2.11 Provisions, contingent liabilities and contingent
assets:

(a) Provisions

Provisions are recognised when the Company
has a present obligation (legal or constructive)
as a result of a past event, it is probable that the
Company will be required to settle the obligation,
and a reliable estimate can be made of the
amount of the obligation.

Provision is measured using the cash flows
estimated to settle the present obligation and
when the effect of time value of money is material,
the carrying amount of the provision is the present
value of those cash flows. Reimbursement
expected in respect of expenditure required to
settle a provision is recognised only when it is
virtually certain that the reimbursement will be
received.

(b) Contingent liabilities

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 Company or a present obligation
that arises from past events where it is either
not probable that an outflow of resources will
be required to settle or a reliable estimate of the
amount cannot be made.

(c) Contingent assets

Contingent assets are not recognised in the
financial statements, however they are disclosed
when an inflow of economic benefits is probable.

2.12 Share-based payment arrangements:

The stock options granted to employees pursuant
to the Company's Stock Options Schemes, are
measured at the fair value of the options at the grant
date in accordance with IND AS 102, Share-based
payments. The fair value of the options is treated as
discount and accounted as employee compensation
cost over the vesting period on a straight-line basis.
The amount recognised as expense in each year is
arrived at based on the number of grants expected
to vest. If a grant lapses after the vesting period,
the cumulative discount recognised as expense in
respect of such grant is transferred to the general
reserve within equity.

The Company has constituted an Employee Stock
Option Plan 2016. The Plan provides for grant of
options to employees of the Company to acquire
equity shares of the Company that vest in a graded
manner and that are to be exercised within a specified
period.

The Company has constituted an Employee Stock
Option Plan 2020. The Company has transferred all
the ungranted options under Employee Stock Option
Plan 2016 to Employee Stock Option Plan 2020 while
options granted under the Employee Stock Option Plan
2016 continue to be governed by the conditions of
Employee Stock Option Plan 2016. Both plans provide
for grant of options to employees of the Company to
acquire equity shares of the Company that vest in a
graded manner and that are to be exercised within a
specified period.

2.13 Financial instruments:

Financial assets and financial liabilities are recognised
when the Company becomes a party to the contractual
provisions of the instrument.

Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of
financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from the
fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial
assets or financial liabilities at fair value through profit
or loss are recognised immediately in profit or loss.

(a) Financial assets

Initial recognition and measurement

All financial assets are recognised initially at fair
value and transaction costs that are attributable
to the acquisition of the financial asset are
adjusted to the fair value on initial recognition.

Subsequent measurement

For the purpose of Subsequent measurement, the
Company classifies financial assets in following
categories:

(i) Financial assets at amortised cost

(ii) Financial assets at fair value through other
comprehensive income (FVTOCI)

(iii) Financial assets at fair value through profit
or loss (FVTPL)

Financial assets shall be measured at amortised
cost if both of the following conditions are met:

(i) The asset is held within a business model
whose objective is to hold assets for
collecting contractual cash flows, and

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

A financial asset shall be measured at fair value
through other comprehensive income if both of
the following conditions are met:

(i) The asset is held within a business model
whose objective is achieved by both
collecting contractual cash flows and selling
financial assets; and

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

All financial assets not classified as measured at
amortised cost or FVTOCI as described above are
measured at FVTPL

Subsequent measurement of financial assets

Financial assets at amortised cost are
subsequently measured at amortised cost
using effective interest method. The amortised
cost is reduced by impairment losses. Interest
income, foreign exchange gains and losses and
impairment are recognised in Statement of profit
and loss. Any gain and loss on derecognition is
recognised in statement of profit and loss.

Financial investment at FVOCI are subsequently
measured at fair value. Interest income under
effective interest method, foreign exchange gains
and losses and impairment are recognised in
Statement of profit and loss. Other net gains and
losses are recognised in OCI. On derecognition,
gains and losses accumulated in OCI are
reclassified to statement of profit and loss.

Financial assets at FVTPL are subsequently
measured at fair value. Net gains and losses,
including any interest or dividend income, are
recognised in statement of profit and loss.

All other equity investments are measured at fair
value, with value changes recognised in Profit
and loss, except for those equity investments for
which the Company has elected to present the
changes in fair value through OCI.

The Company derecognises a financial asset
when the contractual rights to the cash flows
from the financial asset expire, or it transfers
the rights to receive the contractual cash flows
in a transaction in which substantially all of the
risks and rewards of ownership of the financial
asset are transferred or in which the Company
neither transfers nor retains substantially all
of the risks and rewards of ownership and
does not retain control of the financial asset.
The Company considers control to be transferred
if and only if, the transferee has the practical ability
to sell the asset in its entirety to an unrelated
third party and is able to exercise that ability
unilaterally and without imposing additional
restrictions on the transfer. When the Company
has neither transferred nor retained substantially
all the risks and rewards and has retained control
of the asset, the asset continues to be recognised
only to the extent of the Company's continuing
involvement, in which case, the Company also
recognises an associated liability. The transferred
asset and the associated liability are measured
on a basis that reflects the rights and obligations
that the Company has retained."

(b) Financial liabilities

Initial recognition and measurement

All financial liabilities are recognised initially at fair
value and transaction costs that are attributable
to the acquisition of the financial liabilities are
adjusted to the fair value on initial recognition.

Subsequent measurement

Subsequent to initial recognition, all liabilities are
measured at amortised cost using the effective
interest method except for derivatives, financial
liabilities designated for measurement at FVTPL
which are measured at fair value.

De-recognition of financial liabilities

A financial liabilities is de-recognised when the
obligation under the liability is discharged or
cancelled or expires. When 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 the de-recognition of the original
liability and the recognition of a new liability. The

difference in the respective carrying amounts is
recognised in the statement of profit and loss.

Offsetting of financial instruments

A financial asset and a financial liability is offset
and presented on net basis in the balance sheet
when there is a current legally enforceable right to
set-off the recognised amounts and it is intended
to either settle on net basis or to realise the asset
and settle the liability simultaneously.

