to substantial growth in the digital economy. This transformation has empowered India to create innovative products and solutions for its vast consumer market, with government policies playing a crucial role in fostering innovation and ensuring infrastructure and security. Notable outcomes include improved financial inclusion through digital payment modes, streamlined tax processes, and increased domestic participation in the capital market. Additionally, Indias focus on niche and complex manufacturing, supported by initiatives like the Production Linked Incentive Scheme and national infrastructure plans, aims to boost the sectors contribution to the GDP and capitalise on the countrys competitive advantages. As India continues its manufacturing focus, addressing the demand for cleaner energy sources is crucial for reducing dependence on fossil fuels and enhancing energy security.

While Indias remarkable rise as a key player in the global business arena is a significant milestone, acknowledging potential risks in the evolving global risk landscape is essential. Currently, the spotlight is on the urgent threat of Al-generated misinformation and disinformation, driven by the swift dissemination of false information in our technologically advancing world. This inherent risk bears the potential to mould public opinion, influence decision-making processes, and sow social discord. Also, there is a notable emphasis on climate-related threats, underscoring the escalating awareness of environmental challenges that demand sustained global attention and collaborative efforts. Furthermore, the anticipated emergence of a multipolar or fragmented global order over the next decade signals a significant shift in power dynamics, with potential implications for international relations, trade, and geopolitical stability. An insightful understanding of this evolving risk landscape is paramount for effectively navigating the intricate terrain of global affairs in the years to come.

India is undeniably at a cusp of its greatest economic expansion as it strides forward on its transformative path, ushering in an era focussed on empowering its youth. This journey lays the foundation for Viksit Bharat, a nation dedicated not only to economic progress but also to the seamless fusion of prosperity with environmental harmony, thereby creating opportunities for the prosperity of every citizen. In the pursuit of a developed India, the nation stands at the crossroads of innovation, economic reform, and responsible statecraft. This vision is not merely a government initiative; it is a collective dream encompassing the hopes and aspirations of every Indian. It calls for harnessing the potential of the youth, leveraging technological advancements, and promoting inclusive growth that respects the nations diverse cultural fabric. As India navigates the complexities of the global stage, its emphasis on responsible governance, economic resilience, and innovation positions the country as a beacon of progress and possibilities.

Industry Structure and Developments

Edelweiss is one of Indias leading diversified financial services companies, offering a broad range of financial products and services to a substantial and varied client base. This includes retail individuals, High-Net-worth Individuals (HNIs) and Ultra-High-Net-worth Individuals (UHNIs), corporations, and institutions across both domestic and global geographies. Its businesses span Alternative Asset Management, Mutual Fund, Asset Reconstruction, Housing Finance, SME Finance, General Insurance, and Life Insurance.

Asset Management

The asset management industry in India comprises Alternative Asset Management and Mutual Funds.

Alternative Asset Management can be classified as Public Alternatives (hedge funds, concentrated public eguity strategies), Private Alternatives (private eguity, private credit, real assets) and Perpetual Strategies (InvITs and REITs).

Within Indias Private Alternatives investment landscape, over the last decade Private Credit and Real Assets have provided investors superior risk-adjusted returns leading to development of this market. Indias projected GDP growth towards $10 trillion within the next decade presents a massive $600 billion opportunity for alternative assets, creating an attractive investment environment. Within this, Private Credit and Real Assets in India are expected to reach 37% of the Indian Alternatives market by 2035 to $225 billion, leading the industrys growth.

Along with Indias GDP scale up there is also a robust expansion in the investor base. The number of High-Net-worth Individuals (HNIs) and Ultra-High-Net-worth Individuals (UHNIs) are anticipated to double by 2027. Additionally, the increasing corpus of pension funds and insurance companies is expected to provide a substantial pool of capital actively seeking alternative investment options. This is expected to translate into significant growth potential for Private Credit and Real Assets in India.

Private Credit funds look to provide flexible financing solutions for meeting the growth and refinancing requirements for Corporate India. They are becoming an integral part of the financial ecosystem and are playing an important role in the development of bond markets in India. Private Credit delivered through Private Alternative funds with matched asset-liability structures solves a tangible problem for the borrowers.

Real Assets funds focus on development and monetisation of assets to release productive capital in the country and are a large investment opportunity for Private Alternative asset managers. This exceptional growth trajectory positions Indias Private Alternative investment space as a pre-eminent destination for investors seeking risk-adjusted, long-term, high-potential returns.

Indias mutual funds industry is also making significant strides, characterised by consistent growth and promising indicators. With a strong track record of performance and a diverse range of investment options, it is well-positioned to meet the needs of various investors. In FY24, Mutual Funds Industry AUM grew 35%, reaching ^53.40 trillion as of March 31,2024, compared to ^39.42 trillion as of March 31,2023. This growth is fuelled by a combination of factors, including the rising financial literacy among the populace, favourable performance of the stock market, and the convenience of digital investing. Notably, there is a rising involvement of young Indians in equity investments, driven by the desire to build wealth in a changing economic landscape. Technology has played a pivotal role in democratising access to mutual funds, offering simplified processes and user-friendly platforms that make investing more accessible to a wider audience.

Looking forward, the outlook for Indias mutual funds industry remains promising. With ample opportunities for expansion and the potential to attract new investors, the industry is poised for further growth. As more participants enter the market and innovative products emerge, we anticipate an exciting journey of wealth creation and financial empowerment. While challenges may arise, the resilience and adaptability of Indias mutual funds industry position it for continued success in the years ahead. With a strong foundation and a commitment to innovation, the industry is well-equipped to navigate obstacles and capitalise on emerging opportunities, driving sustained growth and prosperity for investors.

Asset Reconstruction

ARCs, pivotal in acquiring and revitalising distressed assets, serve as essential bridges to reintegrate them into the economy, earning global recognition as resolution institutions. This positions them well amidst Indias substantial volume of stressed assets, presenting robust growth prospects. According to a Crisil Ratings report released at an Assocham seminar on ARCs and stressed assets, the sector is expected to cross the ?10 lakh crore AUM mark this fiscal year, up from ?8.48 lakh crore a year ago.

However, the report also indicates that the sectors growth rate of the industry is expected to temper down in FY25 compared to the growth trajectories seen in previous years. This moderation is largely on account of large transactions concluded by NARCL and quicker resolutions in the retail portfolio.

The retail lending environment remains robust, with a significant YoY growth of 24% (as of September 2023) compared to the more modest 1 0% growth in corporate accounts. Within the retail sector, two-wheeler and education loans have seen the highest growth in outstanding balances. Unsecured loan segments (personal loans & credit cards) maintained their growth momentum, while mortgage loans are expected to exhibit stable YoY growth. Despite lower delinquencies across secured and unsecured loans, including microfinance, the coming year might see higher Non-Performing Assets (NPAs) due to an increase in loan ticket sizes.

This risk is particularly relevant for personal loans and credit cards, which are already experiencing rising delinquency trends. Interestingly, NBFC lending shows signs of declining delinquencies despite modest growth. These dynamics suggest a positive outlook for the growth of the retail assets business in the ARC space.

On the corporate assets segment, the supply of stressed assets from public sector banks continues to be limited and the terms of sale is skewed towards all cash transactions. Majority transactions available would continue to be from the NBFCs and private banks.

