Dar Credit & Capital Ltd

To,

The Members,

Your director's have pleasure in presenting their Thirty-First Annual Report on the Business and Operations of the Company and the accounts for the financial year ended 3istMarch, 2025.

i. FINANCIAL RESULTS

2. DIVIDEND

In view of the financial performance of the Company during the year under review, the Board of Directors has recommended a dividend of 5% (i.e., ^0.50 per equity share of Rsio each) for the financial year ended 31st March 2025, subject to the approval of the shareholders at the ensuing Annual General Meeting (AGM).

The recommended dividend is in accordance with the Dividend Distribution Policy of the Company, which aims to balance the objective of rewarding shareholders and maintaining adequate reserves for future growth.

3. RESERVES

The Board has decided to transfer a sum of Rs. I Crores to General Reserves and a sum of Rs.1.41 Crores to statutory Reserve Fund maintained as per RBI guidelines.

4. BRIEF DESCRIPTION OF THE COMPANY'S AFFAIRS

The Company successfully listed its equity shares on the NSE Emerge platform under the SME segment on 28th May 2025. This marks a significant milestone, as the Company has become the first Non-Banking Financial Company (NBFC) from the Eastern region to be listed on NSE Emerge and the issue received an overwhelming response from investors and was oversubscribed approximately 106 times.

During the year under review Company has delivered strong performance. Despite a complex macroeconomic environment - market by fluctuating interest rates, geopolitical uncertainty, and evolving regulatory landscapes - we remained resilient and agile.The Company's total income for the financial year ended March 31,2025, has increased to Rs. 41.39 Crores from Rs. 32.86 Crores having a revenue growth of 26%. The Profit before Depreciation & Tax (PBDT) of the Company has increased to Rs 9.72Crores from Rs. 5.49 Crores. The Profit after Tax has also increased to Rs 7.04 Crores from Rs 3.68 Crores having a growth of 91%. During the year under review an amount of Rs.1.41 Crores was transferred to Statutory Reserve Fund pursuant to Section 45-IC of the Reserve Bank of India Act, 1934 and an amount of Rs. 1 Crores was transferred to General Reserve. The Company's Net Worth as on March 31,2025 stood at Rs. 73.51 Crores as against Rs. 66.97 Crores, in the last year. The Company has continued its thrust in financing Personal Loan/MSME Loans.

In the current year, your Company has focused on Secured MSME Lending, which involves providing loans to businessmen who offer their shops, houses, vacant land as collateral security. To support this initiative, several branches have been opened in West Bengal, Bihar, and Jharkhand, continuing the Company's focus on the MSME lending program. These expansions are expected to drive improved business performance, higher profits, increased revenue, and overall growth for the Company.

Your Company has been operating in Rajasthan for the past 30 years. As part of its strategic expansion in the region, a new branch has been opened in Chittorgarh, primarily focused on providing Loan against Property (LAP) for business loans.

Since your Company is engaged in the small value loan and delivering credit to the last mile borrower, there is enormous opportunity to grow.

5. RESOURCES

State Bank of India our main lender in banking has continued to support Company's lending programs.

During the year under review, other Banks & NBFCs have also supported Company's lending program.

6. RATING

To scale up the resource base of the Company and to take bank loan, the Company had applied for credit rating of bank /NBFC loan limit for upto Rs. 162 Crores to Credit Analysis & Research Ltd. (CARE), who have maintained the investment grade rating of the Company-“BBB-” (stable outlook).

7. NPA

The percentage of gross non-performing assets (GNPA) as of March 31, 2025 is 1.11%, as against 0.55% as of March 31,2024. The percentage of net non-performing assets (NNPA) as of March 31,2025is 0.58% as against 0.35% as of March 31,2024.

Gross NPA and Net NPA shown an increase due to recognition of NPA on 120 days basis and also due to marginal distress on unsecured loan portfolio.