Reclassification of financial assets and liabilities

The Company doesn't reclassify its financial
assets and liabilities subsequent to their initial
recognition.

Modification of financial assets and financial
liabilities

Financial assets

The Company evaluates whether the cash flows
from a financial asset are modified and the modified
asset is substantially different. If the cash flows are
substantially different, then the contractual rights
to cash flows from the original financial asset are
deemed to have expired. In this case, the original
financial asset is derecognised and a new financial
asset is recognised at fair value.

In case the cash flows of the modified asset
carried at amortised cost are not substantially
different, then the modification does not result in
derecognition of the financial asset. In this case,
the Company recalculates the gross carrying
amount of the financial asset as the present value
of the renegotiated or modified contractual cash
flows that are discounted at the financial asset's
original effective interest rate and recognises the
amount arising from adjusting the gross carrying
amount as modification gain or loss in statement
of profit and loss. Any costs or fees incurred adjust
the carrying amount of the modified financial asset
and are amortised over the remaining term of the
modified financial asset. If such a modification
is carried out because of financial difficulties of
the borrower, then the gain or loss is presented
together with impairment losses. In other cases,
it is presented as interest income.

Financial liabilities

The Company derecognises a financial liability
when its terms are modified and the cash flows
of the modified liability are substantially different.
In this case, a new financial liability based on

the modified terms is recognised at fair value.
The difference between the carrying amount
of the financial liability extinguished and the
new financial liability with modified terms is
recognised in statement of profit and loss.

2.14 Impairment of financial instruments:

In accordance with Ind-AS 109, the Company applies
Expected Credit Loss (ECL) model for measurement
and recognition of impairment loss for financial assets
other than those measured through profit and loss
(FVTPL).

(a) Expected credit losses are measured through a
loss allowance at an amount equal to:

The 12-months expected credit losses (expected
credit losses that result from those default events
on the financial instrument that are possible
within 12 months after the reporting date); or

Full lifetime expected credit losses (expected
credit losses that result from all possible default
events over the life of the financial instrument)

Both LTECLs (Lifetime expected Credit losses)
and 12 months ECLs are calculated on collective
basis.

(b) Based on the above, the Company categorises
its loans into Stage 1, Stage 2 and Stage 3, as
described below:

Stage 1

When loans are first recognised, the Company
recognises an allowance based on 12 months
ECL. Stage 1 loans includes those loans where
there is no significant increase in credit risk
observed and also includes facilities where the
credit risk has been improved and the loan has
been reclassified from stage 2 or stage 3.

Stage 2

When a loan has shown a significant increase in
credit risk since origination, the Company records
an allowance for the life time ECL. Stage 2 loans
also includes facilities where the credit risk has
improved and the loan has been reclassified from
stage 3 and facilities where the credit risk has
been increased due to restructuring and loan has
been reclassified from stage 1.

Stage 3

Loans considered credit impaired are the loans
which are past due for more than 90 days. The
Company records an allowance for life time ECL.

The Company considers a financial instrument
as defaulted and considered it as Stage 3 (credit-
impaired) for ECL calculations in all cases, when
the borrower becomes more than 90 days past
due on its contractual payments.

Significant increase in credit risk

The Company continuously monitors all assets
subject to ECLs. In order to determine whether an
instrument or a portfolio of instruments is subject
to 12mECL or LTECL, the Company assesses
whether there has been a significant increase in
credit risk since initial recognition. The Company
considers an exposure to have significantly
increased in credit risk when contractual
payments are more than 30 days past due.

(c) Calculation of ECLs

The mechanics of ECL calculations are outlined
below and the key elements are, as follows:

Probability of Default (PD)

Probability of Default (PD) is an estimate of the
likelihood of default over a given time horizon.
A default may only happen at a certain time
over the assessed period, if the facility has not
been previously derecognised and is still in the
portfolio.

Exposure at Default (EAD)

Exposure at Default (EAD) is an estimate of the
exposure at a future default date, taking into
account expected changes in the exposure after
the reporting date.

Loss Given Default (LGD)

Loss Given Default (LGD) is an estimate of the
loss arising in the case where a default occurs at
a given time. It is based on the difference between
the contractual cash flows due and those that
the lender would expect to receive, including
from the realisation of any collateral. It is usually
expressed as a percentage of the EAD.

The Company has calculated PD, EAD and LGD
to determine impairment loss on the portfolio
of loans. At every reporting date, the above
calculated PDs, EAD and LGDs are reviewed and
changes in the forward looking estimates are
analysed.

While estimating the expected credit losses, the
Company reviews macro-economic developments
occurring in the economy and market it operates
in. On a periodic basis, the Company analyses if
there is any relationship between key economic
trends like GDP, Unemployment rates, Benchmark
rates set by the Reserve Bank of India, inflation
etc. with the estimate of PD, LGD determined by
the Company based on its internal data. While
the internal estimates of PD, LGD rates by the
Company may not be always reflective of such
relationships, temporary overlays are embedded
in the methodology to reflect such macro¬
economic trends reasonably.

The mechanics of the ECL method are
summarised below:

Stage 1

The 12 months ECL is calculated as the portion
of LTECLs that represent the ECLs that result
from default events on a financial instrument
that are possible within the 12 months after the
reporting date. The Company calculates the 12
months ECL allowance based on the expectation
of a default occurring in the 12 months following
the reporting date. These expected 12-months
default probabilities are applied to the EAD and
multiplied by the expected LGD.

Stage 2

When a loan has shown a significant increase in
credit risk since origination, the Company records
an allowance for the LTECLs. The mechanics
are similar to those explained above, but PDs
and LGDs are estimated over the lifetime of the
instrument.

Stage 3 / Regulatory Stage 3

For loans considered credit-impaired, the
Company recognises the lifetime expected credit
losses for these loans. The method is similar to
that for Stage 2 assets, with the PD set at 100%.