Lower funding requirement and lenders requirement for upfront exit have also raised the proportion of cash deals compared to SR deals. FY24 has seen higher participation from AIFs and QIBs to support the transactions and lower capital deployment by ARC in the backdrop of revised minimum SR subscription requirement from ARC at 2.5% from 15% earlier. The trend is expected to continue further.

The Company remains cautiously optimistic on the business growth in wholesale segment and positively optimistic in retail segment in the near to medium-term despite heightened global uncertainty, considering various policy and enablers from the government, regulators, and improved business sentiments.

MSME Finance

Indias economy continues to grow, primarily propelled by robust domestic demand and notable expansions in manufacturing and services sectors. This growth trajectory is anticipated to sustain strong demand for credit, especially among Micro, Small, and Medium Enterprises (MSMEs) and retail credit.

The MSME sector is expected to play a significant role in Indias growth story, with their contribution to the GDP expected to increase from 30% in FY24 to 40% in the next five to seven years. Formal credit deployment will play a crucial role in the growth of this sector and NBFCs will be a critical contributor.

NBFCs have emerged as pivotal financial sources, serving a broad spectrum of the population, including SMEs and economically underserved individuals. Their expansive reach, understanding of diverse financial needs, and rapid turnaround times have facilitated efficient borrowing processes. NBFCs have contributed significantly to financial inclusion by fostering the growth of numerous MSMEs and self-employed individuals. The financial services sector has witnessed substantial growth, with various players adopting diverse business models. NBFC AUM is projected to grow by 14-17% in FY25 and cross the ?32 trillion mark by March 2025.

Here are the Key Highlights of FY24 for the Industry:

The repo-rate remained unchanged throughout FY24. However, MCLR-linked bank loans were repriced upwards due to a lag, resulting in higher borrowing costs for NBFCs and impacting their NIMs.	The regulatory landscape for NBFCs saw significant changes with the introduction of risk weights for consumer credit exposure. Additionally, there was increased scrutiny to ensure timely compliance with existing regulations.
C The co-lending assets under management of NBFCs touched the ^1 lakh crore mark.	Strategic partnerships between banks and NBFCs, among NBFCs, and between NBFCs and Fintech companies continued to reshape the sector by creating a robust ecosystem.

Housing Finance

As we assess the housing finance sectors performance in FY24, its clear that the industry has navigated a dynamic environment with resilience. The Reserve Bank of Indias latest data on "Sectoral Deployment of Bank Credit" reveals that over the past two financial years, there has been a robust growth of Indias residential real estate market and the rising demand for homes nationwide. According to the data, credit outstanding to the housing sector, which primarily includes home loans, has surged by ?10 lakh crore over the last two years, reaching an impressive ^27.22 lakh crore as of March 2024. This marks a notable increase from ?17.26 lakh crore at the end of March 2022.

While higher interest rates pose a hurdle, the residential property sector continues to see healthy demand. This is driven by a strong economy, changing preferences for more spacious and amenity-rich homes post-pandemic, and the rise of remote and hybrid work models. This trend is reflected in the steady growth of Housing Finance Companies (HFCs) assets under management (AUM) as they cater to this robust demand in the retail home loan market. Looking ahead, the sector remains supported by favourable macroeconomic conditions and ongoing government policies. With continued demand for housing and a focus on guality lending practices, HFCs are well-positioned to navigate the challenges and opportunities that lie ahead in the coming fiscal year.

While Net Interest Margins (NIM) may face some pressure, overall profitability is expected to improve as asset guality concerns diminish. The sectors resilience is further underscored by the sustained momentum in residential sales and launches, despite the Reserve Bank of Indias repo-rate increases.

However, its important to acknowledge potential risks to this outlook, including regulatory changes, tightening liguidity conditions, persistently high-interest rates, and increased competition from banks. Managing and mitigating these challenges will be essential for HFCs to sustain their growth momentum and ensure financial stability in the foreseeable future.

^General Insurance

The general insurance industry has ended FY24 posting a 13% YoY growth in gross direct premium underwritten, compared to 16% in the previous financial year. With growth rates of 19% and 21 % respectively, Private Insurers in the general and standalone health sectors expanded faster than the industry average. Both segments of Private Insurers have gained market share at the expense of the public sector. Private General Insurers now contribute to 53.5% ofthe market (vs. 51.4% in FY23), PSU Insurers down to 31.2% (vs. 32.3% in FY23), Standalone Health Insurers 11.4% (vs. 10.2% in FY23) and the Specialised PSU Insurers have 3.9% (vs. 6.2% in FY23).

The general insurance industry continues to be dominated by the health and motor insurance segments. Health has continued its dominance over Motor in both contribution & growth, post COVID-19.

The financial year heralded the advent of a landmark regulatory change for the Industry with EOM regulations prescribing one limit for expenses and subsuming all other expenses under it. This gave the industry the flexibility to decide their own sub-limits for commission and acquisition costs. This can and has resulted in some pain in the short-term adjustment period, however, over the long-term, it is expected to drive greater cost-efficiency for customers.

The year 2024 underscored the Regulators focus on the Health segment with a view to simplify and improve customers experience with claims and creation of more inclusive products. Integration with the India Health Stack, emergence of the National Health Claims Exchange and Industry-wide cashless networks are significant milestones that can enable 100% cashless claims for customers - the stated aspiration from the Regulator.

The year ended with a spate of regulations - largely, the focus being to consolidate the multiplicity of guidelines making it easier for reference and the move to "principle-based" regulatory regime. These set the stage for the achievement of the mission "insurance for all. The industry needs to evolve its own framework within these guidelines and ensure adherence to facilitate orderly development.

In the coming year, the regulatory is expected to overhaul the distribution regulations, similar to the way they changed the product regulations in the last two years. Besides this, we expect to see regulations around Risk-based Capital and Accounting for Commission and Premium, which will impact the P&L and capital efficiency. The industry is cautiously optimistic about these developments.

)j Life Insurance

Indias vast and youthful population presents a significant growth opportunity for the life insurance sector. As a significant number of individuals enter the workforce and attain financial independence, the demand for life insurance products is expected to increase. With a substantial protection gap of 87% in 2023 and insurance penetration at just 3% of GDP in FY23, Indias insurance market is poised to be the fastest growing among G20 countries over the next five years, according to Swiss Re.

Despite challenges such as high-ticket taxation in the non-linked segment, Indias life insurance sector has demonstrated resilience and stable growth. The private sector, in particular, has strengthened its foothold, capturing 68% of the market share in FY24, up from 66% in the previous year. This indicates a robust expansion and increasing competitiveness within the market. The growth in new business premium collections, showing a year-on-year increase in March 2024 for FY24, underscores strong demand for life insurance products among individual and corporate customers.

The rise of Insurtech is revolutionising the life insurance industry in India. Innovative technologies are enhancing brand recall and shifting consumer preferences towards more personalised and intuitive experiences. This shift underscores the importance of shifting consumer preferences towards more personalised and intuitive experiences. This shift underscores the importance of agility and innovation for insurers to meet the evolving needs of consumers in the digital age. Established players continue to assert their dominance, but challenger brands are gaining ground, intensifying competition and driving increased market consideration.

