Onemi Technology Solutions Ltd Management Discussions

(1) Capital to risk weighted assets ratio or CRAR is computed by dividing our tier I and tier II capital by risk weighted assets (computed in accordance with the relevant RBI guidelines) as on the last day of the relevant period by the Subsidiary). ⁽²⁾ Interest service coverage ratio is calculated as earnings before interest and taxes (EBIT) divided by finance cost. ⁽³⁾ Debt to equity ratio is calculated as total borrowings divided by Net Worth of our Company as on the last day of the relevant period. ⁽⁴⁾ Average cost of borrowing is calculated as finance cost for the relevant period as a percentage of average total borrowings in such period.

Our results of operations are significantly influenced by the evolving regulatory landscape in India. The digital lending sector is subject to extensive oversight by various regulatory authorities, including the Reserve Bank of India and other governmental bodies. Regulatory frameworks governing digital lending are continually being refined to address emerging risks, promote financial inclusion and ensure consumer protection. Any changes in applicable laws, regulations, or guidelines, such as those relating to data privacy, KYC norms, interest rate caps or digital lending practices, may necessitate adjustments to our business model, operational processes or technology infrastructure. These regulatory shifts could also influence both the cost and accessibility of funds, necessitating ongoing vigilance and adaptability in our funding strategies. Compliance with these evolving requirements may result in increased costs, operational complexities or restrictions on certain business activities, all of which could materially impact our financial performance.

In addition, our operations are inherently sensitive to broader macroeconomic factors prevailing in India. Fluctuations in economic growth, inflation rates, employment levels and consumer confidence directly affect the creditworthiness of our borrowers and the demand for our lending products. Adverse macroeconomic conditions may lead to higher default rates, reduced loan disbursements and increased provisioning requirements, thereby exerting downward pressure on our profitability. Conversely, periods of economic expansion and stability typically foster greater demand for credit and improved repayment behavior, positively influencing our results. Additionally, macroeconomic factors such as inflation, currency fluctuations, and shifts in monetary policy can alter the broader funding environment, potentially increasing our cost of capital or constraining our access to liquidity.

The mass-market segment remains the largest and fastest-growing cohort in India, driven by population growth and rising aspirations. While some conventional NBFCs cater partially to this segment, the mass-market segment has historically been underserved by banks and conventional financial institutions due to a lack of tailored products and insufficient credit information to undertake effective credit assessments. This has opened significant opportunities for digital-first players, including us, that offer faster and more accessible credit solutions. Sensing this opportunity, many digital players have entered the market to cater to this segment, resulting in improved products and technology creating a better end user experience. (Source: 1Lattice Report)

Our ability to attract and retain borrowers, maintain favorable interest margins, expand our product offerings is intrinsically linked to our ability to effectively differentiate ourselves from competitors. Further, our ability to continuously invest in technology, enhance our customer experience, and innovate our credit assessment methodologies will determine our competitive edge.

Interest income

Interest income is recognized by applying the Effective Interest Rate (EIR) to the gross carrying amount of financial assets measured at amortized cost other than credit-impaired assets and financial assets classified as measured at FVTPL.

The EIR in case of a financial asset is computed

As the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset.

By considering all the contractual terms of the financial instrument in estimating the cash flows.

Including all fees received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts.

Any subsequent changes in the estimation of the future cash flows is recognized in interest income with the corresponding adjustment to the carrying amount of the assets. Interest income on credit impaired assets is recognized by applying the effective interest rate to the net amortised cost (net of ECL provision) of the financial asset. Interest on delayed payments by customers are treated to accrue only on realisation, due to uncertainty of realisation and are accounted accordingly.

Fees and commission income are recognised when the Group satisfies the performance obligation, at the amount of transaction price (net of variable consideration) allocated to that performance obligation based on a five-step model as set out in IND AS 115. Revenue from all services is recognized at a point in time when the related services are rendered as per the terms of the agreement.

Marketing Income is recognized when the Group satisfies the performance obligation, at the amount of transaction price (net of variable consideration) allocated to that performance obligation based on a five-step model as set out above.

Any differences between the fair values of financial assets classified as fair value through the profit or loss, held by the Group on the balance sheet date is recognised as an unrealised gain/loss. In cases there is a net gain in the aggregate, the same is recognised in ‘Net gains on fair value changes under other income and if there is a net loss the same is disclosed under ‘Expenses in the Statement of Profit and Loss.

Similarly, any realised gain or loss on sale of financial instruments measured at FVTPL and debt or equity instruments measured at FVOCI is recognised in net gain / loss on fair value changes. As at the reporting date, the Group does not have any debt instruments measured at FVOCI.

Insurance commission and rewards includes commission and rewards earned for solicitation of insurance products/policies based on the leads generated from its designated website using telemarketing modes and through offline activities. Revenue is recognized when the right to receive the income is established as per the terms of the contract.

The Group earns license fee income from permitting the use of its brand and trademarks by its subsidiary under a licensing agreement. Revenue from such license arrangements is recognized in accordance with Ind AS 115 Revenue from contracts with customers. The license fee income is recognized over time, on a monthly basis, as the performance obligation is satisfied.

Other operational revenue represents income earned from the activities incidental to the business and is recognised when the right to receive the income is established as per the terms of the contract.

The group on derecognition of financial assets under the direct assignment transactions, recognises the right of excess interest spread (EIS) which is difference between interest on the loan portfolio assigned and the applicable rate at which the direct assignment is entered into with the assignee. The group records the discounted value of scheduled cash flow of the future EIS, entered into with the assignee, upfront in the statement of profit and loss under other income.

The Group recognises income on recoveries of financial assets written off on realisation basis.

Income Taxes

The income tax expense or credit for the period is the tax payable on the taxable income of the current period based on the applicable income tax rates adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and unused tax losses.

Current tax assets and liabilities for the current and prior years are measured at the amount expected to be recovered from, or paid to, the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted, or substantively enacted, by the reporting date where the Group operates and generates taxable income.

Current income tax relating to items recognised outside the Statement of Profit and Loss is recognised outside the Statement of Profit and Loss (either in other comprehensive income or in equity). Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax assets and liabilities are recognised for temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled.

Deferred tax assets are only recognised for temporary differences, unused tax losses and unused tax credits if it is probable that future taxable amounts will arise to utilize those temporary differences and losses. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities are realised simultaneously.

Leases

The determination of whether an arrangement is a lease, or contains a lease, is based on the substance of the arrangement and requires an assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets or whether the arrangement conveys a right to use the asset.

Group as lessee-

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

Leases of low value assets; and

Leases with a duration of 12 months or less.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Groups incremental borrowing rate on commencement of the lease is used. Variable lease payments are expensed in the period to which they relate.

On initial recognition, the carrying value of the lease liability also includes:

amounts expected to be payable under any residual value guarantee;

the exercise price of any purchase option granted in favour of the Group if it is reasonably certain to assess that option;

any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.

Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

lease payments made at or before commencement of the lease;

initial direct costs incurred; and

the amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset.

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortized on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.

