Sundaram Finance Ltd Directors Report

Your Directors have pleasure in presenting the 72^nd Annual Report together with audited accounts for the year ended 31^st March 2025. The summarised financial results of the Company are presented hereunder:

FINANCIAL RESULTS: STANDALONE

(Rs in crores)

Particulars	Year ended March 31, 2025	Year ended March 31, 2024
Revenue from Operations	6,520.44	5,479.94
Other Income	75.63	14.44
Total Revenue	6,596.07	5,494.38
Less: Total Expenses	4,534.39	3,797.71
Profit before exceptional items and tax	2,061.68	1,696.67
Add: Exceptional item	–	133.85
Profit before tax	2,061.68	1,830.52
Profit after Tax	1,542.65	1,454.01
Other Comprehensive Income	451.47	596.95
Total Comprehensive Income for the Year	1,994.12	2,050.96
Dividend
– Final 2022-23	–	166.66
– Interim 2023-24	–	155.55
– Final 2023-24	177.77	–
– Interim 2024-25	155.55	–

DIVIDEND

Your Company paid an interim dividend of Rs14/- per share in March 2025. Your Directors are pleased to recommend a final dividend of Rs21/- per share, which, together with the interim dividend, would aggregate to a total dividend of Rs35/- per share (350% on the face value of Rs10/-), representing a dividend pay-out of 25.21%.

The Dividend Distribution Policy, formulated in accordance with the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been disclosed on the website of the Company under the web link - https://www.sundaramfinance.in/assets/app_docs/investor-info/ corporate_governance/policies/sebi/sfl_policy_for_distribution_of_dividends.pdf

CORPORATE GOVERNANCE

Your Company has always focused on ensuring the highest standards for prudence, ethics and transparency in corporate governance over the decades. The Board of Directors serve as stewards of the performance and health of your Company. The Boards mandate is to oversee your Companys strategic direction, monitor the performance of your Company, its subsidiaries & joint venture, maintain highest ethical standards of governance, assess the adequacy of risk management measures, evaluate internal financial controls, authorise and monitor strategic investments, facilitate and review Board and senior management succession planning and oversee regulatory compliance and corporate social responsibility activities. Their collective experience has been brought to bear to guide the Company through various challenges, including the pandemic-related complications and their aftermath. The Directors deep industry knowledge, functional specialization and decades of experience has helped your Company handle complex issues related to macroeconomic uncertainty, regulatory changes, technological & digital developments, market volatility & risk management and information security & cyber security threats.

The Corporate Governance Report of the Company provides information about the corporate philosophy, details of the Directors and their other directorships, number of Board Meetings and Committee Meetings held during FY 2024-25, various other details which evidence the fact that the Company is customer-oriented, respectful in letter and spirit of all the regulatory provisions, mindful of high quality standards in all areas and, above all, follows a time-tested approach that balances growth with quality and profitability.

A detailed report on corporate governance, together with a certificate from the Secretarial Auditor, in compliance with the relevant provisions of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is attached as part of this report, vide Annexure I.

Compliance reports in respect of all laws applicable to the Company have been reviewed by the Board of Directors.

RELATED PARTY TRANSACTIONS

All transactions with related parties were in the ordinary course of business and on an arms length basis. The Company did not enter into any material transaction with such related parties, under Section 188 of the Companies Act, 2013, during the year. Form AOC-2, as required under Section 134 (3) (h) of the Act, read with Rule 8 (2) of the Companies (Accounts) Rules 2014, is attached as part of this report, vide Annexure II (i). The Companys Policy on Related Party Transactions is attached as part of this report, vide Annexure II (ii).

The Company did not have any transactions with any person or entity belonging to the promoter or promoter group and holding 10% or more shareholding in the Company.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company, along with its subsidiaries and associates, has always proactively invested in a responsible manner to the growing needs of the communities in which it operates and has responded swiftly to health-related complications, weather & catastrophic events and other unexpected challenges that have impacted these communities. During the year, your Company has, in consonance with the CSR Policy of the Company, undertaken a number of initiatives that contribute to society at large, in the areas of healthcare, education, environmental sustainability and ecological balance, and preservation of the countrys rich culture and heritage. The highlights of the CSR activities are:

1. Average Net Profit computation in accordance with Sec.135(5): Rs1,21,552.00 lakhs.

2. CSR Budget, Amount spent in CSR, amount un-spent if any and amount to be set off in the financial year, if any.

Particulars	Amount Rs
	( in lakhs)
Total CSR Obligation for FY 2024-25	2,431.04
Less: Set off from FY 2023-24	(7.83)
Net CSR Obligation for FY 2024-25	2,423.21
CSR spent during FY 2024-25	2,330.21
Administrative overheads (including expenses incurred towards Impact Assessment)	138.67
Amount spent in excess of the requirement	45.67

The Annual Report on CSR Activities undertaken by the Company for FY 2024-25, is attached as part of this report, vide Annexure III.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

A Business Responsibility and Sustainability Report (BRSR) as required under Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is enclosed as part of this report, vide Annexure IV Further, as required under the SEBI Circular on BRSR Core – Framework for Assurance and ESG Disclosures for Value Chain dated 12^th July 2023, the Company has undertaken a reasonable assurance of the BRSR Core during the year and the Independent Practitioners Reasonable Assurance Report issued by M/s Sundaram and Srinivasan, Chartered Accountants, Chennai, is enclosed as part of this report.

