L&T Finance Ltd

The Directors of your Company have the pleasure in presenting the Seventeenth Annual Report together with the audited financial statements for the financial year ("FY") ended March 31, 2025.

The summary of the Company's financial results, both on a consolidated and standalone basis, for FY25 as compared to the previous FY i.e., FY24 is given below:

Figures for the previous year have been regrouped/re-classified to confirm to the figures of the current year.

• Total income was Rs.15,940.98 Cr in FY25 as compared to Rs.14,051.05 Cr in FY24.

• Profit before exceptional items and tax was Rs.3,491.26 Cr in FY25 as compared to Rs.3,029.03 Cr in FY24.

• Profit for the year attributable to owners of the Company was Rs.2,643.66 Cr in FY25 as compared to Rs.2,320.10 Cr in FY24.

During the year, the net loan book increased from Rs.81,359.39 Cr to Rs.93,773.06 Cr primarily on account of growth in retail loan book and partially offset by reduction of the wholesale book in line with Lakshya 2026 strategy.

• Total income was Rs.15,930.12 Cr in FY25 as compared to Rs.14,043.80 Cr in FY24.

• Profit before taxes (including exceptional item) was Rs.3,454.93 Cr in FY25 as compared to Rs.2,986.64 Cr in FY24.

• Profit for the year was Rs.2,617.81 Cr in FY25 as compared to Rs.2,286.23 Cr in FY24.

As required u/s 45—IC of the Reserve Bank of India Act, 1934, Rs.523.56 Cr has been transferred to Special Reserve during the year (previous year Rs.457.25 Cr).

The Company is not required to maintain cost records as per the provisions of Section 148 (1) of the Companies Act, 2013 ("the Act").

The information on the affairs of the Company has been given as part of the Management Discussion and Analysis section of the Report.

During the year under review, your Company executed the business transfer agreement ("BTA") and other ancillary documents (as applicable) for acquiring the gold loan business of Paul Merchants Finance Private Limited by way of slump sale on a going concern basis for a lumpsum consideration ("Proposed Transaction"). The Proposed Transaction is subject to fulfilment of conditions precedents stipulated in the BTA and such other approvals/consents as may be required.

There were no material changes and commitments affecting the financial position of the Company which occurred between the end of the financial year to which these financial statements relate and the date of the Board's Report.

The Dividend Distribution Policy of the Company approved by the Board of Directors ("Board") is in line with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") and RBI regulations. The policy is available on the website of the Company at https://www.ltfinance.com/investors. Please refer to the section, Policy Compendium for accessing the policy.

The Board has recommended a final dividend of r 2.75 per equity share (face value of r 10 each) subject to approval of the Members at the ensuing Annual General Meeting ("AGM"). The dividend recommended is in accordance with Dividend Distribution Policy.

In terms of Ind AS 10, events after the reporting period as notified by the Ministry of Corporate Affairs, the proposed dividend of r 686.09 Cr is not recognised as liability as on March 31, 2025.

The dividend, if approved at the ensuing AGM, would be paid to those Members whose names appear in the Register of Members maintained by the Registrar and Share Transfer Agents/Beneficial Owners maintained by the depositories as stated in notice of the ensuing AGM.

During year under review, there have been no changes to the credit ratings assigned in FY24.

During the year under review, CRISIL Ratings Limited ("CRISIL"), CARE Ratings Limited ("CARE") India Ratings and Research Private Limited ("India Ratings") and ICRA Limited ("ICRA") have reviewed and reaffirmed the ratings as stated below:

The instruments/ bank facilities with long term ratings of AAA are considered to have highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk.

The instruments with long-term ratings of AA+ are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

The instruments with a short-term rating of A1+ are considered to have a very strong degree of safety regarding timely payment of financial obligations. Such instruments carry the lowest credit risk.

