CARE Ratings Ltd

Your Directors are pleased to present the Thirty First (31^st) Annual Report of your Company along with the Audited Financial Statements for the year ended March 31, 2024.

Action-packed FY24

FY24 represented a pivotal year in which your Company took decisive action, implementing strategies honed over the preceding years and setting industry standards through exemplary leadership. The year was highlighted by celebrations to mark our 30^th anniversary, a significant milestone. We celebrated the landmark with a series of major events. These were among the largest and most prestigious within our industry, attracting top leaders from both government and the private sector. Their participation not only honoured our past achievements but also set the stage for future initiatives. Furthermore, FY24 was a period of intensive restructuring and refinement of our business operations. We undertook a comprehensive overhaul across the board, extending to our subsidiaries as well. This strategic realignment was aimed at enhancing operational efficiency, improving service delivery, and positioning the Company for sustainable growth in an increasingly competitive marketplace.

Economic Backdrop - FY24

The Indian economy exhibited resilience in FY24 amidst lingering geopolitical uncertainties, slowing external demand and weather-related irregularities. The GDP grew at a healthy 8.2% in FY24. The growth has been supported by the government's capital spending resulting in an upbeat expansion of gross fixed capital formation (9% y-o-y). However, the private consumption growth was weak at 4% in FY24 compared with pre-pandemic growth of 7% in FY19. While rural demand has been lagging, the resilience in urban demand as reflected in high-frequency indicators such as air passenger traffic, passenger vehicle sales etc. has provided some respite. On a sectoral basis, the growth was led by manufacturing, construction, and services sectors while agriculture recorded a muted growth.

Retail inflation averaged 5.4% in FY24, moderating from 6.7% in the previous year. While erratic weather conditions kept food inflation elevated (averaging 7% in FY24), a sustained moderation in core inflation came as a relief. In terms of monetary policy, the Reserve Bank of India left the policy repo rate unchanged at 6.5% in FY24 while maintaining a vigil on the challenges emerging from persistently high food inflation and volatile crude oil prices.

The gross bank credit offtake remained healthy, increasing by 16.3% year-on-year in FY24, up from 15% growth in the previous year. Bank credit was primarily supported by high demand in the personal loans and services segments. However, there was a moderation in credit growth for personal loans and non-banking financial companies (NBFCs), due to an increase in the banks' risk weightage for credit disbursement to both segments. Industrial credit growth improved to 8.5% in FY24 from 5.6% in FY23, with credit disbursement to

large enterprises (constituting 72% of total industrial credit) improving to 7% from last year's 3.1%.

Corporate bond issuances reached Rs 10.2 lakh crore in FY24, marking a 19% year-on-year increase. Commercial paper issuances maintained a steady level at Rs 13.8 lakh crore in FY24, the same as the previous year.

Note: Data on corporate bond issuances extracted from Prime Database on May 2, 2024'; Bank credit data for FY24 excludes the impact of the merger of a non-bank with a bank

On the external front, robustness in services exports has helped offset the weakness in merchandise exports. In terms of capital flows, net foreign direct investment inflows have moderated in FY24. However, foreign portfolio investments have been upbeat with net inflows to the tune of USD 41 billion in FY24 as against net outflows of USD 5.5 billion in the previous year. This translated into India's foreign exchange reserves being at a comfortable level of USD 646 billion as of end-FY24.

To summarise, the Indian economy remained resilient throughout the year despite facing challenges from geopolitical uncertainties, elevated food inflation and persistent weakness in external demand. A stronger- than-expected economic growth performance and a comfortable external position have supported India's healthy recovery in FY24.

Looking Ahead - FY25

The healthy economic performance is expected to continue in the current year with several high-frequency indicators pointing towards continued momentum. The prospects for the organised sector remain encouraging as reflected in the PMIs for the manufacturing and services sectors. On the consumption front, we expect rural demand to improve in the current fiscal based on expectations of normal monsoons this year.

The government has been at the forefront of the investment scenario in the economy with an emphasis on capex-led growth. While private capex has been slow, it is expected to improve in the current fiscal year as the capacity utilisation level for the manufacturing sector has already risen above the long-term average. Higher investment projects announced by the private sector are reflective of their increasing intent to invest. We can expect the private capex cycle to improve with policy certainty post-general elections. Overall, the economy remains well-placed compared to its peers with the GDP growth projected at around 7% in FY25.

Sustained moderation in CPI inflation is a positive. Though elevated food inflation remains a challenge, the government's continued supply-side interventions and expectations of a normal monsoon could aid in easing price pressures in the food basket. We project CPI inflation to moderate to 4.8% in FY25 from 5.4% in FY24. However, upside risks to commodity prices amid improving global growth and continued geopolitical tensions remain a key monitorable for the inflation trajectory.

On the external front, prospects for world merchandise trade are expected to improve gradually as demand rebounds. Thus, we could see some improvement in India's merchandise exports following a lacklustre performance in the last fiscal. The healthy performance in services exports is expected to continue, albeit with some moderation in growth. Overall, we expect the current account deficit to remain comfortable around 1% of GDP in FY25. In terms of capital flows, healthy foreign portfolio investment inflows are expected to continue supported by India's inclusion in the global bond indices.

Overall, the economy remains well placed with healthy economic growth, moderating inflation, and a comfortable external position. However, there is a need to remain watchful of the risks emerging from weather- related uncertainties, escalating geopolitical conflicts, and volatile commodity prices. Further improvement in consumption and private investment would be critical for sustained economic growth.

Way Forward

Building on the initiatives of FY24, your Company's management is committed to spearheading innovation and driving substantial growth within the sector. The strategic focus will encompass:

Improving rating operations and leveraging technology: We will continuously strengthen our core

rating processes to improve accuracy, reliability, and market responsiveness. Additionally, we will expand the use of cutting-edge technology across core functions and support areas to streamline operations and enhance decision-making.

Transparent and effective stakeholder engagement:

We are committed to open, clear, and effective communication with all stakeholders, enhancing transparency and trust.