DISCLOSURE UNDER THE ‘PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICY

The Company has in place a Policy for prevention of sexual harassment, in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. One complaint was received and resolved during the financial year. No complaints were pending unresolved as on 31^st March 2025.

SECRETARIAL AUDIT

The Secretarial Audit Report and Secretarial Compliance Report for FY 2024-25, issued by M/s M Damodaran & Associates LLP, Practising Company Secretaries, Chennai, who has been appointed as the Secretarial Auditor of the Company as per Section 204 of the Companies Act, 2013 and rules made thereunder, are attached as part of this report vide Annexures V(i) and (ii) respectively.

Further, pursuant to the introduction of Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, read with Section 204 of the Companies Act, 2013 and rules made thereunder, the Board of Directors has, at its meeting held on 26^th May 2025, based on the recommendations of the Audit Committee, recommended the appointment of M/s M Damodaran & Associates LLP, Practising Company Secretaries, as the Secretarial Auditor of the Company, for a term of five (5) consecutive years w.e.f. 1^st April 2025, subject to the approval of the shareholders.

REMUNERATION TO DIRECTORS / KEY MANAGEMENT PERSONNEL

Disclosure pursuant to Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as part of this report, vide Annexure VI.

SUNDARAM FINANCE EMPLOYEE STOCK OPTION SCHEME (SFESOS)

Based on the recommendations of the Nomination, Compensation and Remuneration Committee, the Board has granted, subject to regulatory approvals where necessary, 10,922 Stock Options to select eligible employees, on 26^th May 2025. The disclosure required under SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 is furnished, vide Annexure VII.

EXTRACT OF ANNUAL RETURN

As required under Section 92 (3) of the Companies Act, 2013, read with Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, the link for the Extract of the Annual Return in E-form MGT-7 is https://www.sundaramfinance.in/assets/app_docs/downloads/annual-reports/2024-2025/eform_mgt_7_annual_return_2024_25.pdf?v=1.0

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

During the year under review, no significant and material orders were passed by the regulators, courts, or tribunals against the Company, impacting its going concern status or its future operations.

INFORMATION AS PER SECTION 134(3)(m) OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014

The initiatives taken by your Company towards conservation of energy have been provided in the Business Responsibility and Sustainability Report, which has been annexed to this Report. Further, your Companys initiatives towards technology absorption have been provided in the portion relating to Information Technology, forming part of this Report. During FY 2024-25, expenditure in foreign currencies amounted to

Rs0.09 cr. There were no earnings in foreign currency during the year.

INTERNAL OMBUDSMAN

Your Company has appointed Mr. S. Muralidharan, retired Chief General Manager (Operations) from State Bank of India, as the Internal Ombudsman of the Company, for a term of 3 years with effect from 22^nd April 2025, in the place of Mr. A.S. Narayan, who will be completing his 3 year term as Internal Ombudsman on 16^th June 2025.

MANAGEMENT DISCUSSION AND ANALYSIS

Global Economy

During the FY 2024-25, the global economy demonstrated modest growth amid ongoing geopolitical tensions, persistent inflationary pressures, and monetary policy adjustments. While advanced economies like the U.S. and the Eurozone experienced slower growth due to high interest rates and weakened consumer spending, emerging markets, particularly in Asia, maintained better economic momentum, driven by domestic demand and technology sector growth. Inflationary pressures eased in most economies through the course of the year.

The outlook has weakened further after January 2025, pursuant to the announcement of a series of new tariff measures by the Trump administration in the United States and counter measures by its trading partners. These trade tariff measures have heightened uncertainties surrounding the global economic outlook, creating additional challenges for growth and inflation across regions. Financial markets reacted with a sharp decline in the dollar index, equity sell-offs, and notable drops in bond yields and crude oil prices.

In response to the fluidity and complexity of the current environment, the World Economic Outlook (WEO) released in April 2025 by International Monetary Fund replaced its usual baseline forecast with a "reference forecast", which projects a sharp downgrade in global economic activity. World GDP growth is expected to fall to 2.8 per cent in CY 2025 and modestly improve to 3.0 per cent in CY 2026, which is expected to be considerably lower than the historical average of 3.7 per cent recorded between CY 2000 and CY 2019.

Global inflation is expected to moderate to a slower pace than previously anticipated. Headline inflation has been forecast at 4.3 per cent in CY 2025 and 3.6 per cent in CY 2026. While inflation expectations for advanced economies have been revised upward, projections for emerging and developing economies have been adjusted slightly downward.

The global economic outlook is fraught with downside risks. The continuation or escalation of geo-political tensions, combined with the elevated uncertainty around trade and economic policies, could suppress growth further and undermine investor confidence. Additional risks stem from the erosion of policy buffers, which limits the capacity of governments to respond effectively to future shocks. Despite these headwinds, there are potential upside opportunities. A de-escalation of tariffs and greater clarity on trade policies could restore investor confidence and lift global growth above the current projections. Structural reforms will play a pivotal role in reinvigorating growth and reducing cross-country disparities.

The global outlook for the upcoming financial year is cautiously optimistic. Interest rates in major economies are expected to decline modestly, improving credit conditions, subject to favourable inflation trends.

Indian Economy

Despite the global uncertainties, the Indian economy registered a healthy growth in FY 2024-25 relative to the global economy.

