ICICI Securities Ltd

To the Members

The Directors are pleased to present the Twenty-Eighth Annual Report of ICICI Securities Limited ('the Company') along with the audited financial statements for the financial year ended at March 31,2023.

Industry overview

The global economy continued a strong recovery in CY2022 but trade volumes began to slow down by September 2022 due to monetary tightening policies. Inflation became a global concern due to excessive money supply, fiscal stimulus programmes in the US and Europe in 2020-21 and Russia-Ukraine war. To control inflation, US Fed abruptly began its most aggressive monetary tightening in four decades. The International Monetary Fund (IMF), in its latest World Economic Outlook (released on January 30), estimated that world Gross Domestic Product ('GDP') grew 3.4% (real, inflation-adjusted) in CY2022, decelerating from the post-Covid bounce to 6% growth in CY2021 and the longer-term average annual growth of 3.8%.

After expanding by 8.8% in FY2022, India's real GDP decelerated to 7.7% YoY growth in the first 3 quarters of FY2023. Inflation as measured by the Consumer Price Index (CPI) edged above the Reserve Bank of India's ('RBI') preferred target range (2-6% YoY) between January and October 2022, but moderated to 5.7% YoY by December 2022. To counter inflation, RBI steadily hiked its policy repo rate from 4% in April 2022 to 6.5% by February 2023.

For Indian investors, FY2023 was highly volatile for equities, with the asset class returning flat returns, against 13% YoY growth for gold, 9% for US Dollar, 5-6% for real estate and 3.3% for bonds. Within equities, high- beta, capital-intensive and value stocks outperformed low-volatility stocks. Large cap stocks outperformed small cap stocks during FY2023. Amongst large caps, the sectors which outperformed were PSUs, FMCG, Auto, Infrastructure, Corporate Banks and Industrials.

Within equities, FY2023 has been a year of continued growth, as far as derivatives volumes were concerned. It would be fair to say that the Indian equity market has gravitated towards F&O in a big way. The gross industry Average Daily Turnover ('ADTO') was up by 117% YoY, and within this, the equity ADTO decreased by 20% and derivatives ADTO grew by 118%. New customer addition by the industry (in terms of net monthly demat account additions) was also down by ~28%.

Company overview

ICICI Securities Limited is a leading wealth-tech firm in India, meeting the three financial needs of its customers viz., Investments, Loans and Insurance. The Company operates across capital market segments including retail and institutional equity, financial product distribution, private wealth management and investment banking. The Company is amongst the leading equity house in the country with ~ 9+ Million customers and total client assets worth ' 5.9 Lakh Crore (assets of our clients including equity demat assets maintained with ICICI Bank Limited and excluding promoter holding).

The Company operates www.icicidirect.com, India's leading wealth-tech platform. The Company assists its customers like retail investors, corporates, financial institutions, High Net Worth Individuals ('HNIs') and Ultra HNIs in meeting their financial goals by providing them with research, advisory and execution services. Headquartered in Mumbai, the Company operates out of ~ 66 cities in India and wholly-owned subsidiary in US and its branch in Singapore.

The table below summarises the key financials of your Company for FY2023:

' Million

Note: Figures in parenthesis are negative

APPROPRIATIONS

Your Company has ' 31,849.8 Million available for appropriation, comprising total comprehensive income of ' 20,734.6 Million for FY2023 and balance of ' 11,115.2 Million brought forward from the previous financial year.

An appropriation of ' 7,263.0 Million towards interim and final dividend has been approved by the Board resulting in profit of ' 24,586.8 Million being the surplus carried forward. Your Company does not propose any transfers to reserves.

' Million

' (112.8) Million as at March 31,2023 [' (112.0) Million as at March 31, 2022] out of the total amount available for appropriation pertains to other comprehensive income which is not available for distribution as dividend.