Proactive HR initiatives: We will attract and retain top talent through innovative HR strategies, focusing on creating a dynamic workplace culture that fosters growth and satisfaction.

Leadership development: We will invest in

comprehensive skills development, encompassing both technical and soft skills training, ensuring our team is well-equipped to meet current and future challenges. Furthermore, we are dedicated to cultivating future leaders by providing opportunities to lead and fostering a culture of empowerment and innovation.

With a clear vision for the future, management is dedicated to repositioning the Company on a sustained growth trajectory. The foundations laid in FY24 have already begun to bear fruit, and we anticipate seeing further positive outcomes as these strategies are implemented.

Financial Performance

Your Company's Financial Performance for the year ended March 31, 2024, is summarised below:

(Rs in Crore)

The total operating income for the financial year of FY24 was Rs 283.07 crore, a 14% increase from FY23, while the other income stood at Rs 46.96 crore, a 27% increase from the previous year.

Your Company's total expenditure in the financial year was Rs 168.15 crore, 14% higher than the previous year, primarily due to the increase in manpower cost by 20%. The FY24 net profit increased by 15% as compared to the previous year driven by an increase in total income.

Returns to Shareholders Dividend

During the year, your Company paid an interim dividend of Rs 7/- per equity share amounting to a pay-out of Rs 20.84 crore. The Board has recommended a final dividend of Rs 11/-per equity share amounting to a payout of Rs 32.84 crore for FY 2023-24, for approval of members at the ensuing Annual General Meeting.

The dividend recommended is in accordance with the Company's Dividend Distribution Policy and would be paid in compliance with the applicable rules and regulations. The Dividend Distribution Policy is available on the website of the Company at

https://www.careratings.com/Uploads/newsfiles/ FinancialReports/1679558992 21032023065712 Dividend Distribution Policy.pdf

Transfer to Reserves

During the year under review, your company has not transferred any amount into the general reserve.

Business Operations: Strategic Reorganisation

In FY24, the business development team underwent a strategic reorganisation from a geographical structure to one focused on specific sectors, to sharpen focus within key domains. This shift has facilitated the unlocking of value across various geographies, translating into increased business opportunities for the Company. With this approach, the Company has been able to unlock value in different geographies as also garner significant market share in new clients added during the year. As part of this strategy, your Company has adopted a targeted approach to expand its market share in the securitisation domain, both by engaging new originators and by deepening relationships with existing clients. The outcomes of this initiative have been encouraging, with volume growth of 59% leading to a significant enhancement in our market share during FY24.

In our pursuit of leveraging technology to drive efficiencies throughout the organisation, the business team initiated the implementation of a comprehensive Customer Relationship Management (CRM) software, which is considered as one of the best in the industry. A detailed Business Requirement Document (BRD) was developed, and the software is now in the advanced stages of implementation. The CRM software is expected to significantly improve sales efficiency and is designed to equip the business team with extensive data, enabling them to make informed and intelligent decisions.

CareEdge Ratings used an innovative approach for rating the transaction of the fund raising program of an Alternative Investment Fund (AIF). Instead of employing traditional methods, CareEdge Ratings utilized complex simulation techniques, to assess the transaction's risk and assigned a capital protection rating. This assessment involved considering various factors such as fund structure, Probability of Defaults associated with the ratings of the underlying exposure and their correlations. This approach demonstrates the use of

advanced techniques to assess risk in complex financial transactions, providing valuable insights for investors and stakeholders involved in the fund-raising program.

To enhance brand positioning as a knowledge institution, monthly Infra and BFSI newsletters were launched this year. Building on last year's success, your Company's highly appreciated monthly collection of sectoral reports and opinion pieces, Foresights, has continued to grow stronger. The aim is to provide a thematic understanding of specific sectors and to highlight CareEdge Ratings' extensive coverage and expertise. Additionally, we continued with our regular publications of knowledge papers, thematic reports, and daily updates such as the Morning Brief.

Technology: Safe and Secure

In FY24, your Company performed the Disaster Recovery Plan and executed Disaster Recovery (DR) for business-critical applications to provide business continuity in the event of any shut-down unexpectedly due to unforeseen circumstances, such as natural events, or security issues. This involved shutting down Core business applications from the Production/Live Environment from the Data Centre (DC) routing all the Business Applications from Disaster Recovery (DR) for 7 (seven) days and successfully resuming business applications from the Primary Data Centre. In addition, your Company successfully executed an unplanned Business Continuity and Disaster Recovery Plan. Furthermore, to augment the data availability and ensure timely recovery of systems during a disaster event, we have migrated the backup solution from the tape library to the latest backup technology which provides rapid data recovery, low-cost archival and higher performance.

Your Company improved its security posture concerning web app security and enhanced the Web Application Firewall (WAF) features which now protects all the business-critical web applications. The Web Application Firewall filters, monitors, and blocks any malicious HTTP/S traffic travelling to the web application.

In FY24, as per the information security strategy, your Company implemented Privileged Access Management (PAM) for cyber threats by controlling, monitoring and securing privileged access to critical business resources.

Usage of Technology in Ratings

Ratings is a regulated business and most of the processes are standardised across the rating agencies by regulators. However, we believe ratings operations can become more efficient with the data and technology available today. We have optimised the Machine Learning (ML) models to read financial and operational data from publicly available corporate company filings. The data accuracy based on ML results has significantly improved and the models are being continuously revised. This has augmented the business operations by improving the overall efficiency and reducing the turnaround time.

Your Company has enhanced the features and functionalities on its website, in addition to the regulatory requirements. During FY24, the subsidiary company's websites have been rolled out to provide the same brand vision across the group. In addition, business applications supporting the ratings analyst team had made significant enhancements for ratings letters, press releases and evaluation forms which would reduce the analyst operational time.

In FY24, your Company embarked on a partnership with a technology service provider to build a rating platform by using cutting-edge secure technology and leveraging ML and Artificial Intelligence (AI).