When the Group revises its estimate of the term of any lease, it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted using a revised discount rate. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised, except the discount rate remains unchanged. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortized over the remaining (revised) lease term. If the carrying amount of the right-of-use asset is adjusted to zero, any further reduction is recognised in the statement of profit and loss.

Financial Instrument

Financial assets and liabilities, with the exception of loans, debt securities, deposits and borrowings are initially recognised on the trade date, i.e., the date that the Group becomes a party to the contractual provisions of the instrument. This includes regular way trades: purchases or sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the market place. Loans are recognised when funds are transferred to the customers account. The Group recognizes debt securities, deposits and borrowings when funds reach the Group.

Initial measurement

Financial assets are initially measured at transaction price, which generally represents fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets are added to or deducted from the fair value of the financial assets, on initial recognition. For financial assets measured at FVTPL, such costs are recognised immediately in the Statement of Profit and Loss.

Subsequent measurement

Based on the business model, the contractual characteristics of the financial assets and specific elections where appropriate, the Group classifies and measures financial assets in the following categories:

Amortised cost

Fair value through other comprehensive income (‘FVOCI)

Fair value through profit and loss (‘FVTPL)

The classification depends on the contractual terms of the cash flows of the financial assets, the Companys business model for managing financial assets and, in case of equity instruments, the intention of the Company whether strategic or non-strategic. The said classification methodology is detailed below-

Business model assessment:

The Group determines its business model at the level that best reflects how it manages groups of financial assets to achieve its business objective. The Groups business model is not assessed on an instrument-by-instrument basis, but at a higher level of aggregated portfolios and is based on observable factors such as:

How the performance of the business model and the financial assets held within that business model are evaluated and reported to the entitys key management personnel.

The risks that affect the performance of the business model (and the financial assets held within that business model) and the way those risks are managed.

The expected frequency, value and timing of sales are also important aspects of the Groups assessment. The business model assessment is based on reasonably expected scenarios without taking ‘worst case or ‘stress case scenarios into account. If cash flows after initial recognition are realised in a way that is different from the Groups original expectations, the Group does not change the classification of the remaining financial assets held in that business model but incorporates such information when assessing newly originated or newly purchased financial assets going forward.

The Solely Payments of Principal and Interest (SPPI) test:

As a second step of its classification process the Group assesses the contractual terms of financial assets to identify whether they meet the SPPI test.

‘Principal for the purpose of this test is defined as the fair value of the financial asset at initial recognition and may change over the life of the financial asset (for example, if there are repayments of principal or amortisation of the premium/discount).

In making this assessment, the Group considers whether the contractual cash flows are consistent with a basic lending arrangement i.e. interest includes only consideration for the time value of money, credit risk, other basic lending risks and a profit margin that is consistent with a basic lending arrangement. Where the contractual terms introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related financial asset is classified and measured at fair value through profit or loss.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

the asset is held within a business model whose objective is to hold assets to collect contractual cash flows (‘Asset held to collect contractual cash flows); and

the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (‘SPPI) on the principal amount outstanding.

After initial measurement and based on the assessment of the business model as asset held to collect contractual cash flows and

SPPI, such financial assets are subsequently measured at amortised cost using effective interest rate (‘EIR) method.

Interest income from these financial assets is included in finance income using the EIR method. Any gain and loss on derecognition is also recognised in statement of profit and loss.

The EIR method is a method of calculating the amortised cost of a financial instrument and of allocating interest over the relevant period. The EIR is the rate that exactly discounts estimated future cash flows (including all fees paid or received that form an integral part of the EIR, transaction costs and other premiums or discounts) through the expected life of the instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Financial assets that are held within a business model whose objective is both to collect the contractual cash flows and to sell the assets, (‘Contractual cash flows of assets collected through hold and sell model) and contractual cash flows that are SPPI, are subsequently measured at FVOCI. Movements in the carrying amount of such financial assets are recognised in Other

Comprehensive Income (‘OCI), except dividend income which is recognised in statement of profit and loss. Amounts recorded in OCI are not subsequently transferred to the statement of profit and loss. Equity instruments at FVOCI are not subject to an impairment assessment.

Financial assets, which do not meet the criteria for categorization as at amortized cost or as FVOCI, are measured at FVTPL. Subsequent changes in fair value are recognised in the statement of profit and loss. The Group records investments in equity instruments, mutual funds and Treasury bills at FVTPL.

Derecognition of financial assets

A financial asset (or a part thereof) is derecognised when the contractual rights to receive the cash flows from the asset expire, or when the asset is transferred and substantially all the risks and rewards of ownership are transferred with no continuing involvement.

The Company transfers financial assets through partial assignment transactions and derecognises the transferred portion when it does not retain control or any continuing involvement in the asset.

A write-off of a financial asset is considered a derecognition event.

On derecognition, the difference between the carrying amount of the asset and the consideration received (including any new asset acquired, net of any liability assumed) is recognised in the Statement of Profit and Loss.

The Company writes off financial assets, either partially or in full, when there is no reasonable expectation of recovery based on past experience and assessment of the borrowers financial condition.

Amounts written off that exceed the accumulated loss allowance are recognised as an expense in the Statement of Profit and Loss in the period in which the write-off occurs.

Initial measurement

The Group recognizes all financial liabilities initially at fair value adjusted for transaction costs that are directly attributable to the issue of financial liabilities except in the case of financial liabilities recorded at FVTPL where the transaction costs are charged to the Statement of Profit and Loss. Generally, the transaction price is treated as fair value unless there are circumstances which prove to the contrary in which case, the difference, if material, is charged to the Statement of Profit and Loss.

Subsequent measurement

The Company subsequently measures all financial liabilities at amortised cost using the EIR method as per Ind AS 109.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability. The difference between the carrying value of the original financial liability and the consideration paid is recognised in the Statement of Profit and Loss.

Financial liabilities and equity instrument

The Group classifies financial instruments, at the time of initial recognition, as either financial liabilities or equity instruments in accordance with the substance of the contractual terms and the definitions provided under Ind AS 32 Financial Instruments: Presentation.

Equity Instruments:

An instrument is classified as equity when it evidences a residual interest in the assets of the Group after deducting all its liabilities and meets the following conditions:

The instrument does not contain a contractual obligation to deliver cash or another financial asset, or to exchange financial assets or liabilities under potentially unfavourable conditions; and

If the instrument will or may be settled in the Groups own equity instruments, it is either: o A non-derivative that includes no contractual obligation to deliver a variable number of the Groups equity instruments; or o A derivative that will be settled only by the Group exchanging a fixed amount of cash or another financial asset for a fixed number of its own equity instruments ("fixed-for-fixed" test).

Financial Liabilities:

A financial instrument is classified as a financial liability if it:

Contains a contractual obligation to deliver cash or another financial asset to another entity; or

Is a contract that may be settled in the Groups own equity instruments but does not meet the equity classification criteria (i.e., fails the fixed-for-fixed condition).

Instruments with both liability and equity components are bifurcated and accounted for as compound financial instruments under Ind AS 32, with each component classified and measured separately.

Debt and equity instruments issued by the Group are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of financial liability and an equity instrument.

Equity instrument:

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of directly attributable transaction costs.