FUND RAISING

During the year under review, the Company met its funding requirements through issue of Non-Convertible Debentures, Commercial Papers, borrowings from bank, External Commercial Borrowings, Securitisation Borrowings (PTC), Treasury Bills Repurchase and Borrowings (including Repo Borrowings). As on March 31, 2025, the Company doesn't have any listed green debt securities.

During the year under review, the net borrowings saw an increase of r 15,706.03 Cr vis-a-vis a decline of r 6,502.58 Cr in the previous year.

The aggregate debt outstanding as on March 31,2025 was R 92,246.90 Cr.

During the year under review, the Company has issued 65,000 equity shares and 58,62,791 equity shares to employees of the Company pursuant to the exercise of stock options under the Employee Stock Option Scheme - 2010 and Employee Stock Option Scheme - 2013 ("ESOP Schemes") respectively.

Pursuant to the allotment of equity shares under the ESOP Schemes, the paid-up share capital of the Company was r 2,494.87 Cr as at March 31, 2025 as compared to r 2,488.94 Cr as at March 31, 2024.

There has been no change in the ESOP Schemes during the year under review. The ESOP Schemes are in compliance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("sBsE Regulations").

The disclosures required to be made under the Act and SBSE Regulations are available on the website of the Company at https://www.ltfinance.com/investors (click - ESOP Disclosure). The certificate from the Secretarial Auditor, confirming compliance with the aforesaid provisions has been appended as Annexure A to the Board's Report.

During the year under review, the Company has not made any investments in its subsidiaries.

The Company is a Non-Banking Financial Company- Investment and Credit Company ("NBFC-ICC") registered with Reserve Bank of India ("RBI"), bearing reference number N-13.02052 dated August 2, 2024.

RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the Company or for the correctness of any of the statements or representations made or opinions expressed by the Company and discharge of liabilities by the Company.

The Company being a non-deposit taking Non-Banking Financial Company ("NBFC"), has not accepted any deposits from the public during the year under review.

As on March 31,2025, the composition of the Board is in accordance with the provisions of Section 149 of the Act and Regulation 17 of the SEBI Listing Regulations, with an appropriate combination of Executive Director, Non-Executive Directors and Independent Directors. The list of Directors of the Company has been disclosed as part of the Corporate Governance Report.

Mr. Dinanath Dubhashi (DIN:03545900), who was re-designated as the Whole-time Director of the Company with effect from January 24, 2024 until April 30, 2024, ceased to be the Whole-time Director of the Company on account of completion of his tenure.

During the year under review, in view of the termination of the investment agreement entered into between BC Asia Growth Investments, BC Investments VI Limited (collectively referred to as "Bain Capital") and the Company in relation to the acquisition of shares (directly or indirectly) by Bain Capital and in accordance with the terms of the investment agreement, Mr. Pavninder Singh (DIN: 03048302) ceased to be a Director (Nominee Director) on the Board of the Company w.e.f. June 13, 2024.

The Board records its deepest appreciation for the contribution by Mr. Dinanath Dubhashi (DIN:03545900) and Mr. Pavninder Singh (DIN: 03048302) during their tenure on the Board of the Company.

The terms and conditions of appointment of Independent Directors are available on the website of the Company at https://www.ltfinance.com/investors. Please refer to the section, Policy Compendium for accessing the policy. The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience, expertise (including proficiency, as applicable) and hold highest standards of integrity.

Section 152 of the Act provides that unless the Articles of Association provide for retirement of all directors at every AGM, not less than two-third of the total number of directors of a public company (excluding the Independent Directors) shall be persons whose period of office is liable to determination by retirement of directors by rotation, of which one-third are liable to retire by rotation. Accordingly, Mr. Sudipta Roy (DIN: 08069653) will retire by rotation at the ensuing AGM and being eligible, has offered himself for re-appointment.

Declaration by Independent Directors

All Independent Directors have submitted the declaration of independence, pursuant to the provisions of Section 149(7) of the Act and Regulation 25(8) of the SEBI Listing Regulations, stating that they meet the criteria of independence as provided in Section 149(6) of the Act and Regulations 16(1)(b) of the SEBI Listing Regulations and they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact his/her ability to discharge his/ her duties with an objective independent judgment and without any external influence.

