Muthoot Finance Ltd

Leading with Consistency, Commitment and Compassion

Dear Shareholders,

It gives me immense pleasure to present before you our annual performance for the financial year 2023-24. A landmark year of growth and achievements, which saw us achieving many significant milestones and expanding our horizons to amplify the value for all customers, shareholders and various stakeholders.

We believe, it is a natural progression for us, as we have always remained committed towards driving financial inclusion, achieving operational efficiencies, diversifying our offerings to derisk our business model and raising our ESG performance benchmarks.

Operating Environment

When we look at the big picture, though a lacklustre global economic environment, India continued to be one of the fastest growing major economies of the world, registering 8.2% growth in FY2023-24.

Global uncertainties, supply chain disruptions and the vagaries of monsoons intermittently fuelled domestic inflationary pressures. However, these headwinds were managed to a great extent by administrative and monetary policy responses. The fiscal balances of the Government of India and state governments have improved progressively, despite growing public investments in various sectors.

The country's real GDP in FY24 was 20% higher than the level in FY20, a feat that only a very few major economies have achieved, while also leaving a strong possibility for robust growth in FY25 and beyond.

The country's NBFC sector is also benefiting from a huge credit demand, improved asset quality and the drive towards greater financial inclusion to empower the last-mile citizen. Moreover, robust domestic consumption growth, expanding middle-class segment and rising aspirations provide ample opportunities for future growth.

On the other hand, as risks evolve and unprecedented challenges emerge, the regulator's emphasis on staying vigilant, adaptive and proactive with regard to the regulatory frameworks and supervisory systems to safeguard the stability of the financial system is also a welcome measure.

Gold Loan Opportunities Glitter

Gold prices may see temporary volatility owing to various global macro-economic factors and government measures to curb surging prices. However, it is worthwhile to mention that the long-term demand for gold loans in India will remain unaffected by these temporary developments.

It is driven by various factors such as need-based nature of gold loans and large-scale economic revival from the grassroots creating huge credit demand especially in the MSME sector. Gold loans have emerged as a powerful tool to empower MSMEs and gold loan NBFCs have served as a catalyst for growth. Simplicity and accessibility of gold loans through digitalisation of services have also played an important role.

Outperformance Across the Board

We continue to be India's most trusted pan-India brand in the gold loans sector and the largest gold loan company in terms of loan portfolio, empowering millions of people across the social pyramid.

I must say, this was a year of achieving the 'highest ever' performance metrics on multiple fronts, reinforcing our industry leadership. Our consolidated loan assets under management (Loan AUM) crossed the milestone of Rs890 billion and standalone Loan AUM exceeded the milestone of Rs750 billion. The consolidated Loan AUM increased by 25% year-on- year and the standalone Loan AUM increased by 20%.

The Loan AUM growth rate was also accelerated by increase in loan disbursements to new customers and we witnessed highest ever gold loan disbursements to new customers in any year during FY24 of Rs164 billion.

Further, appreciation in gold prices during the last few quarters of FY24 gave an attractive proposition to borrowers and increased the visibility of gold loan as a convenient and hassle free borrowing option. This enabled us to increase the number of active customers who has outstanding borrowing with us to 5.67 million as on March 31,2024 as compared to 5.32 million as on March 31, 2023. Similarly, the number of loan accounts also increased to 8.74 million as on March 31, 2024, from 8.14 million as of March 31, 2023.

The contribution of subsidiaries in the consolidated profit after tax also increased to 10% from earlier 6%, which underscores the resilience of our diversified business model. Seen through that lens FY24 was a landmark year of transformation for us.

On the operational front, the Group opened 703 new branches across multiple locations in India as well as in Sri Lanka by our subsidiary located there.

Our capital position remains very strong owing to large accretions to net worth from strong internal cash generation from the gold loan business Our Capital Adequacy Ratio stood at 30.37% against a regulatory requirement of 1 5%.

We are gradually pivoting our efforts towards growing our non-gold loan book. We are also strengthening our digital strategies for a transformative growth across our product portfolio. Despite various industry headwinds, we have continued to maintain our position as a leader in the gold loan industry and capitalised on the strong growth opportunities in micro finance, affordable housing, personal loans and business loans.

Muthoot Finance's extensive branch network and customer base, which is relatively more diverse in terms of geographies and which is gradually improving further, will strengthen our overall competitive position in the foreseeable future.

Performance of Subsidiaries

We are firmly focused on cross-selling opportunities. A customer who takes out a gold loan from us should also be able to access home, personal, business, or vehicle loans if needed, and vice versa.

This way, we ensure that our relationships with customers remain endearing and everlasting.

