I K F Finance Ltd Directors Report

To,

The members of IKF Finance Limited.

Your Directors have pleasure in presenting the 34 th Annual Report together with the Audited Financial Statements for the financial year ended March 31, 2025.

FINANCIAL RESULTS:

The summarized financial results of the Company are as given hereunder:

(Amount in Lakhs, unless otherwise stated)

Particulars	Standalone		Consolidated
	2024-25	2023-24	2024-25	2023-24
Revenue from Operations	65,024.92	43,422.54	85,395.38	57,941.85
Other Income	988.43	325.04	1,899.41	658.34
Profit (loss) before depreciation, interest and tax	48,010.19	32,701.38	61,668.57	42,646.12
Depreciation/amortization	336.80	340.89	516.00	468.88
Finance cost	33,197.34	22,022.85	42,037.67	28,476.10
Impairment expense on loans	2,407.48	599.58	3,352.30	843.03
Portfolio Loans & other balances written off	1,564.95	1,040.93	1,564.95	1,175.29
Profit (loss)before tax	14,476.05	10,337.63	19,114.91	13,701.14
Provision for tax/deferred tax	3,681.32	2,640.19	4,832.97	3,520.61
Profit (loss) after tax before exception item	10,794.73	7,697.44	14,281.94	10,180.53
Less: Other comprehensive income / (loss)	(6.02)	(3.26)	(47.14)	(19.23)
Net profit (loss) after exceptional items	10,788.71	7,694.18	14,234.80	10,161.30
Balance brought forward from previous year	26,152.48	20,382.66	29,844.64	22,518.92
Dividend on Equity Shares	0.00	0.00	0.00	0.00
Transfer to Statutory Reserve as required by Section 45-IC of Reserve Bank of India Act, 1934	2,158.94	1,539.49	2,158.94	1539.49
Transfer to General reserve	539.74	384.87	539.74	384.87
Transferred to Share Based payment reserve	14.21	1.08	14.21	1.08
Surplus carried to Balance sheet	8,090.03	5,769.82	10,424.45	7,407.08

REVIEW OF OPERATIONS:

Standalone:

The performance for the year ended March 31, 2025 has improved and the Revenue from operations has grown by 50% to 650.25 Crores from 434.23 Crores for the corresponding previous year and Net Profit increased to 107.95 Crores as against 76.97 Crores registering a growth of 40% for the corresponding previous year. During the year, the Loan Book has grown by 39% from

3,291.04 Crores to 4,573.57 Crores (before Impairment loss allowance). The total assets managed by the Company, including receivables assigned / securitized stood at around 5,195 Crores as at March 31, 2025 as against

3,775 Crores in the previous year thereby registering a

growth of 38%.

Consolidated:

The Companys performance, along with its subsidiarys performance for the year ended March 31, 2025 on a consolidated basis is satisfactory. The Revenue from

operations has increased to 853.95 Crores from 579.42 Crores and Net Profit increased to 142.82 Crores from

101.81 Crores registering a growth of 40 % for the corresponding previous year.

FUTURE OUTLOOK:

Global Economic Scenario:

The global economy demonstrated stronger-than- expected resilience through 2024, with growth reaching approximately 3.2%, slightly above earlier projections. The anticipated slowdown to 2.9% was less severe than expected, with several economies showing robust performance. Major central banks, including the Federal Reserve and European Central Bank, began implementing gradual rate cuts in the latter half of 2024 as inflation moved closer to target levels.

Inflation has continued its downward trajectory across major economies, with headline inflation in most developed nations falling to within target ranges by late 2024.

However, services inflation has remained somewhat sticky, particularly in labor-intensive sectors. Geopolitical tensions, including ongoing conflicts in Eastern Europe and the Middle East, have continued to create volatility in energy markets, though global supply chains have shown improved adaptability.

The economic outlook for FY 2024-25 appears more optimistic, with projections suggesting global growth could accelerate to 3.3-3.5%, supported by easing monetary policies, improved business confidence, and stabilizing geopolitical conditions. Emerging markets, particularly in Asia, are expected to lead this recovery.

Indian Economic Scenario:

India has maintained its position as the worlds fastest- growing major economy, with FY 2024-25 GDP growth estimated at approximately 6.8-7.2%, meeting earlier projections. The economy has benefited from strong domestic consumption, robust investment in infrastructure, and continued digitalization across sectors.

Indias fintech ecosystem has further expanded, now ranking as the worlds third-largest fintech market by transaction volume. The country has also made significant strides in manufacturing through the Production Linked Incentive (PLI) schemes, attracting substantial foreign investment, particularly in electronics and renewable energy sectors.s

The governments continued focus on infrastructure development through initiatives like the National Infrastructure Pipeline has maintained momentum, with allocation increases in the Union Budget 2024-25. Digital public infrastructure, including the expansion of UPI (Unified Payments Interface) and other digital platforms, has continued to drive financial inclusion and economic efficiency.

Looking ahead to FY 2025-26, India is projected to maintain growth rates of 6.5-7%, supported by improving global conditions, sustained domestic demand, and ongoing structural reforms.

Indian Financial Services Sector:

The financial services sector has experienced significant evolution through 2024, with several key developments:

Banking Sector : Public and private sector banks have reported improved asset quality, with gross NPA ratios declining to multi-year lows. Credit growth has remained robust at approximately 14-16% year-on-year, driven by retail lending and MSME financing.

NBFCs : The sector has shown remarkable resilience and growth, with assets under management growing by approximately 18-20% in FY 2024-25. Regulatory changes, including revised capital adequacy norms and enhanced governance requirements, have strengthened the sectors foundation.

Digital Financial Services : The adoption of digital lending platforms has accelerated, with NBFCs increasingly partnering with fintech companies to enhance reach and efficiency. Alternative credit scoring methods using AI and machine learning have improved risk assessment capabilities.

Insurance and Mutual Funds : The insurance sector has seen growth in both life and general insurance, with increased penetration in tier-2 and tier-3 cities. Mutual fund assets under management have crossed new highs, driven by systematic investment plans and increased retail participation.

SECTORAL PERFORMANCE UPDATES:

Commercial Vehicles:

The Commercial Vehicle sector experienced a recovery in FY 2024-25, with volume growth estimated at 8-12%, significantly better than earlier projections of decline. This turnaround was driven by:

Accelerated infrastructure spending and increased freight movement

Recovery in the logistics sector post-pandemic normalization

Replacement demand and fleet modernization

Growth in e-commerce and last-mile delivery requirements

Sales volumes are estimated to have reached approximately 10.5-11 Lakhs units in FY 2024-25, setting new records.

Passenger Vehicles:

The Passenger Vehicle market continued its strong momentum, with FY 2024-25 sales estimated at 45-47 Lakhs units, representing continued growth from the previous years record levels. Key trends include:

SUV dominance continuing, now accounting for over 50% of total passenger vehicle sales

Electric vehicle adoption accelerating, with EVs comprising approximately 2-3% of total passenger vehicle sales

Premium segment growth driven by increasing affluence and aspirational purchases

Rural market recovery contributing to overall growth

Two-Wheelers and Three-Wheelers:

Two-Wheelers : The segment maintained strong growth momentum with FY 2024-25 sales estimated at 190-195 Lakhs units, representing continued double-digit growth. Electric two-wheelers have seen substantial adoption, with market penetration reaching approximately 5-6% of total two-wheeler sales.

Three-Wheelers : The segment has sustained its growth trajectory, with sales reaching approximately 8-8.5 Lakhs units in FY 2024-25. Electric three-wheelers have gained significant traction, particularly in urban areas and for commercial applications, comprising nearly 15-20% of total three-wheeler sales.

