SBFC Finance Ltd Directors Report

To the members of SBFC Finance Limited

(Erstwhile SBFC Finance Private Limited)

Your Directors have the pleasure of presenting the Seventeenth Annual Report on the business and operations of your Company together with the audited standalone and consolidated financial statements for the Financial Year (FY) ended March 31, 2024.

Financial Performance

The highlights of the standalone financial results are given below:

Particulars	FY24	FY23
Total Income	10,198.20	7,403.61
Total Expenditure	7,037.59	5,389.15
Profit before Tax	3,160.61	2,014.46
Tax Expense	790.40	516.5
Profit after Tax	2,370.21	1,497.96
Amount brought forward from the previous year	2,909.64	1,711.27
Amount available for appropriation	2,370.21	1,497.96
Appropriations:
Transfer to Reserve Fund u/s 45IC of the RBI Act, 1934	474.04	299.59
Balance carried forward to Balance Sheet	4,805.81	2,909.64

Your Company posted total income and net profit of Rs. 10,198.20 million and

Rs. 2,370.21 million, respectively, for the FY ended March 31, 2024, as against

Rs. 7,403.61 million and Rs. 1,497.96 million, respectively, for the previous financial year ended March 31, 2023. The Company transferred an amount of Rs. 474.04 million to the Reserve Fund under section 45-IC of the RBI Act, 1934.

Material Developments:

Your Company had raised Rs. 1,500 million in the month of May, 2023 by the issue of 27,272,727 equity shares on a private placement basis. During FY 2024, your Company successfully completed an Initial Public Offer ("IPO" or "Issue") comprising a fresh issue of 105,301,883 Equity Shares aggregating to Rs. 6,000 million and an offer for sale of 74,561,402 Equity Shares aggregating to Rs. 4,250.00 million and pursuant to the IPO, the shares of the Company were listed on The National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) on August 16, 2023. The Company has utilised Rs. 5,520.30 million out of the amount to be utilised as per the Prospectus of Rs. 5,590.80 million as on March 31, 2024.

Your Directors wish to place on record gratitude for the trust, faith and confidence reposed by the institutional investors, public, and other shareholders in the Company.

Dividend:

The Directors do not recommend payment of any dividend on the Equity Shares for the financial year ended March 31, 2024, to conserve capital for future business expansion.

Share Capital:

During the year, the Company allotted equity shares as per details given in Annexure – 1 hereto.

Post allotment of Equity Shares as aforesaid, the issued and subscribed share capital of your Company stands increased to 1,073,754,986 equity shares of the face value of Rs. 10/- each as of March 31, 2024.

Equity:

Your Company had a total equity of Rs. 27,782.55 million and Goodwill of Rs. 2,603.92 million as on March 31, 2024. Net of Goodwill, your Company had a Tangible Equity of

Rs. 25,178.63 million.

Funding Capacity:

Your Company had total borrowings (including NCDs) of Rs. 37,351.06 million as on March 31, 2024. Your Company also had collateralised borrowings (secured against a pool of loan assets) of Rs. 2,604.06 million as on March 31, 2024.

Your Company follows a prudent borrowing policy and has a CRAR of 40.52%, including a Tier I CRAR of 40.52% and Tier II CRAR of NIL as of March 31, 2024.

Employee Stock Options:

Your Company has formulated the following Employees Stock Option Schemes:

• SBFC Stock Option Policy I 2018

• SBFC Stock Option Policy II 2018

• SBFC Stock Option Policy 2021 –I

• SBFC Stock Option Policy 2021 –II

• SBFC Stock Option Policy 2021 –III -Special Grant

• SBFC Stock Option Policy 2021 –IV

• SBFC Stock Option Policy 2021 –V

• SBFC Stock Option Policy 2023 –I

• SBFC Stock Option Policy 2023 –II

• SBFC Stock Option Policy 2023 –III

In terms of Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, (SBEB) the disclosures with respect to the ESOP Schemes have been provided on the website of the Company at http://www.sbfc.com.

The certificate from secretarial auditor M/s Parikh & Associates, Company Secretaries confirming implementation of the ESOP Schemes in accordance with the SBEB and shareholders resolutions will be available for inspection of the shareholders at the ensuing Annual General Meeting (AGM).