8. MANAGEMENT DISCUSSION & ANALYSIS Opportunities

In the current financial ecosystem, NBFCs (Non-Banking Financial Companies) are strategically positioned to capitalize on emerging opportunities in the MSME and personal loan segments. The MSME sector in India, despite its vital role in employment generation and economic development, continues to face a significant credit shortfall. Traditional banks often shy away from lending to MSMEs due to perceived risks, lack of formal documentation, and rigid collateral requirements. NBFCs, with their flexible approach and deep penetration into semi-urban and rural markets, are well-suited to fill this gap. By using alternative credit assessment models, digital tools, and localized outreach strategies, NBFCs can offer tailored financial products that meet the diverse needs of small and medium enterprises.

The increasing formalization of MSMEs through GST registrations and digital adoption has improved their visibility and credit profile, making them more bankable. NBFCs that adopt technology for credit scoring and monitoring can gain a competitive edge in efficiently underwriting and servicing these clients.

Simultaneously, the personal loan segment has seen robust growth, driven by changing consumer behavior, increasing urbanization, and a growing preference for short-term, unsecured credit. Traditional financial institutions often find it challenging to cater to this segment due to the lack of conventional income proofs or credit histories. NBFCs, on the other hand, are more agile and open to using alternate data?like transaction patterns, mobile usage, and social media footprints?for credit evaluation. This makes them better equipped to offer small-ticket, quick-disbursal loans in a fully digital environment.

The advent of fintech partnerships has further enhanced the capabilities of NBFCs in delivering personal loans at scale. By integrating with payment gateways, e-commerce platforms, and digital wallets, NBFCs can embed credit products directly into consumer journeys. This not only improves loan uptake but also provides rich data for better risk assessment With advanced analytics, Al-driven models, and automation, NBFCs can significantly reduce operational costs and improve turnaround times?key factors in customer satisfaction for personal lending.

In conclusion, the MSME and personal loan segments offer immense growth potential for NBFCs that are willing to innovate, digitize, and adapt to evolving market dynamics. By focusing on underserved segments, adopting risk-sharing mechanisms, and leveraging technology, NBFCs can play a crucial role in driving inclusive credit growth while building sustainable and profitable lending portfolios.

Threat

Despite the growth opportunities in the MSME and personal loan segments, NBFCs face several critical threats in the current economic and regulatory environment One of the primary concerns is the rising credit risk, especially in the MSME sector. Many MSMEs continue to operate in informal settings with volatile cash flows and limited financial documentation, making it challenging to assess creditworthiness accurately. While alternative data and digital underwriting can improve assessments, they are not foolproof. In times of economic stress?such as inflationary pressures, supply chain disruptions, or geopolitical tensions?MSMEs are among the first to feel the impact, which can lead to increased defaults and NPAs for lenders, especially those with significant exposure.

Another pressing threat is the intensifying competition from both traditional banks and new-age fintechs. Large private banks are increasingly entering the MSME and personal loan spaces with aggressive pricing, better technology, and stronger balance sheets. At the same time, fintech startups, often backed by venture capital, are offering highly personalized digital lending products with rapid disbursals, often outpacing NBFCs in

customer experience. This competition is squeezing margins and forcing NBFCs to either take on higher risk or invest heavily in tech to stay relevant, which may not be feasible for all players.

Additionally, regulatory tightening by the RBI poses a significant challenge. The regulator is increasingly bringing NBFCs under a more stringent compliance and supervision framework, similar to banks. Recent guidelines on digital lending, data privacy, co-lending norms, and provisioning requirements aim to safeguard customers and the system, but they also increase the operational and compliance burden on NBFCs. Smaller or mid-sized NBFCs, in particular, may struggle to keep up with these requirements, impacting their ability to scale efficiently.

Lastly, funding constraints remain a structural threat for many NBFCs. Unlike banks, NBFCs do not have access to low-cost deposits and are heavily dependent on market borrowings or bank lines of credit In times of market volatility or credit tightening, raising funds becomes more expensive and difficult, directly affecting lending capacity. This is especially critical in segments like MSME and personal loans where default risks are inherently higher, and margins must be managed carefully. Without consistent and affordable funding, many NBFCs may be forced to slow down disbursements or exit riskier segments, losing ground to better-capitalized competitors.