Construction Equipment:

The construction equipment industry has shown robust growth, with the market size expanding significantly in 2024. Key growth drivers include:

Continued government focus on infrastructure development

Urban development projects and smart city initiatives

Private sector investment in industrial and commercial construction

Replacement demand for aging equipment

The market is now projected to reach USD 12-13 billion by 2029, with an updated CAGR of 9-10%, reflecting stronger- than-expected demand.

MSME Sector Performance:

The MSME sector has shown remarkable resilience and growth through FY 2024-25:

Improved access to formal credit, with MSME lending growing at 20-25% year-on-year

Increased adoption of digital tools and e-commerce platforms

Government initiatives like the Emergency Credit Line Guarantee Scheme (ECLGS) continuing to support liquidity

Growing integration with larger value chains and export markets

Credit Gap and Opportunities : While the overall credit gap has reduced from 25 Tn, a significant opportunity of approximately 20-22 Tn remains. NBFCs, in partnership with fintech companies and supported by improved credit bureau data, are well-positioned to address this gap through innovative lending solutions.

Digital Transformation : The sector has accelerated its digital adoption, with increased use of digital payment systems, online marketplaces, and digital lending platforms. This transformation has improved operational efficiency and access to formal financial services.

KEY OUTLOOK AND TRENDS FOR FY 2024-25:

Continued Economic Growth : India is expected to maintain its position as the fastest-growing major economy.

Digital Finance Expansion : Further integration of AI, blockchain, and other emerging technologies in financial services.

Sustainable Finance : Increased focus on ESG (Environmental, Social, and Governance) lending and green finance initiatives.

Electric Vehicle Ecosystem : Accelerated adoption across all vehicle segments supported by improved charging infrastructure.

Infrastructure Investment : Continued government and private sector investment in infrastructure development.

Financial Inclusion : Enhanced reach of formal financial services to underserved populations through digital platforms.

RISK MANAGEMENT & CREDIT MONITORING:

Overview of Risk Management:

At IKF Finance Limited, a robust and proactive Risk Management Framework is integral to our sustainable growth and financial stability. We recognize that in the dynamic landscape of the Non-Banking Financial Company (NBFC) sector, effective identification, assessment, mitigation, and monitoring of risks are paramount to safeguarding stakeholder interests and achieving strategic objectives. Our framework is designed to align with regulatory guidelines, industry best practices, and the specific nature of our diverse product portfolio, primarily focused on vehicle and SME financing.

IKF Finance views risk management as a cornerstone of its strategic vision, crucial for achieving sustained growth and profitability. We operate on the principle that the systematic identification, assessment, and mitigation of risks are indispensable in the contemporary, and complex financial landscape. Our comprehensive risk management framework is distinguished by robust governance structures, clearly articulated policies, and advanced analytical methodologies. This framework is meticulously applied across all material risk categories, including credit, market, operational, and liquidity risks. We are dedicated to the continuous enhancement of our risk management processes and the strategic deployment of technology, thereby fortifying our resilience, minimizing adverse impacts, and optimizing our capacity for expansion.

Our approach is characterized by:

Board Oversight and Governance: The Board of Directors, through its committees (e.g., Audit Committee, Risk Management Committee), provides strategic direction and oversight of the overall risk management framework. A dedicated Chief Risk

Officer (CRO) is responsible for the implementation and continuous improvement of risk management policies and procedures across all operational levels.

Integrated Risk Management: We adopt an integrated approach to risk management, ensuring that various risk categories are not viewed in silos but are understood in their interdependencies. This allows for a holistic assessment of potential impacts on our financial health and operational resilience.

Proactive Identification and Assessment: Our framework emphasizes continuous identification and assessment of existing and emerging risks. This involves a systematic process of gathering information from internal operations, market intelligence, regulatory changes, and economic trends. Risk assessment includes both qualitative and quantitative analyses to determine the likelihood and potential impact of identified risks, supported by a dynamic "Risk Triggers Dashboard" that monitors key metrics against predefined thresholds.

Defined Policies and Procedures: For each material risk, IKF Finance has established clear policies, limits, and operational procedures. These policies guide our business decisions, from credit underwriting and disbursement to collections and treasury management, ensuring that risk exposures remain within acceptable thresholds.

Internal Controls: A strong system of internal controls is fundamental to our risk management strategy. These controls are embedded in our processes to prevent errors, detect irregularities, and ensure compliance with policies and regulations. Regular internal audits and reviews further strengthen the control environment. Our operational metrics demonstrate robust control, with zero instances of Operational Loss, Data Breach, or CyberAttack reported in March 2025.

Technology Integration: We leverage technology to enhance our risk management capabilities, particularly in credit appraisal, portfolio monitoring, and data analytics. Digital tools aid in faster processing, more accurate risk profiling, and improved efficiency in managing our operations. This is reflected in a 99% uptime of our critical IT systems as of March 2025.

Culture of Risk Awareness: IKF Finance fosters a culture where every employee understands their role in risk management. Regular training and communication programs are conducted to enhance risk awareness and adherence to established protocols. Over the fiscal year, our employee strength grew from an opening count of 1,517 to a closing count of 1,860 by the end of March 2025.

RELEVANT RISKS FOR FY 2024-25

For the financial year 2024-25, IKF Finance continues to focus on managing the following key risks inherent to the NBFC sector and specific to our operational profile:

Credit Risk

Credit Risk is the primary and most significant risk faced by financial institutions like IKF Finance, representing the potential for financial loss arising from a borrowers failure to meet their contractual obligations. This occurs when a borrower or counterparty defaults on the repayment of principal, interest, or other financial commitments, as they become due. For IKF Finance, this risk primarily manifests in the context of our vehicle and MSME loan portfolios, where it stems from the possibility that individual or business borrowers may be unable or unwilling to repay their dues, leading to impaired assets and direct financial losses, as well as potential impacts on liquidity and profitability. Effective management of credit risk, therefore, involves rigorous credit assessment, prudent lending practices, robust collateral management, and proactive collection strategies to minimize the likelihood and impact of such defaults.

Underlying Factors and Mitigation:

Borrower Profile: Our exposure to self-employed individuals in the informal segment and MSME financing inherently carries higher credit risk. We mitigate this through:

Rigorous Credit Underwriting: A well- defined credit policy that includes comprehensive due diligence, assessment of borrowers cash flows, credit history, and financial commitments. Our Loan-to- Value (LTV) on disbursals stood at 75% in March 2025, indicating prudent collateral management.

Collateral-backed Lending: Our portfolio is secured by collateral (primarily vehicles for commercial vehicle, car, tractor, three- wheeler loans; and property for MSME Loans). We focus on prudent Loan-to- Value (LTV) ratios and robust valuation mechanisms.

Geographical Concentration: While we are operating in 9 states, a significant portion of our AUM remains concentrated in South India. The top 3 states viz. Telangana, Andhra Pradesh and Maharashtra stood at 58% as on March 2025, reflecting strong penetration in these key markets, also highlights a potential exposure to regional economic fluctuations or localized events.

IKF Finance continuously monitors these geographical concentrations and evaluates strategies for further diversification to mitigate associated risks.

Sectoral Concentration: Our portfolio demonstrates robust diversification across multiple vehicle segments and economic sectors, effectively mitigating concentration risk. Heavy Commercial Vehicles (HCV), our largest segment at 1,190 Crores, primarily serves the transportation and logistics sector, benefiting from increased freight movement and e-commerce expansion. Construction Equipment (CE) at 1,347 Crores represents exposure to diverse industries including mining, infrastructure development, and real estate?€”each operating on independent business cycles

Our Small Commercial Vehicles (SCV) segment at 485 Crores caters to last-mile connectivity and rural economy needs, while Light Commercial Vehicles (LCV) at 295 Crores bridges urban and semi- urban logistics requirements. This multi- tier approach ensures that sector-specific headwinds are naturally hedged?€”rural consumption slowdowns affecting SCVs are offset by urban logistics growth driving LCVs, while infrastructure delays impacting CE are balanced by steady transportation demand supporting HCVs. The MSME segment at 474 Crores adds another layer of diversification, spanning multiple small business sectors from manufacturing to services.

