Firstsource Solutions Ltd Directors Report.

Dear Members,

Directors of your Company take great pleasure in presenting the 20th Annual Report on the business and operations of your Company and the Audited Financial Statements for the financial year ended March 31, 2021.

FINANCIAL RESULTS:

Pursuant to the notification dated February 16, 2015 issued by the Ministry of Corporate Affairs, the Company has adopted the Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 w.e.f. April 1,2016. The performance of the Company for the FY2020-21 is summarised herein below:

(Rs. in Million)
Particulars Consolidated Standalone
FY 2020-21 FY 2019-20 FY 2020-21 FY 2019-20
Total Income 50,792.46 41,074.57 13,529.55 9,707.12
Profit Before Interest and Depreciation 8,054.71 6,377.31 5,204.22 2,982.53
Interest and Finance Charges 522.30 583.21 153.00 156.77
Depreciation/ Amortization 2,063.52 1,852.00 797.95 705.84
Profit Before Tax and exceptional items 5,468.89 3,942.10 4,253.27 2,119.92
Exceptional items 1,150.55 - - -
Share in net profit of associate - 0.01 - -
Profit from ordinary activities before tax and after share in net profit of associate 4,318.34 3,942.11 4,253.27 2,119.92
Provision for Taxation (including Deferred Tax Charge/ Credit) 701.57 545.26 586.74 299.77
Net Profit After Tax 3,616.77 3,396.85 3,666.53 1,820.15
Owners of the Company 3,616.86 3,396.86 3,666.53 1,820.15
Non-controlling Interest (0.09) (0.01) - -
Total 3,616.77 3,396.85 3,666.53 1,820.15
Opening Balance in Profit & Loss Account 12,076.46 13,004.03 11,886.49 14,170.47
Closing Balance in Profit & Loss Account 13,810.25 12,076.46 13,669.95 11,886.49
Earning Per Share (Rs.) - Basic 5.31 4.90 5.38 2.63
Earning Per Share (Rs.) - Diluted 5.13 4.89 5.20 2.62

RESULT OF OPERATIONS:

The consolidated total income increased from H 41,074.57 Million to H 50,792.46 Million, an increase of 23.66% over the previous financial year. The consolidated Net Profit After Tax increased from H 3,396.85 Million to H 3,616.77 Million, an increase of 6.47% over the previous financial year. The detailed analysis of the consolidated results form as part of the Management Discussion and Analysis Report provided separately as part of the Annual Report.

The standalone total income increased from H 9,707.12 Million to H 13,529.55 Million, an increase of 39.38% over the previous financial year. The standalone Profit After Tax increased from H 1,820.15 Million to H 3,666.53 Million, an increase of 101.44% over the previous financial year.

INCREASE IN SHARE CAPITAL:

During the year, your Company issued/ allotted 2,272,436 equity shares of the face value of H 10/- each on the exercise of stock options under Firstsource Solutions Employee Stock Option Scheme 2003 (ESOS 2003). Consequently, the outstanding, issued, subscribed and paid up capital of the Company has increased from 693,826,780 shares to 696,099,216 shares of H 10/- each aggregating to H 6,960.99 Million as on March 31, 2021.

CHANGE IN THE NAME OF PROMOTERS:

During the year under review, the name of the promoters of the Company has been changed w.e.f. January 19, 2021 to "RPSG Ventures Limited" from "CESC Ventures Limited".

GLOBAL OPERATION CENTERS:

The Company, on a consolidated basis has 39 global operation centers as on March 31, 2021. The centers are located across the US, the UK, India and the Philippines. 13 of the Companys operation centers are located in 7 cities in India, 18 in the US, 6 in the UK and 2 in the Philippines.

During the year, the Company incurred capital expenditure of H 1,731 Million mainly towards refurbishment and maintenance of operation centers, technology upgrade and setting up of new operations centers.

QUALITY INITIATIVES:

The Company follows global best practices for process excellence and the quality framework is based on COPC principles. The Company uses innovative techniques like Speech & Text Analytics, Robotic Process Automation and Intelligent Action Board to drive improvements across. Also, as part of the Quality Management System, the Company has embraced ISO 9001:2008. The Company continues to follow process improvement methodologies like Six Sigma, Lean and Kaizen.

AWARDS AND ACCOLADES:

The Company received the following awards and accolades during the year.

Awards:

• International Customer Experience Awards 2020

Won the Silver Award for Best Customer Experience Strategy, jointly with our client giffgaff

• Top Patient Engagement Solutions Provider

Named a 2020 Top Patient Engagement Solutions Provider by Healthcare Tech Outlook

• HousingWires Tech100 Mortgage Award

Mortgage business innovative, post-closing solution listed in 2021 HW Tech100

• Business Impact Awards 2020

Recognized as the The Most Innovative Company in the MultiCloud category at the Business Impact Awards 2020, hosted by VMware and The Economic Times

• IMEA Partner Awards by Automation Anywhere

Awarded the Digital Evangelist of the Year - India 2020 award at Automation Anywheres prestigious IMEA Partner Awards

• Contact Centre Network Northern Ireland Awards 2020

Firstsources Derry contact centre bagged first place in the Best Homeworking Programme category at the CCNNI 2020

• Welsh Contact Centre Awards 2020

Firstsource bagged an award in the Contact Centre Manager of the Year category and the Cardiff centre was declared runner up in the Outsourced Contact Centre of the Year category

Analyst Recognition:

• NelsonHalls NEAT Evaluation

Positioned as a Leader in NelsonHalls NEAT Evaluation - both for Overall Mortgage & Loan Services as well as Support for New Digital Business Models

CONSOLIDATED FINANCIAL STATEMENTS:

In accordance with Section 129(3) of the Companies Act, 2013 and in view of notification issued by the Ministry of Corporate Affairs on Ind- AS, the Company has prepared consolidated financial statements of the Company and all its subsidiaries as per Ind-AS, which forms part of this Annual Report.