Regulatory liberalisation has been a significant growth driver for the life insurance sector in India. The Insurance Regulatory and Development Authority of India (IRDAI) aims to achieve "Insurance for all by 2047", ensuring every citizen and enterprise has appropriate insurance coverage. Recent regulatory changes have been landmark in supporting this mission and fostering market expansion. These changes, coupled with strong economic growth, provide a favourable environment for the life insurance sector to thrive.

: Edelweiss Outlook & Strategy

1 Edelweiss Outlook

A paradigm shift is underway within Indias financial services sector. Technology, personalisation, and a growing emphasis on sustainability are converging to reshape the industry. This powerful confluence empowers both individuals and businesses to navigate the complexities of a rapidly evolving world and emerge stronger. Fuelled by a growing demand for innovative financial solutions, supportive government policies, and an ever-expanding market reach, a wave of significant opportunity is gathering momentum. We, at Edelweiss, standing at the forefront of this transformation, are actively positioning ourselves to capitalise on these prospects and contribute to the continued growth and evolution of Indias financial landscape.

With a diverse business portfolio, were poised for substantial growth. Our diversified franchise acts as a natural hedge, ensuring resilience in earnings and performance while providing unique cross-selling opportunities. Over the next year, our strategic priorities and initiatives will continue to focus on fortifying profitability, streamlining operations, and leveraging emerging technologies to innovate and withstand market turbulence. Leveraging our expertise and forward-thinking approach, were ready to capitalise on emerging trends. Our unwavering commitment to identifying and nurturing growth opportunities underscores our role as an Investment Company ("InvesCo") committed to unlocking significant value for stakeholders.

Opportunities

Within the ever-evolving domain of financial services, several key trends and factors present a compelling strategic framework for our organisations continued expansion. By meticulously analysing these opportunities, we can solidify our position as a pre-eminent leader in the industry.

Supportive Policy Framework -

Government policies exert a significant influence on nurturing a vibrant financial services industry. Indias ongoing reforms and the implementation of digital-centric tax and compliance frameworks go beyond mere bureaucratic streamlining; they represent the foundational pillars of a transparent and efficient ecosystem. Streamlined regulations, coupled with a reduction in administrative burdens and a focus on promoting operational efficiency, create a fertile ground for businesses like ours to flourish. This supportive environment empowers us to concentrate on innovation and consistently deliver exceptional value to our clientele.

. Technology-driven Financial Inclusion ?

The rise of financial inclusion in India underscores the transformative power of technology. Initiatives such as the Pradhanmantri Jan Dhan Yojana and Stand Up India programmes extend beyond simply opening bank accounts; they equip millions, particularly those within vulnerable segments of society, with the tools and access necessary to construct a secure financial future. Technological advancements, such as mobile banking and digital wallets, transcend mere convenience; they represent gateways to financial empowerment. Furthermore, the expanding participation of High-Net-worth Individuals (HNIs) signifies a maturing market brimming with untapped potential. By meticulously developing innovative financial solutions tailored to this sophisticated segment, we can strategically expand our reach and solidify our pre-eminence within the marketplace.

Al-powered Personalisation .

The digital transformation era signifies a paradigm shift beyond mere technological adoption; it represents a fundamental change in how we cultivate relationships with our clientele. Artificial Intelligence (Al) is rapidly transitioning from rudimentary automation to a sophisticated tool-set capable of fostering deeper client understanding. Generative Al, the next frontier of this technological revolution, will dynamically tailor financial products and services to individual needs and preferences.

This empowers us to curate hyper-personalised experiences across all client touchpoints - from mobile applications and online platforms to in-person interactions. By fostering deeper customer relationships built upon a foundation of trust and comprehensive understanding, we can unlock significant business growth through a technology-driven, client-centric approach.

Commitment to Sustainability

The contemporary marketplace demands not only robust financial performance but also a demonstrably strong commitment to a sustainable future. By prioritising sustainability initiatives and meticulously integrating Environmental, Social, and Governance (ESG) principles into our overarching business strategy, we unequivocally demonstrate our alignment with the evolving expectations of stakeholders. This unwavering commitment to positive social impact not only enhances our brand image but also attracts environmentally and socially conscious clients and investors, ultimately contributing to our long-term success and solidifying our position as a responsible industry leader.

By embracing these trends and capitalising on the associated opportunities, we strategically position ourselves for sustained growth, resilience, and leadership within the ever-evolving landscape of our industry. This comprehensive framework empowers us to not only achieve exceptional business growth but also contribute meaningfully to the construction of a more inclusive and sustainable financial future for India.

Threats

The global financial services industry today stands at a critical juncture. Geopolitical tensions—from trade wars to regional conflicts—alongside economic uncertainties threaten to disrupt vital resources and overall stability. Domestically, rising interest rates, increased regulatory scrutiny aimed at curbing financial risks, and persistent inflation create a challenging environment for Indian financial institutions. In this unpredictable landscape, adaptability, strategic foresight, and a customer-centric approach will be the hallmarks of success.

. Fortifying the Digital Frontier -

In a world dominated by digital interactions, the spectre of cyber threats looms large. Safeguarding sensitive data like account information and transaction details is paramount. Financial institutions must invest in robust cybersecurity infrastructure, implementing advanced encryption and fraud detection systems. Furthermore, Indias cybersecurity laws and regulations need to keep pace with evolving threats, ensuring effective enforcement and international cooperation. However, defence alone is not enough. Empowering consumers through financial literacy programmes is egually critical. By equipping individuals with the knowledge to navigate online transactions and identify suspicious activity, we can build a collective resilience against cyber crime and financial exploitation. Educational initiatives can range from interactive workshops to gamified learning platforms, making financial literacy engaging and accessible for all age groups.

G Attracting and Retaining Talent

The digital transformation in financial services has intensified the competition for talent, particularly in tech roles, leading to a critical shortage of skilled professionals. To stand out and retain critical talent, organisations must commit to professional growth by offering mentorship programmes, continuous learning opportunities, and re-skilling initiatives in key areas such as data analytics, artificial intelligence, and cloud computing. Adapting to the evolving work landscape by embracing remote work flexibility and fostering collaboration through well-designed programmes can support the growing preference for work-life balance. Ultimately, financial institutions that prioritise building a culture of innovation, growth, and flexibility will be best-positioned to attract and retain the talent necessary to thrive in the digital age.

Rising Global Competition —

Indias financial services landscape is no longer solely domestic. The entry of international players brings a new layer of complexity and fierce competition. These global giants, armed with vast resources, cutting-edge technology, and innovative financial products, present a significant challenge. To remain competitive, domestic institutions must embrace a culture of continuous innovation. This means developing new products and services that cater to evolving customer preferences, such as personalised wealth management solutions or seamless mobile banking experiences. Collaboration with FinTech startups, known for their agility and tech-driven approach, could also be a strategic move.

The Way Forward

FY24 was a year of strong performance and growth, driven by successful execution of our strategy. Our profitability saw substantial growth, primarily driven by the expansion of our Alternative Asset Management, Mutual Fund, and Asset Reconstruction businesses. Our Insurance business gained good momentum, and were on track to achieve break-even. By focussing on reducing wholesale loan assets, optimising debt structures, and improving liguidity management, we successfully reduced our net debt, reinforcing our financial stability and laying a solid foundation for future endeavours.