The Company has familiarized the Independent Directors with the Company, their roles and responsibility in the Company, nature of industry in which the Company operates, business model of the Company, etc. Further, during the year under review, a dedicated AI bootcamp was organised specifically for the independent directors in light of the growing focus on AI highlighting how AI can help bring in business and operational efficiencies. The specific details of trainings are covered in the Business Responsibility & Sustainability Report ("BRSR") forming part of the Report.

Additionally, dedicated field visits (visits to the Company's branches, dealers and CSR projects) were undertaken to familiarize the Directors with the on ground operations.

The details relating to the familiarisation programme are available on the website of the Company at https://www. ltfinance.com/investors (click - Familiarisation Programme).

Fit and Proper Criteria & Code of Conduct

All the Directors meet the fit and proper criteria stipulated by RBI. All the Directors and Senior Management Personnel ("SMP") of the Company under the SEBI Listing Regulations have affirmed compliance with the Code of Conduct of the Company.

As on March 31,2025, the Company had the following KMPs:

1) Mr. Sudipta Roy - Managing Director and Chief Executive Officer

2) Mr. Sachinn Joshi - Chief Financial Officer

3) Ms. Apurva Rathod - Company Secretary

Mr. Dinanath Dubhashi was the Whole-time Director of the Company with effect from January 24, 2024 until April 30, 2024.

During the period under review, apart from the aforesaid, there were no changes in the KMPs of the Company.

A. Background and objectives

Section 178 of the Act and Regulation 19 read with Part D of Schedule II of the SEBI Listing Regulations, requires the Nomination and Remuneration Committee ("NRC") to formulate a policy relating to the remuneration of the Directors, SMP/KMPs and other employees of the Company and recommend the same for approval of the Board.

Further as per requirements of Master Direction - Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023, the Company is required to put in place a Board approved compensation policy.

Further, Section 134 of the Act stipulates that the Board's Report is required to include a statement on the Company's policy on Directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of director and remuneration for KMPs and other employees ("the Policy").

In view of the aforesaid, the Board has, based on the recommendation of the NRC of the Company, approved the Policy which is available on the website of the Company at https://www.ltfinance.com/investors. Please refer to the section, Policy Compendium for accessing the Policy.

B. Brief framework of the Policy

The objective of this Policy is:

a) to guide the Board in relation to appointment and removal of Directors.

b) to formulate criteria for evaluation of Independent Directors and the members of the Board.

c) to evaluate the performance of the members of the Board including Independent Directors.

d) to determine criteria for payment of remuneration/compensation to Directors, SMPs/KMPs and employees.

e) to recommend to the Board, remuneration/ compensation payable to the Directors including SMPs, KMPs and employees, if required.

f) to ensure relationship of remuneration/ compensation to performance is clear and meets appropriate performance benchmarks.

C. Appointment of Director(s) - Criteria and requirements

The NRC identifies and ascertains the integrity, professional qualification, areas of expertise and experience of the person, who is proposed to be appointed as a director and appropriate recommendation is made to the Board with respect to his/ her appointment to maintain balance, ensure effective functioning of the Board and ensure orderly succession planning.

The Committee ensures that at least 1 (one) of the Directors on the Board has relevant experience of having worked in a Bank/NBFC.

Appointment of Independent Directors is subject to the provisions of Section 149 of the Act read with Schedule IV and rules thereunder and SEBI Listing Regulations. The NRC satisfies itself that the proposed person satisfies the criteria of independence as stipulated under Section 149(6) of the Act and SEBI Listing Regulations, before the appointment as an Independent Director.

No person is eligible to be appointed as a Director, if he/she is subject to any disqualifications as stipulated under the Act or any other law(s) for the time being in force.