DIVIDEND:

The Board approved and declared an interim dividend on February 9, 2021 at the rate of 30% i.e. H 3.00 per share of Rs. 10/- each.

The interim dividend for FY2020-21 aggregated to H 1928.32 Million (net of applicable TDS).

The Dividend Distribution Policy of the Company was approved by the Board at its meeting held on August 8, 2017 and is available on the Companys website at https://mk0firstsourcecw8t7d.kinstacdn. com/wp-content/uploads/2021/03/Dividend-Distribution- Policy-1.pdf.

TRANSFER TO RESERVE:

The Board of Directors of the Company (hereinafter referred to as the "Board") have not recommended transfer of any amount of profit to reserves during the year under review other than as mentioned above. Hence, the remaining amount of profit for the financial year under review has been carried forward to the Statement of Profit & Loss.

HUMAN RESOURCES:

On a consolidated basis, the Company has 28,004 employees as of March 31,2021.

PARTICULARS OF THE EMPLOYEES AND RELATED DISCLOSURES:

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 ("Act") read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report and are annexed as Annexure I.

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this Report. Further, the Report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

PUBLIC DEPOSITS:

During the year under review, your Company has not accepted any deposits under Section 73 of the Act, and as such, no amount on account of principal or interest on public deposits was outstanding as of March 31,2021.

PARTICULARS OF LOANS, INVESTMENTS, GUARANTEES AND SECURITIES:

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the notes to the standalone financial statements. (Please refer to Note No. 6 and 29 to the standalone financial statements).

CREDIT RATINGS:

During the year under review, the rating given by CARE and CRISIL are mentioned herein below:

(i) CARE Rating:

Long/ Short term Bank Facilities CARE A+:Stable/CARE A1 + (Single A plus; Outlook:Stable/A One plus)
Short Term Bank Facilities CARE A1 + (A One plus)

(ii) CRISIL Rating:

Long/ Short term Bank Facilities CRISIL A+/Stable
Short Term Bank Facilities CRISIL A1

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:

The Company seeks to be a good corporate citizen in all aspects of its operations and activities. The Company commits to operating in an economically, socially and environmentally responsible manner whilst balancing the interests of diverse stakeholders. Our CSR Policy is governed and guided by our Groups corporate vision to enable inclusive growth and our aspiration to be Indias leading business group serving multiple market segments, for our customers, shareholders, employees and community. The Company seeks to undertake programmes in the areas of Healthcare, Education, Environment, Arts & Culture, Promotion of Sports as well as support initiatives towards Gender Equality and Empowerment of Women.

The Board constituted a Corporate Social Responsibility (CSR) Committee, pursuant to Section 135 of the Act, consisting of Mr. Shashwat Goenka (Chairman), Mr. Vipul Khanna, Mr. Subrata Talukdar and Mr. Pradip Roy (Independent Director) as its members. The CSR Committee meets at least once in a year. During the year under review, the Committee met once. The details of CSR Committee and its meetings are given in Report on Corporate Governance forming part of the Annual Report. The CSR Committee has framed and formulated a CSR Policy indicating the activities to be undertaken by the Company, in accordance with Schedule VII of the Act and the Companies (Corporate Social Responsibility Policy) Rules, 2014 issued under the Act. The same has also been approved by the Board. The CSR policy is available on the website of the Company at the link https://mk0firstsourcecw8t7d.kinstacdn.com/wp-content/ uploads/2021/04/CSR-Policy.pdf.

The Annual Report on CSR Activities, as stipulated under the Act and the SEBI (LODR) Regulations, 2015 forms an integral part of this Report and is appended as Annexure II. The details of focus areas of engagement as mentioned in the CSR Policy of the Company are mentioned in the said Annual Report on CSR Activities.

The CSR activities, as per the provisions of the Act, may also be undertaken by the Company through a registered trust. Accordingly, "RP - Sanjiv Goenka Group CSR Trust" ("Group CSR Trust") was formed along with other Group Companies to pursue CSR activities as mentioned in the CSR Policy of the Company.

During the year, the Company has spent an amount of H 0.73 Million, on CSR activities as mentioned in the CSR Policy. The Company has been contributing a portion of amount of its CSR obligation every year for the project to set up an International Baccalaureate School in Kolkata taken up by the Group CSR Trust which is as an ongoing project as defined in the Companies (Corporate Social Responsibility Policy) Rules, 2014. Accordingly, the Company had transferred H 38.74 Million to Unspent CSR Account for the above mentioned cause towards CSR expenditure for FY 2020-21.

The CSR at the Company is a platform for giving back to the communities in which we live and work. The Company looks to engage employees in focus areas where possible through programmes such as employee volunteering, payroll giving, participating in fundraising events, partnering with NGOs and response to disasters.

India:

• A virtual workshop on "Job Readiness" was organised for final year engineering school students in collaboration with Foundation for Excellence (FFE). Topics such as resume writing, interview skills, problem solving techniques and mental health & wellness were covered during the course of this Program. 27 students were impacted and a team of 7 Firstsourcers were involved in workshop coordination and delivery;

• Awareness campaigns were organised to promote partner NGO merchandise. Participating NGOs included Thank you foods & Blessdbuy selling goods such as masks, sanitizers, food items;

• We have a long term association with Cheshire, which is a home for about 25+ visual and hearing impaired girls. FSL India sponsored a Dandiya Dance program and a meal from Dominos Pizzas for all beneficiaries;

• Light of Life Trust (LOLT) was established, with a vision to transform the lives of the underprivileged rural communities through Education, Skilling and Livelihood and Primary Health Care services. To support LOLT efforts in this direction, FSL directed funds of H 0.2 Million for Project Anando- that aims at holistic child development;

• Foundation for Excellence was formed with the mission to help economically underprivileged and academically bright students complete their higher education in the field of medicine and engineering through a Scholarship Program. Firstsource granted Rs.0.2 Million during the financial year 2020-21 towards sponsoring the education of 5 engineering students from marginalized communities;

• Good Friday and Easter meals were distributed amongst 30+ people at Cheshire homes.