DIVIDEND

The Board has recommended a final dividend of ' 9.25 per equity share (185%) for FY2023. The Board had also approved payment of interim dividend of ' 9.75 (195%) per equity share for FY2023, aggregating to ' 19/- per equity share (380%) for FY2023 vs ' 24/- per equity share (480%) paid for FY2022. The payment of interim dividend along with the proposed final dividend would result in cumulative dividend pay-out ratio of 55.18% of the standalone profits. The final dividend is subject to the approval of the Members at the ensuing Annual General Meeting ('AGM'). The payment of interim and final dividend is in line with the Dividend Distribution Policy of the Company.

TRANSFER OF UNCLAIMED/UNPAID AMOUNTS TO THE INVESTOR EDUCATION AND PROTECTION FUND ('IEPF')

In terms of the provisions of Section 124 of the Companies Act, 2013 ('the Act') and the rules made thereunder, the provisions of IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ('IEPF Rules') and other applicable provisions, all monies remaining unpaid or unclaimed for a period of seven years from the date of transfer to unpaid/ unclaimed dividend account are required to be transferred to IEPF.

Pursuant to the provisions of Rule 7 of IEPF Rules, Raju Nanwani, Company Secretary of the Company is the Nodal Officer for the purposes of verification of claims and co-ordination with IEPF Authority under IEPF Rules. Further, Rupesh Jadhav, Chief Manager, Secretarial is the Deputy Nodal Officer to assist the Nodal Officer in connection with the verification of claims and for co-ordination with IEPF Authority. The said details can be viewed at

https://www.icicisecurities.com/Upload/ArticleAttachments/

Details_of_Nodal_Deputy_Nodal_officer_of_the_Company_for_coordination_with_IEPF.pdf

Information relating to unclaimed dividend and the due dates by which it can be claimed by the shareholders are as under:

SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES

At March 31, 2023, the Company has two subsidiaries (including step-down subsidiary) and has no associate and joint venture companies. The subsidiaries are:

a. ICICI Securities Holdings, Inc.; and

b. I CICI Securities, Inc.; (subsidiary of ICICI Securities Holdings, Inc.).

During FY2023, no Company has become or ceased to be Subsidiary, Joint Venture or Associate Company of the Company.

A separate statement containing the salient features of the financial statements of the subsidiaries required to be disclosed under Form AOC-1 is enclosed as Annexure A to this Report.

RISK MANAGEMENT FRAMEWORK

Our Board oversees our risk management and has constituted a Risk Management Committee, which frames and reviews risk management policies and controls. A comprehensive system for risk management and internal controls for all our businesses has been established to manage the risks we are exposed to. The objective of our risk management framework is to ensure that various risks are identified, measured and mitigated and also that policies, procedures and standards are established to address these risks and to ensure a systematic response in the case of crystallisation of such risks.

The key risks associated with our business have been classified into implied market risk, market risk, operational risk, information technology/cyber security risk, liquidity risk, credit risk and reputation risk. The policies have been framed with respect to such risks which set forth limits, mitigation strategies and internal controls. These policies include Corporate Risk and Investment Policy, Liquidity Risk Management Policy, Operational Risk Management Policy, Outsourcing Policy, Fraud Risk Management Policy, Information Technology Risk Management Policy, Information Security Management Policy, Cyber-security & Cyber Resilience Policy, Business Continuity Policy and Surveillance Policy.

We are particularly sensitive to the risks emanating from the introduction of new products and services. All new products are approved by the Committees constituted by the Board. In case a product entails taking credit risk or market risk on the Company's books or entails offering margin based products to clients, then, the risk management framework for such products is approved by our Risk Management Committee. In case of all other new product offerings, approval is sought from our Product Committee which is a Committee constituted by our Board. Before we launch a new product or service, it is also reviewed and approved by our Risk Management Group, Compliance and Operations Groups and the Process Approval Committee set up for this purpose. These Groups and Committees review the product/ service through the lenses of regulatory compliance, risk management and integration with the existing risk management systems.