(d) Loss allowances for ECL are presented in the
statement of financial position as follows:

(i) for financial assets measured at amortised
cost: as a deduction from the gross carrying
amount of the assets;

(ii) for debt instruments measured at FVTOCI:
no loss allowance is recognised in Balance
Sheet as the carrying amount is at fair value.

(e) Write offs

Loans and debt securities are written off when
the Company has no reasonable expectations
of recovering the financial asset (either in its
entirety or a portion of it). This is the case when
the Company determines that the borrower
does not have assets or sources of income that
could generate sufficient cash flows to repay
the amounts subject to the write-off. A write-off
constitutes a derecognition event. The Company
may apply enforcement activities to financial
assets written off. Recoveries resulting from the
Company's enforcement activities will result in
impairment gains.

2.15 Derivative financial instruments

The Company enters into derivative financial
instruments, primarily foreign exchange forward
contracts, currency swaps and interest rate swaps, to
manage its borrowing exposure to foreign exchange
and interest rate risks. Derivatives embedded in non¬
derivative host contracts are treated as separate
derivatives when their risks and characteristics are not
closely related to those of the host contracts and the
host contracts are not measured at FVTPL. Derivatives
are initially recognised at fair value at the date the
contracts are entered into and are subsequently
remeasured to their fair value at the end of each
reporting period. The resulting gain/loss is recognised
in statement of profit and loss.

Hedge accounting

The Company makes use of derivative instruments
to manage exposures to interest rate and foreign
currency. In order to manage particular risks, the
Company applies hedge accounting for transactions
that meet specified criteria.

Hedges that meet the criteria for hedge accounting are
accounted for, as described below:

Fair value hedges the exposure to changes in the fair
value of a recognised asset or liability, or an identified
portion of such an asset, liability, that is attributable to
a particular risk and could affect profit or loss.

For designated and qualifying fair value hedges,
the cumulative change in the fair value of a hedging
derivative is recognised in the statement of profit
and loss in net gain/(loss) on fair value changes.
Meanwhile, the cumulative change in the fair value
of the hedged item attributable to the risk hedged is
recorded as part of the carrying value of the hedged

item in the balance sheet and is also recognised in the
statement of profit and loss in net gain/(loss) on fair
value changes.

2.16 Fair value measurement

Fair value is the price at the measurement date,
at which an asset can be sold or paid to transfer a
liability, in an orderly transaction between market
participants at the measurement date. The Company's
accounting policies require, measurement of certain
financial / non-financial assets and liabilities at fair
values (either on a recurring or non-recurring basis).
Also, the fair values of financial instruments measured
at amortised cost are required to be disclosed in the
said financial statements. The Company is required
to classify the fair valuation method of the financial
/ non-financial assets and liabilities, either measured
or disclosed at fair value in the financial statements,
using a three level fair-value-hierarchy which reflects
the significance of inputs used in the measurement).
Accordingly, the Company uses valuation techniques
that are appropriate in the circumstances and for
which sufficient data is available to measure fair
value, maximizing the use of relevant observable
inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is
measured or disclosed in the financial statements are
categorized within the fair value hierarchy described
as follows:

(a) Level 1 financial instruments

Those where the inputs used in the valuation are
unadjusted quoted prices from active markets for
identical assets or liabilities that the Company
has access to at the measurement date. The
Company considers markets as active only if
there are sufficient trading activities with regards
to the volume and liquidity of the identical assets
or liabilities and when there are binding and
exercisable price quotes available on the balance
sheet date.

(b) Level 2 financial instruments

Those where the inputs that are used for valuation
and are significant, are derived from directly or
indirectly observable market data available over
the entire period of the instrument's life.

(c) Level 3 financial instruments

Include one or more unobservable input where
there is little market activity for the asset/liability
at the measurement date that is significant to the
measurement as a whole.

2.17 Significant management judgements in applying
accounting policies and estimation uncertainty

The preparation of financial statements requires the
use of accounting estimates which, by definition,
will seldom equal the actual results. Management
also needs to exercise judgement in applying the
Company's accounting policy. This note provides an
overview of the areas that involved a higher degree
of judgement or complexity, and of items which are
more likely to be materially adjusted due to estimates
and assumptions turning out to be different than
those originally assessed. Detailed information about
each of these estimates and judgements is included
in relevant notes together with information about the
basis of calculation for each affected line item in the
financial statements.

The following are significant management estimation/
uncertainty and judgement in applying the accounting
policies of the Company that have the most significant
effect on the financial statements:

Defined benefit obligation

Management estimates of these obligation is based
on a number of critical underlying assumptions such
as standard rates of inflation, mortality, discount rate
and anticipation of future salary increases. Variation
in these assumptions may significantly impact the
defined benefit obligation amount and the annual
defined benefit expenses.

Business model assessment

Classification and measurement of financial assets
depends on the results of business model and the solely
payments of principal and interest ("SPPI") test. The
Company determines the business model at a level that
reflects how groups of financial assets are managed
together to achieve a particular business objective.
This assessment includes judgement reflecting all
relevant evidence including how the performance of the
assets is evaluated and their performance measured,
the risks that affect the performance of the assets and
how these are managed and how the managers of
the assets are compensated. The Company monitors
financial assets measured at amortised cost that are
derecognised prior to their maturity to understand
the reason for their disposal and whether the reasons
are consistent with the objective of the business for
which the asset was held. Monitoring is part of the
Company's continuous assessment of whether the
business model for which the remaining financial
assets are held continues to be appropriate and if it

is not appropriate whether there has been a change in
business model and so a prospective change to the
classification of those assets.

Fair value of financial instruments : The fair value of
financial instruments is the price that would be received
to sell an asset or paid to transfer a liability in an orderly
transaction in the principal (or most advantageous)
market at the measurement date under current market
conditions (i.e. an exit price) regardless of whether
that price is directly observable or estimated using
another valuation technique. When the fair values of
financial assets and financial liabilities recorded in the
balance sheet cannot be derived from active markets,
they are determined using a variety of valuation
techniques that include the use of valuation models.
The inputs to these models are taken from observable
markets where possible, but where this is not feasible,
estimation is required in establishing fair values.