Details of options granted under the Employees Stock Option Scheme as per Rule 12(9) of Companies (Share Capital and Debentures) Rules, 2014, as on March 31, 2024, are attached in Annexure - 4 of this Report.

Directors and Key Managerial Personnel:

The Company has an optimum combination of executive, non-executive and independent directors, including an independent woman director. As on March 31, 2024, the Board is comprised of 8 (eight) directors, with 7 (seven) non-executive directors, of which 5 (five) are Independent Directors, including the Chairman and a woman director.

The Board approved the appointment of Mr. Ravi Venkatraman (DIN: 00307328) as an Independent Director (Additional) of the Company for a term of five (5) years with effect from February 21, 2024, through a resolution passed on February 21, 2024 subject to the approval of the shareholders of the Company.

The Board approved the appointment of Mr. Koni Uttam Nayak (DIN: 02543830) as an Independent Director (Additional) of the Company for a term of five (5) years with effect from March 26, 2024, through a resolution passed at its meeting held on March 26, 2024 subject to the approval of the shareholders of the Company.

In accordance with the applicable provisions of Section 152 of the Act, Mr. Jonathan Tatur (DIN: 08639243), Nominee Director and Mr. Aseem Dhru (DIN: 01761455), Managing Director & CEO of the Company, retires by rotation at the forthcoming annual general meeting of the Company. Being eligible, Mr. Jonathan Tatur and Mr. Aseem Dhru have offered themselves for re-appointment as Directors. Brief particulars of Mr. Jonathan Tatur and Mr. Aseem Dhru as required under the Secretarial Standard on General Meetings issued by ICSI have been provided in the notice of the 17^th AGM of the Company. None of the Directors of the Company are disqualified and/or debarred as per the applicable provisions of the Act and the Securities and Exchange Board of India (SEBI).

Pursuant to the provisions of Section 203 of the Companies Act, 2013 read with the rules made there under, the following employees are the wholetime key managerial personnel of the Company as on March 31, 2024:

a. Mr. Aseem Dhru, Managing Director & CEO

(DIN: 01761455)

b. Mr. Narayan Barasia, Chief Financial Officer

c. Mr. Jay Mistry, Company Secretary & Chief Compliance Officer

Resignation of Directors:

Mr. Amol Jain (DIN: 00334710), Director, ceased to be a Director of the Company consequent upon his resignation on February 21, 2024.

Mr. Arjun Sakhuja (DIN: 08669224), Nominee Director, ceased to be a Director of the Company consequent upon his resignation on March 29, 2024.

The Board has placed on record its deep appreciation for the valuable contribution made by Mr. Amol Jain and Mr. Arjun Sakhuja and the services rendered by them during their tenure as Directors of the Company.

Information on the state of affairs of the Company:

Management Discussion and Analysis Report (including key financial ratios) for the year under review, as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the "SEBI LODR"), is presented in a separate section, forming part of the Annual Report.

Review of Operations of the Company:

The total Assets under Finance increased from Rs. 44,526.92 Million as on March 31, 2023, to Rs. 59,139.11 Million on March 31, 2024.

Related Party Transactions:

All the related party transaction(s) that were entered into during the financial year were on arms length basis and in ordinary course of business. Pursuant to the provisions of Section 134(3)(h) read with Rule 8(2) of the Companies

(Accounts) Rules, 2014, particulars of the contracts or arrangements with related parties referred to in section 188(1) in Form AOC-2 is annexed as Annexure -5.

Credit Rating:

The brief details of the ratings received from the credit rating agencies by the Company for its outstanding instruments are given in Annexure -3.

RBI Guidelines:

The Company continues to comply with all the requirements prescribed by the Reserve Bank of India from time to time.

Statutory Auditors:

At the 15^th Annual General Meeting of shareholders held on June 27, 2022, the shareholders approved the appointment of M/s Suresh Surana & Associates LLP, Chartered Accountants, Mumbai (Firm Registration No. 121750W/W-100010) as Statutory Auditor of the Company for the FY 2023 and FY 2024 based on the recommendation of the Board and the Audit Committee.

The Audit Report by Statutory Auditor for the FY 2024 does not contain any qualification, reservation and adverse remark.