During the year, the Company largely resumed its operations from office locations as the spread of the COVID-19 pandemic was contained.

INTERNAL FINANCIAL CONTROLS AND ITS ADEQUACY

The internal financial controls with reference to financial statements as designed and implemented by the Company are adequate for safeguarding its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. Further, the Statutory Auditors have verified the systems and processes and confirmed that the internal financial controls over financial reporting are adequate and such controls are operating effectively.

STATUTORY AUDITORS REPORT

There were no qualifications, reservations, adverse remarks or disclaimers in the report of Statutory Auditors of the Company.

No frauds were reported by the auditors under Section 143 (12) of the Act.

ANNUAL RETURN

The annual return for FY2023 comprising of the information available upto the date of this report can be viewed at the following link: https://www.icicisecurities.com/Upload/ ArticleAttachments/ICICI_Securities_Limited_Annual_ Report_FY2022_23.pdf

The said annual return shall be further updated as soon as possible but no later than sixty days from the date of the AGM.

SHARE CAPITAL

During FY2023, the Company has allotted 1,89,005 equity shares of ' 5/- each pursuant to exercise of stock options under the ICICI Securities Limited - Employees Stock Option Scheme - 2017. As a result, the share capital increased from ' 1,613,393,605/- to ' 1,614,338,630/- during FY2023.

PUBLIC DEPOSITS

Your Company has not accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of loans, guarantees and investments covered under Section 186 of the Act are given in Annexure B to this report.

RELATED PARTY TRANSACTIONS

The Company has put in place a policy for related party transactions ('RPT policy') which has been approved by the Board of Directors. The RPT policy provides for identification of related party transactions, necessary approvals by the Audit Committee/Board of Directors/Shareholders, reporting and disclosure requirements in compliance with the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('Listing Regulations').

The said RPT policy has been uploaded on the website of the Company and can be accessed at the following link:

https://www.icicisecurities.com/UPLOAD/ARTICLEIMAGES/Policy_on_RPT.pdf

All transactions executed by the Company during the financial year with related parties were on arm's length basis and in the ordinary course of business. All such related party transactions were placed before the Audit Committee for approval, wherever applicable.

Pursuant to the provisions of Regulation 23 (4) of Listing Regulations, approval of the Members was obtained at the Annual General Meeting held on August 26, 2022 for:

• availing of credit facility(s) from ICICI Bank Limited, a related party as well as the Banker to the Company, which may exceed the limit specified under Regulation 23 (1) of Listing Regulations, viz., rupees one thousand crore or ten percent of the annual consolidated turnover of the Company as per the last audited financial statements of the Company, whichever is lower, but not exceeding credit facilities of ' 60.00 billion, provided that the said contract(s)/ arrangement(s)/transaction(s) so carried out shall be at arm's length basis and in the ordinary course of business of the Company; and

• approval of material related party transaction(s) with ICICI Bank Limited (Holding Company) for:

? placing fixed deposits, recurring deposit accounts (in any form and by whatever name called) (whether individual transaction or transactions taken together or series of transactions or otherwise) with ICICI Bank Limited, a related party as well as the Banker to the Company on such term(s) and condition(s) as may be agreed, which may exceed the limit specified under Regulation 23 (1) of Listing Regulations, viz., rupees one thousand crore or ten percent of the annual consolidated turnover of the Company as per the last audited financial statements of the Company, whichever is lower, but not exceeding maximum outstanding balance of ' 10.00 billion (excluding accrued interest thereon), provided that the said contract(s)/arrangement(s)/transaction(s) so carried out shall be at arm's length basis and in the ordinary course of business of the Company.