Business Outlook

The Non-Banking Financial Company (NBFC) segment is expected to gain positive momentum in coming future. The growth of many NBFCs in India had been driven by higher-than-expected investment banking revenues and interest income. NBFCs had also mobilized their on-ground recovery staff to ramp up their collection efforts. NBFCs with a niche presence and strong pricing power are likely to witness margin expansion in the years ahead.

NBFC segment has entered into a new business landscape wherein it needs to continuously strive to innovate and add new products to its toolkit. Core strength of NBFCs include customer base; strong distribution and servicing reach; higher risk appetite; flexible business model and faster scale-up and scale-down capability. The NBFCs have also been fast in adopting newer technology led processes. Leveraging the above, product providers like NBFCs can consider expanding into marketplace driven platforms to serve a customer with multitude of products and services while ensuring customer protection.

9. CHANGE IN THE NATURE OF BUSINESS. IF ANY

There has been no change in the nature of business of the Company.

10. THE NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES. JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR

The Company does not have any Subsidiaries, Joint Ventures or Associate Companies during the year

11. MAINTENANCE OF COST RECORDS AS SPECIFIED BY THE CENTRAL GOVERNMENT UNDER SUB-SECTION (i) OF SECTION ia8 OF THE COMPANIES ACT. 2on.

Maintenance of cost records and requirements of cost audit as prescribed under the provisions of section 148(1) of the Act is not applicable for the business activities carried out by the company.

12. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

No material changes occurred subsequent to the close of the financial year of the Company to which the balance sheet relates and the date of the report.

13. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

No significant and material orders have been passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future.

14. DEPOSITS

Your Company does not accept deposits from the public.

15. STATUTORY AUDITORS

At the Twenty-Sixth AGM held on iythAugust 2020, the Members approved appointment of M/s K A S G 8c Co., Chartered Accountants (Firm Registration No. 002228C) as Statutory Auditors of the Company to hold office for a period of five years from the conclusion of that AGM till the conclusion of the thirty-first AGM. The statutory audit report is attached with financial statements and forms part of this report and does not contain any qualification, reservation or adverse remarks.

As per Section 139 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, the term of M/s K A S G & Co., Chartered Accountants (Firm Registration No. 002228C), as the Statutory Auditors of the Company, expires at the conclusion of 31st AGM of the Company.

The Board of Directors of the Company at their meeting held on nth June, 2025, based on the recommendation of the Audit Committee, have recommended the appointment of M/s. VMSM & Co., Chartered Accountants (Firm Registration No. 329962E) as Statutory Auditors of the Company in place of M/s K A S G & Co., Chartered Accountants, for a term of 5 (five) consecutive years from the conclusion of 31st AGM till the conclusion of the 36th AGM, i.e FY 2025-2026 till FY 2030-2031 subject to the approval of the members. Accordingly, an Ordinary Resolution, proposing appointment of M/s. VMSM & Co., Chartered Accountants as the Statutory Auditors of the Company for a term of five consecutive years pursuant to Section 139 of the Act, forms part of the Notice of the 31st AGM of the Company.

The Company has received the written consent and certificate that they satisfy the criteria provided under section 141 of the Act and that the appointment, if made, shall be in accordance with the applicable provisions of the Act and rules framed thereunder.

16. AUDITOR'S REPORT

The observations of Auditors in their report read with notes to the accounts are self- explanatory and do not call for any further explanation. The Report given by the Statutory Auditors is annexed as “Annexure 1 and Annexure 2”

17. INTERNALAUDITORS

The Board approved appointment of M/s B Chatterjee & Co., Chartered Accountants as Internal Auditor of the Company to conduct audit for FY 2024-25.

18. SHARE CAPITAL

The Authorised Share Capital of the Company has increased from Rs. 12.50 Crores to Rs. 15 Crores.

The Paid up Share Capital of the Company has increased from Rs. 10 Crores to Rs. 14.27 Crores.

19. ANNUAL RETURN

Pursuant to section 92(3) read with section 134 (3)(a) of the Companies Act, 2013 the annual return as on 31st March, 2025 can be accessed on the Company's website at the https://www.darcredit.com/

20. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

Since your Company renders financial services, the disclosure relating to conservation of energy and technology absorption is not applicable.