Each vehicle category responds to different economic drivers: HCVs correlate with industrial output and inter-state goods movement, SCVs track rural consumption and agricultural cycles, CE follows infrastructure spending and mining activity, while passenger vehicles (Cars, 2W, 3W) reflect personal mobility trends across urban and rural markets. This sectoral diversification ensures resilience against localized economic disruptions, as no single industry downturn can significantly impact overall portfolio performance.

Asset Quality and Delinquencies: We have seen a healthy asset quality with Gross NPA (GNPA) at 2.24% in March 2025 (down from 2.35% in March 2024). The DPD 90+ (delinquency beyond 90 days) stood at 1.65% in March 2025. While

there has been a slight increase of 4 basis points in DPD 90+ compared to March 2024 (1.61%), the overall GNPA showed an 11-basis points improvement. This indicates effectiveness in managing our non-performing assets.

Early Warning Systems: Implementing systems to detect early signs of potential default.

Proactive Collection Strategies: IKF Finance maintains proactive and comprehensive collection strategies, built upon dedicated collection teams, active customer engagement, and structured recovery processes.

Expected Credit Loss (ECL) Approach: Impairment on financial instruments is estimated as per the ECL approach prescribed under Ind AS 109, with provisions held towards expected credit loss. (please see if we can put up the ECL % here)

Credit Monitoring:

Portfolio Monitoring: Regular tracking of borrower repayment behaviour, and industry trends that could impact creditworthiness. Our Asset Quality metric "Stage-2 assets as

% of AUM" stood at 7.31% in March 2025 (down from 11% in March 2024), indicating improved early-stage delinquency management. Further, at the group level, our Stage 2 assets as % of AUM stood at 7.12 % as of March 2025.

Early Detection & Intervention: Timely identification of at-risk accounts allows for proactive engagement, initiating recovery measures promptly.

Reporting to Credit Bureaus: Adherence to RBI guidelines for reporting loan defaults, settlements, and overdue accounts to Credit Information Companies (CICs) to maintain credit discipline across the ecosystem.

Liquidity Risk

Liquidity Risk is the risk that IKF Finance will be unable to meet its financial obligations as they fall due, without incurring unacceptable losses or material damage to its financial position. This risk primarily arises from potential mismatches between the maturity profiles of our assets (loans disbursed) and liabilities (funding sources such as bank borrowings and NCDs). Should there be an unexpected surge in funding outflows (e.g., loan disbursements, debt repayments etc.), or an inability to raise new funds or liquidate assets

quickly at fair value, IKF Finance could face difficulties in meeting its commitments. Effective management of liquidity risk involves maintaining a robust Asset- Liability Management (ALM) framework, diversifying funding sources, holding adequate liquidity buffers (cash, equivalents, and undrawn credit lines), and establishing comprehensive contingency funding plans to ensure financial stability even under stress scenarios.

Underlying Factors and Mitigation:

Asset-Liability Management (ALM): We maintain a robust ALM framework, continuously monitoring and managing the maturity profiles of our assets and liabilities to ensure no negative cumulative mismatches in various time buckets. Our product portfolio features maturity profiles ranging from 3 to 10 years, with vehicle loans typically maturing around 3 years. Weve designed our financial structure to naturally align assets and liabilities, securing long-term funding from banking partners that matches our product tenures. This strategic alignment ensures our monthly collections and accruals from the asset portfolio consistently meet our fixed obligations, including debt servicing and operational expenses. Supporting this structural balance, our robust Asset-Liability Management (ALM) framework provides continuous monitoring and proactive management of any residual mismatches, further strengthening our liquidity position and financial resilience. As on March 2025, our Liquidity Cumulative Mismatch analysis indicates comfortable surplus visibility across all the buckets indicating a healthy liquidity position.

Diversified Funding Sources: Our resource profile is moderately diversified, with an inclination towards banks, and includes term loans, cash credit facilities, and non-convertible debentures (NCDs). We aim to further diversify our funding base to reduce over-reliance on any single source. Our funding risk from a "Single Lender Concentration" perspective, measured as Funding from Largest Lender / Total Borrowings, stood at 5.76% in March 2025, signifying low concentration risk.

Adequate Liquidity Buffers: Maintaining sufficient cash and cash equivalents, along with un-availed lines of credit, to meet short-term obligations and unforeseen liquidity needs. Our reported liquidity was 785 Crore in March 2025. The Liquidity Position metric (Liquid Investment

/ 3 months outflow) was at 229.20% in March 2025, demonstrating robust liquidity.

Contingency Funding Plan: A well-defined contingency funding plan is in place to address potential liquidity stress scenarios.

Market Risk

Market Risk is the potential for losses arising from adverse movements in market prices or rates that can impact the value of IKF Finances on- and off-balance sheet positions. This risk primarily encompasses Interest Rate Risk, where fluctuations in market interest rates can adversely affect our Net Interest Margin (NIM) by increasing the cost of our borrowings more than the yield on our assets, or vice-versa. It also includes Valuation Risk on Collateral, where the market value of the assets we hold as security for our loans (such as vehicles or property) could decline, potentially leading to higher losses in the event of a borrower default and subsequent recovery. Managing market risk involves dynamic pricing strategies, effective asset-liability management (ALM) to minimize sensitivity to interest rate changes, and conservative collateral valuation practices to mitigate potential adverse impacts on our profitability and asset quality.

Underlying Factors and Mitigation:

Interest Rate Risk: As a lending institution, changes in interest rates can impact our Net Interest Margin (NIM).

Dynamic Pricing Strategy: Our interest rate policy considers the weighted average cost of borrowing and market conditions. We adopt a discrete interest rate model that allows for differentiated pricing based on borrower profile and market dynamics. Our Book Yield was 17.30% in March 2025, reflecting a 10 basis points increase from March 2024 (17.20%), indicating effective pricing strategies. While the Weighted Average Interest Rate on Disbursals (WIRR) saw a slight decrease of 16 basis points to 17.36% in March 2025, our profitability metrics such as Return on Assets (ROA) at 3.20% and Return on Equity (ROE) at 11.72% in March 2025 indicate healthy performance. The Gross Spread (Gross Income%-Finance Cost %) stood at 7.67% in March 2025.

Valuation Risk on Collateral : The value of the collateral securing our loans can fluctuate due to market conditions.

Prudent Valuation : Thorough valuation of collateral at the time of loan origination and periodic re-evaluation where necessary.

Focus on Saleability : Prioritizing collateral types with good liquidity and saleability in the market.

Operational Risk

Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people, and systems, or from external events. Unlike financial risks, operational risk stems from the day-to-day workings of the organization. For IKF Finance, this can manifest in various forms, including human errors (e.g., mistakes in loan processing, data entry), system failures (e.g., IT outages, cybersecurity breaches), internal fraud, inadequate internal controls, or external factors such as natural disasters, regulatory non-compliance leading to fines, or issues with third-party service providers. Effective management of operational risk requires robust internal controls, well-defined processes, adequate technology infrastructure, ongoing employee training, clear ethical guidelines, and comprehensive business continuity and disaster recovery planning to ensure resilience and minimize disruptions to operations and potential financial and reputational damage.