As part of the Business Transformation Program, the Company has implemented enterprise cloud-based solutions for their financial management. This was a greenfield implementation covering the order to cash (OTC) module for the Company and its subsidiaries. The procure-to-pay (P2P) module is currently under implementation.

To help the business manage corporate spending, we are implementing an avant-garde cloud-based expense management software, which shall provide the employees, managers and finance team to track spending trends, categorize expenditures and make better decisions based on insights.

Outreach

FY24 marked a monumental year for your Company as we celebrated our 30^th anniversary with a flourish of activity that significantly bolstered our outreach and visibility. This special year was punctuated by a series of high-octane 'Conversations' events, bringing together eminent leaders from both the government and private sectors. These gatherings were not just events but pivotal forums for discourse, featuring insights from our top policy-makers and industry stalwarts.

Our efforts this year have drawn widespread acclaim from top media outlets and senior industry professionals, evident from our participation in 26 enriching webinars and 110 speaker and knowledgesharing forums. These sessions have not only been platforms for dialogue but have also allowed us to produce a wealth of content, including knowledge papers, thematic reports, and regular updates such as the Morning Brief and Foresights, alongside specialised BFSI and Infrastructure rating newsletters.

The impact of our initiatives has been magnified by our strategic Knowledge Partnerships with leading entities like ET NOW and CNBC TV18, positioning us at the forefront of thought leadership in our industry. This extensive array of activities has also received robust coverage in print, digital, and broadcast media, showcasing our prominent forums and the cutting-edge insights shared, which have been regularly featured in opinion pieces and headline stories.

Social media has played a crucial role in amplifying our reach, significantly enhancing our visibility and engagement across platforms, and solidifying our presence in the digital landscape. Furthermore, your

Company's investor relations outreach, continues to foster robust connections with the financial community, ensuring our stakeholders remain well- informed and engaged. This multifaceted approach has not only celebrated our past achievements but also set a dynamic course for the future, reinforcing your Company's position as a leader in the industry.

Some of the notable events of FY24 included:

CareEdge Conversations: Delhi

As part of our 30^th-anniversary celebrations, we successfully hosted 'CareEdge Conversations' at the Taj Mahal Hotel in New Delhi on May 23. The evening was graced by our Chief Guest Shri Nitin Gadkari, Honourable Minister for Road Transport and Highways, Government of India, who unveiled CareEdge's special report titled 'Infrastructure: Key Driver of India's Amrit Kaal March', along with our Guest of Honour Shri Rajiv Bansal, IAS, Secretary, Ministry of Civil Aviation, Govt of India. Shri Gadkari live-streamed his speech at the event on his Twitter handle. There was an inaugural address from our Chairman, Najib Shah, and a thematic address from our MD and Group CEO, Mehul Pandya. The vote of thanks was given by our Executive Director, Revati Kasture.

CareEdge Conversations: Mumbai

We hosted our flagship event in Mumbai on July 23 with 'Collaboration for Growth' being the theme of the night. We were honoured to have Shri Piyush Goyal, Minister of Commerce & Industry, Consumer Affairs & Food & Public Distribution and Textiles, Government of India, present with us via video conferencing to share his invaluable insights on India's major strides in trade and textiles globally. His discussion with CNBC TV18's Executive Editor Latha Venkatesh was nothing short of riveting. Our Chief Economist also engaged in an enlightening talk with Ms Venkatesh, analysing the current economic landscape. Furthermore, we heard from CareEdge Ratings Chairman Najib Shah and MD & Group CEO Mehul Pandya, who provided their experienced perspectives on trade and collaboration of industries for growth. The valedictory address was given by our Executive Director, Revati Kasture.

CareEdge Conversations: Kolkata

CareEdge hosted its flagship 'Conversations' event in Kolkata on August 7 with 'India - Reversing The Gaze' being the theme of the night. At the event we unveiled our groundbreaking initiative - the 'Sovereign Risk Assessment', thereby becoming the first domestic credit rating agency in the country to do so. Shri Sanjeev Sanyal, Member of the Economic Advisory Council to the Prime Minister, graced the evening as the Chief Guest and congratulated CareEdge for introducing a comprehensive framework for sovereign risk assessment. Mehul Pandya, MD & Group CEO, delivered a thoughtful inaugural address while our Chairman Najib Shah shared an insightful thematic address. The evening saw an insightful panel discussion between Mr. Shashwat Goenka, Vice Chairman of CESC; Sachin Gupta, Chief Ratings Officer at CareEdge, and Rajani Sinha, Chief Economist at CareEdge. Revati

Kasture, Executive Director, and Rajani Sinha added to the enriching experience with their insightful Sovereign Risk Assessment framework presentation.

CareEdge Conversations: Pune

CareEdge successfully hosted its flagship Conversations event in Pune on July 7. Themed 'India: Tapping into its Potential', the evening saw the esteemed presence of Dr. Bhagwat Kishanrao Karad, Union Minister of State for Finance, Government of India, who graced the occasion as the Chief Guest. Shri Asheesh Pandey, Executive Director, Bank of Maharashtra, was the Guest of Honour and shared valuable insights. Mehul Pandya, MD & Group CEO of CareEdge Ratings, delivered the welcome address and set up the stage for an engaging and fruitful discussion. At the same time, Adesh Kumar Gupta, a Board Member of CareEdge Ratings, shared enriching insights. Esteemed speakers, Ms. Nina Nagpal, MD, Citicorp Finance India Ltd, Mr. Ajit Kumar Rath CVO & MD, State Bank of India, and Rajani Sinha, Chief Economist, CareEdge, shared their expertise and contributed to an enlightening panel discussion. Revati Kasture, Executive Director of CareEdge, skilfully moderated the panel discussion and ensured a smooth flow of thoughts and ideas.

CareEdge associated as the Knowledge Partner with CNBC-TV18 for the ICAI CA 40 Under 40 Awards. CareEdge's role involved collaborating with CNBC TV18 in the award planning process, including evaluating parameters, shortlisting nominees, and tabulating results for the jury.