21. FOREIGN EXCHANGE EARNINGS AND OUTGO

We have made payment for Rising Sun Software for the service availed by us for the FY

2024- 2025 is f 5,92,409.

22. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company has met the prescribed threshold under section 135 of the Companies Act,20i3 during FY 2024-2025 but the provisions of CSR shall be applicable from the FY

2025- 2026.

23. NUMBER OF MEETINGS OF THE BOARD

24. CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Saswata Chaudhuri, Independent Director of the Company retired from his position with effect from 31.07.2024 in accordance with the provision of the Companies Act,20i3 and Article of Association of the Company. He was eligible for reappointment and has been reappointed for a further term of 2 (two) years with effect from 01.08.2024.

Further, Ms. Neha Baid, Independent Women Director of the Company, retired from her position with effect from 24.03.2025 in accordance with the provision of the Companies Act,20i3 and the Article of Association of the Company.

She was subsequently appointed as an Additional Director (Independent Director) with effect from 25th March 2025 and shall hold office up to the date of the ensuing Annual General meeting and thereafter she will be reappointed as an Independent Director subject to the approval of shareholders of the Company for a second term of five years in the upcoming annual general meeting.

25. DECLARATION OF INDEPENDENCE

The Company has received declarations from all Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under the provisions of Section 149(6) of the Companies Act, 2013 along with Rules framed thereunder.

In the opinion of the board, Independent Directors fulfil the conditions specified in the Act and the rules made there under for appointment as Independent Directors including integrity, expertise and experience and confirm that they are independent of the management All the Independent Directors of the Company have registered their names with the data bank of Independent Directors and completed online proficiency self- assessment test as per the timeline notified by the Ministry of Corporate Affairs (MCA).

26. DETAILS OF FRAUDS REPORTED BY THE AUDITORS

During the year under review, the Auditors of the Company have not reported any fraud as required under Section 143(12) of the Companies Act, 2013.

27. INFORMATION ON COMMITTEES OF BOARD;

Following is the details of various committees and its members. The committee meetings were held periodically and were attended by the respective members. The Finance Management Committee (Formerly known as Borrowing Committee) meetings took place as and when fresh/new loans were availed by the Company.

A. Risk Management Committee;

B. Internal Compliants Committee:

C. Asset and Liability Management Committee:

D. Finance Management Committee:

E. Audit Committee:

F. Nomination & Remuneration Committee:

G. Stakeholder Relationship Committee

28. GENERAL BODY MEETING

29. PARTICULARS OF LOANS. GUARANTEES OR INVESTMENTS UNDER SECTION 186

The disclosure under section 186 of Companies Act, 2013 is not applicable since your Company is a Non-Banking Finance Company.

30. RISK MANAGEMENT POLICY

Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. The Company has adopted strict measures towards formulating an effective operational risk management strategy which involves identification, assessment, review, control and reporting of key operational risks. The Company has built into its operational process proper segregation of functions, clear

reporting structures, well-defined processes, operating manuals, staff training, verification of high value transactions and strong audit trails to control and mitigate operational risks. New product and activity notes prepared by business units are reviewed by all concerned departments including compliance, risk management and legal. Measurement and reporting is also achieved through the various management information systems, providing easily retrievable information, intertwined with each operational process which are generated and monitored regularly. All concerned departments coordinate and discuss key operational risk issues involving people, process, and technology, external factors, among others, so as to minimize them or ensure adequate controls over them. Risk registers across various processes are assessed for likelihood and vulnerability of threats, and their acceptability evaluated based on existing controls. The Company has set up a centralized control mechanism for better deployment and management of resources. The Company has also put in place a rigorous surveillance and classification of information system to ensure robust information technology risk management. The Company has a well-designed business continuity plan, whose effectiveness is gauged by proper testing mechanisms and which ensures continuity of business in the unlikely event of business disruption. In order to provide continued and uninterrupted service even during natural disasters, a disaster recovery site is in place. To further enhance the standard operating procedures and various technological functions, the Company is has been investing so as to keep its technological systems constantly updated across the various domain functions. In addition, to manage operational risk prudently, know your customer and anti-money laundering policy are in place. The Company's risk management framework emphasizes on analyzing and understanding the underlying risks before undertaking any transactions and changing or implementing processes and systems. This is facilitated by a robust governance structure, which includes multi-tiered approval levels for all transactions and processes. This mechanism is aided by a regular review of the portfolio and control mechanisms, undertaking self- assessment programs and monitoring of key risk indicators.