Looking ahead to FY25, our strategic direction is clear: We aim to scale up profitability in Alternative Asset Management and Mutual Fund, while also intensifying efforts to expand retail credit through an asset-light, co-lending model. Additionally, were focussed on ensuring the sustainability and profitability of our Insurance businesses, with a clear objective to achieve break-even status by FY27. Our commitment to reducing net debt remains steadfast, ensuring financial stability and flexibility for future endeavours.

As the environment evolves, so does our approach. With clarity in our key focus areas for the next year, were poised to thrive in the evolving landscape, delivering value to our stakeholders and reinforcing our position as a leader in the financial sector.

Performance Highlights

We had a strong finish to FY24 with impressive growth in our core businesses, maintaining the strong momentum from the previous year. This year, we achieved a significant milestone by completing the Value Unlock Journey for Nuvama, culminating in its listing on September 26, 2023, and distribution of 30% of the shares to our shareholders. This year we experienced significant growth in our asset management and insurance businesses.

The Alternative Asset Management platform continued its strong track record, achieving an 18% increase in AUM YoY to ^54,700 crore, with feepaying AUM growing by a remarkable 39% to ^32,200 crore. In Mutual Fund, AUM surged 21% YoY to reach ?1 27k crore, with Eguity AUM growing a healthy 61 % YoY to ?43.7k crore. Retail credit witnessed a significant growth via co-lending model, where MSME disbursements tripled, and Housing Finance disbursements doubled in the year. General Insurance also recorded an exceptional 54% growth in Gross Written Premium (GWP), securing the industrys highest growth rate. Gross Premium of Life Insurance business grew by 15% YoY to ?1,926 crore.

Customer reach expanded further on the back of a retail scale up, growing 35% YoY to 76 lakh.

This has also aided a 1 3% YoY growth in customer assets to over ?2.1 lakh crore. Overall businesses saw a significant growth in customer base - demonstrating the continued trust in us by our customers. These impressive accomplishments across all sectors showcase the strength and guality of our established businesses.

Our consolidated Profit After Tax (PAT) before minority interest (pre-MI) for FY24 grew by 30% to ?528 crore as compared to ?406 crore last year. PAT from our non-insurance businesses stood at ?661 crore ( vs ?610 crore in FY23).

Total income for the year increased by 11 % YoY to ?9,602 crore, driven by a 34% YoY uptick in net gain on fair value changes (?3,091 crore vs ?2,304 crore). There was a 3% YoY decline in interest income (?2,854 crore vs ?2,946 crore), due to a strategic shift towards asset-light models in retail credit and the wind-down of our wholesale book. Our insurance business maintained its growth momentum, achieving a net premium of ?2,278 crore for FY24, up from ^ 1,928 crore in FY23, reflecting a healthy 18% growth.

Post distribution of the 30% stake in Nuvama to our shareholders in Sept 2023, the total Net Worth stood at ?6,216 crore as on March 31,2024, including the amount of eguity convertible instruments (CCDs) vis-a-vis ? 8,502 crore as on March 31, 2023.

FY24 expenses increased by 9.4% compared to FY23 (?9,165 crore vs ?8,380 crore). The increase in expenses is largely driven by variable business costs proportionate to the growth in revenue, whilst fixed and overhead costs have remained flat, thus demonstrating efficient scaling. Impairment on financial instruments decreased to ?15 crore, compared to ?362 crore in FY23. Additionally, the change in valuation of credit-impaired loans was also lower by 17% YoY, at ?733 crore vs ?885 crore in FY23. As of March 31,2024, total gross debt stood at ?1 8,218 crore, decreasing progressively throughout the year from ?19,263 crore at the end of FY23. Finance costs increased to ?2,786 crore compared to ?2,575 crore in FY23 due to a slight uptick in our cost of borrowing. Throughout the year, we maintained a prudent approach to liguidity management, ensuring readily available resources at approximately 16% of our borrowings.

The diluted EPS for FY24 stood at ?4.68 compared to ?3.83 for FY23. Book Value per share was ?48 at the end of FY24. The Board of Directors have recommended a final dividend of ?1.50 per eguity share. Total Dividend for the year stands at ?1.50 per eguity share.

3) Liquidity and ALM Profile

We ensure that an adeguate liguidity cushion is maintained to take care of all maturing liabilities with a focus on optimum revenue generation from liguid assets.

At the end of FY24, we maintained available liguidity of ?2,900 crore. This included overnight liguid assets of ^1,700 crore, high-guality liguid assets of over ?1,000 crore which can be liguidated within a short span (if the need arises), and undrawn committed bank credit lines of ?200 crore.

Over the years, we have demonstrated a strong track record of fund raising from both retail and institutional lenders. With the help of public issues and our retail borrowing programmes, we have increased the proportion of funding through retail sources from 42% to 45% in the past one year.

On the asset side, we continue to focus on and reorient our balance sheet towards retail growth. As wholesale recoveries remain slightly slower than anticipated, we have optimised the tenor and focussed on medium to long-term borrowings. Long-term borrowings now stand at 68% of the total debt.

All these steps have ensured that we maintain a positive ALM gap across all-time buckets.

Analysis of Significant Changes in Financial Ratios

As per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, below is the additional information in respect of the financial parameters that are applicable to our company.

Details of significant changes in key financial ratios:

• Debt Equity Ratio

The Debt Equity Ratio as on March 31,2024 stood at 3.35 times compared to 2.77 times as on March 31,2023.The increase in gearing is on account of drop in equity, post distribution of the 30% stake in Nuvama to our shareholders on September 2023. Including the amount of equity convertible instruments (CCDs) in our net worth and excluding the liquid treasury assets that we hold for liquidity management; the Net Gearing Ratio is 2.5 times as on March 2024 compared to 1.9 times as on March 2023.

• Profit before Tax Margin (%)

The Profit before Tax Margin for FY24 was 4.6% compared to 4.5% in FY23.

• Net Profit Margin (%)

The Profit after Tax Margin for FY24 stood at 5.5% compared to 4.7% for FY23.

Other parameters, namely Debtors Turnover, Inventory Turnover, Interest Coverage Ratio, and Current Ratio, are not applicable to our Company.

Details of any changes in Return on Net Worth as compared to the previous financial year:

Return on Net Worth, i.e. Return on Equity (RoE), post-MI on consolidated basis for FY24 stood at 9.2% compared to 5.1% for FY23

Business-wise Analysis of Profitability

Distribution of earnings among these businesses

Business	Year Ended: March 2024	Year Ended: March 2023
Alternative Asset Management	210	159
Mutual Fund	38	18
Asset Reconstruction	355	318
NBFC	150	139
Housing Finance	19	16
General Insurance	(123)	(125)
Life Insurance	(157)	(199)
Corporate	36	80
EFSL Consolidated PAT (Pre-MI)	528	406
(Less) Minority Shareholders PAT	107	61
EFSL Consolidated PAT (Post-MI)	421	344
EFSL Ex-Insurance PAT (Post-MI)	661	610

INRCr

Alternative Asset Management

The financial landscape in India is witnessing a notable surge in absolute wealth among Ultra High Net-worth Individuals (UHNIs) and Family Offices, coupled with a growing trend of financialisation of savings. Concurrently, there are increasing allocations to India compared to other developing nations, driven by the countrys robust GDP growth prospects fuelled by infrastructure development, capital expenditure, and productivity enhancements. This has led to the shift in focus and mainstreaming of Private Alternatives, offering stability unlinked to market volatility. Indias rising affluent class underscores substantial growth potential, with alternative assets such as Private Credit and Real Assets gaining prominence amidst evolving market dynamics.