Pursuant to the provisions of Sections 139, 141, 142 and other applicable provisions, if any, of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, and in accordance with the Guidelines for Appointment of Statutory Auditors issued by the Reserve Bank of India vide Circular Ref. No. DoS.CO.ARG/SEC.01/08.91.001/2021-22 dated April 27, 2021, the Board of Directors of the Company at their meeting held on April 27, 2024, on the recommendation of the Audit Committee, have made its recommendation to appoint M/s. M M Nissim & Co LLP, Chartered Accountants, Mumbai (Firm Registration No. 107122W/W100672) as Statutory Auditors of the Company for a period of three years from the conclusion of the ensuing 17^th AGM till the conclusion of the 20^th AGM of the Company.

M/s. M M Nissim & Co LLP, Chartered Accountants, Mumbai (Firm Registration No. 107122W/W100672) have consented to their appointment as Statutory Auditors and have confirmed that if appointed, their appointment will be in accordance with Section 139 read with Section 141 of the Act.

Accordingly, a resolution proposing the appointment of M/s. M M Nissim & Co LLP, Chartered Accountants, as the Statutory Auditors of the Company for a term of three consecutive years, i.e. from the conclusion of the ensuing 17^th AGM till the conclusion of the 20^th AGM of the Company, forms part of the Notice of the 17^th Annual General Meeting of the Company.

Number of meetings of the Board:

During the financial year ended March 31, 2024, the Board met 13 (thirteen) times. The details of the Board and various committee meetings are given in the Corporate Governance Report annexed as Annexure - 8.

Committee(s) of Board:

Pursuant to various requirements under the Act and the SEBI LODR, and the requirements under applicable RBI Regulations, the Board of Directors has constituted/ reconstituted (whenever necessitated) various committees such as Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee, Risk Management Committee, IT Strategy Committee. The details of composition, terms of reference, number of meetings held during the year, attendance there at and other details pertaining to these committees are mentioned in the Corporate Governance Report.

All recommendations made by the Audit Committee during the year were accepted by the Board of Directors of the Company.

The Audit Committee comprised of the Directors, namely, Mr. Ravi Venkatraman (Chairperson), Ms. Surekha Marandi, Mr. Neeraj Swaroop and Mr. John Mescall.

Corporate Governance:

The Company is committed to maintaining the highest governance standards and has also implemented several best governance practices. Pursuant to Regulation 34(3) read together with Schedule V of the SEBI LODR, the Company has prepared Corporate Governance Report which forms part of this Report, marked as Annexure - 8. As per Para C and E of Schedule V of the SEBI LODR, the Company has obtained two certificates from M/s Parikh & Associates, Company Secretaries (a) Certificate on Non-Disqualification of Directors; and (b) Certificate on the compliance of the conditions of the Corporate Governance. These certificates form part of this Report, marked as Annexure 10 and 8 respectively. The Company has in place an Insider Trading Code for compliance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015.

The Company Secretary is the Compliance Officer and is responsible for compliance with policies and procedures, maintenance of records and monitoring adherence to the Regulations. Regular trainings are conducted for designated persons and other employees of the Company to sensitise them about the compliance requirements of the Regulations.

The Managing Director and the Chief Financial Officer have given their certificate as required under Regulation 17(8) read with Part B of Schedule II of the SEBI LODR regarding the annual Financial Statements of the Company for the year ended on March, 31 2024, which forms part of this Report, marked as Annexure - 11.

Business Responsibility and Sustainability Report:

Pursuant to the SEBI LODR, the Business Responsibility

& Sustainability Report (BRSR) describes the initiatives taken by the Company from an environmental, social and governance perspective, which forms part of this Report, marked as Annexure - 13.

Particulars of Employees and Related Disclosures:

Details required under the provisions of section 197(12) of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, containing, among other things, the ratio of remuneration of Director to the median remuneration of employees, the percentage increase in the median remuneration, are annexed to this Report. This disclosure forms part of this Report, and is marked as Annexure - 7.