According to the Second Advance Estimates (SAE) by the National Statistics Office (NSO), real Gross Domestic Product (GDP) is estimated to have grown at 6.5% in FY 2024-25, on top of a 9.2% growth in FY 2023-24. Agriculture and allied activities witnessed an improvement to register a growth of 4.6 per cent, and services grew by 7.5 per cent, even as industrial growth was low at 4.3 per cent. The manufacturing sector faced pressures due to weak global and domestic demand, complicated by domestic seasonal circumstances such as the general elections and an unusually hot summer. The predicted slowdown in growth is aligned to the pervasive uncertainty in the global economy.

The impact of the trade tariffs announced by the US presents a mixed picture for India. The tariff rates applied to Indian exports are relatively lower than those imposed on other Asian economies and hence, are likely to improve Indias export share in the US and could also hasten the relocation of supply chains from China to India. However, India is likely to face competitive pressures in other markets like the EU and the UK, as well as the domestic market, due to possible dumping of products by China. Further, the world economy faces the risk of an economic slowdown or potentially even a prolonged recession caused by trade wars and protectionism, which is also likely to have an adverse effect on Indias growth prospects.

On the inflation front, there has been significant recovery, thanks to the Governments efforts to curtail retail inflation through reduction in duties and restriction of exports in select commodities and products, combined with decisive and timely monetary policy actions of the Reserve Bank of India. CPI headline inflation declined from 5.2% in December 2024 to 3.6% in February 2025, driven largely by a stable monsoon, steep seasonal correction in vegetable prices and a general easing in food inflation, which dropped to a 21-month low of 3.8%. Core inflation remained stable, inching up marginally to 4.1% due to a spike in gold prices.

Due, in large part, to the significant improvement in inflation, the Monetary Policy Committee (MPC) of the Reserve Bank of India had reduced the Policy Repo Rate by 25 basis points from 6.50% to 6.25% in February 2025. After assessing the current and evolving macroeconomic situation, in April 2025, the MPC further reduced the Policy Repo Rate by 25 basis points to 6%. These measures are expected to bolster private consumption and support a revival in private corporate investment activity.

Indias fiscal deficit, which was at 5.5% of GDP during FY 2023-24, was at 4.7% of GDP in FY 2024-25 and has been estimated at 4.4% of GDP in FY 2025-26, thanks to prudent fiscal management by the Government and supported by appreciable increase in revenue collection over the last few years.

During FY 2024-25, the Indian Rupee remained steady within the range of Rs83-88 per US$, positioning it as one of the least volatile major currencies among both emerging markets and a few advanced economies.

Automotive Sector

The performance of the Indian automobile industry in FY 2024-25 was muted. The first quarter of the year witnessed general elections and a particularly hot summer. Government spending on infrastructure was lower than expected and demand for commercial and passenger vehicles was weak. While the second half witnessed some improvement in sentiment, global events and geopolitical tensions had an overhang on overall demand. According to the Society of Indian Automobile Manufacturers (SIAM), wholesale despatches by the industry grew by 7.3% in domestic sales and exports grew by 19.2%.

The passenger vehicle (PV) segment posted its highest ever sales in FY 2024-25 of 4.3 million units, albeit with a moderate growth of 2% as compared to FY 2023-24. Utility vehicles (UVs) continued to drive growth, contributing 65% of total PV sales, as compared to about 60% in FY 2023-24. New model launches, packed with advanced features and modern design, resonated strongly with consumer aspirations. The growth was supported primarily by attractive discounts and promotional offers.

Electric Vehicle (EV) adoption saw relatively strong growth in FY 2024-25 with a 17% increase supported by growth across Electric Passenger Vehicles, e-Two-Wheeler and e-Three-Wheeler segments. Government initiatives for sustainable transportation like the Electric Mobility Promotion Scheme

(EMPS), PM E-Drive, and PM e-Bus Sewa are expected to further accelerate EV adoption.

The commercial vehicle (CV) segment witnessed a decline of 1.2% in FY 2024-25, compared to the previous year. However, the segment posted a growth of 1.5% in the last quarter of FY 2024-25. Though the overall trucks segment has witnessed a slight year-on-year decline, the requirement of freight movement has been suitably served with fleets migrating towards higher GVW vehicles. The performance of this segment has been supported effectively by the expanding highways and expressway network, which is playing a crucial role in reducing logistics costs and enhancing regional connectivity. Equally, the infrastructure development has helped this segment in driving sales of buses for inter-city travels and increasing focus on mass-mobility in intra-city routes.

The Tractor & Farm Equipment (TFE) segment rebounded with a modest year-on-year growth of 8.4% in FY 2024-25 despite adverse erratic rainfall and an unusually hot summer in the first half of the year. The segment experienced a recovery in the latter part of the year, aided by favourable monsoon conditions, robust procurement along with increased minimum support prices and higher rural income.

Exports grew by 19.2%, reflecting global preference for Indian automotive products. The PV segment witnessed the highest ever exports in FY 2024-25, registering a growth of 14.6% as compared to FY 2023-24. Export of CVs also posted a healthy growth of 23% in FY 2024-25, as compared to the previous year.

Looking ahead, a stable policy environment, coupled with recent personal income tax reforms and RBIs rate cuts, is expected to bolster consumer confidence and drive demand across vehicle segments.