Underlying Factors and Mitigation:

Process Efficiency and Controls: Continuous review and optimization of internal processes, coupled with strong internal controls to minimize errors and fraud. Our "Operational Loss (Fraud Cases)" was NIL for the year, indicating effective fraud prevention.

Technology and System Failures: Investing in robust IT infrastructure, cybersecurity measures, and data backup/recovery systems to ensure business continuity. "Uptime of Critical (Core) IT systems" was 99.00% in March 2025, reflecting high system availability. Furthermore, there were no reported instances of "IT Systems Breach (unsuccessful/incomplete DR tests)" or "CyberAttack" (severe cybersecurity incident affecting business continuity for >24 hours) in March 2025

Human Error and Misconduct: Comprehensive training programs, clear job roles and responsibilities, and a strong ethical framework including a Whistle Blower Policy and Code of Conduct for employees and recovery teams.

Third-Party Risk: Managing risks associated with outsourced activities (e.g., collection agencies, IT vendors) through due diligence, robust contracts, and ongoing monitoring of their performance and compliance.

Data Management and Privacy: Implementing stringent data management policies and systems to protect customer data and comply with privacy regulations.

Regulatory and Compliance Risk

Regulatory and Compliance Risk is the risk of legal or regulatory sanctions, material financial loss, or damage to reputation that IKF Finance may suffer as a result of its failure to comply with laws, regulations, rules, prescribed practices, and ethical standards applicable to the financial industry. As a Non- Banking Financial Company (NBFC), we operate in a highly regulated environment, primarily under the purview of the Reserve Bank of India (RBI), but also encompassing other statutory bodies like SEBI and the Ministry of Corporate Affairs. This risk includes non-adherence to prudential norms (e.g., capital adequacy, asset classification), Know Your Customer (KYC) and Anti-Money Laundering (AML) guidelines, fair practices codes, data privacy laws, and corporate governance requirements. Managing this risk necessitates a dedicated compliance function, continuous monitoring of the evolving regulatory landscape, proactive policy adjustments, and a strong culture of adherence to ensure that all business activities are conducted within the bounds of applicable legal and ethical frameworks, thereby safeguarding our integrity and license to operate.

Underlying Factors and Mitigation:

RBI Guidelines: Adherence to all regulations and guidelines issued by the Reserve Bank of India (RBI) for NBFCs, including prudential norms, capital adequacy, and fair practices. Our Total Capital Adequacy Ratio (CRAR) stood at a healthy 21.5% in March 2025 (compared to 26.5% in March 2024, significantly higher than the 15% threshold.

KYC & AML Compliance: Strict adherence to Know Your Customer (KYC) and Anti-Money Laundering (AML) policies, including risk-based customer categorization and periodic updation of KYC documents.

Corporate Governance: Maintaining high standards of corporate governance, transparency, and timely disclosures as per SEBI (Listing Obligations and Disclosure Requirements) Regulations and Companies Act, 2013.

Legal and Statutory Compliance: Ensuring compliance with all other applicable central, state, and commercial laws governing our

operations. There were no reported "Breaches in regulatory compliance (breach in regulatory payments/reporting)" in March 2025, indicating robust compliance.

Dedicated Compliance Function: A robust compliance department led by a Chief Compliance Officer, responsible for monitoring regulatory changes and ensuring adherence across the organization.

Reputation Risk

Reputation Risk is the potential for damage to IKF Finances public image and standing, leading to a loss of trust, customer confidence, and potentially adverse financial consequences. This risk can arise from a multitude of sources, including customer dissatisfaction due to poor service or unfair practices, negative media coverage (whether accurate or inaccurate), ethical lapses, operational failures (like data breaches or system outages), non-compliance with regulations leading to public penalties, or even association with problematic third parties. For a financial institution like IKF Finance, a strong reputation is paramount for attracting and retaining customers, securing funding, and maintaining investor confidence. Effective management of reputation risk involves consistent adherence to a Fair Practices Code, transparent communication, prompt and efficient customer grievance redressal, robust operational resilience, and strong corporate governance, all aimed at fostering a positive brand perception and building long-term stakeholder trust.

Underlying Factors and Mitigation:

Fair Practices Code: Strict adherence to our Fair Practices Code, which emphasizes transparency, ethical conduct, and customer-centricity in all dealings, particularly in lending and recovery processes.

Customer Grievance Redressal: A well-defined and accessible grievance redressal mechanism, including a designated nodal officer as per the Integrated Ombudsman Scheme, to promptly address customer complaints. The percentage of "genuine customer complaints to customer base" was 0.10% in March 2025, reflecting high customer satisfaction and effective complaint resolution.

Responsible Lending: Practicing responsible lending by ensuring clear communication of loan terms, fees, and repayment obligations.

Media and Public Relations: Proactive and transparent communication with stakeholders to manage public perception.

External Audits: The number of overdue major audit findings (all external audits) was NIL in March 2025, and there were no monetary fines by Regulators, reinforcing our strong governance and compliance framework.

CONCLUSION

IKF Finance is committed to continually strengthening its risk management capabilities to navigate the complexities of the financial sector effectively. By fostering a strong risk- aware culture, investing in robust systems, and adhering to prudent policies, we aim to ensure the long-term sustainability, profitability, and resilience of our operations for the benefit of all stakeholders. Our proactive approach to risk management and diligent credit monitoring remains a cornerstone of our strategic objectives for FY 2024-25 and beyond.

CORPORATE GOVERNANCE:

The Companys Non-convertible debt securities were listed with Bombay Stock Exchange Limited ("BSE"). A report on the Corporate Governance along with a declaration by the Managing Director with regard to code of conduct to be presented to the members of the Company as such a report on Corporate Governance Report is attached as part of this report.

MANAGEMENTS DISCUSSION AND ANALYSIS:

Strategic Focus and Growth Strategy

At IKF Finance, our strategic focus for FY 2024-25 would shift towards achieving product focussed granular growth, with a heightened emphasis on creating a separate product level verticals on retail lending. We believe that by prioritizing high-yielding retail loans for small & light commercial vehicles and cars we can diversify the portfolio growth and continue to build Heavy Commercial vehicle, Construction Equipment and Loans to MSMEs. This targeted approach allows us to manage business cycles and concentrate on more profitable segments, ensuring sustainable growth in margins.

Our commitment to these products reflects our dedication to reaching niche markets curating underwriting within the underbanked and unbanked segments, which are crucial to the economic fabric of rural India. We aim to optimize our portfolio and harness the high-yield opportunities to deliver stronger returns for our stakeholders. This strategy not only supports our goal of enhancing profitability but also fortifies our market position and financial stability.

Commitment to Digitalization and Customer-Centric Solutions

In line with our strategic priorities, we remain committed to offering curated and intuitive customer journeys and financial solutions, on the back of robust digital

investments. This focus on digital transformation enhances the customer experience, streamlining our processes and making it easier for our clients to access financial services. Our transparent communication practices empower customers to make informed decisions, reinforcing our reputation as a trusted and preferred lender in a competitive landscape.

The robust growth in our portfolio and margins are the evidence of trust our customers place in our core loan products over the past year, resulting in a significant 54% increase in AUM compared to FY 2023-24. This growth highlights the success of our strategic focus and our ability to meet the financial needs of underserved markets effectively.

Liquidity Management

While we have observed a slight increase in the cost of debt during last fiscal, largely due to prevailing market rates, we continue to maintain sufficient liquidity buffers to manage our liability repayments effectively.

All the Asset-Liability Management (ALM) buckets remain positive, with a significant cumulative surplus up to one year.