Appointment of a Director is subject to the provisions of the Act and rules thereunder, SEBI Listing Regulations, RBI regulations and other applicable regulations, as the case may be.

Appointment of Managing Director and Whole-time Director is subject to the provisions of Sections 196, 197, 198 and 203 of the Act read with Schedule V and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, RBI regulations, SEBI Listing Regulations and such other applicable regulations. A person cannot occupy the position as a Managing Director/Whole-time Director beyond the age of seventy years, unless the appointment is approved by a special resolution passed by the Company in general meeting. No re-appointment is made earlier than 1 (one) year before the expiry of term.

D. Evaluation criteria of Directors and SMPs/KMPs/Employees

• Independent Directors/Non-Executive Directors

The Board/NRC carries out evaluation of performance of Independent Directors/Non- Executive Directors every year ending March 31 on the basis of the following criteria:

a) Membership & Attendance - Board and Committee meetings;

b) Contribution during such meetings;

c) Active participation in strategic decision making;

d) Inputs to executive management on matters of strategic importance;

e) Performance of the directors;

f) Fulfilment of the independence criteria and their independence from the management, as applicable; and

g) Such other matters, as the NRC/ Board may determine from time to time.

• Executive Directors

The NRC carries out evaluation of performance of Executive Directors ("EDs") every year ending March 31. The evaluation is on the basis of key performance indicators ("KPIs"), which are identified well in advance for EDs and weights assigned for each measure of performance keeping in view the distinct roles of EDs. The identified KPIs for EDs are approved by the NRC or the Board, pursuant to recommendation of the NRC, if required.

• SMPs/KMPs (other than EDs)/Employees

The Human Resource ("HR") department initiates the process of evaluation of the aforementioned persons every year ending March 31, with the Department Head(s)/ Management concerned. KPIs are identified well in advance at the commencement of the financial year. Performance benchmarks are set and evaluation of employees is done by the respective reporting Manager(s)/Management/ Department Head(s)/NRC as prescribed by law or regulator to determine whether the performance benchmarks are achieved. The payment of remuneration/compensation/ annual increment to the aforementioned persons is determined after the satisfactory completion of evaluation process.

The HR department of the Company is authorised to design the framework for evaluating the EDs/SMPs/KMPs/employees. The objective of carrying out the evaluation by the Company is to identify and reward those with exceptional performances during the financial year. Training and development orientation programmes on a need basis are provided to employees, whose performance during any financial year does not meet the benchmark criteria.

E. Criteria for Remuneration

The NRC, while determining and/or recommending the criteria for remuneration/remuneration for Directors, SMPs/KMPs and other employees ensures that:

a. the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully;

b. the relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

c. the remuneration to Directors, SMPs and KMPs involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals.

The NRC with respect to SMPs and KMPs, further ensures that:

i. the compensation levels are supported by the need to retain earnings of the Company and the need to maintain adequate capital based on Internal Capital Adequacy Assessment Process Policy;

ii. the remuneration is reasonable, recognising all relevant factors including adherence to statutory requirements and industry practices; and

iii. the remuneration/compensation packages may comprise of fixed and variable pay components aligned effectively with prudent risk taking to ensure that compensation is adjusted for all types of risks, the compensation outcomes are symmetric with risk outcomes, compensation pay-outs are sensitive to the time horizon of the risks, and the mix of cash, equity and other forms of compensation are consistent with risk alignment.

During the year under review, the Policy was amended/updated to carry out changes required to be incorporated in accordance with the regulatory changes.

Pursuant to the provisions of the Act and the SEBI Listing Regulations, the Board has carried out an annual evaluation of its own performance, performance of the Directors individually and the Committees of the Board.

During the year under review, the NRC approved expansion of the evaluation criteria of the Stakeholders' Relationship and Customer Protection Committee in line with the widened scope of the committee as specified in the Master Direction - Reserve Bank of India (Internal Ombudsman for Regulated Entities) Directions, 2023.