Edelweiss Alternatives is poised to seize this growth opportunity with its strong market presence in the Private Alternatives space.

It is the pioneer in Private Credit and Real Assets class, has a diversified LP base spanning North America, EMEA, APAC and India, with consistent best-in-class performance backed by localised expertise, a tech-enabled institutional platform, and a long-tenured management team.

AUM of the alternative asset funds have grown at a CAGR of 34% over the last 2 years to ^54,700 crore. During the year, we have raised ?9,525 crore, leveraged on growing demand for Private Alternatives in global markets as well as India.

This strong business performance helped in the rise of FPAUM to ^32,200 crore (CAGR of 35% over last 2 years) and accordingly,

Fee Revenue rose 42% YoY to ?398 crore in FY24 and a Profit After Tax of ?210 crore. With strong governance and focus on robust risk management, the total deployment was ?6,550 crore and realisation was ?9,200 crore across strategies in FY24. We made successful exits in EISAF II Onshore fund that led to surpassing the investor hurdle rate return of the fund.

Our third series of Special Situation Fund declared its Final close at USD 1.33 billion (~?11,000 crore) while second series of Infrastructure Yield Fund has raised more than USD 1 billion (~?8,000 crore) and continues to see robust investor response. In FY24, we launched three new products - Rental Yield Plus (RYP), Core Credit Fund (C-SIP) and Energy Transition Fund. RYP is a first-of-its- kind pre-REIT offering for Indian Investors, the fund invests in pre-leased commercial buildings. C-SIP focusses on generating returns through investments in performing credit opportunities across sectors. Energy Transition Fund offers investors a long-term investment vehicle and opportunity to participate in Indias sustainable energy transition.

Our IYP-II Fund also completed the acquisition of L&T Infrastructure Development Projects (L&T IDPL), which owns various road assets and power transmission lines, further scaling up our Real Assets platform and is one of the largest deals in India in this sector.

With strong institutional capabilities, including skilled teams in investment and asset management, robust risk management, and governance frameworks, we will remain well-positioned for sustained growth in FY25. Our strategy will continue to focus on delivering strong investment performance, introducing new products regularly, expanding into new client segments and geographies, and maintaining rigorous risk and governance standards.

Edelweiss Alternatives is also one of the few Private Alternative asset managers who are signatory to the United Nations Principles of Responsible Investing (UN PRI). Our funds adhere to the best global practices of asset management and are focussed on sustainable investing.

Industry Accolades

Our achievements in the industry have been recognised with several prestigious awards. We were honoured with the "Market Award - India" category Asian lnvestor Asset Management Awards and named the Best BFSI Brand by ET Edge. Additionally, we received the "Best Overall Performance of the Year" award from the IVCA at the Alternate Capital Excellence Awards. Notably, we are the only Indian Alternatives player to consistently feature among the top PDI fund raisers of the year for three consecutive years.

^Mutual Fund

At Edelweiss Mutual Fund, our values are centred around creating simple yet innovative solutions that genuinely address the needs of our investors. Our core product philosophy embodies simplicity, boldness, pioneering innovation, and a customer-first approach. We prioritise making complex financial concepts accessible, empowering investors to make confident, informed decisions. Our diverse product portfolio, including eguity, debt, balanced, and liguid funds, caters to various financial goals and risk appetites. Committed to innovation, we strive to set industry benchmarks with our inventive solutions, consistently enhancing our offerings to deliver superior value. Our experienced team ensures consistent performance, maintaining our reputation as a top-tier asset management company.

Our growth journey is anchored by a solid foundation and driven by three distinct investment capabilities that define our excellence. Our fundamental investing strategies, guided by the FAIR framework, delve deeply into market fundamentals to unearth high-potential opportunities. Our factor-based quantitative investing strategies that leverage comprehensive data analysis to pinpoint lucrative investment opportunities. Lastly, our fixed income strategies use the CLEAR framework and target high-quality assets that provide sustainable and resilient returns. We have a robust risk management framework serving as a strong foundation in which these aspects are firmly grounded.

Our exceptional investment team, with over 230 years of collective experience, equips us to navigate market complexities and seize opportunities with confidence. Our focus has always been on strengthening our internal investment processes and how they are communicated to customers and distribution partners. This commitment is reflected in our performance, with 83% of our Equity & Hybrid Funds ranking in the top quartile (Q1-Q2) over the past three years.

This dual focus on process excellence and stakeholder trust builds strong relationships and amplifies our impact in the investment community and forms the bedrock of our sustained growth and success. As a result of these factors, we have established ourselves as a trusted and reputable asset management company. We are the 13^th largest AMC in the country and continue to be one of the fastest growing among the top 15 mutual fund houses in the industry. Profitability of this business grew by a robust 112% YoY to ?38 crore in FY24.

We manage an AUM of ?1.27 lakh crore as on March 2024, a growth of 21 % over the AUM of ?1.05 lakh crore a year ago.

Our AUM ex Bharat Bond crossed ^65,700 crore as on March 2024, a growth of 46%. Our Equity & Hybrid AUM grew by 61 % in FY24 to ^43,700 crore in assets, from ?27,100 crore as on March 2023. We saw net inflows of ?8,100 crore in FY24. SIP book witnessed a robust uptick of 56% YoY to ?234 crore. We catered to 1 5.5 lakh active folios, compared to 11.7 lakh at the end of FY23, an increase of 32% YoY vs industry growth at 22%.

Asset Reconstruction

EARC is playing a significant role in managing stressed assets in the country with an impressive AUM of ?31,600 crore, the largest ARC in the country.

We prioritise consistent excellence in governance, compliance, and risk management standards. These areas are essential for maintaining trust, stability, and sustainability within any organisation, especially one dealing with stressed assets. EARC adopts a multi-pronged strategy for resolution of stressed assets with primary focus to Revive or Reconstruct operating assets with last-mile funding needs. Based on asset-specific complexities, settlement/enforcement of security interest/resolution through IBC are also adopted with an aim to optimise stakeholder benefits.

We continue to look for potential turnaround cases based on a genuine borrower profile backed by commensurate cash flows and collaterals. Over the medium term, acguisitions will continue in a calibrated way while exploring partnership with investors (as minimum investment by the Company can be as low as 2.5% on such deals) with focus on fee-based business models. The experienced and gualified manpower and management team at the Company is a key factor in building a strong market position and delivering a sustained performance over the years.

Our acguisitions continue to target operating assets that can be revived. During the year, we invested ?1,641 crore. EARC has been able to maintain its market leadership with -26% of the market share as at December 2023.

The company has consistently shown its excellence on the retail portfolio front for the last 4 years and will continue to focus on the retail segment to improve the granularity and geographical diversification of the portfolio, enhance cash flow certainty and improve overall valuation. The share of the retail division is expected to grow to 40% over the medium term from 15% as on March 31,2024.