Operating & Financial Performance

Gross receivables managed by your Company as of March 31, 2025, stood at Rs60,290 cr., as against

Rs51,385 cr., recording a growth of 17.3% over the previous year. Your Companys disbursements at Rs28,405 cr. (PY Rs26,163 cr.) have registered a moderate growth of 8.6% during the year under review, amidst the uncertainties in external demand. While your Company has recorded growth in disbursements across all geographies, growth has been muted in some asset classes. During the year, overall margins continued to be under pressure, but your Companys "AAA" credit rating and the treasury teams ability to raise resources at competitive rates enabled your Company to maintain its cost of borrowings at a reasonable level. Despite competitive intensity and mix of price-sensitive medium & heavy commercial vehicle segments, your Company was able to improve yields through better pricing of risk and improving asset mix. Consequently, your Companys focus on improving pricing and managing borrowing costs well has yielded positive results on margin expansion in FY 2024-25.

Collections has been challenging through the year, largely on account of the muted economic activity in the first half as well as tight liquidity conditions, although there was marginal improvement in external conditions during the fourth quarter. Your Companys superior credit standards, strong customer relationships and systematic collection efforts have enabled it to ensure best-in-class performance on asset quality in the year in question. Stage III assets, Gross and Net of ECL provisions, stood at 1.44% (PY 1.26%) and 0.75% (PY 0.63%) respectively, as at 31^st March 2025.

Your Company has been maintaining comfortable liquidity in the form of liquid investments and undrawn bank limits, to meet its maturing liabilities.

Your Company registered a net profit of Rs1,543 cr. compared to Rs1,454 cr. in the previous year, a growth of 6%. This low net profit growth is primarily due to a one-time gain in profits last year as well as a shift in timing of dividends year on year. Profits from core operations registered a growth of 25%.

Your Companys net worth stood at Rs11,139 cr., as on 31^st March 2025. Capital adequacy (CRAR) at 20.42% was comfortably higher than the statutory requirement of 15%.

There are no significant changes in key financial ratios of the Company for FY 2024-25 as compared to FY 2023-24. Your Companys Return on Net Worth as on 31.03.2025 stood at 16.3% as compared to 17.5% as on 31.03.2024. Core Return on Net Worth, adjusting for investments in Group companies, as on 31.03.2025 stood at 19.0% as compared to 16.5% as on 31.03.2024. The increase in Core Return on Net Worth was because of an overall improvement in the margins, tight operating expense controls and improvements in asset quality & business disbursements.

RESOURCE MOBILISATION

a) Deposits

During the year, your Company mobilised fresh deposits aggregating to Rs993.41 cr. Renewal of deposits during the year amounted to Rs1,698.67 cr. representing 83% of the matured deposits of Rs2,036.39 cr. Deposits outstanding at the year-end were at Rs6,094.08 cr. as against Rs5,584.93 cr. in the previous year. The net accretion for the financial year was Rs509.15 cr. as at 31^st March 2025. 2,828 Term Deposit Receipts (TDRs) amounting to Rs32.69 cr. had matured for payment and were due to be claimed or renewed. After close follow-up, these figures are currently at 2,074 and

Rs19.09 cr. respectively. Continuous efforts are being made to arrange for repayment or renewal of these deposits. There has been no default in repayment of deposits or payment of interest thereon during the year.

You will be happy to note that as part of the continued digital journey, during the year, your Company has introduced online fresh deposits for new depositors. Depositors can also place additional deposits, renew their deposits, initiate payment requests, furnish Form 15G/H, provide instruction for change in address and/ or bank details with necessary supporting documents, through our online customer portal and SF Next mobile application.

b) Term Funding

During the year, your Company raised term funding from Banks, Mutual funds, Insurance companies and others in the form of non-convertible debentures and long term loans to the tune of Rs7,750 cr., across varying tenors.

c) Bank Finance

As part of the overall funding plan, your Companys working capital limits with consortium banks were retained at Rs3,500 cr. During the year, your Company also issued several tranches of commercial paper aggregating to Rs7,305 cr. The maximum amount of outstanding commercial papers at any time was Rs4,950 cr. and the amount outstanding at the end of the year was Rs4,680 cr.

d) Assets Securitised / Assigned

During the year, your Company raised resources to the extent of Rs4,399 cr. through securitisation and assignment of receivables.

CREDIT RATINGS

Your Companys long term credit ratings have been retained at "AAA" (Highest Degree of Safety) with a "Stable Outlook", by both ICRA and CRISIL. The short-term borrowings (including commercial paper) are rated "A1+" by both ICRA and CRISIL. Fixed Deposits are rated "AAA" (Highest Credit Quality) by both ICRA and CRISIL.

OUTLOOK

Indias journey towards a middle income economy is progressing well and India is well-positioned to remain one of the fast-growing major economies in the world in FY 2025-26. While global headwinds persist, Indias domestic fundamentals and focus on infrastructure provide a good foundation for sustained economic momentum. The countrys development track record and structural reforms of the past 10 years has reposed confidence in Indias potential and enhanced her global stature. Indias economic outlook for the fiscal year 2025-26 presents a cautiously optimistic picture, underpinned by robust domestic drivers, improving inflationary trends, an accommodative monetary policy stance, and focused fiscal consolidation efforts.