As a Knowledge Partner with ET MSME Awards 2023, CareEdge celebrated the success of the Indian MSME sector by recognising 26 outstanding micro, small, and medium enterprises across various award categories.

CareEdge Advisory was a Knowledge Partner with Free Press Journal for 'Best Annual Report 2023' for Corporate India. CareEdge Advisory Team led by Swati Agrawal, President presented its assessment of the best Annual Reports across 8 sectors to the eminent Jury. Revati Kasture Executive Director CareEdge was part of the Jury Panel.

Mehul Pandya, MD and Group CEO of CareEdge was elected to serve a second consecutive term on the Board of Directors of Association of Credit Rating Agencies in Asia (ACRAA) and was also appointed as its Vice Chairman w.e.f. January 1, 2024.

Mehul Pandya, MD & Group CEO of CareEdge, participated in an engaging panel discussion at the Mint India Investment Summit 2024. The event was held at the ITC Grand Central in Parel, Mumbai, on March 29-30. The summit was attended by the Honourable Finance Minister Nirmala Sitharaman, senior officials from the Finance and Commerce Ministries, along with numerous esteemed professionals and dignitaries over two days.

Mehul Pandya, MD and Group CEO of CareEdge, was the keynote speaker at the International Conference of Advances in Theories, Research and Practices in Management. The event was organised by GLS University, Ahmedabad, on March 23.

Mehul Pandya, MD & Group CEO of CareEdge, was invited as a distinguished speaker at the felicitation event for Dr. Ravi Margasahayam, Global Ambassador of NASA, organised by USIIC with support from the US Consulate in Mumbai, on December 4.

Sachin Gupta, Executive Director & Chief Rating Officer at CareEdge Ratings, was invited as a panellist at the Edelweiss Annual Investors Meet on November 6. The topic of discussion was 'India Credit Landscape: Emerging Trends and Opportunities'.

Sachin Gupta, Executive Director & Chief Rating Officer, CareEdge Ratings, was invited to the Directors' Strategy Meet, organised by National Highways Infra Trust (NHIT) at Udai Vilas, Udaipur, Rajasthan, where he made a presentation on 'Perspective on Indian Infrastructure' on August 23.

Revati Kasture, Executive Director at CareEdge Ratings, was the Advisory and Jury Member at the 8^th ET Edge Infra Focus Summit.

Revati Kasture, Executive Director at CareEdge Ratings, was a panellist for the workshop on 'Expected Loss Based Credit Rating Mechanism', conducted by the Department of Economic Affairs, Government of India on June 5, New Delhi.

Rajani Sinha, Chief Economist at CareEdge Ratings, gave a presentation on the State of the Economy at the CII Western Regional Council Meeting on August 24 in New Delhi.

Nehal Shah, Head, Compliance, Legal and Secretarial, CareEdge Ratings, was felicitated by Legasis Private Limited for her contribution to the field of compliance. The Compliance 10/10 Awards, hosted by Legasis, is one of the most prestigious events for compliance professionals in India.

Nadir Bhalwani, Chief Information & Technology Officer at CareEdge Ratings, was a panelist at the Mumbai Cloud and Datacentre Convention 2023 on December 1.

Sanjay Agarwal, Senior Director at CareEdge Ratings, was a moderator in the session titled ''Infrastructure Financing - A Key Enabler for Infrastructure Growth" at the ICEMA 4^th Annual Finance Conclave held in New Delhi on May 11.

Rajashree Murkute, Senior Director at CareEdge Ratings, participated in a round table panel discussion on increasing muni-bond issuances at SEBI's munibonds outreach program in Chandigarh on December 18.

Human Resources: Recruiting and Retaining Top Talent

To ensure CareEdge is recognised as one of the best places to work, your Company has focused on enhancing the quality of work life through various engagement programmes and training interventions throughout the year. Continuing with the aim to deliver efficient and high-quality services, your Company has paid special attention to retaining talent and recruiting new personnel. As of March 2024, there were 563

full-time employees compared with 517 last year, with employee attrition at 23.5% for FY24. In FY23, our attrition rate was 28%.

Highlights of some of the key HR initiatives of FY24:

a) Mid-Year Appraisal (MYA): For the first time at CareEdge, a system-based MYA was implemented, providing a structured opportunity for employees and their supervisors to acknowledge achievements from the first half of the year and identify areas needing further development.

b) Employee Engagement Survey (EES): Your

Company conducted a system-based, fully anonymous Employee Engagement Survey in November 2023, which saw the participation of 79% of the eligible population Workload Management and Employee Engagement & Wellness were identified as areas requiring additional attention. Subsequently, business verticals have identified action plans to address the matter, and we have started the process of implementing them.

c) Leadership Training on Stakeholder Engagements (WISE): Twenty-two senior employees participated in a two-day training session on "Winning and Influencing Stakeholder Engagements" with a focus on "Elevator Pitches." This session was led by the globally recognised communication expert, Prof. Mihir Mankad, who travelled from the U.S. to deliver this bespoke program to CareEdge executives.

d) Learning Intervention (BLEND): A unique training module was developed specifically for the Business Development vertical, covering essential skills such as precise communication, negotiation techniques, and effective brand pitching.

e) Performance vs Potential Grid (9 Box): The renowned "9 Box - Performance vs Potential Grid" was utilised to identify high performers and potential future leaders, facilitating informed discussions around promotions to higher responsibilities. Concurrently, an exercise was undertaken to identify the 20 most critical positions within the company and their potential successors.

f) Long-Term Incentive Plan (LTIP): FY24 marked the selection of "brightest young talents" for the company's Long-Term Incentive Plan (LTIP), aiming to reward and retain exceptional performers.

Strengthening the Subsidiaries:

Your Company has six subsidiaries: CARE Ratings (Africa) Private Limited, CARE Ratings Nepal Limited, CARE ESG Ratings Limited (formerly known as CARE Advisory Research and Training Limited), CARE Analytics and Advisory Private Limited (formerly known as CARE Risk Solutions Private Limited), CARE Ratings South Africa (Pty) Limited and CareEdge Global IFSC Limited.