Philippines:

• Firstsourcers donated PHP10,059.00 and items such as plastic containers of biscuits, big packs of powdered milk and hygiene kits to Haven for Children. An agency managed by DSWD (govt) providing care and rehabilitation services and home to around 80 abandoned boys age ranging from 7 to 17 years old located at Muntinlupa City, Manila;

• Support and donation for Firstsource employees whose houses got destroyed when typhoons Rolly & Ulysses struck. Cash donations to Philippine Red Cross were made in order to reach more victims in need of aid.

USA:

• A six week challenge program was designed to encourage a healthy lifestyle through the successful completion of various exercise and dietary related tasks and daily goals at Amherst;

• Teaming and Confidence Exercises were organised educating employees about recognition and reinforcement of positive interaction at Laporte;

• National Heart Disease Awareness Month was celebrated across all US locations. This was done through a "Wear Red Campaign" to support Heart Health and increase awareness;

• Firstsourcers at Louisville participated in coat and warm clothing donation drive for the community;

• Firstsourcers and their children were given virtual sessions (FS Educator) on how to cope with the stress of Covid-19 required homeschooling, across all US locations. Consequently, a virtual session on Coping with Back to School Concerns was organised as part of the FS Educator series;

• A team from Firstsource participated in the WNY Veterans Food Initiative hosted by WNYHeroes, a not-for-profit veterans organization. The food initiative is a program designed to provide food to veterans and their families every other Tuesday, for the remainder of the year. The product is provided by USDA and shipped directly to the WNYHeroes Main Office on Main Street in Williamsville, NY. It is here where the Firstsourcers assisted in the unloading and sorting of all the protein boxes, produce boxes, and dairy boxes that were provided. From here, the food is either delivered or it is picked up by the veterans themselves. Each family that receives a meal will receive a box of each. The program will feed approximately 240+ families every other week stretching to families from Williamsville to as far East as Rochester, NY;

• A virtual web session on "How to manage your finances during a crisis" was delivered by Key Bank for all US employees;

• Amherst office witnessed a blood donation drive where 10 units of blood impacted 30 patients at various local hospitals;

• A virtual candy drive was organised at Louisville using an Amazon wish list to have employees fulfil orders of candy to be delivered to the Norton Childrens Hospital;

• A donation drive was organised for 3 homeless children (clothes, food, personal hygiene items, toys) that a Firstsource employee fostered because the children were left parentless by a tragedy in the local community area;

• A blood donation drive was organised at Palm Bay;

• Toys, hats and gloves were donated for Toys for Tots program run by the United States Marine Corps Reserve which distributes toys to children whose parents cannot afford to buy them gifts for Christmas;

• Firstsourcers across all US offices shared Holiday Tradition photos as part of "Show your Spirit Campaign" on Christmas. Approximately 2300 employees participated;

• 1500+ employees participated in donations through the FirstReward platform redeeming Vantage Points to send giftcards to NGOs;

• 300 Firstsourcers participated in the Ultimate Buffalo Bills Fan Challenge at Amherst. They dressed up in their best Bills Gear and submitted a picture and a write up as to why they are the Ultimate Buffalo Bills Fan. Top 3 won a USD100 Buffalo Bills store giftcard;

• All offices celebrated the Black History Month through Educational Mailers, Trivia, Book Club featuring Great Black Leaders (1 event each week for a month) with 2300+ employees in attendance;

• Awareness campaign on Ergonomics witnessed participation from 300 employees. The session was centred around the nuances of posture and how-to setup your work station for best results;

• Daily Inspirational messages were shared across all US Healthcare business units to bring motivation, lift spirits, and give inspiration to 1500+ Firstsourcers;

• International Womens Day witnessed participation from 1500+ employees in a photo challenge contest.

UK:

Firstsourcers celebrated Autism awareness day, World Heath day, Earth day, Mental Health awareness week across all sites in the UK;

• Llamau couch to 5k Challenge & Marathon in a month Challenge was organised at Cardiff which involves developing a running plan for beginners in an attempt to promote wellness;

• Firstsourcers collaborated with Domestic Abuse Charity My Sisters Place to promote their local services for women & children at high risk, specifically during Covid 19-lockdown;

• Middlesbrough centres launched social media messages on Mental Wellbeing in collaboration with Red Umbrella- a UK based organisation providing bespoke mental healthcare;

• Firstsourcers at Derby offices participated in a 5k Rainbows virtual challenge where a member of the Rainbows Hospice for Children and Young People will support in completing the 5k anytime anywhere over a number of days;

• Firstsourcers at Derby offices organised a Lockdown Hamper Raffle.

• Firstsourcers promoted local Mental Health Charity One Life Stockton and Be Kind Appeal during Mental Health Awareness Week;

• Firstsourcers celebrated Pride Month through educational campaigns on newly recognised genders, history of Pride and by wearing bright colours to work across all sites;

• All sites celebrated Carers week through advertised support and help groups, recognising the work of carers and encouraged employees to add their voice to the cause;

• Firstsourcers at the Derby offices raised 171 as part of Childrens Hospice Week, Slush Puppy Day & World Chocolate Day celebration, in support of the Rainbows charity;

• Awareness campaigns on single use plastic, swap-able alternatives, using no plastic shops and getting commitments from individuals across all sites;

• 500 Firstsourcers across all sites supported local Food Banks by donating nonperishable goods;

• 6 Interactive virtual sessions were organised as part of the Virtual World of Work Programme for second year college students that aims at making them job ready;

• Firstsourcers at Derry offices supported Foyle Foodbank- a local charity that provides meals for those in the community who are struggling;

• As part of LGBT Awareness employees at Belfast & Derry, participated in various educational campaign on Awareness of local charities working in this space alongside wearing bright colours to work and sharing personal stories;

• Firstsourcers at Belfast donated 168 to a Childrens Hospice;

• 7 Firstsourcers at Cardiff supported a local school through educational videos;

• A Wellness Wednesday Session on Home Gardening was organised for employees at Cardiff;

• Employees participated in the 10,000 steps a day challenge for Brain Tumour Reasearch;

• Employee Assistance Program (EAP) Promotion Week - Showcasing the benefits of throughout the week for better mental and physical wellness;

• Firstsourcers participated in acknowledgement and information sharing for World Cancer day, Time to Talk day, Lunar New Tear and International Mother language day at Cardiff.