Financial liabilities:

Financial liabilities are measured at amortized cost. The carrying amounts are determined based on the EIR method. Interest expense is recognised in the statement of profit and loss. Any gain or loss on de-recognition of financial liabilities is also recognised in profit or loss. Undrawn loan commitments are not recorded in the balance sheet.

Debt securities and other borrowed funds:

After initial measurement, debt issued, and other borrowed funds are subsequently measured at amortised cost. Amortised cost is calculated by taking into account any discount or premium on issue funds, and transaction costs that are an integral part of the Effective Interest Rate (EIR).

Impairment of Financial Asset

The Group assesses on a forward-looking basis the expected credit losses associated with its assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

The ECL allowance is based on the credit losses expected to arise over the life of the asset, unless there has been no significant increase in credit risk since origination, in which case, the allowance is based on the 12 months expected credit loss (12-month ECL). The Group has established a policy to perform an assessment, at the end of each reporting period, of whether a financial instruments credit risk has increased significantly since initial recognition, by considering the change in the risk of default occurring over the remaining life of the financial instrument.

Based on the above process, the Group categories its loans into Stage 1, Stage 2 and Stage 3 as described below:

Stage 1 includes financial instruments that have not had a significant increase in credit risk since initial recognition and are not credit-impaired upon origination. For these assets, 12- month expected credit losses (‘ECL) are recognised and interest revenue is calculated on the gross carrying amount of the asset (that is, without deduction for credit allowance).

Stage 2 includes financial instruments that have had a significant increase in credit risk since initial recognition but that do not have objective evidence of impairment. For these assets, lifetime ECL are recognised, but interest revenue is continued to be calculated on the gross carrying amount of the asset.

Stage 3 includes financial assets that have objective evidence of impairment at the reporting date. For these assets, lifetime ECL are recognised and interest revenue is calculated on the net carrying amount.

The Group calculates ECLs based on four probability-weighted scenarios to measure the expected cash shortfalls, discounted at an approximation to the EIR. A cash shortfall is the difference between the cash flows that are due to an entity in accordance with the contract and the cash flows that the entity expects to receive. The mechanics of the ECL calculations are outlined below and the key elements are, as follows:

Probability of Default (PD): The PD represents the likelihood of a borrower defaulting on its financial obligation, either over the next 12 months (12M PD), or over the remaining lifetime (Lifetime PD) of the obligation.

Exposure at Default (EAD) is based on the amounts the Group expects to be owed at the time of default, over the next 12 months (12M EAD) or over the remaining lifetime (Lifetime EAD).

Loss Given Default (LGD) represents the Groups expectation of the extent of loss on a defaulted exposure. LGD varies by type of counter party, type and seniority of claim and availability of collateral or other credit support. LGD is expressed as a percentage loss per unit of exposure at the time of default (EAD). LGD is calculated on a 12-month or lifetime basis, where 12-month LGD is the percentage of loss expected to be made if the default occurs in the next 12 months and lifetime LGD is the percentage of loss expected to be made it the default occurs over the remaining expected lifetime of the loan.

When estimating the ECLs, the Group considers four scenarios (a base case, an upside, a mild downside (‘downside 1) and a more extreme downside (‘downside 2)). Each of these is associated with different PDs, EADs and LGDs. When relevant, the assessment of multiple scenarios also incorporates how defaulted loans are expected to be recovered, including the probability that the loans will cure and the value of collateral or the amount that might be received for selling the asset. Impairment losses and releases are accounted for and disclosed separately from modification losses or gains that are accounted for as an adjustment of the financial assets gross carrying value.

Under the Groups business model, FLDG (First Loss Default Guarantee) obligations are treated as financial guarantees and are typically based on the business arrangements (maximum capped at 5%) of the disbursed portfolio by the lending Banks/ NBFCs.

For Trade Receivables, the Group follows simplified approach for calculation of expected credit loss (ECL).

Determination of Fair Value

The Group measures certain financial instruments at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principle market or in absence of the principle market, the most advantageous market.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques, as summarized below:

Level 1 includes financial instruments measured using quoted prices.

Level 2 Financial instruments the fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3 If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. The Group evaluates the leveling at each reporting period on an instrument-by-instrument basis and reclassifies instruments when necessary based on the facts at the end of the reporting period.

Cash and Cash Equivalents

Cash and cash equivalents comprise the net amount of short-term, highly liquid investments that are readily convertible to known amounts of cash (short-term deposits with an original maturity of three months or less) and are subject to an insignificant risk of change in value, cheques on hand and balances with banks. They are held for the purposes of meeting short-term cash commitments (rather than for investment or other purposes).

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash on hand, cheques on hand, balances with banks (of the nature of cash and cash equivalents).

Property, Plant and Equipment

Property, plant and equipment ("PPE") are carried at cost, less accumulated depreciation and impairment losses, if any. The cost of PPE comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use and other incidental expenses. Subsequent expenditure on PPE after its purchase is capitalized only if it is probable that the future economic benefits will flow to the enterprise and the cost of the item can be measured reliably.

Depreciation is calculated using the straight-line method to write down the cost of property and equipment to their residual values over their estimated useful lives as specified under schedule II of the Act. Land is not depreciated. Individual Assets having value up to Rs 5000 is depreciated fully in the year of purchase of assets.

The estimated useful lives are, as follows:

Computer and other Equipments -3 Years

Servers & Networks 6 Years

Office equipment 5 years

Furniture and fixtures 10 years

Leasehold improvements over the remaining period of Lease

Depreciation is provided on a pro-rata basis from the date on which such asset is ready for its intended use. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

PPE is derecognised on disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognised in other income / expense in the statement of profit and loss in the year the asset is derecognised.

Impairment of Non-Financial Asset

Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets. Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

Intangible Assets

Intangible assets represents computer software acquired by the Group carried at cost of acquisition less amortisation. The cost of the item of intangible assets comprises its purchase price, including non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use; any trade discounts and rebates are deducted in arriving at the purchase price. Other Indirect Expenses incurred relating to asset under development, net of income earned during the asset development stage prior to its intended use, are disclosed under Intangible Assets Under Development and are capitalised when asset is ready for the intended use.

At intangible asset is de-recognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from de-recognition of an intangible asset is recognised in profit or less when the asset is de-recognised.

Amortisation methods, estimated useful lives and residual value Intangible assets, comprising software, are amortised over the estimated life of 5 years on a straight-line basis from the date of capitalization. Software developed in-house is amortized over estimated life of 5 years on a straight-line basis from the date of capitalisation till the previous financial year. However, beginning from current financial year software developed in-house is amortized over estimated life of 10 years on a straight-line basis from the date of capitalisation. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

Retirement and Other Employee Benefits

The Groups contribution to provident fund are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.

The Group pays gratuity to the employees whoever has completed five years of service with the Group at the time of resignation / retirement. The gratuity is paid @ 15 days salary for every completed year of service as per the Payment of Gratuity Act, 1972. The liability in respect of gratuity and other post-employment benefits is calculated using the Projected Unit Credit

Method and spread over the period during which the benefit is expected to be derived from employees services. As per Ind AS

19, the service cost and the net interest cost are charged to the statement of profit and loss. Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in OCI.