In conclusion, IKF Finances strategic emphasis on product- focused granular growth, particularly within the high-yield segments of small commercial vehicles, light commercial vehicles position us strongly for sustained profitability. Our unwavering commitment to digitalization and customer- centric solutions continues to enhance our operational efficiency and strengthen our customer relationships. Supported by our robust financial performance and prudent liquidity management, we are well-equipped to navigate the evolving financial landscape. As we move forward, we remain focused on optimizing our portfolio, delivering superior value to our stakeholders, and ensuring long-term growth and stability in a competitive environment.

Resource Mobilization:

The Company has established a diversified funding base, drawing from Public Sector Banks, Private Sector Banks, Foreign Banks, Financial Institutions (including foreign entities), Mutual Funds, and other sources. During the year under review, the Company continued to leverage multiple funding avenues beyond conventional borrowings?€” such as secured debentures, term loans, working capital facilities, PTCs, and assignment transactions. Throughout the year, the Company maintained a prudent Asset-Liability Management (ALM) position. In line with its Resource Planning Policy, the Company secured long-term funds

through debentures and loans from banks and various institutions. The Companys overall borrowing limit stands at 6,000 Crores.

Total borrowings of the Company for the year under review (at amortized cost) stood at 3927 Crores, of which borrowings from Banks/FI constituted 58%, borrowings from NBFCs 17%, Non-Convertible Debentures 18% , PTC 3% and Tier II Capital / Sub-Debt 4%. Our Company is continuously exploring all options to access low cost funds, mostly by way of Term Loans and Cash Credit in the current financial year, to further expand the operations.

Deposits :

The Company has not accepted any deposits during the year under review and it continues to be a Non-deposit taking Non-Banking Financial Company in conformity the guidelines of the Reserve Bank of India and Companies (Acceptance of Deposits) Rules, 2014.

Working Capital Limits:

During the year, the Company has reduced its reliance on Cash Credit Limits by raising term resources to better manage the Asset-Liability Mismatch (ALM). However, going forward, the Company plans to increase the utilization of Cash Credit Limits proportionately with the growth in term resources, as this facility plays a crucial role in maintaining overall liquidity.

Term Loans:

During the year, the Company mobilized 1,692 Crores through a diversified mix of term loan sources to enhance liquidity and support business expansion. Private Sector Banks were the leading contributors, providing 60% of the total borrowings. Public Sector Undertakings and Financial Institutions contributed 18%, while Non-Banking Financial Companies (NBFCs) accounted for the remaining 22% of the total term loan funding.

Commercial Paper:

During the year under review, your Company has not issued any Commercial Paper.

SECURITIZATION / ASSIGNMENT OF LOAN RECEIVABLES:

During the year, the Company assigned /securitized its loan portfolio having disbursed value of 516.55 Crores of which 137.00 Crores were securitized through issue of Pass-Through Certificates in 1 transaction and 378.55 Crores was assigned /securitized in Direct Assignment mode in 8 Transactions.

NON-CONVERTIBLE DEBENTURES:

During the year under review, your Company has raised 663 Crores through Secured and Listed NCD as below

Sl. No	ISIN	Date of Allotment	Secured / unsecured	Listed/ Unlisted	No. of debentures	Maturity Date	Issue Price	Amount (in Cr)
1	INE859C07170	July 25, 2024	Secured	Listed	7000	July 25, 2026	100000	70
2	INE859C07188	August 01, 2024	Secured	Listed	6000	July 30, 2027	100000	60
3	INE859C07196	October 17, 2024	Secured	Listed	6000	October 17, 2027	100000	60
4	INE859C07204	November 13, 2024	Secured	Listed	6000	March 15, 2027	100000	60
5	INE859C07212	December 31, 2024	Secured	Listed	8500	December 30, 2027	100000	85
6	INE859C07220	January 28, 2025	Secured	Listed	17500	January 20, 2027	100000	175
7	INE859C07238	March 26, 2025	Secured	Listed	15300	September 26, 2027	100000	153

The Company has been regular in making payments of principal and interest on all the NCDs issued by the Company on a private placement basis. There are no NCDs which have not been claimed by investors or not paid by the Company after the date on which the NCDs became due for redemption. The assets of the Company which are available by way of security are sufficient to discharge the claims of the debt security holders as and when they become due.

CREDIT RATING OF SECURITIES:

Name of the Credit Rating Agency	Borrowing Instrument	Amount Rated (in Crores)	Date of Rating	Rating Assigned	Rating Valid Till	Whether New/ Renewal/ Reassigned/ Withdrawn
CARE	Long Term Bank Facilities	3400	24-03-2025	CARE A+ (Stable)	23-03-2026	renewal
CARE	Subordinate Debt	165	24-03-2025	CARE A+ (Stable)	23-03-2026	renewal
CARE	NCDs	906.67	24-03-2025	CARE A+ (Stable)	23-03-2026	renewal

All of the above ratings indicate a high degree of safety with regard to timely payment of interest and principal. The Company has placed on its website all credit ratings obtained for all its outstanding instruments and has intimated the revision in the ratings to the stock exchange.

CAPITAL ADEQUACY:

The Capital to Risk Assets Ratio of your Company is 20.86% as on March 31, 2025, well above the minimum of 15% prescribed by the Reserve Bank of India, of which Tier I Capital constituted 18.79% and Tier II constituted 2.07%.

DIVIDEND:

Your Directors have not recommended payment of dividend for the financial year ended March 31, 2025 since it is proposed to retain the same in the business.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND:

During the period under review, no such case was raised to credit / to pay any amount to the Investor Education and Protection Fund.

Share Capital:

Authorized Share Capital:

The Authorized Share Capital of the Company was increased during the year from 105,00,00,000/-

(Rupees One Hundred and Five Crores only) divided into 8,00,00,000 (Eight Crores only) Equity Shares of

10/- (Rupees Ten only) each and 25,00,000 (Twenty Five Lakhs only) Preference Shares of 100/- (Rupees One Hundred only) each to 125,00,00,000/- (Rupees One Hundred and Twenty Five Crores only) divided into 100,00,00,000 (One Hundred Crores only) Equity Shares of 10/- (Rupees Ten only) each and 25,00,000 (Twenty Five Lakhs only) Preference Shares of 100/- (Rupees One Hundred only) each.

Paid up Share Capital:

During the year there was no change in the paid-up share capital of the Company and as on March 31, 2025 the total Paid up Share Capital of the Company stood at 70,15,64,450 consisting of 7,01,56,445 fully paid equity shares of 10/- each.

Further, after the closure of the financial year under review, in May & August 2025 the following allotments were made by our Company:

Partly Paid-up Shares

S. No.	Date of Allotment	Name of the Allottees	No. of Equity shares allotted	Issue Price ( )	Consideration received ( )
1	May 13, 2025	Gopala Kishan Prasad Vupputuri	28,39,785	366.42	28,39,785
2	August 14, 2025	Gopala Kishan Prasad Vupputuri	4,09,366	366.42	4,09,366
Total			32,49,151		32,49,151

Fully Paid-up Shares

S. No.	Date of Allotment	Names of the Allottees	No. of Equity Shares allotted	Issue Price ( )	Consideration received ( )
1.	May 16, 2025	Norwest Capital, LLC	23,41,860	366.42	85,81,04,341.20
2.	May 16, 2025	India Business Excellence Fund - IV	95,51,880	366.42	3,49,99,99,869.60
3.	May 16, 2025	IBEF Gift SPV 3	39,30,000	366.42	1,44,00,30,600.00
4.	May 16, 2025	Motilal Oswal Wealth Limited	32,80,021	366.42	1,20,18,65,294.82
5.	August 13, 2025	Gopala Kishan Prasad Vupputuri	13,50,634	366.42	49,48,99,310.28
Total			2,04,54,395		7,49,48,99,415.90

Post allotment the outstanding paid-up share capital of the Company was stood at 90,93,57,551 consisting of

9,06,10,840, Fully paid-up equity shares and 32,49,151 Partly paid-up equity shares of 1/- each

Compulsorily Convertible Preference Shares :

There are no Compulsorily Convertible Preference Shares outstanding as on March 31, 2025

Issue of Shares with differential voting rights:

The Company has not issued any Shares with differential voting rights during the period under review.