• Placement of current account deposits by the Company whether by way of fresh deposit(s) or any extension(s) or modification(s) of earlier contract(s)/ arrangement(s)Aransaction(s) or otherwise, from time to time, with ICICI Bank Limited, a related party as well as the Banker to the Company on such term(s) and condition(s) as may be agreed, notwithstanding the fact that the maximum balance at any day, may exceed the limit specified under Regulation 23 (1) of Listing Regulations viz., rupees one thousand crore or ten percent of the annual consolidated turnover of the Company as per the last audited financial statements of the Company, whichever is lower, provided that the said contract(s)/arrangement(s)/ transaction(s) so carried out shall be at arm's length basis and in the ordinary course of business of the Company.

The Board of Directors, at its meeting held on April 19, 2023, based on the recommendation of the Audit Committee and subject to the approval of the Members, have approved continuing availing of credit facility(s) from ICICI Bank Limited, a related party as well as the Banker to the Company, which may exceed the limit specified under Regulation 23 (1) of Listing Regulations, viz., rupees one thousand crore or ten percent of the annual consolidated turnover of the Company as per the last audited financial statements of the Company, whichever is lower, but not exceeding credit facilities of ' 60.00 billion, provided that the said contract(s)/ arrangement(s)/transaction(s) so carried out shall be at arm's length basis and in the ordinary course of business of the Company.

The Board of Directors, at its meeting held on April 19, 2023, based on the recommendation of the Audit Committee and subject to the approval of the Members, have also approved the following material related party transactions:

• continuing placement of current account deposits by the Company whether by way of fresh deposit(s) or any extension(s) or modification(s) of earlier contract(s)/ arrangement(s)/transaction(s) or otherwise, from time to time, with ICICI Bank Limited, a related party as well as the Banker to the Company, on such term(s) and condition(s) as may be agreed, notwithstanding the fact that the maximum balance at any day, may exceed the limit specified under Regulation 23 (1) of Listing Regulations, provided that the said contract(s)/ arrangement(s)/transaction(s) so carried out shall be at arm's length basis and in the ordinary course of business of the Company; and ^•

• placing of deposits in fixed deposits accounts, recurring deposit accounts (in any form and by whatever name called) ('Deposits') with ICICI Bank Limited, a related party as well as the Banker to the Company, subject to maximum outstanding balance not exceeding ' 40.00 billion (excluding accrued interest thereon) and subject to such transaction being on arm's length and in the ordinary course of business.

The details of related party transactions under Section 188 (1) of the Act required to be disclosed under Form AOC-2 pursuant to Section 134 (3) of the Act are given in Annexure C enclosed to this report.

DIRECTORS AND OTHER KEY MANAGERIAL PERSONNEL

The Board of Directors of the Company consists of nine Directors, out of which five are Independent Directors, two are Non-Executive Non-Independent Directors and two are Whole-time Directors.

As at the end of FY2023, Vijay Chandok (DIN: 01545262)

- Managing Director & CEO, Ajay Saraf (DIN: 00074885)

- Executive Director, Harvinder Jaspal - Chief Financial Officer and Raju Nanwani - Company Secretary are the Key Managerial Personnel as per the provisions of the Act and the rules made thereunder.

Changes in the composition of the Board of Directors and other Key Managerial Personnel

The Board of Directors, at its meeting held on April 20, 2022, based on the notice received from a Member under Section 160 of the Act and the recommendation of the Nomination & Remuneration Committee, re-appointed Subrata Mukherji (DIN: 00057492) as an Independent Director of the Company for a second term of 5 (five) consecutive years with effect from November 29, 2022 upto November 28, 2027, subject to the approval of the Members of the Company by way of Special Resolution. The Members of the Company, at the Twenty-Seventh Annual General Meeting ('AGM') of the Company held on August 26, 2022, approved the re-appointment of Subrata Mukherji (DIN: 00057492) by way of Special Resolution. Subrata Mukherji (DIN: 00057492) is a person of high repute, integrity and has rich and varied experience which will be an invaluable input to the Company's strategic direction and decision making. His contributions and guidance during the deliberations at the Board and Committee meetings have been of immense help to the Company. Pursuant to the provisions of Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014, Subrata Mukherji (DIN: 00057492) is not required to pass an online proficiency self-assessment test conducted by the 'Indian Institute of Corporate Affairs at Manesar'.