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages etc. and the expected cost of ex-gratia are recognised in the period in which the employee renders the related service. A liability is recognised for the amount expected to be paid when there is a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

The cost of short-term compensated absences is accounted as under:

In case of accumulative compensated absences, the employees can carry-forward a portion of the unutilized accrued compensated absences and utilize it in future service periods. Leave encashment occurs only at the time of separation, with basic salary considered for encashment. Since the compensated absences fall due wholly within twelve months after the end of the period in which the employees render the related service and are also expected to be utilized wholly within twelve months after the end of such period, the benefit is classified as a short-term employee benefit.

Share-based payments:

The Group recognizes compensation expenses relating to share-based payments in net profit using fair value in accordance with Ind AS 102 - Share-based Payment. The estimated fair value of awards is charged to income on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was in-substance, multiple awards with a corresponding increase to share options outstanding amount.

Provisions & Contingencies

Provisions:

The Group recognises a provision when there is a present obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risk and uncertainties surrounding the obligation.

The cases where the available information indicates that the loss on the contingency is the reasonably estimated, a disclosure is made in the financial statements. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimates. If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the past events but probably will not require an outflow of resources to settle the obligation.

When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.

Contingent assets are neither recognised nor disclosed in the financial statements.

Our total income comprises revenue from operations and other income.

Revenue from operations

Our revenue from operations comprises: (i) interest on loans; (ii) sourcing and servicing fees; (iii) marketing and commission income; (iv) insurance commission and rewards; and (v) other fees and charges.

Interest on loans relates to our on-book loans and includes (a) interest on loans to customers comprising secured and unsecured loans; and (b) processing fees comprise the administrative fees charged to customers at loan origination for services including credit appraisal, document verification, underwriting and related costs.

Sourcing and servicing fees relate to our off-book loans. Sourcing fee refers to the revenue generated through the acquisition and onboarding of customers on behalf of our lending partners. The servicing fee refers to the revenue generated from the end-to-end management of loan accounts including collections, customer relationship management and associated administrative support services.

Marketing and commission income includes: (a) marketing revenue generated from promoting products or services of other institutions on our mobile application; and (b) commission income generated by selling third party products such as credit improvement plans and wellness programs.

Insurance commission and rewards include commission and rewards earned from sale of third-party insurance products/ policies on the Companys platform.

Other fees and charges include late payment charges and foreclosure charges.

Other income

Our other income includes: (i) interest on bank deposits; (ii) net gain on sale of fixed assets (computer, furniture and fixture, and office equipment) (iii) interest income on security deposits; (iv) profit on derecognition of loan assets; (v) gain on termination of lease; and (vi) miscellaneous income comprising interest on staff loans and interest on income tax refund.

Our expenses include: (i) employee benefits expenses; (ii) impairment on financial instruments; (iii) finance costs; (iv) depreciation and amortisation; and (v) other expenses.

Employee benefits expenses

Our employee benefits expenses include: (i) salaries, wages and allowances; (ii) contribution to provident fund and other funds; (iii) gratuity expense; (iv) leave encashment; (v) employee share based payments; and (vi) staff welfare expenses.

Impairment on financial instruments

Our impairment on financial instruments comprises expenses on our financial instruments measured at amortised cost. These include expected credit loss against standard assets and non performing assets, and financials assets written off.

Finance costs

Our finance costs comprise finance costs on financial liabilities measured at amortised costs which includes: (i) interest on debt securities comprising non convertible debentures; (ii) interest on borrowings (other than debt securities) comprising term loans, working capital demand loans, overdraft facilities and securitisation liabilities (interest on securitisation liabilities primarily comprises interest paid on the securitised portfolio through pass-through certificates ("PTC")); (iii) interest on statutory dues; (iv) other finance cost including processing fees, rating charges and trusteeship charges; and (iv) interest expenses on lease liability.

Depreciation and amortization

Our depreciation and amortization expenses comprise (i) depreciation of property, plant and equipment; (ii) depreciation on right of use assets; (iii) amortisation of intangible assets; and (iv) loss on discard of property, plant and equipment.

Other expenses

Our other expenses primarily comprise: (i) outsourcing and back office expenses comprising outsourced customer support services, tele-calling, collection and recovery services, and lead generation; (ii) server and communication cost; (iii) branding and marketing expenses; (iv) expected credit loss on off balance sheet exposure.

The following table sets forth selected financial data from our audited consolidated statement of profit and loss for Fiscals 2025, 2024 and 2023, the components of which are expressed as a percentage of total income for such years.

Total income. Total income decreased by 20.44% from 17,003.02 million in Fiscal 2024 to 13,526.88 million in Fiscal 2025 primarily due to the reasons discussed below.

Revenue from operations. Revenue from operations decreased by 20.12% from 16,744.46 million in Fiscal 2024 to 13,374.65 million in Fiscal 2025, primarily due to a decrease in revenue from our on-book loans, attributable to a decrease in interest on loans and other fees and charges. These decreases were primarily on account of the following:

Interest on loans (including interest and processing fees charged on loans) decreased from 12,110.14 million in Fiscal 2024 to 9,943.06 million in Fiscal 2025. However, our on-book AUM increased from 14,752.15 million as of March 31, 2024 to 24,745.58 million as of March 31, 2025. The decrease in interest on loans was driven by the implementation of competitive pricing to acquire and retain high-quality customers. While a decrease in pricing led to a reduction in our revenue from operations, the improvement in our customer profiles led to a reduction in our expenses towards impairment on financial instruments and credit loss on off balance sheet exposure (as discussed below);

Further, we originated a higher mix of longer-tenure loans and the average contractual loan tenure increased from 2.92 months in Fiscal 2024 to 9.65 months in Fiscal 2025. Under Ind AS, processing fees that are collected upfront are spread across the loan tenure which results in a significant portion of such fees being deferred as unamortised income in any given period. Accordingly, the increase in our contractual loan tenure led to the deferment in the recognition of a significant portion of our processing fees generated in Fiscal 2025 to future years. Our unamortized processing fees was 544.83 million as of March 31, 2025 as compared to 113.01 million as of March 31, 2024; and

Other fees and charges (comprising late payment charges and foreclosure charges) decreased from 2,833.56 million in Fiscal 2024 to 944.44 million in Fiscal 2025. Our data-driven underwriting and risk assessment models enhanced our customer selection processes, leading to high-quality borrower profiles. We leveraged AI/ML-driven credit models, credit bureau data and alternative data signals to assess customer repayment capacity and risk profiles with greater accuracy. Consequently, our overall bounce rates decreased from 18.96% in Fiscal 2024 to 14.98% in Fiscal 2025, leading to a decrease in income from late payment charges. This also led to a reduction in our outsourcing expenses towards collections and recovery (as discussed below).

While the above reasons decreased our revenue from operations from Fiscal 2024 to Fiscal 2025, the residual tenure of our AUM increased to 14.90 months as of March 31, 2025 as compared to 7.07 months as of March 31, 2024. Accordingly, interest on such residual tenure of loans (including processing fee) will be realized in future periods.