NOTE: Firstsources modes of CSR delivery also extends into "Payroll Giving" where employees volunteer to deduct a small part of their salary every month, which accumulates and can then be donated to a cause of their choice. Please find below our FY21 update on the same:

• Employees in the UK donated to various charities via payroll giving. A sum of 37,904 was raised across all sites;

• A sum of PHP 19,105 was raised through payroll giving at Cebu and Manila. The sum was directed towards staff welfare (security and housekeeping) and Rehabilitation centeres (NGOs) alongiwth food items being donated;

• 988 Firstsourcers across all India location contributed towards GiveIndia donation and we raised a sum upwards of H 2 Million.

RISK MANAGEMENT:

The Company has implemented a comprehensive and fully integrated Enterprise Risk Management framework in order to anticipate, identify, measure, manage, mitigate, monitor and report the principal risks and uncertainties that can impact its ability to achieve its strategic business objectives.

The Enterprise Risk Management drives a common integrated view of risks and optimal risk mitigation responses. This integration is enabled by alignment of Risk Management and Internal Audit methodologies and processes in order to maximize enterprise value of the Company and ensure high value creation for our stakeholders over a time.

The details of the Enterprise Risk Management framework with details of the principal risks and the plans to mitigate the same are given in the Risk Management Report section of the Management Discussion and Analysis Report which forms part of this Annual Report.

Further in view of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), effective April 1,2019, the Board constituted a Risk Management Committee on February 4, 2019 to monitor & mitigate the Risk.

INTERNAL FINANCIAL CONTROLS:

The Company has in place adequate internal financial controls with reference to financial statements. Such internal financial controls over financial reporting are operating effectively and the Statutory Auditor has also expressed their opinion on the same in the Annexures to the Auditors Report.

WHISTLE BLOWER POLICY:

The Company has a Whistle Blower Policy (the "WB Policy") with a view to provide vigil mechanism to Directors, Employees and other Stakeholders

to disclose instances of wrongdoing in the workplace and report instances of unethical behavior, actual or suspected fraud or violation of the Companys code of conduct or ethics policy. The WB Policy also states that this mechanism provides for adequate safeguards against victimization of Director(s)/ Employees who avail of the mechanism and also provides for direct access to the Chairperson of the Audit Committee in exceptional cases. The WB Policy has been posted on the website of the Company and the details of the same are provided in the Report on Corporate Governance forming part of this Annual Report.

The WB Policy is available on the website of the Company at https://mk0firstsourcecw8t7d.kinstacdn.com/wp-content/ uploads/2021/05/WHISTLE-BLOWER-PQLICY-2021-1.pdf.

PREVENTION OF SEXUAL HARRASSMENT POLICY:

The Company has a Prevention of Sexual Harassment Policy in force in compliance with the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The objective of this Policy is to ensure a safe, secure and congenial work environment where employees deliver their best without any inhibition, threat or fear. The Company has Zero Tolerance to any form of harassment especially if it is sexual in nature. The complaints filed under the Policy are reported to the Audit Committee at its quarterly meetings with details of action taken thereon.

It is confirmed that during the year under review, the Company has complied with applicable provisions in relation to sexual harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, including the provisions relating to the constitution of Internal Complaints Committee under the said act.

BOARD OF DIRECTORS:

During the year under review, the following are the changes in the Board of Directors:

• Mr. Subrata Talukdar (DIN 01794978) retires by rotation and being eligible, has offered himself for re-appointment at the ensuing Annual General Meeting CAGM");

• The Board appointed Mr. Anjani K. Agrawal (DIN 08579812) as an Additional Director (Non-Executive, Independent) on the Board of the Company w.e.f. May 11, 2021. He holds office up to this Annual General Meeting (AGM). The Board recommends appointment of Mr. Anjani K. Agrawal as an Independent Director for a term of three (3) consecutive years, effective from May 11, 2021 for approval of members of the Company at this AGM. The Company has received the declaration from Mr. Anjani K. Agrawal confirming that he meets the criteria of independence as prescribed under Section 149(6) of the Act;

• Mr. Pradip Roy (DIN 00026457) ceased to be an Independent Director on account of completion of his two (2) consecutive terms, at the conclusion of ensuing AGM. The Board places on record its appreciation towards valuable contribution made by him during his tenure as a Director of the Company;

• All the Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act.

Board and Audit Committee Meetings:

During the FY2020-21, the following four (4) Board and Audit Committee Meetings were held on:

1. May 26, 2020

2. August 12, 2020

3. October 28, 2020

4. February 9, 2021

Note: Due to the exceptional circumstances caused by the COVID-19 pandemic and consequent relaxations granted by MCA and SEBI, all Board/ Committee Meetings in FY 2020-21 were held through Video Conferencing.

Time gap between any two meetings was not more than one hundred twenty (120) days.

The full details of the said meetings are given in the Report on Corporate Governance forming part of this Annual Report.

The Familiarisation Programmes for Independent Directors:

The Company has put in place a system to familiarise its Independent Directors with the Company, their roles, rights & responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. The details of such familiarisation programmes are put up on the website of the Company at the below link: https://mk0firstsourcecw8t7d.kinstacdn.com/wp-content/ uploads/2021/03/Policy-on-familiarisation-of-Independent- Directors.pdf.