EARC has been able to recover more than ?9,416 crore in FY24 and a total of ?51,953 crore since inception.

NBFC

Indias NBFC sector demonstrated robust performance in FY24, serving as a pivotal source of credit, notably in sectors such as microfinance and personal loans. Industry AUM witnessed healthy growth, with some reports suggesting increases exceeding 25% YoY. While new regulatory measures may temper growth rates compared to previous years, NBFCs remain well-positioned to support credit needs across the country.

The NBFC business has two distinct business segments, namely MSME Finance and Wholesale Fending.

Expanding AUM and stable asset guality were key drivers of MSME performance in FY24. Our strategic approach has led to a 2.5x jump in disbursements to ?1,050 crore for the year, driven by our co-lending partnerships with the Central Bank of India, IDFC First Bank, and Standard Chartered Bank, which contributed to 80% of overall disbursements. During the year, we forged a new CLM partnership with Godrej Capital. We maintain strong asset guality with a Gross Non-Performing Asset (GNPA) ratio of 2.45%. Looking ahead, we anticipate continued momentum in disbursement growth and portfolio optimisation, driven by technology, strong partnerships, and rigorous risk management, positioning us as a leading player in MSME lending.

With approximately 64 million MSMEs in India, the sectors total funding reguirement is expected to reach ?134.4 lakh crore. According to a CareEdge report, the debt demand is estimated at ?106.1 lakh crore, with ?56.2 lakh crore (53%) potentially accessible through formal funding channels such as banks and NBFCs. We aim to expand our market presence in the MSME Priority Sector Lending (PSL) segment, capitalising on its significant growth prospects and current opportunities. Our vision for the MSME sector is to become the most trusted financial partner in the growth journeys of Indias micro and small enterprises. To achieve this goal, we are focussed on establishing a differentiated, asset-light retail MSME lending business.

We have discontinued our Wholesale Lending business as of January 2024. In line with our proactive strategy, we have been scaling down the wholesale lending book through a combination of organic repayments and sell-downs. Our rigorous resolution plans have resulted in significant inflows throughout the year. Supported by strong investor demand, the wholesale book has decreased to approximately ?4,150 crore, marking a 60% reduction in the last 2 years. Throughout the current fiscal year, we have generated substantial net liguidity through recoveries, resolutions, and sell-downs, ensuring that our wholesale ALM remains well-matched.

Housing Finance

Nido Home Finance (formerly known as Edelweiss Housing Finance) has undergone a notable transformation. Initially serving high-income urban clients, weve shifted focus to provide affordable housing solutions to a broader spectrum, including low-income and informal-income segments. This shift has expanded our reach into smaller towns and allowed us to cater to unigue customer groups such as new-to-credit individuals and women borrowers.

Nido Home Finance has a presence across 67 branches strategically positioned in markets characterised by high urban migration, tier 2 towns, and micro-geographies of tier 1 cities. We are proud to serve around 20,000 customers, with our loan portfolio primarily focussed on retail home loans. Nine out of ten of our customers have a loan ticket size of less than ?3 million.

We have embraced a new asset-light business model. Powered by co-lending, this asset-light model has enabled us to provide loans at attractive lending rates to customers while complementing the banks in fulfilling their need for priority sector financing. Importantly, this co-lending has provided us access to ALM-matched capital. Under this business model, we have established strategic co-lending partnerships with marguee banks across HL and LAP products and will look forward to leveraging the same as a part of our long-term growth strategy. Another dimension of our asset-light business model is the way we have diversified our liabilities-mix through sell-downs in the form of direct assignment and securitisation transactions.

In FY24, we were able to securitise a pool size of?575 crore via multiple transactions with NBFCs and insurance companies. On the back of disbursals of ?1,325 crore, Nido Home Finance ended FY24 with an AUM of ?3,962 crore, and a loan book of ?3,105 crore. As on March 31,2024, the Net worth stood at ?815 crore and the CAPAD at 39.1%.

Underlying portfolio quality manifested itself in a GNPA of 1.69% as on March 31,2024 (1.91% on March 31,2023), and collection efficiency that was consistently above 98% through the financial year.

The AUM mix remains biased towards granular, retail home loans, and new origination will also continue to focus on affordable- housing, and informal income customer segments. We continue to invest in developing future-fit capabilities such as data sciences which we have used for driving multiple use-cases associated with portfolio management, and now with use-cases also associated with Customer Value Management (CVM) and process efficiency.

General Insurance

Zuno continued to demonstrate a consistent growth trajectory, emerging as the fastest growing non-life insurer in FY24, increasing from 53% in FY23 to 56% in FY24 as compared to the industry growth of 13%.

With steady growth in the target markets: In FY24, the Motor & Health (Including Group health) segments increased by 32% & 100%, respectively, versus industry averages of 13% & 1 9%. Our efficiency improved with Combined Operating ratio coming down by 4% and the Opex ratio by 5% from FY23 level.

Our focus on customer experience was demonstrated by the fact that we ended the year in March 2024 with an NPS of 53. Besides giving us an immediate indicator of customers experience with us, this has been the most important source of valuable feedback that has helped us to constantly improve and enhance our platform.

We continue to expand our revenue and service partnerships across motor and health segments. Additionally, we kept forming alliances for external distribution with OEMs and cutting-edge, contemporary digital players. While we have on-boarded & activated marquee names such as Maruti Suzuki, Volkswagen, Skoda, we also have made payments simple, easy through Bharat bill pay integration in renewal journeys across payment gateways like Razorpay & Bill desk. We continued to keep an eye on new developments in the motor and health space. After five years, we currently boast an enviable active client base of over four million, with a 5X growth in FY24.

Throughout FY24, we maintained a strong focus on innovation, operational efficiency, and enhancing customer experience. Key innovations included the launch of the Zuno Driving Quotient (ZDQ), a unique driving score accessible via the Zuno app, which utilises mobile sensor-based telematics to evaluate driving behaviour and promote road safety. Additionally, Zuno introduced EV add-on covers tailored for electric and hybrid vehicles, featuring pioneering policy elements to ensure comprehensive coverage. The rollout of Health Plus phase 1 offered enhanced benefits such as expanded coverage, zone-based pricing, and streamlined policy terms. Operational efficiencies were achieved through enhancements in the telematics platform, improved scalability of unassisted policies, and the implementation of an SDK-based KYC solution that minimised dropouts and complaints. Customer experience was further enriched with enhanced self-service options on the website, upgraded app features including ZDQ and Motor-Health Claim Intimation & Renewals, improvements to the Partner Platform EDGE, and real-time policy communication within 60 seconds.

These efforts were underscored by the receipt of 16 awards across multiple categories from various industry forums, highlighting Zunos leadership and innovation in the insurance sector during FY24.

Apart from bringing innovative solutions for customers and enhancing their experience with us, we take continuous strides to improve operational efficiency using our digital platform and leveraging data analytics for risk selection and pricing. We are continuing our journey of expanding our distribution network by partnering with new partners and establishing new points of presence; creating a UBI category; creating new lines that are EOM-friendly; and improving our front-end digital assets to become the best in their class.

; Life Insurance

The financial year gone by was defined by a relentless pursuit of delivering customer delight, supported by a growth mindset.