CARE Ratings (Africa) Private Limited (CRAF)

Operating since 2015, CRAF has contributed significantly towards the development of the debt capital market in Mauritius.

In FY24, CRAF experienced a 32% increase in revenue, driven by a rise in the total volume of debt rated, stemming from both new assignments and ongoing surveillance activities. Looking ahead, CRAF is strategically planning to broaden its operational reach into additional African territories, primarily targeting countries within the Southern African Development Community (SADC). The aim is to leverage the CareEdge Group's vast experience in the Indian and Mauritian markets, utilising this knowledge to foster the adoption of credit rating practices within Africa's capital market ecosystem through comprehensive training, advisory services, and advanced technology- driven analysis.

In its expansion efforts, the company established CARE Ratings South Africa (Pty) Ltd in October 2023 and applied for a Credit Rating Agency license from the Financial Sector Conduct Authority (FSCA) of South Africa in February 2024. The Board at CARE Ratings South Africa comprises Mr Najib Shah, Mr Mehul Pandya, and Mr Saurav Chatterjee as Directors, with Mr Ravi Mohan and Mr Saveshan Pillay serving as Independent Directors.

CARE Ratings Nepal Limited (CRNL)

CARE Ratings Nepal Limited (CRNL), a subsidiary of CARE Ratings Limited, offers a comprehensive array of rating services tailored to the Nepalese market, leveraging expertise and technical support from its parent company. CRNL has developed a robust capability to deliver diversified products and services that meet the unique needs of this region.

Reflecting on the past financial year, CRNL has sustained its growth trajectory. Our primary focus has been on enhancing customer relationships, a strategy that continues to strengthen our position in the Nepalese market. Despite facing industry headwinds, such as sluggish growth in bank loans and advances, CRNL has successfully increased the number of its active ratings. This achievement is attributed to our proactive participation in educational initiatives, conferences, and stakeholder engagements, among other activities.

The economic landscape in Nepal, especially within the banking sector, presents several challenges, including rising non-performing assets (NPAs) and growth limitations driven by stricter regulatory demands. Despite these obstacles, CRNL has adeptly navigated the environment, achieving a consistent revenue increase in FY24. However, the subdued growth in bank loans and advances, coupled with broader industry slowdowns, may slightly impact the company's growth trajectory in the short term.

CARE Analytics and Advisory Private Limited (erstwhile CARE Risk Solutions Private Limited)

During the year, a slump sale transaction involving transfer of business of CARE ESG Ratings Limited (CERL) (Formerly known as CARE Advisory Research) and Training Limited including its assets, clients and human resource to CARE Analytics and Advisory Private Ltd. (CAAPL) (Formerly known as CARE Risk Solutions Private Limited) took place. A Business Transfer Agreement was signed between CERL and CAAPL (both wholly owned subsidiaries of CARE Ratings Limited) on September 30, 2023, accordingly entire business of CERL were transferred to the CAAPL w.e.f. October 16, 2023. Accordingly, there are two divisions of businesses

i.e. CareEdge Analytics and CareEdge Advisory. On October 26, 2023, CRSPL was renamed CARE Analytics and Advisory Private Ltd. (CAAPL).

CareEdge Analytics

With over 18 years of global experience, CareEdge Analytics specializes in providing advanced risk and compliance solutions to banks and financial institutions. Over the past three years, the company has consistently ranked among the top Risktech100 companies worldwide, according to Chartis Research. Leveraging the strength and expertise of its parent company, CareEdge Analytics excels in delivering sophisticated analytics solutions to banks globally.

Risk Analytics Products: CareEdge Analytics offers a comprehensive suite of risk analytics products, including credit risk assessment tools, internal rating systems, scorecards, and financial reporting solutions aligned with IFRS standards. These products are designed to effectively manage and mitigate a variety of risks while ensuring regulatory compliance.

Advanced Analytics: Utilising state-of-the-art AI/ML tools and techniques, CareEdge Analytics provides advanced analytics solutions that equip banks with essential insights into their risk management and financial operations. These insights support data-driven decision-making and optimize overall performance.

Risk Consulting: CareEdge Analytics delivers expert advisory services in risk consulting and model development. These services help banks to develop and implement robust risk management strategies, including the design of risk models and enhancement of risk governance frameworks.

Digital Services: Recognising the critical importance of digital transformation in the banking sector, CareEdge Analytics also offers consulting and implementation services for digital products tailored to the BFSI sector. These services are aimed at streamlining processes, enhancing customer experiences, and boosting operational efficiency.

In FY24, CareEdge Analytics reported good growth in its operating revenue, though there were challenges.

CareEdge Advisory

The Advisory Division provides a range of services in Consulting, Research, and Sustainability.

Consulting: Services include infrastructure transaction advisory, bespoke consulting, risk advisory, portfolio investment advisory, domestic and international corporate credit assessments, peer benchmarking, techno-economic viability (TEV) studies, and grading.

Research: This segment produces industry research reports and risk metrics, including customised industry research for DRHP filings.

Sustainability: Offers comprehensive solutions in the ESG domain such as peer benchmarking & gap analysis, reporting & integration, ESG performance evaluation, supply chain reporting, due diligence and Green finance. Offerings also include Second Party Opinion services for Green and Social bonds and assessments of Green deposit frameworks for banks.

F24 was marked by significant growth, expansion of services, stabilisation of operations, and the addition of prestigious clients, including fund houses, PSUs, banks, financial institutions, manufacturers, and municipal corporations. The Division also excelled in producing customised industry research reports, covering niche industries and establishing strong relationships with Capital Market participants. The Sustainability services have gained considerable traction, with notable achievements in Green finance and a diverse and impressive client base that includes international entities in Mauritius.