BOARD EVALUATION:

(i) Performance Evaluation of the Independent Directors and Other Individual Directors:

The Company has framed a policy for Appointment of Directors and Senior Management and Evaluation of Directors Performance ("Board Evaluation Policy"). The said policy sets out criteria for performance evaluation of Independent Directors, other NonExecutive Directors and the Executive Directors.

Pursuant to the provisions of the Act and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), the Board carries out the performance evaluation of all the Directors (including Independent Directors) on the basis of recommendation of the Nomination & Remuneration Committee and the criteria mentioned in the Board Evaluation Policy. The Board decided that the performance evaluation of Directors should be done by the entire Board of Directors excluding the Director being evaluated and unanimously agreed on the following assessment criteria for evaluation of Directors performance:

• Attendance and active participation in the Meetings;

• Bringing ones own experience to bear on the items for discussion;

• Governance covering Awareness and Observance; and

• Value addition to the business aspects of the Company.

(ii) Performance Evaluation of Executive Director:

The performance of the Managing Director & CEO is evaluated on the basis of achievement of performance targets/ criteria given to him by the Board from time to time.

(iii) Performance Evaluation by the Board of its own performance and its Committees:

The performance of the Board is evaluated by the Board in the overall context of understanding by the Board of the Companys principle and values, philosophy and mission statement, strategic and business plans and demonstrating this through its action on important matters, the effectiveness of the Board and the respective Committees in providing guidance to the Management of the Company and keeping them informed, open communication, the constructive participation of members and prompt decision making, level of attendance in the Board meetings, constructive participation in the discussion on the Agenda items, monitoring cash flow, profitability, income & expenses, productivity & other financial indicators, so as to ensure that the Company achieves its planned results, effective discharge of the functions and roles of the Board, etc.

The performance of the Committees is evaluated by the members of the respective Committees on the basis of the Committee effectively performing the responsibility as outlined in its Charter, Committee meetings held at appropriate frequency, length of the meetings being appropriate, open communication & constructive participation of members and prompt decision-making, etc.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION:

The criteria for Directors appointment and for determining qualification, positive attributes and independence of a Director as mentioned in the Policy for Appointment of Directors and Senior Management and Evaluation of Directors Performance in terms of Section 178(3) of the Act is mentioned below:

Appointment criteria and qualifications:

• The Nomination & Remuneration Committee shall identify and ascertain the integrity, qualifications, expertise and experience of the person for appointment as Director, Key Managerial Personnel CKMP") or at Senior Management level and recommend the same to the Board for appointment, if found suitable;

• A person should possess adequate qualifications, expertise and experience for the position he/ she is considered for appointment. The Committee has discretion to decide whether qualifications, expertise and experience possessed by a person are sufficient/ satisfactory for the concerned position; and

• The Company shall not appoint or continue the employment of any person as Managing Director/ Whole-Time Director who has attained the age of seventy years, provided that the term of the person holding this position may be extended beyond the age of seventy years with the approval of shareholders by passing a special resolution based on the statement pursuant to the provisions of Section 102 of the Act annexed to the notice or such motion indicating the justification for extension of appointment beyond seventy years.

Meeting of Independent Directors:

There should be atleast one meeting of Independent Directors in a year, without the attendance of non-independent Directors and members of the Management. One (1) meeting of the Independent Directors of the Company was held on February 9, 2021.

• Review the performance of Non-Independent Directors including Managing Director & CEO and the Board as a whole;

• Review the performance of the Chairman of the Company, taking into account the views of Executive Directors and Non-Executive Directors; and

• Assess the quality, quantity and timeliness of the flow of information between the Companys Management and the Board that is necessary for the Board to effectively and reasonably perform its duties.

REMUNERATION POLICY:

The Board, on the recommendation of the Nomination & Remuneration Committee framed a Remuneration Policy for Non-Executive Directors (including Independent Directors) and a Remuneration Policy for Key Managerial Personnel and other Employees of the Company. The details of Remuneration Policy for Non-Executive Directors and Independent Directors are provided as Annexure IIIA and details of Remuneration Policy for Key Managerial Personnel and Other employees of the Company are provided as Annexure IIIB to this Report.

COMMITTEES OF THE BOARD:

A detailed note on the Board and its Committees is provided in the Report on Corporate Governance forming part of this Annual Report. The composition of the major Committee/(s) is as follows:

Audit Committee:

As on March 31, 2021, the Audit Committee comprised of three (3) Independent Directors viz. Ms. Grace Koshie (Chairperson), Mr. Pradip Roy, Mr. Sunil Mitra and one (1) Non-Independent Director, Mr. Subrata Talukdar.

Nomination & Remuneration Committee:

As on March 31, 2021, the Nomination & Remuneration Committee comprised of two (2) Independent Directors viz. Mr. Pradip Roy (Chairman), Mr. Pratip Chaudhuri and one (1) Non-Independent Director, Mr. Subrata Talukdar.

Corporate Social Responsibility Committee:

As on March 31, 2021, Corporate Social Responsibility Committee comprised of four (4) members viz Mr. Shashwat Goenka (Chairman), Mr. Vipul Khanna, Managing Director & CEO, Mr. Subrata Talukdar and one (1) Independent Director, Mr. Pradip Roy.

Stakeholders Relationship Committee:

As on March 31,2021, Stakeholders Relationship Committee comprised of three (3) members viz. Mr. Subrata Talukdar (Chairman), Mr. Vipul Khanna, Managing Director & CEO, and one (1) Independent Director, Mr. Pradip Roy.

Investment Committee:

As on March 31, 2021, Investment Committee comprised of three (3) members viz. Mr. Shashwat Goenka (Chairman), Mr. Vipul Khanna, Managing Director & CEO and one (1) Non-Independent Director, Mr. Subrata Talukdar.