Buy Back of Securities:

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

Sweat Equity:

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

Bonus Shares:

The Company has not issued any bonus shares during the year under review.

Employees Stock Option:

ESOP 2019 was provided to create, offer, and grant of up to 7,99,516 (Seven Lakhs Ninety Nine Thousand Five Hundred and Sixteen only) stock options to the eligible employees of the Company. Based on the recommendation of Nomination and Remuneration Committee, the Board of Directors, at its meeting held on February 07, 2025, approved to terminate the existing employee Stock Option Plan IKF Finance Limited - Employee Stock option Plan 2019 ("ESOP 2019"), which was subsequently approved by shareholders at its Extraordinary General Meeting held on March 12, 2025. The termination of the ESOP 2019, shall not affect options already offered and granted under this Plan to any grantee and such options shall remain in full force and effect, as if the ESOP 2019 had not been terminated.

Based on the recommendation of Nomination and Remuneration Committee, the Board of Directors, at its meeting held on February 07, 2025, approved the new Employee Stock Option Plan 2025 "IKF

Finance -Employee Stock Option Plan 2025", which was subsequently approved by shareholders at its Extraordinary General Meeting held on March 12, 2025. IKF Finance -Employee Stock Option Plan 2025 provided to create, offer, and grant of up to 6,52,716 (Six Lakhs Fifty-Two Thousand Seven Hundred and Sixteen only) only), equity options in one or more tranches at any time to or for the benefit of employees of the Company.

Further, the Board extended the benefits of the IKF Finance - Employee Stock Option Plan 2025 to the employees of the subsidiary Company, IKF Home Finance Limited, in addition to the employees of the Company as recommended by the Nomination and remuneration Committee. It was also subsequently approved by shareholders at its Extraordinary General Meeting held on March 12, 2025.

The Board of Directors has granted a total of 3,23,312 stock options to the eligible employees of the Company at a price of 305/- (Rupees Three Hundred and Five) per share and 42,782 stock options to the eligible employees of the subsidiary Company, IKF Home Finance at a price of 305/- (Rupees Three Hundred and Five) per share.

DISCLOSURE AS REQUIRED UNDER RULE 12(9) OF COMPANIES (SHARE CAPITAL AND DEBENTURES) RULES, 2014 DURING THE FINANCIAL YEAR ARE AS BELOW:

ESOP 2019

(a) options granted	5,62,860
(b) options vested	1,46,800
(c) options exercised	Nil
(d) the total number of shares arising as a result of exercise of option	Nil

(ii) any other employee who receives a grant of options in any one year of option amounting to five percent or more of options granted during that year	Debnil Chakravarty, CEO \u2013 70000 Options \u2013 19.12% Raghuram Kotamarthi, Business Head - 33,412 Options \u2013 9.13% Hanumakonda Srinivas, National Head Collections \u2013 18,992 options - 5.19%
(iii) identified employees who were granted option, during any one year, equal to or exceeding one percent of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant	Nil

ESOP 2025

Transfer to Reserves:

(e) options lapsed	4,16,060
(f) exercise price	120
(g) variation of terms of options	NA
(h) money realized by exercise of options	Nil
(i) number of options in force	1,46,800
(j) wise details of options granted to:
(i) personnel	Ch Sreenivasa Rao, Company Secretary- 15,180 Options
(ii) any other employee who receives a grant of options in any one year of option amounting to five percent or more of options granted during that year	Chakrapani Gollamudi Chief Risk Officer - 51,500 Options - 10.93%
(iii) identified employees who were granted option, during any one year, equal to or exceeding one percent of the issued capital outstanding warrants and conversions) of the Company at the time of grant	NIL

(a) options granted	3,66,094
(b) options vested	Nil
(c) options exercised	Nil
(d) the total number of shares arising as a result of exercise of option	Nil
(e) options lapsed	Nil
(f) exercise price	120, 215 and 315
(g) variation of options	NA
(h) money exercise of options	Nil
(i) number of options in force	Nil
(j) wise details of options granted to:
(i) personnel	Prakash Bhawnani, Chief Financial Officer \u2013 51,096 Options Prashant Rawat, Chief Financial Officer (IKF Home Finance Limited, Subsidiary Company) \u2013 30,000 Options

The Directors of the Company has transferred 539.74 Lacs to General Reserves out of the current year profits for the Financial Year 2024-25 as against 384.87 Lacs during the Financial Year 2023-24. Further your Directors has transferred 2,158.94 Lacs to Statutory Reserve @20% profit after tax as required under Section 45-IC of Reserve Bank of India Act, 1934 during the Financial Year 2024- 25 as against 1,539.49 Lacs during the Financial Year 2023-24. Further 14.21 Lacs was transferred during the Financial Year 2024-25 to Share Based payment reserve as against 1.08 Lacs during the Financial Year 2023-24.

Details of Subsidiary, Associate and Joint Venture Companies:

The Company is not having any Associate and Joint Venture Companies as on date by virtue of Section 2

(6) of the Companies Act, 2013. As on March 31, 2025, IKF Home Finance Limited is the Subsidiary Company in which the Company holds 90.55%. Policy for determining material subsidiaries is available on the Companys website and can be accessed through the web-link https://

No Company has become or ceased to be the Companys Subsidiaries, joint ventures or associate companies during the year.

Further, after the closure of the year under review, during June 2025, the Company acquired 70,00,000 of equity shares of Subsidiary Company, IKF Home Finance Limited, from the promoters at a price of 92/- (Rupee Ninety Two) per share and now the Subsidiary Company become a Wholly Owned Subsidiary Company.

Salient features of the financials of the above-mentioned Subsidiary have been given in Form AOC-1 as Annexure-I to this report

AUDITORS:

Statutory Auditors:

M/s. Mukund M Chitale & Co (Firm Regn No: 106655W) Chartered Accountants, Statutory Auditors of the Company was appointed by the shareholders at the 33 rd Annual General Meeting held on September 30, 2024 for a period of 3 (Three) years to hold office from the conclusion of 33 rd Annual General Meeting till the conclusion of the 36 th Annual General Meeting of the Company to be held in the year 2027 on such remuneration plus applicable taxes and out-of-pocket expenses, as may be mutually agreed upon by the Audit Committee/Board of Directors and the Statutory Auditors.

Qualification by the Statutory Auditor:

The Audit Report does not contain any qualification, reservation or adverse remarks.

Secretarial Auditor:

Pursuant to provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company has appointed M/s. B S S & Associates, Company Secretaries as Secretarial Auditors of the Company. Secretarial Audit Report is enclosed as Annexure-II to this Report.

Qualification by Secretarial Auditor:

The Secretarial Audit Report does not contain any qualification, reservation or adverse remarks.

Maintenance of Cost Records:

Cost Records are not required to be maintained by the Company under Section 148 of the Companies Act, 2013. Accordingly, such accounts and records are not maintained.

Cost Audit:

In terms of the provisions of Section 148 of the Companies Act, 2013 read with Rule 3 & 4 of the Companies (Cost Record and Audit) Rules, 2014 and all other applicable provisions of the Companies Act, 2013, the Cost Audit is not applicable to the Company.