Muthoot Homefin India Limited, the wholly owned subsidiary, achieved a disbursement of Rs8.1 5 billion during FY24, compared to T2.23 billion in the previous financial year. The profit after tax increased to Rs185 million from Rs104 million. The huge shortfall for housing units in Economic Weaker Section and Low Income Group segment in India combined with Central Govt schemes targeted at these segments provide huge opportunity for us in this space.

Belstar Micro Finance Limited, our microfinance business entity, witnessed an encouraging trend. During the year under review, it has increased its loan assets under management by 62% year- on-year, reaching ^ 100.23 billion and profit after tax by 161 % year-on-year to T3.40 billion. The above achievement is on the back of strong 68% Year-on-Year increase in disbursements of T97.08 billion in FY 24. It also added 247 branches during the year.

Muthoot Money Ltd, the wholly owned subsidiary, increasing its focus on gold loan increased the Loan AUM to Rs11.23 billion in FY24from T3.87 billion in FY23.

It also achieved continued decline in NPA through physical collections which led to decrease in Stage 3 loans to 1.48% in FY24 from 3.72% in FY23. It also opened 321 new branches during FY24.

It achieved a profit after tax of Rs46 million during FY24 as against profit after tax of XI million in FY23.

Muthoot Insurance Brokers Pvt. Limited, the wholly owned subsidiary engaged in insurance broking business generated a total premium collection amounting to T6.56 billion in FY24. Total revenue for FY24 stood at Rs1.53 billion. It achieved a Profit after tax of Rs418 million in FY24.

Asia Asset Finance PLC, a listed subsidiary based in Sri Lanka, where we hold 72.92% stake, the loan portfolio stood at LKR 20.56 billion in FY24. Total revenue for FY24 increased to LKR 6.60 billion as against LKR 6.01 billion in FY23, an increase of 10% Year-on-Year.

It achieved a Profit after tax of LKR 344 million in FY24.

Resolute Focus on Sustainable Growth

In line with our core values, we have always conducted our business in an ethical, transparent and responsible manner in order to safeguard the interests of all our customers, investors, communities and all other stakeholders. Our emphasis is always on adopting best- in-class ESG practices. In this context, it is pertinent to mention that we are reducing our carbon footprint by focusing on renewable energy. Muthoot Finance owns three windmills in Tamil Nadu, and our strategic investments in renewables will continue to grow in the coming years.

Beyond financial empowerment, the Muthoot Group distinguishes itself with a unique commitment to improving rural life and lifestyles, which makes it one of the few entities dedicated to this important societal mission. We engage in a wide range of CSR initiatives that positively impact lives throughout the country.

During the financial year 2023- 24, Muthoot Finance executed 10 projects that collectively aimed to advance various Sustainable Development Goals (SDGs) set by

The profit after tax has soared to Rs 40,497 millions from Rs 34,735 millions. We are committed to providing affordable housing solutions the United Nations. The marginalised communities were benefited irrespective of their socio- economic and cultural background and benefits derived under these CSR projects were relevant and effective.

Recognising students of merit, Muthoot Finance has presented Muthoot M George Excellence Awards felicitating 122 students from 61 government schools in Kerala during the year. The recognition celebrates their exceptional academic performance.

We will continue to participate in numerous activities in areas such as education, environment, sanitation, health, medical assistance and financial support for economically disadvantaged communities. Muthoot Finance has demonstrated a strong commitment to social empowerment by allocating a significant budget of Rs135 million for FY 2023-24.

I am also happy to share that we have been awarded the certification of 'Great Place to Work' for the third year in a row, which demonstrates our commitment to upskilling and empowering our teams.

I truly believe that the future belongs to those who believe in themselves. The year under review has once again reinforced our confidence in our vision and ability to outperform and emerge as a formidable engine of economic and social empowerment for millions of people in India, especially the marginalised sections of society.

We continue to receive numerous felicitations and recognitions for our efforts during the year. Muthoot Finance was felicitated with the Best NBFC Award by FICCI Kerala State Council (Federation of Indian Chambers of Commerce & Industry) at their second edition of Made in Kerala Awards.

I must also share that it is indeed an honour for me to receive the Inspiring Leader Award from the Plonourable Finance Minister of Government of India Smt. Nirmala Sitharaman at the 'Emerging Bharat Growing Kerala' economic conclave organised by Kerala Kaumudi. I dedicate this honour to all our teams and stakeholders for their steadfast support, which has empowered us to achieve sterling performance and create value for the nation.

I would like to conclude with a thought that No Great Achievement is possible without persistent efforts. Let us all put in our best efforts to grow this institution of excellence to benefit and fulfil the aspirations of millions of people.

On behalf of our Board of Directors I express my sincere gratitude to all our customers, partners, regulator, government, investors, communities and the wider stakeholder fraternity for encouragement and support.