The decreases in revenue from on-book loans were partially offset by an increase in revenue from off-book loans. Sourcing and servicing fees increased from 1,639.63 million in Fiscal 2024 to 2,381.90 million in Fiscal 2025, primarily due to an increase in our off-book loan portfolio. Our off-book AUM increased from 11,290.60 million as of March 31, 2024 to 16,120.80 million as of March 31, 2025.

Other income. Other income decreased by 41.12% from 258.56 million in Fiscal 2024 to 152.23 million in Fiscal 2025, primarily due to a decrease in interest on bank deposits from 248.36 million in Fiscal 2024 to 111.28 million in Fiscal 2025.

The reduction in bank deposits was primarily on account of utilization of such funds towards operational activities including our AUM build-up.

Total expenses. Total expenses decreased by 20.69% from 14,328.61 million in Fiscal 2024 to 11,364.24 million in Fiscal

2025 primarily due to the reasons discussed below.

Employee benefits expenses. Employee benefits expenses increased by 6.90% from 1,807.56 million in Fiscal 2024 to 1,932.36 million in Fiscal 2025, primarily attributable to our expansion into secured loan offerings (i.e., LAP) which was introduced in the last quarter of Fiscal 2024. We opened 62 LAP branches and onboarded 521 employees during Fiscal 2025 to support the scale-up of our LAP offering. Salaries, wages and allowances increased from 1,108.50 million in Fiscal 2024 to 1,428.41 million in Fiscal 2025.

Impairment on financial instruments. Impairment on financial instruments decreased by 47.38% from 6,211.51 million in Fiscal 2024 to 3,268.34 million in Fiscal 2025 primarily driven by our strong credit and risk assessment models that led to improvements in our asset quality. Our overall bounce rates decreased from 18.96% in Fiscal 2024 to 14.98% in Fiscal 2025.

Finance costs. Finance costs increased by 139.52% from 686.39 million in Fiscal 2024 to 1,644.02 million in Fiscal 2025 primarily due to an increase in borrowings undertaken to scale our on-book AUM. Our on-book AUM increased from

14,752.15 million as of March 31, 2024 to 24,745.58 million as of March 31, 2025. Consequently, our debt to equity ratio increased from 0.97 as of March 31, 2024 to 1.50 as of March 31, 2025.

Depreciation and amortization. Depreciation and amortization expense marginally decreased by 0.77% from 228.78 million in Fiscal 2024 to 227.02 million in Fiscal 2025 due to a decrease in amortisation of intangible assets and depreciation on tangible assets.

Other expenses. Other expenses decreased by 20.43% from 5,394.37 million in Fiscal 2024 to 4,292.50 million in Fiscal

2025, primarily due to the following:

decrease in outsourcing and collection expenses by 31.92% from 2,205.42 million in Fiscal 2024 to 1,501.45 million in

Fiscal 2025. This decrease was primarily on account of improved asset quality and customer repayment behavior which significantly reduced the requirement of outsourcing field agents and tele-calling staff for collections and recovery processes.

decrease in credit loss on off balance sheet exposure by 16.38% from 740.49 million in Fiscal 2024 to 619.22 million in

Fiscal 2025. This decrease was primarily attributable to the improvement in the overall credit quality of our off-book loan portfolio.

decrease in branding and marketing expenses by 11.03% from 1,076.49 million in Fiscal 2024 to 957.74 million in Fiscal

2025 representing a decrease in our customer acquisition costs.

These decreases in other expenses were partially offset by an increase in rent from 16.06 million in Fiscal 2024 to 27.14 million in Fiscal 2025, and electricity expenses from 8.89 million in Fiscal 2024 to 12.93 million in Fiscal 2025, driven by the expansion of our LAP branch network in Fiscal 2025. Our CIBIL and other verification expenses also increased from 210.45 million in Fiscal 2024 to 248.50 million in Fiscal 2025, in line with our enhanced credit and risk assessment processes.

Profit before tax. Profit before tax decreased by 19.14% from 2,674.41 million in Fiscal 2024 to 2,162.64 million in Fiscal

2025, primarily due to the reasons discussed above and below:

scale-up of our LAP operations involving significant upfront expenses towards setting up the LAP branch network and increase in manpower. Our expenses attributable to our LAP operations increased from 4.34 million in Fiscal 2024 to 357.50 million in Fiscal 2025. This led to an increase in our loss before tax attributable to our LAP operations from 4.17 million in Fiscal 2024 to 292.99 million in Fiscal 2025;

a decrease in other income from 258.56 million in Fiscal 2024 to 152.23 million in Fiscal 2025 (as discussed above); and

net impact of the decrease in revenue from operations largely offset by a decrease in credit costs and operating expenses (as discussed above).

Tax expense. Our total tax expenses decreased by 20.68% from 701.51 million in Fiscal 2024 to 556.43 million in Fiscal

2024 in line with the decrease in our profit before tax during the same years.

Profit for the year. For the various reasons discussed above, profit for the year decreased by 18.59% from 1,972.90 million in Fiscal 2024 to 1,606.21 million in Fiscal 2025.

Total income. Total income increased by 69.77% from 10,015.05 million in Fiscal 2023 to 17,003.02 million in Fiscal 2024 primarily due to the reasons discussed below.

Revenue from operations. Revenue from operations increased by 70.09% from 9,844.57 million in Fiscal 2023 to 16,744.46 million in Fiscal 2024 in line with the growth in our on-book and off-book AUM, primarily attributable to the following:

Interest on loans increased from 6,749.03 million in Fiscal 2023 to 12,110.14 million in Fiscal 2024, attributable to the increase in our on-book AUM from 4,505.67 million as of March 31, 2023 to 14,752.15 million as of March 31, 2024;

Sourcing and servicing fees increased from 773.88 million in Fiscal 2023 to 1,639.63 million in Fiscal 2024, attributable to the increase in our off-book AUM from 8,173.61 million as of March 31, 2023 to 11,290.60 million as of March 31, 2024; and

Other fees and charges increased from 1,620.13 million in Fiscal 2023 to 2,833.56 million in Fiscal 2024.

Other income. Other income increased by 51.67% from 170.48 million in Fiscal 2023 to 258.56 million in Fiscal 2024, primarily due to an increase in interest on bank deposits from 151.33 million in Fiscal 2023 to 248.36 million in Fiscal 2024, due to an increase in funds held as deposits.

Total expenses. Total expenses increased by 46.58% from 9,775.52 million in Fiscal 2023 to 14,328.61 million in Fiscal

2024 primarily due to the reasons discussed below.

Employee benefits expenses. Employee benefits expenses increased by 56.13% from 1,157.72 million in Fiscal 2023 to 1,807.56 million in Fiscal 2024, primarily due to increase in salaries wages and allowances from 721.37 million in Fiscal 2023 to 1,108.50 million in Fiscal 2024 on account of annual increments in salaries and increase in manpower. Our employee headcount increased from 570 as of March 31 2023 to 676 as of March 31, 2024.

Impairment on financial instruments. Impairment on financial instruments increased by 107.53% from 2,993.00 million in Fiscal 2023 to 6,211.51 million in Fiscal 2024. This increase was mainly attributable to an increase in expected credit loss against standard assets from 443.57 million in Fiscal 2023 to 2,603.50 million in Fiscal 2024 due to an increase in our AUM. Further, our financials assets written off increased from 2,585.52 million in Fiscal 2023 to 3,493.39 million in Fiscal 2024, in line with an increase in our AUM.