The Board of Directors, at its meeting held on April 20, 2022, based on the notice received from a Member under Section 160 of the Act and the recommendation of the Nomination & Remuneration Committee, have re-appointed Vijayalakshmi Iyer (DIN: 05242960) as an Independent Director of the Company for a second term of 5 (five) consecutive years with effect from November 29, 2022 upto November 28, 2027, subject to the approval of the Members of the Company by way of Special Resolution. The Members of the Company, at the Twenty-Seventh AGM of the Company held on August 26, 2022, approved the re-appointment of Vijayalakshmi Iyer (DIN: 05242960) by way of Special Resolution. Vijayalakshmi Iyer (DIN: 05242960) is a person of high repute, integrity and has rich and varied experience which will be an invaluable input to the Company's strategic direction and decision making. Her contributions and guidance during the deliberations at the Board and Committee meetings have been of immense help to the Company. Pursuant to the provisions of Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014, Vijayalakshmi Iyer (DIN: 05242960) is not required to pass an online proficiency self-assessment test conducted by the 'Indian Institute of Corporate Affairs at Manesar'.

Pramod Rao (DIN: 02218756), Non-Executive

Non-Independent Director of the Company tendered his resignation from the Board of Directors of the Company with effect from June 30, 2022.

The Board of Directors, pursuant to the provisions of Section 161 of the Act, vide circular resolution passed on June 28, 2022, appointed Pankaj Gadgil (DIN: 08521239) as an Additional Director (Non-Executive Non-Independent Director) on the Board of Directors of the Company with effect from June 30, 2022, subject to regulatory approvals, to hold office upto the date of the Twenty- Seventh AGM. The regulatory approvals were received in this regard. Pankaj Gadgil (DIN: 08521239), Additional Director (Non-Executive Non-Independent Director) of the Company tendered his resignation from the Board of Directors of the Company with effect from July 19, 2022.

The Board of Directors, at its meeting held on July 21, 2022, pursuant to the provisions of Section 161 of the Act, appointed Prasanna Balachander (DIN: 02257744) as an Additional Director (Non-Executive Non-Independent Director) on the Board of Directors of the Company with effect from July 21,2022, subject to regulatory approvals, to hold office upto the date of the Twenty-Seventh AGM. Further, the Board of Directors, at its meeting held on July 21, 2022, based on the notice received from a Member under Section 160 of the Act and the recommendation of the Nomination & Remuneration Committee, also appointed Prasanna Balachander (DIN: 02257744) as a Non-Executive Non-Independent Director of the Company with effect from the date of the Twenty-Seventh AGM, subject to the approval of the Members of the Company. The Members of the Company, at the Twenty-Seventh AGM of the Company held on August 26, 2022, approved the appointment of Prasanna Balachander (DIN: 02257744).

The Board of Directors, at its meeting held on July 21, 2022, based on the notice received from a Member under Section 160 of the Act and the recommendation of the Nomination & Remuneration Committee, appointed Gopichand Katragadda (DIN: 02475721) as an Independent Director of the Company for a term of 5 (five) consecutive years with effect from August 26, 2022 upto August 25, 2027, subject to the approval of the Members of the Company by way of Special Resolution and other regulatory approvals, if any. Accordingly, the Members of the Company, at the Twenty-Seventh AGM of the Company held on August 26, 2022, approved the appointment of Gopichand Katragadda (DIN: 02475721) by way of Special Resolution. The regulatory approvals were received in this regard. Gopichand Katragadda (DIN: 02475721) is a person of high repute, integrity and has rich and varied experience which will be an invaluable input to the Company's strategic direction and decision making. Pursuant to the provisions of Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014, Gopichand Katragadda (DIN: 02475721) has passed an online proficiency self-assessment test conducted by the 'Indian Institute of Corporate Affairs at Manesar'.