Effective Interest Rate (EIR) method : The Company
recognises interest income / expense using a rate of
return that represents the best estimate of a constant
rate of return over the expected life of the loans given /
taken. This estimation, by nature, requires an element
of judgement regarding the expected behaviour and
life-cycle of the instruments, as well as expected
changes to other fee income/expense that are integral
parts of the instrument.

Recognition of deferred tax assets

The extent to which deferred tax assets can be
recognised is based on an assessment of the
probability of the Company's future taxable income
against which the deferred tax assets can be utilized.

Property, plant and equipment

Measurement of useful life and residual values of
property, plant and equipment and useful life of
intangible assets.

Evaluation of indicators for impairment of assets

The evaluation of applicability of indicators of
impairment of assets requires assessment of several
external and internal factors which could result in
deterioration of recoverable amount of the assets.

Contingent liabilities

At each balance sheet date basis the management
judgment, changes in facts and legal aspects, the
Company assesses the requirement of provisions
against the outstanding contingent liabilities. However
the actual future outcome may be different from this
judgement.

Impairment of financial assets

At each balance sheet date, based on historical default
rates observed over expected life, the management
assesses the expected credit losses on outstanding
receivables and advances. The Company's expected
credit loss ("ECL') calculations are outputs of complex
models with a number of underlying assumptions
regarding the choice of variable inputs and their
interdependencies.

These estimates and judgements are based on
historical experience and other factors, including
expectations of future events that may have a financial
impact on the Company and that are believed to be
reasonable under the circumstances. Management
believes that the estimates used in preparation of
the standalone financial statements are prudent and
reasonable.

Determination of lease term

Ind AS 116 Leases requires lessee to determine the
lease term as the non-cancellable period of a lease
adjusted with any option to extend or terminate the
lease, if the use of such option is reasonably certain.
The Company makes assessment on the expected
lease term on lease by lease basis and thereby
assesses whether it is reasonably certain that any
options to extend or terminate the contract will be
exercised. In evaluating the lease term, the Company

considers factors such as any significant leasehold
improvements undertaken over the lease term, costs
relating to the termination of lease and the importance
of the underlying to the Company's operations taking
into account the location of the underlying asset
and the availability of the suitable alternatives. The
lease term in future periods is reassessed to ensure
that the lease term reflects the current economic
circumstances.

Discount rate for lease liability

The discount rate is generally based on the incremental
borrowing rate specific to the lease being evaluated or
for a portfolio of leases with similar characteristics.
And discount rate of security deposits is generally
based on the SBI deposit rate at the time of deposit.

Fair value of share-based payments

Estimating fair value for share-based payment
transactions requires determination of the most
appropriate valuation model, which depends on the
terms and conditions of the grant. This estimate also
requires determination of the most appropriate inputs
to the valuation model including the expected life of
the share option or appreciation right, volatility and
dividend yield and making assumptions about them.
For the measurement of the fair value of equity-settled
transactions with employees at the grant date, the
Company uses a Black-Scholes model.

19.4 Mr. Sanjay Sharma had exercised his rights to convert 9,49,376 warrants into equivalent equity shares and paid remaining
amount of ' 653.11 per warrant. Post that Company allotted him 9,49,376 equity shares of ' 10 each on September 24,
2024.

The Company had also allotted 21,39,125 equity shares of the Company of face value of ' 10 each at a premium of
' 868.63 on September 26, 2024 as per share subscription agreement dated September 18, 2024 entered into by and
amongst the Company, IMP2 Assets Pte. Ltd. ("ABC Impact"), British International Investment plc ("BN"), Mr. Sanjay
Sharma, Shvet Corporation LLP and Shankh Corporation LLP, and the amended and restated shareholders' agreement
dated September 18, 2024 entered by and amongst inter alia the Company, BII and ABC Impact.

Nature and purpose of reserves
Statutory reserves

The reserve is created as per the provision of Section 45(IC) of Reserve Bank of India Act, 1934. This is a restricted
reserve and no appropriation can be made from this reserve fund except for the purpose as may be prescribed by
Reserve Bank of India.

Securities premium reserves

Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilised only for limited
purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013, and during
the year such expenses amounting to the tune of ' 2.25 Crores have been utilised.

Employee stock outstanding account

In accordance with resolution approved by the shareholders, the Company has reserved shares options, for issuance to
the eligible employees through ESOP scheme. The Company has approved stock option schemes - ESOP Scheme 2016,
2020 and 2024 on August 05, 2016, November 10, 2020 and June 26, 2024 respectively as amended from time to time.

The Administrator (i.e. Nomination and Remuneration Committee ('NRC') of the Company's board of directors) has the
power to grant the options in pursuance to the ESOP schemes, each option consists of one equity share. Such option
vest at a definite date, save for specific incidents, prescribed in the schemes as framed/ approved by the Company and
shareholders . Such options are exercisable for a period following vesting at the discretion of the Board of Directors of
the Company , subject to the conditions prescribed in the ESOP schemes as amended from time to time.

Retained earnings - other than remeasurement of post employment benefit obligation

Retained earnings or accumulated surplus represents total of all profits retained since Company's inception. Retained
earnings are credited with current year profits, reduced by losses, if any, dividend payouts, transfers to General reserve or
any such other appropriations to specific reserves.

Retained earnings - remeasurement of post employment benefit obligation

Remeasurement of the net defined benefit liabilities comprise actuarial gain or loss.

2. In the current financial year, the Company received an income tax demand of ' 7.60 Crores for AY 2023-24. The
Company has disputed the order and filed a rectification request under Section 154 for deletion of the demand.

3. In the current financial year, the Company has received a demand order under Section 73 of the CGST Act
for FY 2020-21 amounting to ' 0.09 Crores related to its operations in Karnataka. The Company has filed an
appeal before the GST officer and has deposited ' 0.01 Crores for rectification of the demand. Based on the
management's opinion, the liability may potentially arise.