Finance costs. Finance cost increased by 22.79% from 559.02 million in Fiscal 2023 to 686.39 million in Fiscal 2024 primarily due to an increase in interest on borrowings. Our interest on borrowings (other than debt securities) increased from

255.09 million in Fiscal 2023 to 332.36 million in Fiscal 2024, and our interest on debt securities increased from 171.03 million in Fiscal 2023 to 202.40 million in Fiscal 2024. These increases were attributable to an increase in our total borrowings.

Depreciation and amortization. Depreciation and amortization increased by 28.12% from 178.56 million in Fiscal 2023 to 228.78 million in Fiscal 2024 due to an increase in depreciation on right of use assets. This is primarily attributable to the addition of new premises.

Other expenses. Other expenses increased by 10.38% from 4,887.22 million in Fiscal 2023 to 5,394.37 million in Fiscal

2024, primarily due to the following:

increase in outsourcing and back office expenses by 66.19% from 1,327.07 million in Fiscal 2023 to 2,205.42 million in Fiscal 2024 on account of an increase in the number of field and tele-calling staff to support the scaling of operations in line with the growth in our AUM; and

increase in branding and marketing expenses by 86.87% from 576.07 million in Fiscal 2023 to 1,076.49 million in

Fiscal 2024 on account of increased lead generation activities and enhanced promotion through digital marketing.

These increases were offset by a decrease in expected credit loss on off balance sheet exposure from 1,940.27 million in Fiscal

2023 to 740.49 million in Fiscal 2024, primarily driven by our data-driven credit assessment and risk management processes leading to improvement in our asset quality.

Profit before tax. For the various reasons discussed above, profit before tax increased by 1,016.51% from 239.53 million in Fiscal 2023 to 2,674.41 million in Fiscal 2024.

Tax expense. Current tax increased by 76.61% from 531.40 million in Fiscal 2023 to 938.52 million in Fiscal 2024 in line with our increase in profit before tax. Deferred tax increased from (469.29) million in Fiscal 2023 to (258.39) million in

Fiscal 2024.

Profit for the year. For the various reasons discussed above, profit for the year increased by 613.10% from 276.67 million in Fiscal 2023 to 1,972.90 million in Fiscal 2024.

The following table sets forth the principal components of our assets as of the dates indicated:

As of March 31, 2025, we had total assets of 27,011.04 million compared to 17,965.25 million as of March 31, 2024 and 12,752.00 million as of March 31, 2023. The increase in our total assets was primarily on account of growth in our AUM and in line with the increase in our overall business operations.

Non financial assets

Our deferred tax assets (net) were 1,127.30 million as of March 31, 2025, 1,283.35 million as of March 31, 2024 and 1,024.53 million as of March 31, 2023. The variations in deferred tax assets (net) were largely due to movements in deferred tax assets created on expected credit loss on financial assets of 825.84 million as of March 31, 2025, 1,112.88 million as of March 31, 2024 and 805.29 million as of March 31, 2023.

Our right of use assets was 454.23 million as of March 31, 2025, 482.97 million as of March 31, 2024 and 526.44 million as of March 31, 2023. This decrease was primarily due to completion and termination of premises during these years.

Financial assets

Our loans were 2,808.02 million as of March 31, 2025, 870.78 million as of March 31, 2024 and 10.72 million as of March 31, 2023. This increase in loans was primarily due to an increase in unsecured loans from 16.41 million to 1,219.76 million from March 31, 2023 to March 31, 2024, and further to 2,465.24 million as of March 31, 2025. We introduced secured loans in Fiscal 2024. Our loans secured by tangible assets increased from 6.86 million to 755.14 million from March 31, 2024 to March 31, 2025.

Further, our other financial assets were 884.82 million as of March 31, 2025, 730.62 million as of March 31, 2024 and 318.75 million as of March 31, 2023. This increase in other financial assets was primarily due to an increase in bank deposits with original maturity of more than 12 months of 798.75 million as of March 31, 2025, 652.21 million as of March 31, 2024 and 256.82 million as of March 31, 2023.

Financial assets

Our trade receivables were 700.77 million as of March 31, 2025, 1,624.36 million as of March 31, 2024 and 657.79 million as of March 31, 2023. These variations in trade receivables were largely attributable to one customer, with an outstanding balance as of March 31, 2024, which was subsequently cleared in the following month.

Our cash and cash equivalents were 1,327.23 million as of March 31, 2025, 2,850.37 million as of March 31, 2024 and 5,699.68 million as of March 31, 2023. This decrease in cash and cash equivalents was primarily due to a decrease in balance with banks in bank deposits (with original maturity of less than 3 months) from 3,521.63 million to 590.00 million from March 31, 2023 to March 31, 2024, and further to 350.08 million as of March 31, 2025. Further, our balance with banks in current accounts was 977.15 million as of March 31, 2025, 2,260.29 million as of March 31, 2024 and 2,177.97 million as of March 31, 2023. These variations were attributable to the funds being utilized towards business operations.

Our loans were 18,769.42 million as of March 31, 2025, 9,601.75 million as of March 31, 2024 and 2,933.45 million as of March 31, 2023. This increase in loans was primarily due to an increase in unsecured loans from 4,489.26 million to 13,525.53 million from March 31, 2023 to March 31, 2024, and further to 21,525.20 million as of March 31, 2025.

Further, our other financial assets were 581.78 million as of March 31, 2025, 63.61 million as of March 31, 2024 and 498.95 million as of March 31, 2023. This variation in other financial assets was primarily attributable to our other receivables (comprising balances receivable from gateway partners and others) of 137.28 million as of March 31, 2025, 59.49 million as of March 31, 2024 and 495.91 million as of March 31, 2023. Further, our bank deposit with original maturity of more than 12 months increased from nil as of March 31, 2023 and March 31, 2024 to 433.30 million as of March 31, 2025.

Our other current assets were 116.26 million as of March 31, 2025, 35.11 million as of March 31, 2024 and 32.38 million as of March 31, 2023. This increase in other non financial assets was primarily due to an increase in prepaid expenses (comprising advance payments for marketing) of 101.40 million as of March 31, 2025, 31.31 million as of March 31, 2024 and 23.60 million as of March 31, 2023.

The following table sets forth the principal components of our equity and liabilities as of the dates indicated:

As of March 31, 2025, we had total equity and liabilities of 27,011.04 million compared to 17,965.25 million as of March 31, 2024 and 12,752.00 million as of March 31, 2023. The increase in our total equity and liabilities was primarily on account of debt securities, borrowings (other than debt securities) and other equity primarily comprising retention of earnings during these years.

Our total equity was 10,059.94 million, representing 37.24% of our total assets, as of March 31, 2025, 8,045.69 million, representing 44.78% of our total assets, as of March 31, 2024, 5,662.34 million, representing 44.40% of our total assets, as of March 31, 2023. The increase is primarily due to retention of earnings for the years.

Financial liabilities

Our debt securities were 2,016.63 million as of March 31, 2025, 1,188.99 million as of March 31, 2024 and nil as of March

31, 2023. These increases were attributable to the issue of non-convertible debentures.