Strategy Committee:

As on March 31, 2021, Strategy Committee comprised of three (3) members viz. Mr. Shashwat Goenka (Chairman), Mr. Vipul Khanna, Managing Director & CEO and one (1) Non-Independent Director, Mr. Subrata Talukdar.

Risk Management Committee:

As on March 31, 2021, Risk Management Committee comprised of five (5) members viz. Mr. Shashwat Goenka (Chairman), Mr. Vipul Khanna, Managing Director & CEO, one (1) Independent Director, Ms. Grace Koshie, Mr. Dinesh Jain and Mr. Arun Tyagi, Officials of the Company.

RELATED PARTY TRANSACTIONS:

All the contracts/ arrangements/ transactions that were entered into by the Company during the financial year with related parties were on an arms length basis and in the ordinary course of business and none of such related party transactions required the approval of the the Board of Directors or the Shareholders as per the Act or LODR Regulations. Further, there were no materially significant related party transactions that may have potential conflict of interests of the Company at large. Prior omnibus approval is obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and at arms length. All Related Party Transactions are placed before the Audit Committee for approval.

The policy on Related Party Transactions as approved by the Board is available on the website of the Company at the link: https:// mk0firstsourcecw8t7d.kinstacdn.com/wp-content/ uploads/2021/03/Related-Party-Transactions-Policy.pdf.

The details of the related party transactions as required under the Act and the Rules are attached in Form AOC-2 as Annexure IV.

EMPLOYEES STOCK OPTION SCHEME:

The Company grants share-based benefits to eligible employees with a view to attracting and retaining the best talent, encouraging employees to align individual performances with Company objectives, and promoting increased participation by them. With a view to provide an opportunity to the employees of the Company to share the growth of the Company and to create long term wealth, the Company has an Employee Stock Option Scheme (ESOS), viz., the Firstsource Solutions Employee Stock Option Scheme, 2003 (ESOS 2003). The Scheme is applicable to all eligible employees and Directors of the Company and its Subsidiary Companies. The Scheme is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, (SEBI (SBEB) Regulations), as amended.

FIRSTSOURCE SOLUTIONS LIMITED EMPLOYEE STOCK OPTION PLAN 2019 ("ESOP 2019 PLAN"):

The Company has established the ESOP 2019 Plan, pursuant to approval of shareholders at the Annual General Meeting on August 2, 2019, to allow our employees to acquire greater proprietary stake in our success and growth, and to encourage our employees to continue their association with us. The ESOP 2019 Plan is in compliance with SEBI (SBEB) Regulations, as amended.

As per the ESOP 2019 Plan, the Nomination & Remuneration Committee will issue stock options to the identified eligible employees/ director(s) of the Company and its Subsidiaries at an exercise price which will be the face value of the Shares or any higher price which may be decided by the Nomination & Remuneration Committee considering the prevailing market conditions and the norms as prescribed by SEBI and other relevant regulatory authorities. Further the stock options under the said plan would vest & be exercisable in tranches as determined by the Nomination & Remuneration Committee basis the power given to the Nomination & Remuneration Committee in line with the ESOP 2019 Plan.

LONG TERM INCENTIVE STRUCTURE GRANTS UNDER ESOP 2019 PLAN:

In continuation of the Companys philosophy of aligning employee interests with shareholder value creation and in line with global practices, the Nomination & Remuneration Committee of the Board of Directors has approved the Long Term Incentive Structure ("LTD in the form of ESOP grants which will be granted to identified eligible employees as per ESOP 2019 Plan. This unique plan is a combination of tenure and performance based ESOPs aligned to shareholder value creation which will deepen employee ownership in the Company.

A) Tenure based Structure (ESOP Structure):

Options in this structure will be granted to identified eligible employees, basis the below criteria:

1. Drives ownership of employees in Companys fortunes for better engagement and retention;

2. Seen as part of the total compensation package, in line with competition/ market practice;

3. Quantum of grants is based on the performance and potential of the individual employee.

Vesting Schedule in the given structure is:

Period within which options will vest unto the participant % of options that will vest
End of 12 months from the date of grant of options 25%
At the end of every quarter after year 1, till end of year 4 from date of grant 6.25%

B) Performance based Structure (PSU Structure):

Option in this structure is granted to identified eligible employees -

Functional and Business heads, basis the below criteria:

1. Attainment of options can range between 0% and 150% of tranche eligible for vesting for the respective performance measurement period. Each tranche is separate. Performance and vesting in one performance period has no bearing on performance and vesting in another performance period;

2. Subject to terms and conditions of the scheme, the performance-based component of the grant is measured basis the Performance targets as agreed annually by the Management.

Vesting Schedule in the given structure is:

Period within which options will vest unto the participant % of options that will vest
End of 12 months from the date of grant of options 25%
At the end of every year after year 1, till end of year 4 from date of grant 25%

Under both the above structures grants will be issued at face value of the shares or any higher price which may be decided by the Nomination & Remuneration Committee and will have an exercise period up to ten years as per the ESOP 2019 Plan and as determined by the Nomination & Remuneration Committee.

Under the ESOP 2019 Plan, as on March 31, 2021, the Nomination & Remuneration Committee has approved grant of 16,569,000 options which are a mix of tenure based and performance-based structure options to its senior leadership team and employees.

FIRSTSOURCE EMPLOYEE BENEFIT TRUST UNDER ESOP 2019 PLAN:

The ESOP 2019 Plan shall be implemented through the Trust which will be administered under the guidance, advice and direction of the Nomination & Remuneration Committee in accordance with the provisions of the Companies Act, 2013 and SEBI (SBEB) Regulations.

The Board of Directors has facilitated setting up of Employee welfare trust, viz "Firstsource Employee Benefit Trust" ("ESOP Trust") to implement the ESOP 2019 Plan which has been formed by the Company. The Company shall provide financial assistance to the ESOP Trust for secondary acquisition of equity shares of the Company for the purpose of implementation of ESOP 2019 Plan. The terms and conditions for the financial assistance provided shall be in compliance with the Companies Act, 2013 read with Companies (Share Capital and Debenture) Rules, 2014 and SEBI (SBEB) Regulations.