CARE ESG Ratings Limited (erstwhile CARE Advisory Research and Training Limited)

During the year under review, CareEdge ESG decided to initiate its business as an ESG Rating Provider (ERP) in accordance with the SEBI Notification dated July 3, 2023, and the SEBI Master Circular dated July 12, 2023, in alignment with the SEBI (Credit Rating Agencies) Regulations, 1999. Consequently, the Company transferred its business on a going concern basis, through a slump sale, to CARE Analytics and Advisory Private Limited (formerly known as CARE Risk Solutions Private Limited) effective October 16,

2023. Following the business transfer, the Company applied to the Securities and Exchange Board of India (SEBI) to obtain an ERP license and the CareEdge ESG received the license under Category I on May 2, 2024. CareEdge ESG has already established a core team and is prepared to commence its ESG rating activities.

CareEdge Global IFSC Limited

CareEdge Global IFSC Limited was incorporated as a wholly-owned subsidiary of the Company on April 29,

2024. The CareEdge Global IFSC Limited will carry out the business of Global Scale Ratings of Securities, Sovereign Ratings, sub-Sovereign Ratings, Research, Valuation and any other activity allowed by Regulators. It is in the process of applying for a licence to the International Financial Services Centres Authority and SEZ Authorities - GIFT City for commencing business as a rating agency.

Particulars of Loans, Guarantees or Investments under Section 186 of the Companies Act, 2013 ('the Act')

The details of loans, guarantees and investments covered under Section 186 of the Act read with Companies (Meetings of Board and its Powers) Rules, 2014 are given in the notes to the Financial Statements forming part of this Report.

Particulars of Contracts or Arrangements with Related Parties

All transactions entered into during the Financial Year 2023-24 with Related Parties as defined under Section 188 of the Act and Regulation 23 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, C'SEBI Listing Regulations") were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any contract/ arrangement/transaction referred to in Section 188 of the Act with related parties which could be considered material. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) of the Act in Form AOC-2 is not applicable.

Details of transactions with related parties as required under IND AS-24 set out in Notes to Accounts-Note No. 32 of the Standalone Financial Statements forming part of this Annual Report.

As required under Regulation 23(1) of the SEBI Listing Regulations, the Company has formulated a Policy on the Materiality of and dealing with Related Party Transactions which is available on the website of the Company at https://www.careratings.com/Uploads/ newsfiles/FinancialReports/1679040518 Policy%20 on%20Materiality%20of%20and%20dealing%20 with%20Related%20Party%20Transactions.pdf

Details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year

There are no applications made or any proceedings pending against the Company under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the financial year.

Details of the difference between the amount of the valuation done at the time of one-time settlement and the valuation done while taking a loan from the banks or financial institutions along with the reasons thereof

There are no instances of one-time settlements during the financial year.

Directors and Key Managerial Personnel

Mr. Sobhag Mal Jain (DIN:08770020) was appointed as an Additional Director in the category of Non-

Executive Non-Independent with effect from January 28, 2023. Further, his appointment was approved by the Members as Non-Executive Non-Independent Director of the Company through a postal ballot on April 15, 2023.

The Board of Directors at their meeting held on March 19, 2024, has re-designated Mr. Mehul Pandya as Managing Director and Group CEO. He was earlier designated as Managing Director and CEO of the Company.

Mr. Manoj Chugh was appointed as an Additional Director (in the category of Non-Executive Independent Director) w.e.f. May 9, 2024. Approval from Members of the Company for his appointment as an Independent Director, is being sought at the ensuing Annual General Meeting of the Company.

In accordance with the Articles of Association of the Company and provisions of Section 152(6)(e) of the Act, Mr. Sobhag Mal Jain (DIN:08770020) will retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, offers himself for re-appointment.

Mr. Adesh Kumar Gupta (DIN:00020403), who is an Independent Director of the Company, will complete his second term as an Independent Director at the ensuing Annual General Meeting and accordingly will cease to be a Non-Executive Independent Director of the Company w.e.f July 9, 2024.

Declaration by Independent Directors

The Independent Directors of the Company have submitted their declaration of independence as required under Regulation 25(8) of the SEBI Listing Regulations and Section 149(7) of the Act confirming that they meet the criteria of independence under Section 149(6) of the Act and Regulation 16(1)(b) of SEBI Listing Regulations.

The Board is of the opinion that the Independent Directors fulfil the conditions specified in these Regulations and are independent of the management. There has been no change in the circumstances affecting their status as Independent Directors of the Company. Further, the Independent Directors of the Company possess requisite qualifications, experience and expertise in the field of finance, strategy, auditing, tax, risk advisory and financial services and they hold the highest standards of integrity.

Number of Meetings of the Board of Directors

The Board of Directors met 6 (Six) times during the Financial Year ended 2023-24 on May 11, 2023, August 9, 2023, September 30, 2023, October 31, 2023, January 24, 2024 and March 19, 2024. The particulars of meetings held and attended by each Director are detailed in the Corporate Governance Report, which forms part of this Report. The intervening gap between two consecutive Board meetings did not exceed 120 days.

Vigil Mechanism - Whistle Blower

The Company has established a vigil mechanism for Directors and Employees in compliance with the provisions of Section 177(10) of the Act and Regulation 22 of the SEBI Listing Regulations to report their genuine concerns and to provide for adequate safeguards against victimisation of persons who may use this mechanism. During the year, your Company affirms that no employee of the Company was denied access to the Audit Committee. The said policy is also available on the website of the Company at https://www.careratings.com/Uploads/newsfiles/FinancialReports/1679040341 Whistle%20Blower%20Policy.pdf

Policy on Directors' Appointment and Remuneration

The Policy of the Company on Directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of Section 178 of the Act, is appended as Annexure - I to this Report and is also available on the website of the Company at https://www.careratings.com/Uploads/newsfiles/FinancialReports/1679040649NQMINATION%20&%20REMUNERATION%2QPOLICY.pdf

Annual Evaluation of Performance of the Board

Pursuant to the provisions of the Act and SEBI Listing Regulations, an annual performance evaluation of the Board and its Committees and other individual Directors is required to be undertaken to assess the performance of the Board and its Committees with the aim of improving effectiveness.

The Board Evaluation Cycle for FY24 was completed by the Company internally which included the Evaluation of the Board as a whole, Board Committees and other individual Directors of the Company.