The Governments continued investment in infrastructure is expected to provide support to economic activity. Inflation outlook has turned positive with substantial moderation in food prices. Production of wheat and pulses is expected to improve strongly, setting the stage for durable softening in food inflation. The fall in crude oil prices also provides support for a more benign inflation environment. The outlook for Indias agriculture sector in FY 2025-26 appears promising, supported by healthy reservoir levels and strong crop yields. Manufacturing activity is showing signs of recovery, underpinned by positive business sentiment, while the services sector continues to display resilience.

Private consumption and private sector capital expenditure remain subdued. The RBIs Monetary Policy Committee has reduced the repo rate by 50 basis points this calendar year and shifted its policy stance to accommodative. Further rate cuts are likely especially as inflation softens predictably. The RBI has also assured durable liquidity in the financial system going forward. These bode well for private sector capital expenditure picking up. However, improvement in private consumption sentiment will be the decisive driver to improve private investments.

On the demand front, both rural and urban consumption are poised for take-off. On the rural front, normal monsoons predicted by the Indian Meteorological Department (IMD) signal favourable agricultural prospects and strong procurement, which, in turn, will likely improve rural sentiment and demand. On the urban front, due to the resumption in government spending on infrastructure and the introduction of personal income tax benefits announced in the Union Budget, there is an expectation of an increase in demand.

However, persistent global uncertainties, including the recent escalation in trade protectionism, pose downside risks resulting from global growth slowdown, elevated volatility in the financial markets, and low customer and investor confidence. While India could be in a better position to manage and mitigate such risks, thanks to its growth driven largely by domestic demand, the global disturbances can have some impact on the domestic economy. The global developments are also likely to present some positive results in the form of lower crude oil and commodity prices and relative tariff advantage.

Sectorally, the services sector continues to be the largest contributor to Gross Value Added (GVA), growing by 7.3%, while the industrial sector is expected to expand by 5.8% and agriculture by 4.4%.

Given the global uncertainties and volatility driven by the trade tariff measures, the RBI Monetary Policy Committee (MPC) has revised its FY 2025-26 GDP growth estimates downwards to 6.5%. Further, after balancing positive factors like the fall in crude oil prices, healthy agricultural production, particularly wheat and pulses, expectations of a healthy monsoon and risks such as lingering global uncertainties and the recurrence of adverse weather related supply disruptions, the MPC has projected the CPI inflation for FY 2025-26 at 4%.

The prospects of the automotive sector will largely mirror the balanced set of risks that the broader macro economy is faced with. FY 2025-26 is expected to reflect the cautious optimism for the automotive sector that Indias economy is faced with.

Medium, Heavy and Intermediate Commercial Vehicles (MHICV)

The fortunes of the MHICV segment tend to directly correlate with economic activity. Given the outlook for the Indian economy for FY 2025-26, the governments infrastructure spending and segment-specific activity – highways, ports, irrigation and mining (iron ore, granite, coal, sand, blue metal), and industries (cement, private construction) – will be the primary drivers of demand. In general, freight rates have held up well and there is lesser concern of overcapacity in the industry. Expectations of a good monsoon and a strong rural economy will also be a boost. The ICV growth outlook is more optimistic with resilience in passenger transport demand for staff and school transportation across regions, tourist demand in some markets as well as transportation for e-commerce fulfilment and haulage across industries. Overall, the MHICV segment will likely grow in the low single digits compared to last year.

Material Handling and Construction Equipment (MHCE)

MHCE demand is primarily driven by infrastructure and construction activity, which, in turn, relies largely on the Governments investments. Mining and industries like cement are witnessing improvement in activity levels which will support the demand for MHCE. However, price hikes led by emission norms as well as tariffs related to commodities – for instance, the recent 12% safeguard duty imposed on steel imports with a view to protect domestic providers (for 200 days) – could adversely affect demand. Growth for the MHCE segment in the low single digit range is anticipated in FY 2025-26.

Retail Commercial Vehicles

(Light & Small Commercial Vehicles)

LCV demand is expected to be supported by passenger transport including school buses. In some markets, LCV sales is supported by continued e-commerce and agriculture transport requirements including aquaculture and poultry as well as school transportation. However, unless urban demand significantly improves, the prospects for SCV remains uncertain. Much of SCV growth is expected to come from EV and 3W demand for last mile delivery. Overall, retail commercial vehicles are also expected to grow in the low single digits in FY 2025-26.

Passenger Cars & Utility Vehicles (UVs)

The passenger vehicles market has grown steadily post Covid and reached record numbers in FY 2024-25. However, most of the demand drivers – disposable incomes, cost of ownership, new model launches – remain neutral or unfavourable. The recently announced personal income tax reforms will enhance household savings and improving rural sentiments could fuel demand. Premiumisation of the industry witnessed in the last two years (i.e., increasing demand for higher segment cars as well as UVs) is likely to continue and while entry segments have remained sluggish, the prospects may change as rural sentiments improve through the year. EV, Hybrid and CNG are expected to show continued growth. A mid-single digit growth, albeit on a large base, is expected in FY 2025-26.