4. In the current financial year, the company has received a demand notice of ' 0.54 Crores for AY 2018-19
and ' 2.31 Crores for AY 2019-20 under Section 156 due to an alleged short deduction of TDS. The Company
had issued Rupee Denominated Bonds (RDB) to an investor and deducted TDS at 5% under Section 194LD.
However, the tax department contested that the underlying securities did not meet the conditions required to
be classified as RDB, resulting in a claim of short deduction of TDS. In response, the Company has filed an
appeal against the demand order. Based on the management's opinion, the liability may potentially arise.

| 34 | SEGMENT INFORMATION

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating
Decision Maker (CODM). The CODM makes strategic decisions and is responsible for allocating resources and assessing
performance of the operating segments.

The CODM considers the entire business of the Company on a holistic basis to make operating decisions reviews the
operating results of the Company as a whole. Further, the Company operates in a single reportable segment i.e. granting
loans, which has similar risks and returns for the purpose of Ind AS 108 "Operating segments", and is considered to be
the only reportable business segment. Furthermore, the Company is operating in India which is considered as a single
geographical segment.

| 35 | EMPLOYEE BENEFITS

35.1 Defined contribution plans

The Company has Defined Contribution Plans for post-employment benefits namely Provident Fund and National Pension
Scheme, which are administered by appropriate Authorities.

The Company contributes to a Government administered Provident Fund, Employees' Deposit Linked Insurance Scheme
and Employee Pension Scheme, on behalf of its employees and has no further obligation beyond making its contribution.

The National Pension Scheme applicable to certain employees is a Defined Contribution Plan as the Company contributes
to these Schemes which are administered by an Insurance Company and has no further obligation beyond making the
payment to the Insurance Company.

The Company contributes to State Plans namely Employees' State Insurance Fund and has no further obligation beyond
making the payment to them.

The Company's contributions to the above funds are charged to revenue every year.

The Company has recognised an expense of ' 23.27 Crores (Previous year ' 17.61 Crores) towards the defined
contribution plans.

35.2 Other long-term benefits

The Company has a defined benefit leave encashment plan for its employees. Under this plan, they are entitled to
encashment of earned leaves subject to certain limits and other conditions specified for the same. The liabilities towards
leave encashment have been provided on the basis of actuarial valuation. The Company recognised rupees 7.14 Crores
(March 31, 2024: rupees 4.68 Crores) for compensated absences in the statement of profit and loss.

35.3 Defined benefit plans

The Company's gratuity scheme provide for lump sum payment to vested employees at retirement, death while in
employment or on termination of employment of an amount equivalent to 15 days basic salary for each completed

35.6 Risk exposure:

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are
detailed below:-

Interest risk: The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an
increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability
(as shown in financial statements).

Liquidity risk: This is the risk that the Company is not able to meet the short-term / long term gratuity pay-outs. This may
arise due to non availability of enough cash / cash equivalent to meet the liabilities or holding of illiquid assets not being
sold in time.

Salary Escalation risk: The present value of the defined benefit plan is calculated with the assumption of salary increase
rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate
of increase in salary used to determine the present value of obligation will have a bearing on the plan's liability.

Demographic risk: The Company has used certain mortality and attrition assumptions in valuation of the liability. The
Company is exposed to the risk of actual experience turning out to be worse compared to the assumption.

Regulatory risk: Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act, 1972 (as
amended from time to time). There is a risk of change in regulations requiring higher gratuity pay-outs (e.g. Increase in
the maximum limit on gratuity of ' 0.2 Crores).

| 39 | EMPLOYEE SHARE BASED PAYMENTS*

The Company at its Annual General Meeting (AGM) held on August 05, 2016 had approved an Employee Stock Option
Plan 2016 ('the Plan') with initial pool of 19,32,080 options and had authorised the Company to issue stock options
under the above plan. At the AGM held on September 30, 2019, additional 8,69,390 shares were added to this plan. The
Company has provided loan to Aye Finance Employee Welfare Trust for purchase of total 28,01,470 Equity shares (ESOP
Shares) from the existing shareholders.

In Extraordinary General Meeting (EGM) held on November 10, 2020, the ESOP Plan 2016 was discontinued and balance
5,78,755 shares of ESOP pool were transferred to a new Employee Stock Option Plan (ESOP 2020 Plan). In the same
EGM, resolution was passed for approval of a new Employee Stock Option Plan 2020 ('the ESOP 2020 Plan') with initial
pool sise of 31,64,590 options which has been increased to 44,08,640 options from time to time and authorised the
Company to issue stock options under the above plan.

In financial year 2024, to further enhance employee engagement and retention, the Company introduced a new Employee
Stock Option Plan in 2024 ('the ESOP 2024 Plan'). At the Extraordinary General Meeting held on June 26, 2024, a total
of 15,82,295 options were approved for the 2024 scheme. At the EGM held on August 16, 2024, additional 20,00,000
options were added to this plan and at the EGM held on September 28, 2024, another 20,00,000 options were added to
this plan.

The vesting period for the options in ESOP 2016 Plan, ESOP 2020 Plan and ESOP 2024 Plan is 4 years (with 10%, 20%,
30% and 40% annual vesting under the ESOP 2016 Plan and 25% annual vesting under the ESOP 2020 Plan and ESOP
2024 Plan) commencing from the date of grant of options. It is the intention of the Company that the options would be
exercised at the time of the listing of the shares pursuant to the liquidity event as defined in the ESOP scheme. During
the year, the Company had granted 15,07,460 options on July 02, 2024. Fair valuation has been carried at the grant
date using the Black-Scholes model. The shares of the Company are not listed on any stock exchange. Accordingly, the
expected median volatility for listed peer group has been considered.

| 41 | The Company does not have any long term contracts including derivative contracts for which there are any material
foreseeable losses as at March 31, 2025 and as at March 31, 2024.

| 42 | There are no amounts which were required to be transferred to the Investor Educational and Protection Fund by the
Company as at March 31, 2025 and March 31, 2024.

| 43 | The Company does not have any year end unhedged foreign currency exposures as at March 31, 2025 and March 31,

2024.

| 44 | STANDARDS ISSUED BUT NOT YET EFFECTIVE

There are no standards that have been issued by Ministry of Corporate Affairs that are not yet effective as at March 31,

2025.

| 45 | DISCLOSURES RELATING TO SECURITISATION

The primary objectives of the Company's capital management policy are to ensure that the Company complies with
externally imposed capital requirements and maintains strong credit ratings and healthy capital ratios in order to support
its business and to maximise shareholder value.