As on March 31, 2021, the ESOP Trust holds 17,010,000 equity shares purchased through secondary market.

SUBSIDIARY COMPANIES:

As on March 31,2021, your Company has 17 subsidiaries and 1 Associate Company:

Domestic Subsidiary: (1)

1. Firstsource Process Management Services Limited [Wholly Owned Subsidiary ("WOS") of the Company].

International Subsidiaries: (16)

2. Firstsource Solutions UK Limited, UK (WOS of the Company);

3. Firstsource Solutions S.A., Argentina (Subsidiary of Firstsource Solutions UK Limited);

4. Firstsource BPO Ireland Limited (WOS of Firstsource Solutions UK Limited);

5. Firstsource Group USA, Inc., USA (Subsidiary of the Company);

6. Firstsource Business Process Services, LLC, USA (WOS of Firstsource Group USA, Inc);

7. Firstsource Advantage, LLC, USA (WOS of Firstsource Business Process Services, LLC);

8. One Advantage, LLC, USA (WOS of Firstsource Business Process Services, LLC);

9. MedAssist Holding, LLC, USA (WOS of Firstsource Group USA, Inc);

10. Firstsource Solutions USA, LLC, USA (WOS of MedAssist Holding, LLC);

11. Firstsource Health Plans and Healthcare Services, LLC, USA (Formerly known as Firstsource Transaction Services, LLC) (WOS of Firstsource Solutions USA, LLC);

12. Sourcepoint, Inc. (Formerly known as ISGN Solutions Inc.) (WOS of Firstsource Group USA, Inc);

13. Sourcepoint Fulfillment Services, Inc. (Formerly known as ISGN Fulfillment Services, Inc) (WOS of Sourcepoint, Inc.);

14. Firstsource Dialog Solutions (Private) Limited (Subsidiary of the Company);

15. PatientMatters LLC (WOS of Firstsource Solutions USA, LLC);

16. Kramer Technologies, LLC (WOS of PatientMatters LLC);

17. Medical Advocacy Services For Healthcare, Inc. (WOS of PatientMatters LLC).

Associate Company: (1)

1. Nanobi Data and Analytics Private Limited

Note:

1. During the year under review, the name of Firstsource Transaction Services, LLC was changed to Firstsource Health Plans and Healthcare Services, LLC.

2. Firstsource Solutions USA, LLC, USA, a Wholly Owned Subsidiary (WOS) of MedAssist Holding, LLC, a step down subsidiary of the Company entered into Membership Interest Purchase Agreement to acquire 100% stake in PatientMatters, LLC ("PatientMatters") a leading Revenue Cycle Management solutions provider with focus on US Healthcare Providers (Hospitals). On account of this, PatientMatters, LLC and its WOS Kramer Technologies, LLC and Medical Advocacy Services For Healthcare, Inc. became a step down subsidiary of the Company.

The Company has no other joint venture Company. No company has ceased to be a joint venture or associate during the FY2020-21.

Report on the Performance and Financial Position of Subsidiaries:

A report on the performance and financial position of each of the subsidiaries as per the Act, in the prescribed format AOC - 1 is annexed to the consolidated financial statement and hence not repeated here for the sake of brevity. The Company has a policy on material subsidiaries pursuant to Regulation 16(1)(c) of the Listing Regulations. The same is available on the website of the Company viz: https://mk0firstsourcecw8t7d. kinstacdn.com/wp-content/uploads/2021/03/Material- Subsidiary-Policy.pdf.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Management Discussion and Analysis Report for the year as stipulated under Regulation 34(3) of the Listing Regulations is separately given and forms part of this Annual Report.

BUSINESS RESPONSIBILITY REPORT:

Business Responsibility Report for the year as stipulated under Regulation 34(3) of the Listing Regulations is separately given and forms part of this Annual Report.

REPORT ON CORPORATE GOVERNANCE:

The adherence to the corporate governance practices by the Company not only justifies the legal obedience of the laws but dwells deeper conforming to the ethical leadership and stability. It is the sense of good governance that our leaders portray, which trickles down to the wider Management and is further maintained across the entire functioning of the Company.

The Company is committed to maintain the highest standards of corporate governance and adheres to the corporate governance requirements set out by SEBI.

The report on Corporate Governance as stipulated under provisions of Chapter IV & Schedule V of the Listing Regulations is separately given and forms part of this Annual Report. The requisite certificate from a Practicing Company Secretary confirming compliance of the conditions of corporate governance is attached to the Report on Corporate Governance.

Pursuant to amendment of Rule 12 of Companies (Management and Administration) Rules, 2014 by MCA, wherein, instead of attaching an extract of annual return (to be prepared in Form MGT - 9) to the Directors Report, the Company can host a copy of annual return on the website, if any of the Company and a web link of the same to be given in the Directors Report.

Accordingly, a copy of Annual Return is available on the website of the Company at the below link:

https://mk0firstsourcecw8t7d.kinstacdn.com/wp-content/ uploads/2021/06/Annual-Return-FY-2020-21.pdf.

STATUTORY DISCLOURES OF PARTICULARS:

A) Conservation of Energy:

The Company continues to make progress towards energy conservation across all its operation centers by adopting efficient Air-conditioning management system, usage of Energy efficient LED and efficient power back-up system . The Company is continuously monitoring earlier initiatives of reducing energy consumption within data center/(s) and across its operation centers. The Company, similar to its previous years initiatives of GREEN IT, continued to replace the normal Desktops and old Thin clients with Mini Desktops/ Zero thin-clients in US Geography as the power consumption of mini desktop & Zero thin-clients was 2.5 times less than the power consumed by normal desktops and nearly 5 times less during standby mode. Scripts have been deployed where possible to shut down the Desktops/ Thin clients which are not being used for more than 1 hour which helps conserve energy.