With a heavy focus on improving distribution strength, providing agile support to sales teams for customer engagement, continued innovation & personalisation, process optimisation, we reported a 15% YoY growth in its Total Premium at ,926 crore. Since inception, the company has recorded an impressive 40% CAGR of individual APE.

We achieved remarkable improvements in guality parameters, ending FY24 with our highest-ever Claim Settlement Ratio of 99.23%, a 13-month Persistency Ratio of 78%, and a Net Promoter Score of 56, our highest full-year NPS to date. We maintained an optimal product mix, with approximately 80% of our offerings being traditional products and a higher ratio of longer-duration policies.

We demonstrated notable achievements across various areas during the year. In customer centricity, we enhanced service guality through digital workflows like Pragati for onboarding, a WhatsApp channel for servicing and renewals, and streamlined underwriting processes. In product development, we launched Legacy Plus and Bharat Savings STAR. Legacy Plus is an innovative participating product providing life cover for two generations and income for three, while Bharat Savings STAR stands out for its personalisation, flexibility, and cost-effectiveness. We also revamped four existing products and filed six new ones. Strategic distribution partnerships, including the addition of ESAF Small Finance Bank, expanded our Bancassurance network, particularly strengthening our presence in the Southern region. Our Udaan strategy focussed on enhancing digital capabilities with projects such as U2 for personalised customer engagement, Bolt for Al-powered insta-issuance, the My Zindagi App for a unified distribution team interface, and Dataverse for a cloud-based enterprise data warehouse. In risk management, our initiatives included a Risk Culture and Capability framework and operational risk enhancements, earning us the Golden Peacock Award, 2023. The brand remained aligned with customer centricity, leveraging campaigns and internal expertise to maintain high visibility.

In FY25, the company will continue to be guided by Udaan strategy and expand on its transformation journey towards improving customer and distributor experience while ensuring capital efficiency.

C Awards & Accolades

We continued to excel, receiving 23 industry recognitions over the financial year for our efforts in customer experience, brand building, and risk management. Highlights include being named a Great Place To Work for the fourth consecutive year and ranking among the Top 100 workplaces fostering a culture of innovation in 2024. We also won the Golden Peacock Award, 2023, for Risk Management, featured in the Most Trusted BFSI Brands by Marksman Daily, and secured the Best Programme for Sales Enablement at theTISS LeapVault CLO Awards 2023. Other prestigious awards include Retention Champion, 2023, by WebEngage, Best Use of Integrated Marketing Campaign for Organ Donation at the e4m Indian Marketing Awards, Insurtech Innovation for Unlimited at the IBEX BFSI Technology Awards, and Best Social Welfare Initiative of the Year, 2024, at the Indian Social Impact Awards.

Governance

Across all our businesses, our core commitment to governance guides everything we do. This goes beyond just following regulations; its about upholding ethics and values. For us, good governance embodies trust, legitimacy, accountability, competence, and respect for the law. We believe these are essential for building a transparent, genuine, and fair culture - all crucial for our organisations success.

Our board plays a vital role in ensuring these high governance standards permeate every organisational level. Their unwavering focus on ethical behaviour, integrity, transparency, and fairness has established a robust framework for conduct, behaviour, and process oversight.

To ensure good governance takes root throughout the organisation, we have established clear rules for individual and entity-level behaviour and conduct. These cover crucial areas like conflict of interest, insider trading, and handling sensitive information. Were also leveraging technology to enhance our practices and ensure smooth operation, even in a work-from-home environment, allowing us to maintain the highest compliance standards.

Ultimately, our commitment to good governance reflects our unwavering dedication to our stakeholders - customers, employees, shareholders, and the communities we serve. By upholding these values, we build trust, maintain legitimacy, and hold ourselves accountable to the highest standards of excellence in all aspects of our work.

Risk Management

Risk management stands as the cornerstone of success for any financial services firm, serving as a vital mechanism to identify, assess, and mitigate potential threats that could undermine its stability, profitability, and reputation. In an industry characterised by volatility, uncertainty, and regulatory scrutiny, effective risk management is not just a prudent practice but a strategic imperative. For a listed financial services firm like Edelweiss, which operates in a dynamic and highly competitive environment, the ability to anticipate and manage risks is paramount to sustaining long-term growth and delivering value to stakeholders.

At Edelweiss, in each of our businesses, the commitment to robust risk management practices is deeply ingrained in their organisational culture and business operations. To further formalise this process, they operate via an "Eleven-risk Framework" that guides them in the continuous assessment, voidance, management, and mitigation of risks.

Business Risk	Reputational Risk	Market Risk	Credit Risk
Fraud Risk	Operational Risk	Physical and Infra Risk	Technology Risk
Liquidity Risk	People Risk	Regulatory Risk

One of the key areas of focus within our risk management framework is technology risk, particularly cybersecurity. As financial services firms increasingly rely on technology to deliver products and services, they become more vulnerable to cyber threats and vulnerabilities. A cyber-attack or data breach can not only disrupt operations but also expose sensitive information and erode customer trust. Therefore, we have made significant investments in fortifying our IT infrastructure, implementing robust cybersecurity measures, and enhancing our cyber resilience capabilities to mitigate the evolving cyber threats landscape.

Moreover, the recent enactment of the Digital Personal Data Protection Act, 2023, by the government has introduced new compliance obligations for financial services firms like ours. Compliance with DPDPA, 2023, represents a significant risk project for Edelweiss, as it mandates stringent measures to protect consumer data privacy and confidentiality. Failure to comply with these regulations could result in severe penalties, legal liabilities, and reputational damage. Therefore, ensuring adherence to DPDPA, 2023 requirements is not just a legal obligation but a strategic imperative to safeguard our reputation and maintain the trust of our stakeholders.

^Internal Control Systems and Their Adequacy

Internal Financial Controls

The internal controls at Edelweiss are well-established and robust which are commensurate with the nature of its businesses, size & scale and complexity of its operations to ensure orderly and efficient conduct of business. These controls have been designed to ensure assurance with regards to maintaining proper accounting controls, substantiation of financial statements and adherence to Ind AS requirements, safeguarding of resources, prevention and detection of frauds and errors, ensuring operating effectiveness, reliability of financial reporting, compliance with applicable regulations and relevant matters under the requirements of the Companies Act, 2013.

The internal control framework of Edelweiss continues to follow the assurance practices like the COSO framework, assurance on process efficiency and reliability of internal controls being aligned to risks identified in Risk Control Self-Assessment (RCSA), etc. to strengthen the overall system.

Independent Audit and Assurance

The internal auditors of Edelweiss follow standards on internal audit, along with guidelines issued by the regulators and ensure compliance with Section 1 38 of the Companies Act, 2013, read with Rule 13 of the Companies (Accounts) Rules, 2014, as amended and notified from time to time. The Internal Audit function operates under the supervision of the Audit Committee of the Board.

The internal audits are carried out by external professionals who provide independent view and assurance by assessing the adequacy and effectiveness of internal controls, compliance to internal and external guidelines, and risk management practices across Edelweiss.