The Company manages its capital structure and makes adjustments to it according to changes in economic conditions
and the risk characteristics of its activities. In order to maintain or adjust the capital structure, the Company may adjust
the amount of dividend payment to shareholders, return capital to shareholders or issue capital securities. No changes
have been made to the objectives, policies and processes from the previous years. However, they are under constant
review by the Board.

*The above ratio has been computed in accordance with the relevant guidelines issued by the RBI.

Tier 1 capital consists of shareholders' equity and retained earnings. Tier II capital consists of general provision and loss
reserve against standard assets . Tier 1 and Tier II has been reported on the basis of Ind AS financial information.

| 49 | FINANCIAL RISK MANAGEMENT FRAMEWORK

The Company's principal financial liabilities comprise borrowings from banks and debentures. The main purpose of
these financial liabilities is to finance the Company's operations and to support its operations. The Company's financial
assets include loan and advances, investments and cash and cash equivalents that derive directly from its operations.

In the course of its business, the Company is exposed to certain financial risks namely credit risk, interest risk, price risk,
currency risk & liquidity risk. The Company's primary focus is to achieve better predictability of financial markets and
seek to minimize potential adverse effects on its financial performance.

The Company's board of directors has an overall responsibility for the establishment and oversight of the Company's
risk management framework. The board of directors has established the risk management committee and asset liability
committee, which is responsible for developing and monitoring the Company's risk management policies. The committee
reports regularly to the board of directors on its activities.

The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set
appropriate risk limits and controls and to monitor risks and adherence to limits. risk management policies and systems
are reviewed regularly to reflect changes in market conditions and the Company's activities.

The Company's risk management committee oversees how management monitors compliance with the Company's risk
management policies and procedures, and reviews the adequacy of the risk management framework in relation to the
risks faced by the Company.

Credit risk is the risk that the Company will incur a loss because its customers fail to discharge their contractual
obligations. The Company has a comprehensive framework for monitoring credit quality of its loans and advances
primarily based on days past due monitoring at year end. Repayment by individual customers and portfolio is tracked
regularly and required steps for recovery are taken through follow ups and legal recourse.

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same
geographical region, or have similar economic features that would cause their ability to meet contractual obligations to
be similarly affected by changes in economic, political or other conditions. In order to avoid excessive concentrations of
risk, the Company's policies and procedures include specific guidelines to focus on spreading its lending portfolio across
various products / states / customer base with a cap on maximum limit of exposure for an individual / Group.

The Company reviews the credit quality of its loans based on the ageing of the loan at the year end and hence the
Company has calculated its ECL allowances on a collective basis.

49.1.2 Inputs considered in calculation of ECL

In assessing the impairment of financial loans under Expected Credit Loss (ECL) Model, the assets have been
segmented into three stages. The three stages reflect the general pattern of credit deterioration of a financial
instrument. The differences in accounting between stages, relate to the recognition of expected credit losses and
the measurement of interest income.

The Company categorises loan assets into stages primarily based on the Days Past Due status.

Stage 1 : 0 to 30 days past due
Stage 2 : 31 to 90 days past due
Stage 3 : More than 90 days past due

49.1.3 Definition of default

The Company considers a financial asset to be in "default" and therefore Stage 3 (credit impaired) for ECL
calculations when the borrower becomes 90 days past due on its contractual payments.

49.1.4 Exposure at default

"Exposure at default" (EAD) represents the gross carrying amount of the assets subject to impairment calculation.

49.1.5 Estimations and assumptions used in the ECL model

(a) Loss given default (LGD) is common for all three Stages and is based on loss in past portfolio. Actual cashflows
on the past portfolio are considered at portfolio basis for arriving loss rate.

(b) Probability of default (PD) is applied on Stage 1, Stage 2 and Stage 3 portfolio . This is calculated as an
average of periodic movement of default rates.

49.2 Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial
liabilities (other than derivatives) that are settled by delivering cash or another financial asset. The Company's approach
to managing liquidity is to ensure as far as possible, that it will have sufficient liquidity to meet its liabilities when they
are due.

Liquidity risk management in the Company is managed as per the guidelines of Board-approved Asset-Liability
Management ('ALM') Policy which is monitored by the Asset Liability Committee. The ALM Policy provides the governance
framework for the identification, measurement, monitoring and reporting of liquidity risk arising out of Company's lending
and borrowing activities. The Company maintains flexibility in funding by maintaining availability under committed credit
lines. Management monitors the Company's liquidity positions (also comprising the undrawn borrowing facilities) and
cash and cash equivalents on the basis of expected cash flows. The Company also takes into account liquidity of the
market in which the entity operates.

49.3 Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such
as equity price risk and commodity price risk. Financial instruments affected by market risk include foreign currency
receivables.

49.3.1 Foreign currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange
rates. Foreign currency risk for the Company arises majorly on account of foreign currency borrowings. When a
derivative is entered into for the purpose of being as hedge, the Company negotiates the terms of those derivatives to
match with the terms of the hedge exposure. The Company's policy is to fully hedge its foreign currency borrowings
at the time of drawdown and remain so till repayment.

The Company holds derivative financial instruments such as cross currency interest rate swap to mitigate risk of
changes in exchange rate in foreign currency and floating interest rate. The counterparty for these contracts is
generally a bank. These derivative financial instruments are valued based on quoted prices for similar assets and
liabilities in active markets or inputs that are directly or indirectly observable in market place.