Details of top ten employees in terms of the remuneration and employees in receipt of remuneration as prescribed under rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, containing details prescribed under rule 5(3) of the said rules, which form part of the Directors Report, will be made available to any member on request, as per provisions of section 136(1) of the Act. Any shareholder interested in obtaining such information may write to the Company Secretary at complianceofficer@ sbfc.com

Compliance with the Code of Conduct:

All Directors, Key Managerial Personnel and senior management of the Company have confirmed compliance with the Code of Conduct applicable to the Directors and employees of the Company. The Managing Director & CEO has given the certificate as required under Regulation 34(3) read with Part D of Schedule V of the SEBI LODR regarding compliance with the Code of Conduct of the Company for the year ended on March 31, 2024, which forms part of this Report, marked as Annexure - 12.

The Code of Conduct is available on the Companys website at weblink - www. https://www.sbfc.com/faq

Declaration by Independent Directors of the Company:

The Company has received declarations under section 149(7) of the Companies Act, 2013 from Mr. Neeraj Swaroo Mr. Ravi Venkatraman and Mr. Koni Uttam Nayak, Independent Directors and a confirmation that there has been no change in the circumstances which may affect their status as independent Director during the year. In the opinion of the Board, the independent directors possess appropriate balance of skills, experience and knowledge, as required.

Secretarial Auditors:

The Secretarial Audit Report as received from M/s. Parikh & Associates in the prescribed Form No. MR - 3 is annexed to this Boards Report and marked as Annexure - 9. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.

Directors Responsibility Statement:

Pursuant to Section 134 of the Companies Act, 2013 (‘the Act), the Directors of the Company do hereby confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards were followed, and that there are no material departures thereof; b. such accounting policies had been selected and applied 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 FY and of the profits of the Company for the FY 2024; c. proper and sufficient care had been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d. the annual accounts had been prepared on a going concern basis; e. internal financial controls to be followed by the Company was laid down, and such internal financial controls are adequate and were operating effectively, and f. proper systems had been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Particulars of Loans, Guarantees or Investments:

Pursuant to section 186(11) of the Act, the provisions related to Loans made, guarantees given, and securities provided do not apply to the Company.

Vigil Mechanism:

The Company has established a Vigil Mechanism for its Directors and employees to report their concerns or grievances. The said mechanism, among other things, encompasses the Whistle Blower Policy, which provides adequate safeguards against the victimisation of persons who use it.

Information regarding the mechanism and channel for reporting concerns (including a third-party reporting channel) is communicated to the relevant stakeholders. The Whistle Blower Policy is available on the Companys website, www. sbfc.com.

During the year, the Company has received 1 (one) complaint under Vigil Mechanism, which has been investigated and concluded.

Prevention of Sexual Harassment of Women at Workplace:

The Company has complied with provisions relating to the constitution of the internal complaints committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has a policy on Prevention of Sexual Harassment of Woman at Workplace. No cases were reported during the FY under review.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings & Outgo:

The information pursuant to Section 134(3)(m) of the Act read with Companies Accounts Rules, 2014 is as follows:

a. The Company has no activity involving the Conservation of Energy or Technological or Technology Absorption;

b. The Companys Foreign Exchange Earning was Nil during the year under review. The Companys Foreign Exchange Outgo was Rs. 23.77 million during the FY under Report.

Risk Management:

The Company is exposed to different types of risks, including interest rate risk, business risk, liquidity risk, operational risk, credit risk, credit concentration risk, reputation risk, technology risk, and compliance risk.

The Company has formed a Risk Management Committee and has developed and implemented a Risk Management Policy covering the risk mapping, trend analysis, risk exposure, potential impact and risk mitigation process. A detailed exercise is being carried out to identify, evaluate, manage and monitor both business and non-business risk.

Extract of Annual Return:

In accordance with the requirements under Section 92(3) and Section 134(3)(a) of the Act and the applicable rules, the annual return as on March 31, 2024 is available on the website of the Company www.sbfc.com

Details of subsidiary/ joint ventures/ associate companies:

The Company has a wholly-owned subsidiary - SBFC Home Finance Private Limited. During the year, the Company has made an investment of Rs. 210,000,000 (Rupees Two Hundred and Ten Million Only) in SBFC Home Finance Private Limited on a rights issue basis.

In terms of the provisions of Section 129(3) of the Companies Act, 2013, the Consolidated Financial Statements of the Company and its subsidiary, SBFC Home Finance Private Limited, are prepared and form part of this Directors Report.