31. NOMINATION & REMUNERATION POLICY

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration the contents of which are placed on the website of the Company https://www.darcredit.com/

32. PARTICULARS OF CONTRACT OR ARRANGEMENT WITH RELATED PARTIES

In accordance with the provisions of Section 188(1) of the Companies Act, 2013 there are no materially significant related party transactions made by the Company with Promoters,

Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. Accordingly, no transactions are being reported in Form AOC-2 in terms of Section 134 of the Act read with rule 8 of the Companies (Accounts) Rules, 2014 and hence does not form part of this report

However, the disclosures of the related parties are provided in the notes to accompanying Standalone F inancial Statements of the Company for the F inancial Year ended 31st March 2025 in the accordance with the Accounting Standards.

33. ADEQUACY OF INTERNAL FINANCIAL CONTROL

The Company has in place adequate financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed.

34. OBLIGATION OF COMPANY UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION. PROHIBITION AND REDRESSAL) ACT. 20K

The Company has adopted a policy for prevention of sexual harassment of women at workplace and has set up committee for implementation of said policy. During the year, Company has not received any complaint of harassment.

35. THE DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE. 2016 DURING THE YEAR ALONGWITH THEIR STATUS AS AT THE END OF THE FINANCIAL YEAR

There is no application made or no proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year.

36. ONE TIME SETTLEMENT

There has been no one-time settlement done during the year.

37. SECRETARIAL AUDIT;

M/s. Jayshri Tulsyan & Associates, Company Secretaries, were appointed as the Secretarial Auditor of the Company for the financial years from 2019-2020 to 2023-2024. Considering their valuable contribution and the quality of audit services provided, the Board hasre-appointed w.e.f 5th November, 2024 as the Secretarial Auditor of the Company for the financial years from 2024-2025 to 2028-2029, in compliance with the provisions of Section 204 of the Companies Act, 2013.

The Secretarial Audit was carried out by M/s. Jayshri Tulsyan 8c Associates, Company Secretaries for the financial year ended on 31st March, 2025. The Report given by the

Secretarial Auditors is annexed as “Annexure 4” and forms integral part of this Report There has been no qualification, reservation or adverse remark or disclaimer in their Report.

38. RBI GUIDELINES

Your Company continues to comply with all the requirements prescribed by the Reserve Bank of India as applicable to it. Special Auditor's Report issued by the Auditor to the Board in terms of the requirement of the Reserve Bank of India is annexed herewith and marked as “Annexure 3 “.

39. GOVERNANCE

Your Company is committed to adhere to the best practice of governance it is always ensured, that the practices being followed by the Company are in alignment with its philosophy towards Corporate Governance. Your Company believes that the Corporate Governance is all about effective management of relationship among constituents of the system and always works towards strengthening this relationship through corporate fairness, transparency and accountability. In your Company, prime importance is given to reliable financial information, integrity, transparency, fairness, empowerment and compliance with law in letter and spirit. Your Company proactively follows Government principles and practices as to meet the business and regulatory needs, which has enabled it to emerge as one of the best corporate governed companies.

40. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3) (c) of the Companies Act, 2013, it is hereby confirmed that;

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

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

(c) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) The directors have prepared the annual accounts on a going concern basis; and

(e) The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

41. ACKNOWLEDGMENTS

The Board of Directors wishes to place on record its appreciation for the commitment, dedication and hard work done by the employees of the Company and the co-operation extended by Banks, Government Authorities, Customers, Shareholders and employees of the Company and looks forward to a continued mutual support and co-operation.