Internal Audit and Auditor:

As part of the effort to evaluate the effectiveness of the internal control systems, and to maintain its objectivity and independence and on recommendations of the Audit Committee your directors have re-appointed M/s. Brahmayya & Co, Chartered Accountant as an internal auditor of the Company for the year ended March 31, 2025 who shall report to the Audit Committee / Board. Based on the report of internal auditor, process owners undertake

corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon were presented to the Audit Committee / Board.

Internal Financial Controls:

The Company has a well-established internal financial control and risk management framework, with appropriate policies and procedures, to ensure the highest standards of integrity and transparency in its operations and a strong corporate governance structure, while maintaining excellence in services to all its stakeholders. Appropriate controls are in place to ensure: (a) the orderly and efficient conduct of business, including adherence to policies,

(b) safeguarding of assets, (c) prevention and detection of frauds / errors, (d) accuracy and completeness of the accounting records and (e) timely preparation of reliable financial information.

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

Pursuant to Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, the Board has adopted Whistle Blower Policy. This policy aims for conducting the affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior.

A mechanism has been established for employees to report concerns about unethical behavior, actual or suspected fraud or violation of Code of Conduct and Ethics. The policy also provided adequate safeguards against the victimization of employees who avail of the mechanism and allows direct access to the Chairman of the Audit Committee in exceptional cases.

Your Company hereby affirms that during the year no Director / employee have been denied access to the Chairman of the Audit Committee and that no complaints were received.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE:

During the year under review the Company has spent an amount of 1,61,73,500/- under the CSR activity. The report on CSR activities for FY 2024-25 is enclosed as Annexure-III . The Corporate Social Responsibility policy is available on the website of the Company and can be accessed through the web-link

COMPLIANCE WITH RBI DIRECTIONS:

Under erstwhile Master Direction - Non-Banking Financial Company - Systemically Important Non -Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016, the Company was classified as an Non-Deposit Taking Systemically Important Non-Banking

Financial Company (NBFC-ND- SI). As per the present Master Direction ?€” RBI (Non-Banking Financial Company

- Scale Based Regulation) Directions, 2023, the Company is classified under the "Middle Layer" category under the said framework.

DETAILS OF MONEY ACCEPTED FROM DIRECTOR:

During the period under review the Company has not accepted money in the form of unsecured loan from the director or relative of the director of the Company.

ANNUAL RETURN:

As required under Section 92(3) of the Companies Act, 2013, Annual return in Form MGT-7 would be available on the Companys website and can be accessed through the web-link .ikf

MATERIAL CHANGES AND COMMITMENTS, IF ANY:

There are no Material Changes and Commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS, IF ANY:

There are no significant and material orders passed by the regulators/courts/tribunals impacting going concern status and the Companys operations in future.

DIRECTORS & KEY MANAGERIAL PERSONNEL:

Directors:

Smt. Vasumathi Devi Koganti (DIN: 03161150), retired by rotation and was re-elected at the last Annual General Meeting of the Company held on September 30, 2024, in terms of Section 152 of the Companies Act, 2013.

During the year, there were changes in the composition of Board of Directors as given below:

On February 13, 2024, Shri. Raman Uberoi and Shri. Kannan were appointed as additional directors (Non-Executive & Independent), and w.e.f., June 29, 2024 they were appointed as Independent Director(s) by the shareholders at the Extra Ordinary General Meeting held on June 29, 2024.

On September 30, 2024, the tenure of Mr. Satyanarayana Prasad Kanaparti, Independent Director has ended.

On November 05, 2024, Smt.Vasantha Lakshmi Vupputuri resigned from the position of Alternate Director to Dr. Sinha S Chunduri, Director of the Company.

Based on the confirmations received from Directors, none of the Directors are disqualified from appointment under Section 164 of the Companies Act 2013.

Key Managerial personnel:

During the financial year, there was a change in the appointment of Key Managerial Personnel.

Mr. Ch Sreenivasa Rao, resigned from the position of Chief Financial Officer, w.e.f., November 05, 2024 and continuing as Company Secretary of the Company. Mr. Prakash Bhawnani was appointed as new Chief Financial Officer of the Company, w.e.f., November 05, 2024

Declaration by Independent Directors:

The Independent Directors of the Company have submitted their declarations as required under Section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as per sub-section (6) of Section 149 of the Act.

Familiarization programme for Independent Directors:

The Company proactively keeps its Directors informed of the activities of the Company, its management and operations and provides an overall industry perspective as well as issues being faced by the industry.

Independent Directors Meeting:

The Independent Directors met on February 28, 2025 without the attendance of Non-Independent Directors and members of the Management. The Independent Directors reviewed the performance of Non-Independent Directors and the Board as a whole, the performance of the Chairman of the Company, taking into account the views of Executive Director and Non-Executive Directors and assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

OPINION OF THE BOARD WITH REGARD TO INTEGRITY, EXPERTISE AND EXPERIENCE (INCLUDING THE PROFICIENCY) OF THE INDEPENDENT DIRECTORS APPOINTED DURING THE YEAR:

During the year, the Company has regularized two additional directors, Shri. Raman Uberoi and Shri. Kannan as Independent Directors of the Company. In the opinion of the Board all the Independent Directors of the Company possess integrity, experience, expertise and requisite proficiency required under all applicable laws and policies of the Company.

BOARD EVALUATION:

The Board adopted a formal mechanism for evaluating its performance as well as that of its Committees and individual Directors, including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects of the Board functioning such as composition of the Board & committees, experience & competencies, performance of

specific duties & obligations, contribution at the meetings and otherwise, independent judgment, governance issues etc.

CHANGE IN THE NATURE OF BUSINESS:

There was no change in the nature of business of the Company during the financial year 2024-25.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:

During the financial year 2024-25, the Board of Directors have met nine times viz May 29, 2024, July 1, 2024, August

13, 2024, November 5, 2024, December 16, 2024, January

23, 2025, February 7, 2025, March 12, 2025 and March 28, 2025 The details of which are given in the Corporate Governance Report. The maximum interval between any two meetings did not exceed 120 days, as prescribed in the Companies Act, 2013 and Secretarial Standard-1.

AUDIT COMMITTEE:

The Composition of the Audit Committee is provided in the Corporate Governance Report forming part of this report. All the recommendations made by the Audit Committee were accepted by the Board.

NOMINATION AND REMUNERATION POLICY:

The Nomination and Remuneration Policy containing guiding principles for payment of remuneration to Directors, Senior Management, Key Managerial Personnel and other employees including Non-executive Directors along with Board Evaluation criteria are provided in the Corporate Governance Report. The terms of reference are placed on Companys website and can be accessed through the web-link Nomination%20and%20Remuneration%20Policy.pdf .

The Composition of the Nomination and Remuneration Committee ("NRC") is provided in the Corporate Governance Report forming part of this report. All the recommendations made by the NRC were accepted by the Board.

Criteria of making payments to non-executive directors is also provided in the Corporate Governance Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186:

The Company, being a Non-Banking Finance Company registered with the Reserve Bank of India and engaged in the business of giving loans, is exempt from complying with the provisions of Section 186(2) to (13) of the Companies Act, 2013. Accordingly, the disclosures of the loans given as required under the aforesaid section have not been given in this Report.

REMUNERATION RATIO OF THE DIRECTORS / KEY MANAGERIAL PERSONNEL (KMP):

The provisions of Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are not applicable to the Company.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All transactions entered by the Company with Related Parties were in the Ordinary course of Business and are at Arms Length basis. The Audit Committee granted approvals for the transactions and the same were reviewed by the Committee and the Board of Directors.

There were no materially significant transactions with Related Parties during the financial year 2024-25 which were in conflict with the interest of the Company. The details of contracts and arrangements with related parties as referred to in Section 188(1) of the Companies Act, 2013 were given as Annexure-IV to the Boards Report in form No: AOC-2 pursuant to Section 134 (3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules 2014.