Fair Value hierarchy of Asset and Liabilities not measured at fair value

The management assessed that carrying value of financial asset and financial liabilities are a reasonable approximation
of their fair value and hence their carrying values are deemed to be fair values.

Valuation methodologies of financial instruments not measured at fair value
Loans

Most of the loans are repriced frequently, with interest rate of loans reflecting current market pricing. Hence carrying
value of loans is deemed to be equivalent of fair value.

Borrowings

Debt securities and borrowings are fixed rate borrowings and fair value of these fixed rate borrowings is determined by
discounting expected future contractual cash flows using current market interest rates charged for similar new loans
and carrying value approximates the fair value for fixed rate borrowing at financial statement level. The Company's
borrowings which are at floating rate approximates the fair value.

Short term and other financial assets and liabilities

The management assessed that cash and cash equivalents, investments, other financial assets, trade payables and other
financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

Credit risk is controlled by restricting the counterparties that the Company deals with, to those who either have
banking relationship with the Company or are internationally renowned or can provide sufficient information. Market/
Price risk arising from the fluctuations of interest rates and foreign exchange rates or from other factors shall be
closely monitored and controlled. Normally transaction entered for hedging, will run over the life of the underlying
instrument, irrespective of profit or loss. Liquidity risk is controlled by restricting counterparties to those who have
adequate facility, sufficient information, and sizable trading capacity and capability to enter into transactions in any
markets around the world.

The respective functions of trading, confirmation and settlement should be performed by different personnel.
The front office and back-office role is well defined and segregated. All the derivatives transactions are quarterly
monitored and reviewed. All the derivative transactions have to be reported to the board of directors on every
quarterly board meetings including their financial positions.

Note 1: The above 53.7.1 information is provided as per MIS/reports generated available for internal reporting
purpose which include certain estimates and assumptions. The same has been relied upon by the auditors.
Note 2: There is an investment in subsidiary at cost (unquoted) i.e. 249,999 equity shares of RS 10 in Foundation
for Advancement of Micro Enterprises (FAME) total ' 0.25 Crores. Please refer note 6 - Investments.

Master Direction - Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions,
2023

53.8 Details of financing of parent company products

The Company doesn't have parent Company, hence this clause is not applicable.

53.9 Details of Single Borrower Limit (SBL) / Group Borrower Limit (GBL) exceeded by the NBFC

The Company has not exceeded the Single Borrower Limit (SGL) / Group Borrower Limit (GBL) during the March 31,
2025 and March 31,2024.

53.10 Unsecured advances

The Company has given ' 2,202.90 Crores (previous year: ' 1659.19 Crores) of unsecured loans.

53.11.2 Disclosure of penalties imposed by RBI and other regulators -

No penalties were imposed by the regulator during the year ended March 31, 2025 and March 31, 2024.

53.11.3 Related party transactions

Refer note 36 of Financial Statements for related party transaction disclosure.

The Company have not entered into any transactions related to borrowings, deposits, placement of deposits,
advance, purchase/sale of fixed/other assets and Investments during the year with directors, KMP and their
relatives except (i) advance given to subsidiary (FAME) of ' 2 Crores , maximum outstanding during the year of ' 2
Crores and outstanding as on March 31, 2025 of ' 0.25 Crores. (ii) loan given to KMP of ' 0.36 Crores , maximum
outstanding during the year of ' 0.36 Crores and outstanding as on March 31, 2025 of ' 0.33 Crores.

53.20 Details of the Code on Social Security, 2020 (‘CODE') relating to employee benefits

The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and post-employment
benefits received Presidential assent in September, 2020. The Code has been published in the Gazette of India.
However, the date on which the Code will come into effect has not been notified and the final rules/interpretation
have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record
any related impact in the period the Code becomes effective.

53.21 The Company owns 100% of Foundation for Advancement of Micro Enterprises (FAME), incorporated under Section
8 of the Companies Act, 2013, to carry on social responsibility activities. The financial statements of FAME are not
considered for consolidation since the definition of control is not met as the Company's objective is not to obtain
economic benefits from the activities of FAME.

53.23 Postponement of revenue recognition

There is no significant uncertainty which requires postponement of revenue recognition as at March 31, 2025 and
March 31, 2024.

53.24 Details of dues to micro and small enterprises as defined under the MSMED Act, 2006

Payment against the supplies from the undertakings covered under the Micro, Small & Medium Enterprises
Development Act, 2006 are generally made in accordance with the agreed credit terms.

On the basis of information and record available with the management, there are no overdue balances of such
suppliers and interest due on such accounts as on March 31,2025 and March 31,2024.

The Company has neither paid any interest nor such amount is payable to buyer covered under the MSMED Act, 2006.

53.25 Details of non-performing financial assets purchased/sold

The Company has sold non performing financial asset during 2024-25 and has not sold non performing financial
asset during 2023-24. Refer Note no. 53.27.1 (c ).

53.26 Value of imports calculated on CIF basis

The Company has not imported any goods therefore value of import on CIF basis is Nil. (As on March 31, 2024 -
Nil).

53.27 Disclosure pursuant to Master Direction - Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021
issued by the Reserve Bank

Note 3 : Public funds are as defined in Master Direction - Non Banking Financial Company - Scale based
circular DOR.CRE.REC.No.60/03.10.001/2021-22 dated October 22, 2021.

53.28 Transfer of financial assets

53.28.1 Transferred financial assets that are not derecognised in their entirety

The following tables provide a summary of financial assets that have been transferred in such a way that part or all
of the transferred financial assets do not qualify for derecognition, together with the associated liabilities.

The Company has transferred certain pools of fixed rate loan receivables backed by underlying assets by entering
into securitisation transactions with the Special Purpose Vehicle Trusts (SPV Trust) sponsored by financial
institution for consideration received in cash at the inception of the transaction.