The Board's functioning is evaluated after taking inputs from the Directors on various aspects, including inter alia degree of fulfilment of key responsibilities, board structure and composition, establishment, and delineation of responsibilities to various committees, the effectiveness of board processes, information, and function.

The Committees of the Board were evaluated after taking inputs from the Committee members based on criteria such as degree of fulfilment of key responsibilities, adequacy of committee composition and effectiveness of meetings.

The Board reviewed the performance of the individual directors on aspects such as attendance and contribution at Board/ Committee Meetings and guidance/ support to the management outside Board/ Committee Meetings.

Further, a separate meeting of independent directors was held by the Independent Directors on March 19, 2024, where they reviewed the performance of the Board and assessed the quality, quantity, and timeliness of the flow of information between the Company, Management and the Board.

Committees of the Board

As of March 31, 2024, the Board has the following committees:

i. Audit Committee;

ii. Nomination and Remuneration Committee;

iii. Stakeholders Relationship Committee;

iv. Corporate Social Responsibility and Sustainability Committee;

v. Risk Management Committee;

vi. Rating Sub-Committee;

vii. Strategy and Investment Committee; and

viii. Technology Committee;

A detailed note on the composition of the Board and its Committees is provided in the Corporate Governance Report.

Adequacy of Internal Financial Control with Reference to Financial Statements

The Company has an Internal Financial Control System commensurate with the size, scale and complexity of its operations.

The Company has adopted accounting policies which are in line with the Indian Accounting Standards notified under Section 133 and other applicable provisions, if any, of the Act read together with the Companies (Indian Accounting Standards) Rules, 2015.

The Company, in preparing its financial statements, makes judgments and estimates based on sound policies and uses external agencies to verify/ validate them as and when appropriate. The basis of such judgments and estimates is also approved by the Statutory Auditors and Audit Committee.

The Internal Auditor evaluates the efficacy and adequacy of internal control systems, accounting procedures and policies adopted by the Company for the efficient conduct of its business, adherence to the Company's policies, safeguarding of the Company's assets, prevention and detection of fraud and errors and timely preparation of reliable financial information, etc. Based on the report of the internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

Statutory Auditor and Report by Statutory Auditors

M/s. BSR & Co. LLP (Firm Registration No. 101248W/ W-100022) were appointed as the Statutory Auditors of the Company for a period of five years up to the conclusion of the 33^rd Annual General Meeting of the Company.

The Notes on the financial statement referred to in the Auditor's Report are self-explanatory and do not call for any further comments. The Auditor's Report does

not contain any qualification, reservation, adverse remark or disclaimer.

The disclosure relating to fees paid to Statutory Auditors is provided in the Corporate Governance Report annexed to this Report.

Instances of Fraud, if any, Reported by the Auditors

During the year under review, there have been no instances of fraud reported by the Auditors under Section 143(12) of the Act and rules framed thereunder either to the Company or to the Central Government.

Secretarial Audit Report

The Board of Directors of your Company has appointed A. K. Jain & Co., Company Secretaries, Mumbai, to conduct the Secretarial Audit of the Company for FY 2023-24. The Secretarial Audit Report is appended to this Report as Annexure - II.

There are no qualifications, reservations or adverse remarks or disclaimers made by A. K. Jain & Co., Company Secretaries, Mumbai in their secretarial audit report.

Maintenance of Cost Records and Cost Audit

Maintenance of cost records and requirement 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.

Particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange earnings and outgo Conservation of Energy and Technology Absorption

Your Company has taken necessary steps and initiative in respect of the conservation of energy to a possible extent to conserve the resources as required under Section 134(3)(m) of the Act and rules framed thereunder. As your Company is not engaged in any manufacturing activity, the particulars of technology absorption as required under the section are not applicable and hence are not provided.

Foreign Exchange Earnings and Outgo

During the year under review, the Company has earned a foreign exchange equivalent of Rs 148.06 Lakhs and has spent Rs 243.27 lakhs on foreign exchange.

Material Changes and Commitments Affecting the Financial Position of the Company

There have been no material changes and commitments affecting the financial position of the Company which have occurred between March 31, 2024, and the date of this report other than those disclosed in this report.

Significant and Material Orders passed by the Regulators or Courts Tribunals

There are no significant material orders passed by the Regulators/ Courts which would impact the ongoing concern status of your Company and its future operations.

Management Discussion and Analysis Report

The Management's Discussion and Analysis Report for the year under review, as stipulated under Regulation 34(2)(e) of the SEBI Listing Regulations, is annexed as Annexure - III to this Report.

Particulars of Employees

Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 have been appended as Annexure - IV to this Report.

The information required pursuant to Section 197 of the Act read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of your Company is available for inspection by the members. Any member interested in obtaining such information may address their email to investor. relations@ careedge.in

Business Responsibility and Sustainability Report

A Business Responsibility and Sustainability Report as per Regulation 34(2) of the SEBI Listing Regulations, detailing the various initiatives taken by the Company on the environmental, social and governance front is provided as Annexure - V and forms an integral part of this Annual Report.

Performance and Financial Position of Subsidiary, Associate and Joint Venture Company and their Contribution to the Overall Performance of the Company

As required under Section 129 of the Act and Regulation 33 of the SEBI Listing Regulations, the Consolidated Financial Statements have been prepared by the Company in accordance with the applicable Accounting Standards and form part of the Annual Report. Statement on the highlights of the performance of the subsidiary companies and their contribution to the overall performance of the Company are given in Form AOC-1 has been appended as Annexure- VI to this Report.