Related Party Disclosure ?€“ As per Point no A of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended the detailed disclosures were covered in the Financial Statements, which forms part of this Report.

DIRECTORS RESPONSIBILITY STATEMENT:

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

in the preparation of the annual accounts for the period ended March 31, 2025, the applicable accounting standards had been followed along with proper explanation relating to material departures;

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 at the end of the financial year and of the profit and loss of the Company for that period;

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

the directors had prepared the annual accounts on a going concern basis.

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

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.

COMPANYS POLICY ON PROHIBITION, PREVENTION AND REDRESSAL OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE:

The Company prohibits any form of sexual harassment and any such incidence is immediately investigated and appropriate action taken in the matter against the offending employee(s) based on the nature and the seriousness of the offence. The Company has a policy on Prohibition, Prevention and Redressal of Sexual Harassment of Women at Workplace (the Policy) and matters connected therewith or incidental thereto covering all the aspects as contained under the "The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013" notified by the Government of India vide Gazette Notification dated 23 rd April, 2013.

(a) Number harassment received in the year	Nil
(b) Number of complaints disposed off during the year
(c) Number of cases pending for more than ninety days.

The Company has complied with provisions relating to the constitution of Internal Complaints Committee. There was no case of sexual harassment reported during the year under review.

MATERNITY BENEFIT ACT 1961:

The Company has duly complied with the applicable provisions of the Maternity Benefit Act, 1961, including the provision of maternity leave and other benefits to eligible women employees, as prescribed under the Act.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143 (12) OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT:

There were no frauds as reported by the Statutory Auditors under Sub-section 12 of Section 143 of the Companies Act, 2013 along with Rules made there-under other than those which are reportable to the Central Government.

NAME OF THE DEBENTURE TRUSTEES WITH FULL CONTACT DETAILS - DISCLOSURE UNDER REGULATION 53(e) OF SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015, AS AMENDED:

IDBI Capital Trusteeship Services Limited Asian Building, Ground Floor, 17,

R. Kamani Marg, Ballard Estate, Mumbai ?€“ 400 001, Maharashtra, India

Contact No: 022-40807000

E-mail Id:

Vardhman Trusteeship Private Limited,

3rd Floor, Room No - 15 6, Lyons Range, Turner Morrison House, Kolkata ?€“ 700 001,

West Bengal, India Contact No: 022 42648335

E-mail Id:

Details of revision of financial statement ?€“ Nil

DETAILS OF UTILIZATION OF FUNDS RAISED THROUGH PREFERENTIAL ALLOTMENT OR QUALIFIED INSTITUTIONS PLACEMENT:

During the year under review, the Company had raised 663 Crore (Rupees Six Hundred and Sixty Three Crores through preferential issue/private placement of Non- Convertible Debentures (NCDs). The funds were utilised by the Company for its general corporate purposes. There has been no deviation in the utilisation of issue proceeds of Private Placement of Non-Convertible Debentures (NCDs), and Tier II Debt, from the Objects stated in the Private Placement Offer Letter.

SECRETARIAL STANDARDS:

The Company complies with all applicable Secretarial Standards.

OTHER DISCLOSURES:

Code of Conduct:

The Board has laid down Code of Conduct for Board Members, Key managerial personnels, Senior Managements and Employees of the Company (Codes). The Code stands widely communicated across the Company at all times. The Board has also laid down a Code of Conduct for Independent Directors (forms part of the terms & conditions for appointment of independent director) pursuant to Section 149(8) read with Schedule IV of the Act, which is a guide to professional conduct for Independent Directors of the Company. All the Board Members and Senior Management Personnel have affirmed compliance with these Codes. These Codes are also accessible at the Companys website at the

Recommendations of the Committees:

There have been no occasions during the year where the Board has declined any recommendations made by its Committees

Penalties and Strictures:

The Company confirms that there have been no instances of penalties, adverse orders, or strictures imposed by RBI, SEBI, Stock Exchanges, or any statutory authority pertaining to capital market matters in the past three years.

Breach of Covenant:

The Company has adhered to all covenants associated with borrowings and debt instruments during the year. It is further confirmed that there has been no instance of covenant breach in respect of Non-Convertible Debentures issued by the Company..

Fraud Risk Management ;

The Company has in place a comprehensive Fraud Risk Management Policy which lays down the framework for prevention, detection, and reporting of frauds. A dedicated Fraud Risk Management Committee has been constituted to oversee the implementation of the policy and to review fraud risk?€“related matters. The Committee meets at regular intervals to evaluate the effectiveness of fraud risk controls, monitor incidents, and ensure timely remedial actions. The Company remains committed to strengthening its internal control systems and fostering a culture of transparency and ethical conduct to mitigate fraud risks.

Disclosures by NBFC Systemically Important Non- Deposit Taking Company and Deposit taking Company Auction: Nil

PECUNIARY RELATIONSHIP/TRANSACTION WITH NON-EXECUTIVE DIRECTORS:

During the year under review, there were no pecuniary relationship/transactions of any non?€“executive directors with the Company, apart from sitting fees for attending meetings as directors.

Particulars	As at March 31, 2025	As at March 31, 2024
(a) No. of complaints pending at the beginning of the year	0	0
(b) No. of complaints received during the year	61	55
(c) No. of complaints redressed during the year	61	55
(d) No. of complaints pending at the end of the year	-	-

CUSTOMER COMPLAINTS:

PERPETUAL DEBT INSTRUMENTS (PDI):

During the financial year, the Company has not issued any Perpetual Debt Instruments (PDI).

REGISTRAR AND SHARE TRANSFER AGENCY:

The Company has appointed M/s. Bigshare Services Private Limited situated at Plot No-306, 3rd Floor, Right Wing, Amrutha Ville Opp. Yashoda Hospital, Rajbhavan Road Somajiguda, Hyderabad-500 082, as its Registrar and Share transfer agency for handling both physical and electronic transfers.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREOF:

The key financial ratios were disclosed in the Financial Statements, which forms part of this Report.

HUMAN RESOURCES:

Your Company treats its "human resources" as one of its most important assets. Your Company continuously invests in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused people attention are currently underway. Your Company thrust is on the promotion of talent internally through job rotation and job enlargement.

CAUTIONARY STATEMENT:

Statements in these reports describing Companys projections statements, expectations and hopes are forward looking. Though, these expectations are based on reasonable assumption, the actual results might differ.

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

The Company, being a non?€“banking finance Company (NBFC), does not have any manufacturing activity. The directors, therefore, have nothing to report on conservation of energy and technology absorption.

FOREIGN EXCHANGE EARNINGS AND OUTGO

Total foreign exchange earned	Nil
Total foreign exchange used	22,32,197

INDUSTRIAL RELATIONS:

Industrial relations continued to be cordial throughout the year under review.

THE DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 (31 OF 2016) DURING THE YEAR ALONG WITH THEIR STATUS AS AT THE END OF THE FINANCIAL YEAR:

During the year under review, Company has not made any application under The Insolvency and Bankruptcy Code, 2016 (31 of 2016).

THE DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE-TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF

The requirement to disclose the details of difference between amount of the valuation done at the time of onetime settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof is not applicable.

ACKNOWLEDGMENTS:

Your Company will always keep interest of its customers, employees and the stakeholders as a priority and shall reciprocate their confidence reposed in the Company. It has been a mutually beneficial relationship and looks forward to their continued support.

		For and on behalf of the Board IKF Finance Limited
Place: Vijayawada Date: August 6, 2025	Sd/- Gopala Kishan Prasad Vupputuri Chairman & Executive Director DIN: 01817992	Sd/- Vasumathi Devi Koganti Managing Director DIN: 03161150