A statement containing salient features of the financial statement of subsidiaries or associate companies or joint ventures is provided in AOC – 1, which is attached hereto as Annexure - 6.

Corporate Social Responsibility (CSR):

The CSR report for FY 2024 is annexed to this Report as Annexure - 2.

Deposits:

No disclosure is required in respect of the details relating to the deposits covered under Chapter V of the Act, as the Company has not accepted any deposit.

Status of the Company:

During the FY, there was no significant or material order passed by any regulator, court, or tribunal that would impact the status of the Company as a going concern and the operations in the future.

Internal Financial Controls:

Your Company has in place, adequate and effective internal financial controls with reference to financial statements, commensurate with the size, scale and complexity of its operations. During the FY, such controls were tested and no reportable material weaknesses in the design or operation were observed.

Human Resources Management & Health, Safety and Environment:

At our Company, we prioritise the personal growth and job satisfaction of our employees, recognising them as crucial to our businesss success and expansion. We conduct various training and awareness programs to enhance professional skills, keeping our workforce informed about our core values, behaviors and company policies. Open communication channels, coupled with regular updates across all departments, facilitate the exchange of information and enhance approachability and add to the transparent work culture. We adhere strictly to health, safety, and environmental standards, ensuring a responsible approach to our operations. Through our initiatives, we aim to cultivate fresh talent and nurture a pool of skilled manpower. All employees are well-versed with our Insider Trading Code.

Statutory Disclosure:

Your Company is a systematically important non-deposit-taking Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India and is classified under Middle Layer pursuant to Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023.

The Company has complied with and continues to comply with all applicable regulations, directions and prudential norms of the Reserve Bank of India.

Your Company has complied with the applicable regulations under SEBI (Listing Obligations and Disclosure Requirements Regulations, 2015 (SEBI (LODR), 2015) and Foreign Exchange Management Act (FEMA), 1999, Rules and Regulations thereunder.

a. Pursuant to the provisions of the Act, no fraud was reported by auditors of the Company during FY24.

b. The provisions of section 148 of the Act, are not applicable to the Company. Accordingly, there is no requirement of maintenance of cost records as specified under section 148(1) of the Act.

c. No material changes and commitments occurred since the end of FY till the date of this Report, which may affect the financial position of the Company.

d. There was no change in the nature of business of the Company.

e. The Company has complied with the secretarial standards as applicable to the Company.

f. There is no application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year

g. The details of the difference between the amount of the valuation done at the time of one-time settlement and the valuation done while taking a loan from the Banks or Financial Institutions and the reasons thereof are not applicable.

Performance evaluation of the Board:

Pursuant to the provisions of the Act, the Board has carried out an annual performance evaluation of its own performance, that of its Committees, Chairperson and individual directors. The manner in which the Board carried out formal annual evaluation of performance is given below:

The Nomination and Remuneration Committee (NRC) has approved the criteria for performance evaluation, based on which the evaluation sheet were circulated to the Board members for seeking feedback of the directors with regards to the performance of the Board, its Committee, and individual directors.

The directors sent their feedback on the evaluation sheet to Company Secretary. The performance evaluation was then noted and discussed by the NRC at its meeting held on

March 26, 2024 and the Board at its meeting held on April 27, 2024.

In the opinion of the Board, the Independent Directors have the integrity, expertise and experience (including the pro_ciency) to function effectively.

Acknowledgement:

Your Directors would like to express their sincere appreciation for the co-operation and assistance received from shareholders, debenture holders, debenture trustee, bankers, financial institutions, regulatory bodies and other business constituents during the financial year under review. Your Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers and staff, resulting in the successful performance of the Company during the financial year.

For & on behalf of Board of Directors of SBFC Finance Limited
(Erstwhile SBFC Finance Private Limited)
Neeraj Swaroop	Aseem Dhru
Chairperson & Independent Director	Managing Director & CEO
DIN: 00061170	DIN: 01761455
Address: 1104, Signia Isles, G Block,	Address: B-12, 12th Floor,
Near Dhirubhai International School,	Ahuja Tower, Rajabhau Anant Desai Marg,
Bandra Kurla Complex, Bandra (East),	Prabhadevi, Mumbai – 400025
Mumbai – 400051
Place: Mumbai
Date : April 27, 2024