Tractors & Farm Equipment (TFE)

The outlook for FY 2025-26 for the TFE segment is buoyant due to an anticipated pickup in rural sentiments, good availability of water in major reservoirs, expectation of well-balanced monsoons spatially & temporally as well as an absence of both El Nino & La Nina conditions. The TFE industry is expected to register mid-single digits growth in FY 2025-26. The Tractor Manufacturers Association (TMA) is forecasting a 4-5% increase in tractor sales for FY 2025-26, with a prediction of close to 1 million units in retail sales, a historic high. Harvesters are also likely to register good growth in view of higher farm output. Central and State level subsidy schemes will also give fillip to TFE sales, although in several schemes, NBFCs are not permitted to participate. The Government aiming at increasing the milk procurement by 50%, which will lead to increase in farm income. This, coupled with the Governments commitment to ensure reasonable minimum support prices and strong procurement, will likely support farm mechanisation to continue to flourish.

INTERNAL FINANCIAL CONTROLS

The Company has a well-established internal financial control and risk management framework to ensure the highest standards of integrity and transparency in its operations and a strong corporate governance structure. Appropriate controls are in place to ensure: a) the orderly and efficient conduct of business, including adherence to policies; b) safeguarding of assets; c) prevention and detection of frauds/errors; d) accuracy and completeness of accounting records; and e) timely preparation of reliable financial information.

Additionally, as part of RBIs Risk Based Internal Audit (RBIA) requirement, your Company has adopted appropriate policy and operating guidelines. Along with the Risk Management team and Internal Audit department, the functional and operational risk control matrices have been designed to ensure that adequate controls as may be required are in place and operating effectively and efficiently.

RISK MANAGEMENT

Your Company has built a robust risk governance and risk management framework over the years. The Audit Committee, Risk Management Committee, Asset Liability Management Committee and IT Strategy Committee review and monitor the risks on a regular basis.

The risk management process of the Company is underpinned by a strong and long-standing organisational culture and sound operating procedures involving our Sundaram values, competencies, internal control culture and effective internal reporting.

Your Company has adopted the ERM Framework, which is based on 3 lines of defence:

a. First pillar: Function-heads who are the risk owners and responsible and accountable for assessing, controlling and mitigating risks;

b. Second pillar: Chief Risk Officer and the Risk Management team who assist through facilitating risk awareness, risk reviews, providing analysis and reports including creating a proactive forward looking approach;

c. Third pillar: Internal Auditors and Statutory Auditors who provide assurance to the senior management on risk governance through their assessment of the adequacy and the effectiveness of internal controls and the monitoring mechanisms.

Your Company has a robust first line of defence in the form of sensitised and aware functional teams. Active operational engagement on risk management is enabled through two levels of internal teams that review operational risks on an on-going basis: i) Functional Working Group on operational risks comprised of 66 operating executives across the Company and ii) a Core Working Group on Risk Management comprised of 11 functional heads of various departments of the Company. These groups are convened by our second line of defence, the Risk Management department, which ensures meetings on a regular basis to review status on various risks anticipate emerging risks and define a proactive action plan for containing incipient risk.

The internal audit team reviews the processes and controls to ensure the design effectiveness and to assure adequacy of controls to mitigate risk. Your Company has well-documented standard operating procedures and risk control matrices for all processes to ensure superior control over transaction processing and regulatory compliance. Periodical review of the same ensures that the risks including technology risks are under control. This apart, policies are reviewed and approved by the Board and its Committees that facilitate the review of identification of risks and controls and provide guidance to manage the risks across business that ensures a sustainable and ethical business environment, reflected in our risk management process.

The risk management process fulfils the requirement under Section 134 of the Companies Act, 2013 and also the guidelines under regulation 21 of Listing guidelines (schedule II of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Above all, your Companys values and culture that are enshrined in the Sundaram Way of doing business and the obligations and commitment to our customers, employees, deposit holders and the community are the foundations on which its risk framework rests.

A few principal financial risks of your Company have been furnished in the Notes to the Accounts under Note 38, for your information.

INTERNAL AUDIT

Your Companys internal audit department independently evaluates the adequacy of control measures on a periodic basis and recommends improvements, wherever appropriate to suit the changes in business and control environment. The effectiveness and efficiency of the controls, and the design are regularly measured through process reviews and risk assessment. The internal audit department is staffed by qualified and experienced personnel and reports directly to the Audit Committee of the Board. The Audit Committee regularly reviews the audit findings as well as the adequacy and effectiveness of the internal control measures.

Additionally, an Information Systems Assurance Service is also provided by independent external professionals. Based on their recommendations, the Company has implemented a number of control measures both in operational and IT-related areas, apart from information security related measures.

Your Company has rolled out Risk Based Internal Audit (RBIA) Policy with effect from 1^st April 2022 as required by the RBI. The primary focus of Risk Based Internal Audit is to provide reasonable assurance to the Board and the Senior Management about the adequacy and effectiveness of the risk management and control framework of the Company. The internal audit function assesses and contributes to the overall improvement of the organizations governance, risk management, and control processes using a systematic and disciplined approach. Audits are conducted encompassing all the functional areas of the branch network and Head office in such a manner that it serves as an important tool of internal control.

In the year in question, your Company has also conducted a quality assurance review of the internal audit function, as required by regulations, through an empowered group of senior functional leaders of the Company overseen by the Audit Committee of the Board. As part of the quality assurance exercise, the group has developed an Audit Quality Maturity Model (SF-AMM), which evaluates the quality assurance activities using five practice areas, viz., strategy, structure & communication, people, process & technology, and regulatory matters.

INFORMATION TECHNOLOGY

Your Company recognises Information Technology as a critical pillar to run and grow its business. Significant investments continue to be made in IT infrastructure in the areas of storage and switches. On the applications side, investments have been made to mainly build reusable capabilities that would help better time-to-market as well as to conduct prototypes for building the architectural foundation for your Companys new core system.