The Company, being Originator of these loan receivables, also acts as Servicer with a responsibility of collection of
receivables from its borrowers and depositing the same in Collection and Pay-out Account maintained by the SPV
Trust for making scheduled pay-outs to the investors in Pass Through Certificates (PTCs) issued by the SPV Trust.
These securitisation transactions also requires the Company to provide for first loss credit enhancement in various
forms, such as corporate guarantee, cash collateral etc. as credit support in the event of shortfall in collections
from underlying loan contracts. By virtue of existence of credit enhancement, the Company is exposed to credit
risk, being the expected losses that will be incurred on the transferred loan receivables to the extent of the credit
enhancement provided. In view of the above, the Company has retained substantially all the risks and rewards
of ownership of the financial asset and thereby does not meet the derecognition criteria as set out in Ind-AS 109.
Consideration received in this transaction is presented as 'Borrowing under Securitisation' under Note 14.

53.38 Divergence in Asset Classification and Provisioning

RBI vide its circular RBI/2022-23/26 DOR.ACC.REC.No.20/21.04.018/2022-23 dated April 19, 2022 has directed
NBFCs shall make suitable disclosures, if either or both of the following conditions are satisfied:-

(a) the additional provisioning requirements assessed by RBI (or National Housing Bank(NHB) in the case of
Housing Finance Companies) exceeds 5 percent of the reported profits before tax and impairment loss on
financial instruments for the reference period, or

(b) the additional Gross NPAs identified by RBI/NBH exceeds 5 percent of the reported Gross NPAs for the
reference period.

No inspection conducted by the RBI during the financial year ended March 31,2025 and March 31,2024.

Qualitative Disclosure on LCR -

As per Reserve Bank of India guidelines, all deposit-taking NBFCs irrespective of their asset size and non-deposit¬
taking NBFCs with an asset size of '5,000.00 Crores and above are required to maintain a liquidity coverage ratio
(LCR) to ensure availability of adequate high-quality liquid assets (HQLA) to survive any acute liquidity stress
scenario i.e. cash outflow increased to 115% and cash inflow decreased to 75%, lasting for 30 days. As per RBI
guidelines, LCR has been calculated using the simple average of daily observations (over a period of 90 days).

Cash outflows under secured funding include contractual payments of the term loan, NCDs, and other debt obligations
including interest payments. To compute inflow from fully performing exposures, the Company considers collection
from performing advances including interest due in the next 30 days. Other cash inflows include cash from non-
collable fixed deposits, Certificates of deposits, and mutual fund investments maturing in the next 30 days on as-is
basis. The LCR as of March 31, 2025, is 358.39%, which is above the regulatory requirement of 100%.

Notes:

1 As defined in Paragraph 5.1.26 of the RBI NBFC Directions.

2 Provisioning norms shall be applicable as prescribed in these Directions.

3 All notified Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of
investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect
of quoted investments and break up / fair value / NAV in respect of unquoted investments shall be disclosed
irrespective of whether they are classified as long term or current in (5) above.

| 55 | OTHER STATUTORY INFORMATION

(a) The Company do not have any investment property.

(b) The Company do not have any benami property, where any proceeding has been initiated or pending against the
group for holding any benami property.

(c) Since, the Company does not have any immovable property, clause related to title deeds of property not held in the
Company's own name is not applicable.

(d) The Company does not have any pending creation of charge or satisfaction of charge which are yet to be filed or
registered with Registrar of Companies except for 32 cases where satisfaction of charges could not be filed due to
non receipt of NOC from respective bank/financial institution. The Company is in process of obtaining such NOCs.

(e) The Company is a NBFC - Middle Layer as classified under Master Direction - Reserve Bank of India (Non-Banking
Financial Company - Scale Based Regulations) Directions, 2023.

(f) The quarterly statement of current assets submitted to banks/ financial institutions which are provided as security
against the borrowings are in agreement with the books of account.

(g) There has been no significant events after the reporting date require disclosure in these financial statements.

(h) The Company has not entered any transactions with companies that were struck off under Section 248 of the
Companies Act, 2013 or Section 560 of the Companies Act, 1956.

(i) The Company has not traded or invested in crypto currency or virtual Currency during the financial year.

(j) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign
entities (intermediaries) with the understanding that the intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the Company (ultimate beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

The Company has not received any fund from any person(s) or entity(ies), including foreign entities (funding
party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or
on behalf of the funding party (ultimate beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the ultimate beneficiaries

(k) The Company do not have any such transaction which is not recorded in the books of accounts that has been
surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such
as, search or survey or any other relevant provisions of the Income Tax Act, 1961.

(l) During the year, no scheme of arrangements in relation to the Company has been approved by the competent
authority in terms of Sections 230 to 237 of the Companies Act, 2013. Accordingly, aforesaid disclosure are not
applicable to the Company.

(m) The Company has not granted any loans or advances in the nature of loans to promoters, directors, KMPs and the
related parties (as defined under the Companies Act, 2013), either severally or Jointly with any other person that are:

(a) Repayable on demand; or

(b) without specifying any terms or period of repayment."

(n) The Company is not declared wilful defaulter by any bank or financial institution or other lenders.

(o) During the financials year 2024-25 and financials year 2023-24, The Company has not invested with number of
layers of Companies as prescribed under clause (87) of Section 2 of the Act read with the Companies (Restriction
on number of Layers) Rules, 2017

In terms of our report attached

For S S Kothari Mehta & Co. LLP For and on behalf of the Board of Directors of

Chartered Accountants Aye Finance Limited (Formerly known as Aye Finance Private Limited)

Firm Registration No.: 000756N / N500441

per Vijay Kumar Sanjay Sharma Govinda Rajulu Chintala Krishan Gopal Vipul Sharma

Partner Managing Director Chairperson and Chief Financial Officer Company Secretary

Membership No: DIN: 03337545 Independent Director Membership No: A27737

092671 DIN: 03622371

Gurugram Gurugram Hyderabad Gurugram Gurugram

May 21, 2025 May 21,2025 May 21, 2025 May 21, 2025 May 21, 2025