B) New Technology Adoption:

• Cloud-First Initiatives: As part of Companys Cloud-First and Digital-First-Digital-Now (DFDN) journey, the Company has moved significant part of its Operations and Deliveries, across the geographies and business units, to cloud. Over the past few years, the Company has adopted multiple state- or-art technologies by partnering with Global Cloud Services Platforms (e.g. Amazon Web Services, Microsoft Azure, Google cloud etc.) to move its applications and digital workload to Multi-Cloud. Most of Companys client facing application are deployed on Multi-Cloud environment to make them more Scalable, Resilient and Fault-tolerant;

• Digital Enabled Contact center (DECC): As part of our DECC implementation, the company has implemented multiple Next Generation Contact Centers (NGCC) across the global and business units. The DECC and Omni Channel Platform is further enhanced with Digital Capabilities, such as AI, Social Integration, Chat-Bot, Analytics etc. These state-of-art technologies are implemented to enhance and automate call handling capabilities by Digital/ AI interference, thus enhancing the Customer Experience (CX);

• NextGen Cybersecurity: The Company has also invested significantly in a cloud based Next Generation Cyber-Security solution, covering the entire horizon of endpoints, servers and network security, integrated with Cisco Threat Response and Threat Intelligence. The security solution provides complete protection to endpoints, servers in Data Center and also Companys cloud platform.

C) Foreign Exchange Earnings and Outgo Activities relating to exports, initiatives taken to increase exports, development of new export markets for services and export plans:

The Companys income is diversified across a range of geographies and industries. During the year, 87.12% of the Companys standalone total revenues were derived from exports. The Company provides BPO services mostly to clients in North America, UK and Asia Pacific region. The Company has established direct marketing network around the world to boost its exports.

FOREIGN EXCHANGE EARNED AND USED:

The Companys Foreign Exchange Earnings and Outgo during the year were as under:

(Standalone figures in Rs.Million)
Particulars FY2021 FY2020
Foreign Exchange Earnings 11,541.17 7,703.35
Foreign Exchange Outgo (including capital goods and imports) 62.39 69.54

SECRETARIAL AUDIT:

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company obtained Secretarial Audit Report from MMJB & Associates LLP, Company Secretaries for the FY2020-21. The Secretarial Audit Report is annexed to this Report as Annexure V.

ANNUAL SECRETARIAL COMPLIANCE REPORT:

SEBI vide its Circular No. CIR/CFD/CMD1/27/2019 dated February 8, 2019 read with Regulation 24(A) of the Listing Regulations, directed listed entities to conduct Annual Secretarial Compliance Audit from a Practicing Company Secretary of all applicable SEBI Regulations and circulars/ guidelines issued thereunder. The said Secretarial Compliance report is in addition to the Secretarial Audit Report by Practicing Company Secretaries under Form MR - 3 and is required to be submitted to Stock Exchanges within 60 days of the end of the financial year or as per the extended timelines by the Government from time to time. The Company has engaged the services of MMJB & Associates LLP (CP No. 8968), Company Secretaries for providing this certification.

STATUTORY AUDITORS AND AUDITORS REPORT:

M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, bearing Registration Number: 117366W/W-100018, were appointed as the Statutory Auditors of the Company by the members at their 16th Annual General Meeting (AGM) for a term of consecutive five (5) years i.e. till the conclusion of 21st AGM.

The Notes on financial statements referred to in the Auditors Report are self-explanatory and do not call for any further comments. The Auditors Report does not contain any qualification, reservation or adverse remark.

GENERAL:

Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no transactions on these matters during the FY2020-21:

• Issue of equity shares with differential rights as to dividend, voting or otherwise;

• Issue of shares to employees of the Company under any scheme save and except Employees Stock Option Schemes as referred to in this Report;

• No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and the Companys operations in future.

Further, your Directors would like to mention that the Managing Director & CEO received USD 139.42 Million as remuneration during the year from Firstsource Group USA Inc. subsidiary of the Company.

The disclosure pursuant to Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 read with Circular No. CIB/ CFD/Policy/CELL/2, 2015 dated June 16, 2015, will be placed on the website of the Company.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 134(3) (c) and 134(5) of the Companies Act, 2013, Directors of your Company state and confirm that:

1. In the preparation of the annual accounts for the FY2020-21, the applicable Ind-AS accounting standards have been followed and there are no material departures from the same;

2. The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2021 and of the profit of the Company for year ended on that date;

3. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safe-guarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. The Directors had prepared the annual accounts on a going concern basis;

5. The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

6. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENTS:

The Board wishes to place on record its sincere appreciation for the support and co-operation extended by all the customers, vendors, bankers and business associates. The Board also expresses its gratitude to the Department of Telecommunications, Collector of Customs and Excise, Director of Special Economic Zone, Ministry of Labour, Ministry of Corporate Affairs, Software Technology Parks of India, and various Governmental departments and organisations for their help and cooperation.

Further, the Board places on record its appreciation to all the employees for their dedicated service. The Board appreciates and values the contributions made by every member across the world and is confident that with their continued support, the Company will achieve its objectives and emerge stronger in the coming years.

COVID-19 extracted a huge toll on lives and livelihoods of millions of people in India and other parts of the world. COVID-19 pandemic continues to pose considerable risks across the globe. The Company had implemented its business continuity strategies, including work from home, and has put in place processes and guidelines to ensure safety of workplace for functioning offices. The Company is also in continuous engagement with its clients to ascertain the COVID-19 situation and is accordingly devising strategy to mitigate the impact.

As a result of continuous monitoring of the situation and formulation of its business strategies on an ongoing basis during difficult times the Companys financial result for the year 2020-21 has been encouraging.

Your directors specially thank the employees in the front line and support staffs who had acted selflessly to keep the business continuity during the challenging times of COVID-19 and have supported to serve our clients and other stakeholders in the challenging times.