Our borrowings (other than debt securities) were 676.46 million as of March 31, 2025, 498.81 million as of March 31, 2024 and 198.40 million as of March 31, 2023. These increases were primarily driven by higher securitization liabilities, resulting from an increase in PTC transactions. Our term loans from banks were 108.38 million as of March 31, 2025, 216.34 million as of March 31, 2024 and 47.77 million as of March 31, 2023. Further, our term loans from financial institutions were 54.97 million as of March 31, 2025, 266.26 million as of March 31, 2024 and 150.63 million as of March 31, 2023.

Our lease liabilities were 325.91 million as of March 31, 2025, 362.22 million as of March 31, 2024 and 415.55 million as of March 31, 2023. The variations in lease liabilities were attributable to completion and termination of premises.

Financial liabilities

Our debt securities were 3,117.52 million as of March 31, 2025, 2,069.12 million as of March 31, 2024 and 576.14 million as of March 31, 2023. These increases were attributable to the issue of non-convertible debentures.

Our borrowings (other than debt securities) were 9,265.20 million as of March 31, 2025, 4,086.04 million as of March 31, 2024 and 3,104.32 million as of March 31, 2023. These increases were primarily attributable to an increase in term loans from financial institutions, term loans from banks and securitization liabilities. Our term loans from financial institutions were

4,941.59 million as of March 31, 2025, 3,028.91 million as of March 31, 2024 and 2,370.26 million as of March 31, 2023. Further, our term loans from banks were 1,443.87 million as of March 31, 2025, 861.66 million as of March 31, 2024 and 734.06 as of March 31, 2023. Our securitisation liabilities increased from nil as of March 31, 2023 to 44.13 million as of March 31, 2024, and further to 2,489.32 million as of March 31, 2025. These increases were primarily driven by higher securitization liabilities, resulting from an increase in PTC transactions.

Our other financial liabilities were 497.86 million as of March 31, 2025, 717.83 million as of March 31, 2024 and 2,140.45 million as of March 31, 2023. The decrease in other financial liabilities was primarily due to a decrease in provision on off balance sheet exposure from 1,638.14 million as of March 31, 2023 to 304.17 million as of March 31, 2025. Further, other payables decreased from 502.31 million as of March 31, 2023 to 163.75 million as of March 31, 2025.

Our liquidity requirements consist primarily of credit facilities, statutory payments, payments to employees and other operating expenses. Our capital expenditure needs have historically been minimal as we do not have substantial fixed assets relative to our total assets. The purpose of the liquidity management function is to ensure that we have funds available to fund our credit business, to fund our working capital requirements and to ensure that we comply with RBIs Liquidity Coverage Ratio ("LCR") requirements. We have funded the growth in our operations and loan portfolio through debt securities and borrowings (other than debt securities). As of March 31, 2025, we had cash and cash equivalents amounting to 1,327.23 million. We typically invest our surplus funds in bank deposits (typically ranging between three months to 12 months). Based on our current level of expenditures, we believe our current working capital, together with cash flows from operating activities and the proceeds from the Issue contemplated herein, will be adequate to meet our anticipated cash requirements for capital expenditures, servicing liabilities and working capital requirements for at least the next 12 months.

The following table sets forth our cash flows for the years indicated:

Fiscal 2025

Net cash outflow from operating activities was (6,614.26) million in Fiscal 2025. Our profit before tax was 2,162.64 million in Fiscal 2025, which was primarily adjusted for interest income of (9,943.06) million, impairment of financial instruments of (1,111.48) million, financials assets written off amounting to 4,379.82 million and finance cost of 1,644.02 million. Our operating profit before working capital changes was (2,354.82) million and interest income received was 10,320.87 million in Fiscal 2025. Working capital adjustments primarily comprised increase in loans and advances of 14,751.06 million and decrease in trade receivables of 915.42 million. Cash generated from operations amounted to 16,490.95 million and income taxes paid (net of refunds) was 444.18 million in Fiscal 2025.

Fiscal 2024

Net cash outflow from operating activities was (6,374.34) million in Fiscal 2024. Our profit before tax was 2,674.41 million in Fiscal 2024, which was primarily adjusted for interest income of (12,110.14) million, provision on off balance sheet exposure of (1,342.96) million, financials assets written off amounting to 3,493.39 million and impairment of financial instruments of 2,718.12 million. Our operating profit before working capital changes was (3,427.75) million and interest income received was 11,786.25 million in Fiscal 2024. Working capital adjustments primarily comprised increase in loans and advances of (13,415.98) million and increase in trade receivables of (986.62) million. Cash generated from operations amounted to (17,268.42) million and income taxes paid (net of refunds) was (892.17) million in Fiscal 2024.

Fiscal 2023

Net cash inflow from operating activities was 1,114.78 million in Fiscal 2023. Our profit before tax was 239.53 million in

Fiscal 2023, which was primarily adjusted for financials assets written off amounting to 2,585.52 million, provision on off balance sheet exposure of 1,485.27 million and interest income of (6,749.03) million. Our operating profit before working capital changes was (927.53) million and interest income received was 6,366.12 million in Fiscal 2023. Working capital adjustments primarily comprised increase in loans and advances of (3,627.62) million. Cash generated from operations amounted to (4,802.14) million and income taxes paid (net of refunds) was (449.20) million in Fiscal 2023.

Fiscal 2025

Net cash outflow from investing activities was (332.28) million in Fiscal 2025 primarily on account of an increase in bank deposits with original maturity of more than 12 months of (579.83) million offset by decrease of bank deposit with original maturity of more than 3 months but less than 12 months of 213.73 million.

Fiscal 2024

Net cash inflow from investing activities was 404.22 million in Fiscal 2024 primarily on account of an increase of bank deposit with original maturity of more than 3 months but less than 12 months of 581.67 million and interest income on bank deposits of 248.36 million offset by a decrease of bank deposits with original maturity of more than 12 months of (395.39) million.

Fiscal 2023

Net cash outflow from investing activities was (724.53) million in Fiscal 2023 primarily on account of bank deposit with original maturity of more than 3 months but less than 12 months of (706.18) million and marginally offset by interest income on bank deposits of 151.33 million.

Fiscal 2025

Net cash inflow from financing activities was 5,423.40 million in Fiscal 2025 primarily on account of proceeds from borrowings (other than debt securities) (net) of 5,376.07 million and proceeds from debt securities (net) of 1,980.46 million, offset by finance cost of (1,710.35) million.

Fiscal 2024

Net cash inflow from financing activities was 3,120.81 million in Fiscal 2024 primarily on account of proceeds from borrowings (other than debt securities) (net) of 1,270.63 million and proceeds from debt securities (net) of 2,693.95 million, offset by finance cost of (629.54) million and payment of lease liability of (200.37) million.

Fiscal 2023

Net cash inflow from financing activities was 4,435.90 million in Fiscal 2023 primarily on account of proceeds from borrowings (other than debt securities) (net) of 3,092.08 million and proceeds from issue of equity and preference shares (including securities premium) of 2,559.06 million, offset by proceeds from debt securities (net) of (583.90) million and finance cost of (525.37) million.