Anup Bagchi (DIN: 00105962), Non-Executive

Non-Independent Director of the Company tendered his resignation from the Board of Directors of the Company with effect from September 17, 2022.

The Board of Directors, pursuant to the provisions of Section 161 of the Act, vide circular resolution passed on September 26, 2022, appointed Rakesh Jha (DIN: 00042075) as an Additional Director (Non-Executive Non-Independent Director) on the Board of Directors of the Company with effect from September 26, 2022, subject to regulatory approvals. The regulatory approvals were received in this regard. Further, the Board of Directors, at its meeting held on October 20, 2022, based on the notice received from a Member under Section 160 of the Act and recommendation of the Nomination & Remuneration Committee, appointed Rakesh Jha (DIN: 00042075) as a Non-Executive Non-Independent Director of the Company subject to the approval of the Members of the Company.

Accordingly, the Members of the Company, vide Postal Ballot resolution passed on December 18, 2022, approved the appointment of Rakesh Jha (DIN: 00042075) as a Non-Executive Non-Independent Director of the Company with effect from December 18, 2022.

Declaration of Independence

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149 of the Act and Regulation 16 of Listing Regulations which have been relied upon by the Company.

Based on the declarations received from the Independent Directors, the Board is of the opinion that the Independent Directors fulfil the criteria of independence as specified in Listing Regulations and the Act and are independent of the Management.

All Independent Directors have given declarations that they have complied with the Code for Independent Directors prescribed in Schedule IV of the Act and Code of Business Conduct & Ethics of the Company during FY2023.

Retirement by rotation

In terms of Section 152 of the Act and the Articles of Association of the Company, Prasanna Balachander (DIN: 02257744), Director of the Company, would retire by rotation at the ensuing AGM and being eligible for re-appointment, has offered himself for re-appointment.

Brief details of the Director proposed to be re-appointed as required under Regulation 36 (3) of Listing Regulations are provided in the Notice of the ensuing AGM.

PARTICULARS OF SENIOR MANAGEMENT INCLUDING THE CHANGES THEREIN SINCE THE CLOSE OF THE PREVIOUS FINANCIAL YEAR

As at the end of FY2023, the following officials were designated as officials within the Senior Management category:

• Mr. Amit Gupta, Fund Manager, Portfolio Management Services

• Mr. Ankit Sharma, Head - Compliance and Legal

• Mr. Anupam Guha, Head - Private Wealth Management

• Mr. Harvinder Jaspal, Chief Financial Officer and Head - Operations

• Mr. Jaideep Goswami, Head - Equities

• Mr. Kedar Deshpande, Head - Retail Distribution, Product & Services Group

• Mr. Ketan Karkhanis, Head - Digital Client Acquisition & Co-Head-New Solutions Group

• Mr. Manoj Menon, Head - Institutional Research

• Ms. Nidhi Kajaria, Head - Human Resources

• Mr. Nilotpal Gupta, Head - Data Science

• Mr. Pankaj Pandey, Head - Retail Research

• Mr. Piyush Garg, Head - Treasury and CIO

• Mr. Raju Nanwani, Company Secretary

• Mr. Ravi N, Head - Customer Experience & Service

• Mr. Ripujit Chaudhuri, Chief Risk Officer

• Mr. Subhash Kelkar, Chief Technology & Digital Officer

• Mr. Venkatesh Shankaramani, Head - Internal Audit

• Mr. Vishal Gulechha, Head - Retail Equities

Further, following the resignation of Mr. Subhash Kelkar, based on the recommendation of the Nomination & Remuneration Committee, the Board approved the appointment of Mr. Ragunath Balaji as the Chief Technology & Digital Officer of the Company (within the category of senior management in the Company) with effect from May 2, 2023.