Pursuant to provisions of Section 136 of the Act, the financial statements of the subsidiaries, as required, are available on the Company's website and can be accessed at https://www.careratings.com/financial- performance

The Company has formulated a Policy for determining Material Subsidiaries. The Policy is available on the Company's website and can be accessed at https://www.careratings.com/Uploads/newsfiles/ FinancialReports/1679040466 Policy%20for%20 determining%20material%20subsidiaries.pdf

Corporate Governance

The Company is committed to maintaining the highest standards of Corporate Governance and adhering to the Corporate Governance requirements as set out by the Securities and Exchange Board of India. The Report on Corporate Governance as per Regulation 34(3) read with Schedule V of the SEBI Listing Regulations forms part of the Annual Report. The Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under Schedule V(E) of the SEBI Listing Regulations, a Certificate by the Managing Director affirming the compliance of Code of Conduct and a Certificate of Non-disqualification of Directors provided by the Practicing Company Secretary form part of the Corporate Governance Report which has been appended as Annexure-VII.

Annual Return

Pursuant to the provisions of Section 92(3) of the Act read with the Companies (Management and Administration) Rules, 2014 and Section 134(3)(a) of the said Act, the Annual Return containing details as on March 31, 2024 is available on the Company's website on: https://www.careratings.com/annual-reports

Share Capital

There was no change in Authorised Share Capital during the Financial Year ended on March 31, 2024. The Authorised Share Capital of the Company is Rs 35,00,00,000/- (3,50,00,000 Equity Shares of face value of Rs 10/- each).

During the Financial Year ended March 31, 2024, the Company has allotted 1,51,501 equity shares on account of the exercise of Stock Options under the Employee Stock Option Scheme, 2020, the details of which are given below:

In view of this, the paid-up share capital as on March 31, 2024, was Rs 29,85,21,130/- which consisted of 2,98,52,113 equity shares of Rs 10/- each.

Employees Stock Option Scheme

As required in terms of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, the disclosure relating to CARE Ratings Limited ESOP Schemes is available on the Company's website at: https://www.careratings. com/annual-reports

Details relating to Deposits covered under Chapter V of the Act

Your Company has not accepted or renewed any deposits within the purview of Chapter V of the Act, during the year under review.

Update on Certain Matters:

The following are the updates on certain matters:

A. SEBI initially imposed a penalty of Rs 25 lakhs and subsequently enhanced it to Rs 1 crore in respect of an adjudication proceeding initiated by it in relation to the credit ratings assigned to one of the Company's customers and the customer's subsidiaries under Section 15HB of SEBI Act, 1992. An appeal has been filed before the SAT. The case is pending as of this date.

B. In the suit filed by 63 Moons Technologies Ltd., the Hon'ble Madras High Court passed an Order dated February 1, 2023, directing the Company amongst other respondents to deposit 10% of the total value of the suit claim in the Madras High Court, as a means of furnishing security, failing which the interim order of injunction restraining the Company from dealing with any of its assets will continue till the suit is disposed of. The Company has filed appeals against the said order before the Division Bench of Madras High Court.

Change in the Nature of Business

During the Financial Year 2023-24, there was no change in the nature of business of the Company.

Disclosures under the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013

Your Company has always believed in providing a safe and harassment-free workplace for every individual working on the Company's premises through various interventions and practices. The Company always endeavours to create and provide an environment that is free from discrimination and harassment including sexual harassment.

Your Company has a policy on the Prevention of Sexual Harassment at the Workplace. The policy aims at the prevention of harassment of employees and lays down the guidelines for the identification, reporting and prevention of undesired behaviour. An Internal Complaints Committee (ICC) has been set up as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 in order to investigate any complaints/ issues related to sexual harassment. ICC is responsible for the redressal of complaints related to sexual harassment and follows the guidelines provided in the Policy.

During the year ended March 31, 2024, the ICC did not receive any complaint pertaining to sexual harassment.

Business Risk Management

The Board of Directors of the Company has constituted a Risk Management Committee consisting of members of the Board of the Company to frame, implement and monitor the risk management plan for the Company. The composition of the Committee is in compliance with Regulation 21 of the SEBI Listing Regulations and the detailed composition is provided in the Corporate Governance Report. The Company has a Risk Management framework to identify and evaluate internal and external risks faced by your Company.

The risk management framework defines risk identification and its management across the enterprise at various levels including documentation and reporting. The framework helps in identifying risk trends, exposure, and potential impact analysis on a Company's business in order to minimize the adverse impact of any type of risk on the business objectives.

Together

As a part of CARE Ratings' initiatives under Corporate Social Responsibility (CSR) in FY 2023-24, your Company released payments amounting to Rs 2.28 crores (PY: Rs 1.92 crores) in areas of healthcare, education, community development, mid-day meals, nutritional food to Anganwadi children.

The Board has constituted a Corporate Social Responsibility and Sustainability Committee (CSRS Committee) in accordance with Section 135 of the Act. The CSR Policy has been devised based on the recommendations made by the CSRS Committee. The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year under review are set out in Annexure - VIII of this Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The CSR policy is available on the website of the Company at https://www.careratings.com/Uploads/newsfiles/ FinancialReports/1679039991 Corporate%20 Social%20Responsibilitv%20(CSR)%20Policv.pdf

Material Non-Listed Indian Subsidiary

There was no material (non-listed) Indian subsidiary of your Company as on March 31, 2024.

Directors' Responsibility Statement

As required under Section 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability confirm that:

1. In the preparation of the annual accounts for the financial year ended March 31, 2024, the applicable accounting standards have been followed along with proper explanation relating to material departures;

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

3. They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. They have prepared the annual accounts for the financial year ended March 31, 2024, on a going concern basis;

5. They have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and have been operating effectively;

6. They have devised proper systems to ensure compliance with provisions of all applicable laws and that such systems were adequate and operating effectively.

Compliance with the Secretarial Standards 1 & 2 issued by the Institute of the Company Secretaries of India (ICSI)

The Company has complied with the applicable Secretarial Standards 1 & 2 issued by ICSI related to the Board and General Meetings.

Acknowledgements

The Directors are thankful to the Members for their confidence and continued support. The Board places on record its appreciation of the contribution of its employees to the Company's operations and the trust reposed in it by market intermediaries, issuers and investors. The Board also appreciates the support provided by the Reserve Bank of India, the Securities Exchange Board of India, and the Company's Bankers.

On behalf of the Board of Directors of CARE Ratings Limited