Your Company has a state-of-the-art Data Centre with a capacity of over 400 servers, managed by professionals providing 24/7 support, with over 99.99% uptime. The Data Centre, in this financial year, got accredited for the updated ISO/IEC 27001:2022 Standards for Information Security Management System, by TUV Rheinland. This effectively meets the needs of your Company, as well as its subsidiaries and associates. A Disaster Recovery (DR) site for all critical applications is hosted at a separate facility located in a different seismic zone, with near real-time data replication. Through regular DR drills together with a secure and scalable IT infrastructure for remote working (work from home), business continuity during adversities is assured. Your Companys strategy for leveraging Cloud technology strives to achieve a balance of opportunity, risk and cost. In this financial year, your Company has moved to the cloud some of the security workloads (such as web application and API monitoring tool, DDoS tool) and application workloads (such as Field Investigation App and Intelligent Document processing).

Your Company adopts a proactive stance on Cyber security and makes continuing investments in this critical area. A full-time Chief Information Security Officer (CISO) is in place, as required by extant regulations. Investments in security tools continue to be made. This financial year, the focus has been to protect web applications/APIs and DDoS attacks.

Ensuring reliability, security and integrity of your Companys systems and data are top priorities. Towards this, tools to help data monitoring and reporting have been implemented. Your Company operates a 24x7 Security Operations Centre (SOC) for real-time threat monitoring and alerting. Periodic vulnerability assessment and penetration testing are carried out on the applications as well as the infrastructure to ascertain the effectiveness of the practices laid down by your Company. Your Company engages in regular discussions with external consultants and industry experts to validate its approaches to transformation and to reinforce Information & Cyber Security methodologies.

Your Companys in-house technology team leverages its expertise across multiple technologies and in-depth business & domain knowledge for delivering differentiating solutions. Chosen technology partners with expertise in their areas are engaged to bring in external perspectives and skills. Contemporary technology and architecture practices are now at the core of its digital capabilities. With the advantage of having created a strong digital foundation, your Company is poised to take its technology base to the next level. Your Company has initiated implementation of a Cloud based Data Lake as the foundational component for its Systems of Intelligence layer. Your Company has developed more Machine Learning models to help the business as well as embarked on pilots for leveraging the wave of Agentic framework.

By working closely with the business functions, the technology team has implemented process improvements that have shortened turnaround time, enabled straight through processing, and ensured timely decision making. This has been made possible through implementation of a few reusable capabilities such as digitally guided workflows and task management, communication framework and embedded Nano Learning.

The key priorities continue to be intelligent solutions that enable customer service and acquisition while increasing efficiency of our employees, reducing cost-to-serve, deepening usage of analytics and creating superior customer experience.

Your Company is in a relationship-centric business and has a time-tested and differentiated strength – the Sundaram experience – that relies on physical interactions with customers and other stakeholders. The digital strategy has consciously been adapted to create the right blend of high touch and high tech to deepen the customer and stakeholder relationships.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements, drawn up in accordance with the applicable Accounting Standards, form part of the Annual Report as required by the provisions of Section 129 (3) of the Companies Act, 2013. A separate statement containing the salient features of the financial statements of Subsidiaries and Associates in Form AOC-I forms part of the Annual Report.

The Consolidated profit after tax is Rs1,879 cr. as against Rs1,436 cr. of the previous year, a growth of 30.8% year on year. The total comprehensive income for the year was Rs2,443 cr. as against Rs2,244 cr. The consolidated net worth for the year stood at Rs13,196.83 cr., as against Rs 11,078.22 cr. in the previous year.

The annual accounts of all the Subsidiaries and Joint Venture have been posted on your Companys website www.sundaramfinance.in. Detailed information, including the annual accounts of the Subsidiaries and Joint Venture will be available for inspection by the members, through a digital platform which would be provided by the Company. The same will also be made available in physical form to the members upon request.

SUBSIDIARIES

• Sundaram Home Finance Limited

Sundaram Home Finance Limited, during the year approved loans aggregating to Rs6,940 cr.

(PY Rs5,581 cr.). Disbursements during the year were higher by 30% at Rs6,534 cr. (PY Rs5,029 cr.). The company earned a gross income of Rs1,597 cr. (PY Rs1,412 cr.) and reported a profit after tax at Rs244.66 cr. (PY Rs235.82 cr.). The loan portfolio under management as at 31^st March 2025 stood at Rs17,408 cr. as against Rs13,812 cr. in the previous year Gross Stage 3 assets stood at 1.02% (PY 1.16%) and net of ECL provisions stood at 0.53% (PY 0.50%), as at 31^st March, 2025. The Net Stage 3 assets, excluding restructured assets, stood at 0.42 as at 31^st March 2025. The Board of Directors have recommended a final dividend of Rs3.31/- per share (33.13%) for the year ended 31^st March 2025. This together with interim dividend of 2.73 per share (27.29%), would aggregate to a total dividend of Rs6.04/- per share (60.42%).