As of March 31, 2025, we had a total borrowings of 15,075.81 million, which consisted of term loans from banks, working capital demand loans, overdraft facilities with banks, term loan from financial institutions, securitisation liabilities and debt securities. The following table sets out certain information relating to our outstanding borrowings as of March 31, 2025:

For further details related to our indebtedness, please see "Financial Indebtedness" beginning on page 305. For details on our repayment obligations, see "- Quantitative and Qualitative Disclosures about Market Risk Credit risk" on page 332.

The following sets forth the principal components of our contingent liabilities and commitments as of March 31, 2025:

For further information, see "Restated Consolidated Financial Information Note 35 Contingent Liabilities & Commitments" on page 285.

Return on Equity, Return on Assets, Debt to Equity Ratio and other non-GAAP measures, (together, "Non-GAAP Measures"), presented in this Draft Red Herring Prospectus is a supplemental measure of our performance and liquidity that is not required by, or presented in accordance with, Ind AS, Indian GAAP, IFRS or U.S. GAAP. Further, these Non-GAAP Measures are not a measurement of our financial performance or liquidity under Ind AS, Indian GAAP, IFRS or U.S. GAAP and should not be considered in isolation or construed as an alternative to cash flows, profit/(loss) for the years or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities derived in accordance with Ind AS, Indian GAAP, IFRS or U.S. GAAP. In addition, such Non-GAAP Measures are not standardized terms, hence a direct comparison of these Non-GAAP Measures between companies may not be possible. Other companies may calculate these Non-GAAP Measures differently from us, limiting its usefulness as a comparative measure. Although such Non-GAAP Measures are not a measure of performance calculated in accordance with applicable accounting standards, our Companys management believes that they are useful to an investor in evaluating us as they are widely used measures to evaluate a companys operating performance.

Reconciliation for the following non-GAAP financial measures included in this Draft Red Herring Prospectus are set out below for the years indicated:

Capital Expenditures

Our capital expenditures include expenditures on tangible assets and intangible assets. Tangible assets primarily include computer equipment, office equipment, leasehold improvements and furniture and fixtures. intangible assets comprise computer software and internally generated computer software. The following table sets out additions to the property, plant and equipment and intangible assets for the years indicated:

We expect to meet our funds, capital expenditures and investment requirements for the next 12 months primarily from revenues from operating and financing activities.

Our actual capital expenditures may differ from the amount set out above due to various factors, including our future cash flows, changes in growth strategy, additional investment in technology, operating performance, financial conditions, changes in the local economy in India, changes in the legislative and regulatory environment and other factors that are beyond our control.

The RBI monitors capital to risk-weighted assets ratios based on financial information. The following table sets forth our CRAR as of the dates indicated:

Note: Capital to risk weighted assets ratio or CRAR is computed by dividing our tier I and tier II capital by risk weighted assets (computed in accordance with the relevant RBI guidelines) as on the last day of the relevant period by the Subsidiary).

The following table sets forth our Subsidiarys credit rating as of the date of this Draft Red Herring Prospectus:

We do not have any off-balance sheet arrangements that we believe have or are reasonably likely to have a current or future material effect on our financial condition, change in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

We have engaged in the past, and may engage in the future, in transactions with related parties. For further information relating to our related party transactions, see "Related Party Transactions" on page 303.

There have been no reservations/qualifications/adverse remarks/emphasis of matters highlighted by our Statutory Auditors in their audit reports on the audited financial statements as of and for the years ended March 31, 2025, 2024 and 2023.

Our Board of Directors has the overall responsibility for the establishment and oversight of our risk management framework. Set out below are details of certain major risks that we are exposed to:

Credit risk arises from loans and advances, cash and cash equivalents, deposits and other financial assets carried at amortized cost. This risk is the risk of financial loss to us if a customer or counterparty to a financial instrument fails to meet its contractual obligations.

We follow a simplified expected credit loss ("ECL") approach under Ind AS 109 Financial Instruments for trade receivables and other financial assets. Set out below are details of our expected credit losses for financial assets other than loans as of March 31, 2025:

Liquidity risk is the risk that we will encounter difficulty in meeting the obligations associated with our financial liabilities that are settled by delivering cash or another financial asset. Our approach to managing liquidity is to ensure, as far as possible, that we will have sufficient liquidity to meet our liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to our reputation. Due to the dynamic nature of the underlying businesses, our Groups treasury maintains flexibility in funding by maintaining availability under committed credit lines. Set out below are details of our undrawn borrowing facilities as of the dates indicated:

Further, set out below are our remaining contractual maturities (gross and undiscounted) of financial liabilities as of March 31, 2025:

We provide loans to customers on a fixed rate and hence there is no interest rate risk on loan exposure. However, certain of our borrowings are obtained at floating rate and hence exposed to interest rate risk. Set out below are details of the interest rate profile of our interest-bearing financial instruments as of the dates indicated:

For further information, see "Restated Consolidated Financial Information Note 40 Financial Risk Management" on page

289.

Except as disclosed in this Draft Red Herring Prospectus, there have been no other events or transactions that, to our knowledge, may be described as "unusual" or "infrequent" that led to a material adverse effect on our business and operations.

Our business has been subject, and we expect it to continue to be subject, to significant economic changes. To our knowledge, except as discussed in this Draft Red Herring Prospectus, there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on income from our continuing operations. For further information regarding trends and uncertainties, please see "- Significant Factors Affecting our Financial Condition and Results of Operations" on page 309 and "Risk Factors" on page 29.

Our business is not seasonal in nature.

Given the nature of our business operations, our business is not dependent on any single or a few customers or suppliers.

We operate in a single business segment and there are no other separate reportable segments. Hence, no disclosures related to segments is required to be given under Ind AS 108 "Segment Reporting".

Our business has been subject, and we expect it to continue to be subject, to significant economic changes that materially affect or are likely to affect income from continuing operations. See "Risk Factors" and "- Significant Factors Affecting our Financial Condition and Results of Operations" on pages 29 and 309, respectively.

Apart from the disclosures in "Our Business" on page 169, we currently have no plans to develop new products or establish new business segments that are expected to have a material impact on our business, results of operations or financial condition.

We operate in a competitive environment. For information on our competitive conditions and our competitors, see "Risk Factors" and "Our Business" on pages 29 and 169, respectively.

Except as disclosed below and as set out elsewhere in this Draft Red Herring Prospectus, in our opinion, no circumstances have arisen since March 31, 2025, which have materially or adversely affected or are likely to affect our operations or profitability, or the value of our assets or our ability to pay our material liabilities within the next 12 months.

Pursuant to resolutions passed by our Board at its meeting dated July 8, 2025, and our Shareholders at an extra-ordinary general meeting dated July 8, 2025, each equity share of our Company of face value of 10 each was split into 10 shares of face value of 1 each. Accordingly, the issued, subscribed and paid-up equity share capital of our Company being 5,363,087 equity shares of 10 each was sub-divided into 53,630,870 equity shares of 1 each.

Allotment of 10,000 fully paid-up Equity Shares for cash at par value in accordance with the terms of Kissht Employee Stock Option Plan, 2019 on July 21, 2025.