Technology

In todays fiercely competitive financial services landscape, technology has become the cornerstone of differentiation and success. The global pandemic served as a stark reminder of the critical importance of possessing a resilient and adaptable technological infrastructure. Moving forward, it is imperative to view technology not merely as a tool, but as a fundamental pillar of the organisational business model. Through thoughtful implementation, technology can deliver a transformative impact, not only by significantly enhancing customer experience, but also by bolstering governance and internal control frameworks. This strategic approach fosters the creation of a more agile, efficient, and future-proof institution.

G Key Pillars of Technology Resiliency:

Edelweiss has fortified its technology resilience through two key pillars. Firstly, cloud optimisation saw strategic expansion of cloud adoption, harnessing multiple providers for flexibility and cost control. Concurrently, new applications and platforms were launched on the cloud, fuelling growth across business segments. Secondly, automation and modernisation were prioritised, with Edelweiss embracing low-code tools to automate processes and instil agility, a cornerstone of their technology ethos.

G Al Adoption for Enhanced Productivity:

Weve successfully integrated Gen Al into our operations, specifically leveraging Co-pilot, an Al-powered tool, to streamline workflows and improve user productivity.

O Information Security & IT Governance:

ISO Certification Upgrade	Increased Information Security Awareness
In our pursuit of excellence, weve upgraded our ISO certificate from 27001:201 3 to 27001:2022, reflecting our commitment to implementing the best practices in information security management.	Our commitment to security extends to our entire workforce, achieving a 90% adoption rate on Information Security training, demonstrating their dedication to maintaining a secure and reliable digital environment.

Data Leak Protection Solutions

Weve deployed Data Leak Protection solutions to prevent unauthorised access to sensitive data and mitigate the risk of data breaches. This step strengthens our security posture and ensures compliance with data protection regulations, safeguarding the privacy of our customers and employees.

By prioritising a robust and adaptable technology backbone, Edelweiss fosters business continuity, drives growth, and ensures the security of its clients data. Our commitment to continuous improvement and innovation in these areas ensures we provide the best service to our customers and partners.

Human Resources

Our employees are our most valuable assets, essential for sustaining and advancing our commitment to stakeholders. Guided by core principles, we foster a culture of shared values, propelling us towards continued success.

O Talent

Our talent strategy integrates comprehensive practices, nurturing an agile, adaptable environment that emphasises collaboration and achievement. We attract and retain exceptional talent, offering pathways for professional growth and recognition. Employee engagement and satisfaction are celebrated through diverse recognition initiatives. Our work-design optimisation includes flexible processes and tailored re-skilling programmes. We foster community spirit through interactions, team activities, and social events, promoting a sense of belonging. Performance management supports our team with clear objectives, feedback, and reflective practices.

G Workplace

Our workplace encourages cross-team collaboration and supports flexible working arrangements. We prioritise employee safety and health with robust protocols and regular training. An open-door policy fosters transparency and inclusiveness, offering egual opportunities and promoting work-life balance. We enforce a zero-tolerance policy towards discrimination, harassment, or bullying, adhering to POSH regulations. To reinforce this commitment, we reguire all employees to complete mandatory online training sessions. Our human rights policy ensures fair treatment and protection from discrimination. Our commitment to diversity, eguity, and inclusion is reflected in daily practices, making each individual feel valued.

C Wellbeing

Our wellbeing approach covers physical, mental, emotional, and social aspects, supported by accessible resources and benefits, including competitive leave policies and enhanced Mediclaim benefits. In critical situations, our central incident room operates round- the-clock, offering immediate assistance and ongoing support. Our outreach programmes ensure employees thrive in all facets of life, as their wellbeing is fundamental to our success.

C Leadership

Effective leadership in a hybrid work environment requires innovative strategies. Our leaders leverage technology to ensure seamless communication of organisational plans and achievements. We are committed to continuous development, fostering top talent through tiered development opportunities for employees at every stage. These programmes currently encompass 2% of our workforce. Our diverse team of 6,117 employees, with women representing 25% of the workforce, remains essential as we build a future-oriented Edelweiss.

Cautionary Statement

Statements made in this Annual Report may contain certain words or phrases that are forward-looking statements, which are tentative, based on current expectations of the management of Edelweiss Financial Services Limited or any of its subsidiaries and associates ("Edelweiss"). Actual results may vary from such statements contained in this report due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India and outside India, volatility in interest rates and in the securities market, new regulations and Government policies that may impact the businesses of Edelweiss as well as the ability to implement its strategy. The information contained herein is as of the date referenced and Edelweiss does not undertake any obligation to update these statements. Edelweiss has obtained all market or industry data and other information from sources believed to be reliable or through its internal estimates, unless otherwise stated, although its accuracy or completeness cannot be guaranteed. Some part of the report relating to business-wise financial performance, balance sheet, asset books of Edelweiss and industry data herein is reclassified/regrouped based on Management estimates and may not directly correspond to published data. The numbers have also been rounded off or approximated in the interest of easier understanding. Prior period or other figures have been regrouped/ reclassified/re-casted wherever necessary. FY18, FY19, FY20, FY21,FY22, FY23 and FY24 Numbers are as per Ind AS whereas the rest are as per IGAAP. All information in this presentation has been prepared solely by the company and has not been independently verified by anyone else.

SI. No.	Short particulars of the property or asset(s) [including complete address and location of the property]	Pincode of the property or asset(s)	Date of creation	Amount ofCSR spent (Amount in ?)	Details of entity/ Authority/ beneficiary of the registered owner
					CSR Reg No, if applicable	Name	Registered Address
1	Water filters	342307	31-12-2023	1,65,840	CSR00001526	Srirampura communuity members	Udat, Block Bap, District Phalodi
2	Printer	764020	09-06-2023	10,000	CSR00011968	Pragati Office, Koraput	Pragati,koraput, Pujariput, Near Reeti Printers, Koraput
3	Desktop	764020	09-06-2023	63,000	CSR00011968	Pragati Office, Koraput	Pragati,koraput, Pujariput, Near Reeti Printers, Koraput
4	Furniture	380015	28-08-2023	30,444	CSR00002389	Utthan	36, Chitrakut Twins, Nehru Park, Vastrapur, Ahmedabad 380015
5	Furniture	380015	28-09-2023	10,000	CSR00002389	Utthan	36, Chitrakut Twins, Nehru Park, Vastrapur, Ahmedabad 380015
6	Laptop	393135	26-09-2023	42,000	CSR00002389	Utthan	36, Chitrakut Twins, Nehru Park, Vastrapur, Ahmedabad 380015
7	Desktop	393135	28-09-2023	45,500	CSR00002389	Utthan	36, Chitrakut Twins, Nehru Park, Vastrapur, Ahmedabad 380015
8	Camera	393135	28-09-2023	52,400	CSR00002389	Utthan	36, Chitrakut Twins, Nehru Park, Vastrapur, Ahmedabad 380015
9	Printer	380015	27-12-2023	11,650	CSR00002389	Utthan	36, Chitrakut Twins, Nehru Park, Vastrapur, Ahmedabad 380015

9. Specify the reason(s), if the Company has failed to spend two per cent of the average net profit as per sub-section (5) of section 135:

Not Applicable

For and on behalf of the Board

Edelweiss Financial Services Limited

Venkatchalam Ramaswamy	Vidya Shah
Executive Director (Chairman of CSR Committee)	Non-executive Director
DIN: 00008509	DIN: 00274831
April 18, 2024