• Sundaram Asset Management Company Limited (On consolidated basis)

The company reported a consolidated gross income of Rs515.31 cr. as against Rs456.85 cr. in the previous year. Consolidated Profit after tax was Rs153.53 cr. as compared to Rs111.91 cr. during the previous year. The Average Assets under Management amounted to Rs 76,008 cr. for the year 2024-25 as compared to Rs64,072 cr. in the previous year. The company had declared an interim dividend of Rs7/- per share on 30^th January 2025 and has decided to propose a final dividend of Rs8.85/- per share with the approval of shareholders for the year FY 2024-25.

• Sundaram Trustee Company Limited

Sundaram Trustee Company Limited earned a gross income of Rs3.64 cr., as against Rs2.80 cr., in the previous year and reported a profit after tax of Rs2.23 cr. for the year, as against Rs1.59 cr. in the previous year. The company recommended a dividend of Rs446/- per share for the year ended 31^st March 2025.

• LGF Services Limited

During the year, the company reported a gross income of Rs0.19 cr. as against Rs0.19 cr. in the previous year. The profit after tax for the year was Rs0.08 cr. as against Rs0.11 cr. in the previous year. The company recommended a dividend of Rs3/- (30%) per share for the year.

• Sundaram Fund Services Limited

Sundaram Fund Services Limited earned an income of Rs0.14 cr. during the year as against Rs1.28 cr. in the previous year. The company reported a profit after tax of Rs0.03 cr. as against Rs0.28 cr. in the previous year. During the previous year, a petition was filed with the Honble National Company Law Tribunal (NCLT), Chennai, for reduction of paid-up equity share capital of Sundaram Fund Services Limited, pursuant to Section 66, read with Section 52 of the Companies Act, 2013. The Honble NCLT, Chennai approved and issued an Order on 14^th November 2024, and the reduction of paid-up share capital has been effected.

JOINT VENTURE

Royal Sundaram General Insurance Co. Ltd (Royal Sundaram)

Royal Sundaram reported a Gross Written Premium (GWP) of Rs4,065 cr. as compared to Rs3,825 cr. in the previous year, representing a growth of 6%. The company reported a profit after tax (as per IND AS) of Rs133 cr. for the current year as against Rs169 cr. in the previous year. The current years profit (as per IND AS) was lower than previous year mainly due to "mark to market loss" of Rs29 cr. (net of tax) on equity investments compared to "mark to market gain" of Rs53 cr. (net of tax) in the previous year. The company has paid an interim dividend of Rs0.60/- per share during the year and recommended a final dividend of Rs0.30/- per share, aggregating a total dividend of Rs0.90/- per share for the Financial Year 2024-25 (Previous Year: Rs0.70/- per share). The companys solvency ratio as at March 31, 2025 was at 2.20 times (Previous Year: 2.42 times) as against the mandated threshold of 1.50 times.

BOARD & AUDIT COMMITTEE

The details regarding number of Board Meetings held during the financial year and composition of Audit Committee are furnished in the Corporate Governance Report. The details of all other Committees are also furnished in the Corporate Governance Report.

DIRECTORS

Mr. Ganesh Lakshminarayan, Independent Director, will be completing his first term of five years as Independent Director of the Company on 11^th August 2025. After considering the recommendation of the Nomination, Compensation and Remuneration Committee and evaluation of his performance, your Board of Directors has, on 26^th May 2025, recommended the re-appointment of Mr. Ganesh Lakshminarayan as an Independent Director of the Company for a further term of five (5) consecutive years from the date of expiry of his present term of office, subject to the approval of the shareholders.

Mr. T. T. Srinivasaraghavan and Mr. A. N. Raju, Directors, retire by rotation and being eligible, offer themselves for re-election.

KEY MANAGERIAL PERSONNEL

During the year under review, there were no changes in the Key Managerial Personnel of the Company.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declaration from each Independent Director of the Company under Section 149 (7) of the Companies Act, 2013 that they meet with the criteria of their Independence laid down in Section 149 (6).

ANNUAL EVALUATION BY THE BOARD

The Board has made a formal evaluation of its own performance and that of its committees and individual

Directors as required under Section 134(3)(p) of the Companies Act, 2013.

DIRECTORS RESPONSIBILITY STATEMENT

Your Directors confirm that:

1. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

2. The Company has selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

3. Proper and sufficient care has been exercised for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. The annual accounts have been prepared on a going concern basis;

5. Adequate internal financial controls have been put in place and they are operating effectively; and

6. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

AUDITORS

M/s Brahmayya & Co., Chartered Accountants, Chennai (Regn. No. 000511S) and M/s R.G.N Price & Co., Chartered Accountants, Chennai (Regn. No. 002785S), have been appointed as Joint Statutory Auditors of your Company, to hold office for a term of three (3) consecutive years from conclusion of the 71^st Annual General Meeting to the conclusion of the 74^th Annual General Meeting, in accordance with the Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) issued by the Reserve Bank of India vide their notification dated 27^th April 2021 (RBI Guidelines), at such remuneration may be mutually agreed to between the Board of Directors the Company and the Joint Statutory Auditors.

ACKNOWLEDGEMENT

Your Directors gratefully acknowledge the support and cooperation extended to your Company by all its customers, depositors, shareholders, and bankers, as also the various mutual funds, insurance companies, automotive manufacturers and dealers, oil marketing companies and other stakeholders.

Your Directors also place on record their special appreciation Team Sundaram for its dedication and commitment in delivering the highest quality of service to every one of our valued customers.

	For and on behalf of the Board
Chennai 600 002	S. VIJI
26.05.2025	Chairman