Manner of Evaluation

The NRC and the Board have laid down the manner in which formal annual evaluation of the performance of the Board, its Committees and individual directors is required to be carried out.

It includes circulation of evaluation forms separately for evaluation of the Board and its Committees, Independent Directors/ Non-Executive Directors/ Executive Directors/ Managing Director and Chief Executive Officer and Chairman of the Board, as applicable.

During the year under review, the aforesaid annual performance evaluation was conducted through an independent external service provider's platform. The results of the evaluation were sent to the Chairman of the NRC, after which necessary feedback was provided to the NRC/ Board. This process ensured that the evaluation process was carried out in a confidential manner and independent feedback was obtained on the performance.

The process of the annual performance evaluation broadly comprises:

a) Board and Committee Evaluation:

• Evaluation of Board as a whole and the C ommittees is don e by the indi vid ual Directors/ members, followed by submission of collation to NRC and feedback to the Board by the NRC post discussion.

b) Independent/Non-Executive Directors Evaluation:

• Evaluation done by Board members excluding the Director being evaluated is received and individual feedback is provided to each Director as per the policy for performance evaluation of the Board/its Committees/ Directors.

c) Chairperson/Managing Director and Chief Executive Officer Evaluation:

• Evaluation as done by the individual directors is submitted to the Chairperson of the NRC and Chairperson of the NRC presents the feedback at the NRC meeting and subsequently at the Board meeting.

In accordance with the requirements of Regulation 34 of the SEBI Listing Regulations, the Report includes the Company's BRSR. The Company has followed the framework of the International Integrated Reporting Council (now known as Value Reporting Foundation), the Global Reporting Initiative ("GRI") and the BRSR principles as prescribed by SEBI.

The report on Corporate Governance for the year under review, is forming a part of the Board's Report and the same is prepared in accordance with SEBI Listing Regulations and other applicable regulations, if any. The certificate from the Secretarial Auditor of the Company confirming compliance with the conditions of corporate governance is appended to the Corporate Governance Report.

Pursuant to the provisions of Section 139(2) of the Act and the rules made thereunder and RBI requirements, the Members at their Sixteenth AGM held on June 25, 2024, had appointed M/s T. R. Chadha & Co. LLP, Chartered Accountants (ICAI Firm Registration Number: 006711N/N500028) and M/s Brahmayya & Co., Chartered Accountants (ICAI Firm Registration Number: 000515S) as the Joint Statutory Auditors of the Company for a term of 3 (three) years, i.e., from the conclusion of Sixteenth AGM till the conclusion of the Nineteenth AGM.

The Auditors' Report to the Members for the year under review is unmodified. The notes to the accounts referred to in the Auditors' Report are self-explanatory and therefore do not call for any further clarifications under Section 134(3)(f) of the Act.

Pursuant to the provisions of Regulation 24A of the SEBI Listing Regulations and in accordance with Section 204 of the Act, basis recommendation of the Board, the Company is required to appoint Secretarial Auditor, with the approval of the Members at its AGM.

In light of the aforesaid, the Board of the Company has recommended the appointment of M/s Alwyn Jay & Co., Company Secretaries (Firm Registration Number P2010MH021500) as the Secretarial Auditor of the Company for a period of 5 (five) consecutive financial years, i.e.; from FY2025-26 up to FY2029-30, subject to approval of the Members at the ensuing AGM of the Company, to undertake secretarial audit as required under the Act and SEBI Listing Regulations and issue the necessary secretarial audit report for the aforesaid period.

M/s Alwyn Jay & Co., Company Secretaries (Firm Registration Number: P2010MH021500) have confirmed that their appointment, if made, will comply with the eligibility criteria in terms of SEBI Listing Regulations. Further, the Secretarial Auditor has confirmed that they have subjected themselves to Peer Review process by the Institute of Company Secretaries of India ("ICSI") and hold valid certificate issued by the Peer Review Board of ICSI.

Pursuant to the provisions of Section 204 of the Act, the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 201 4 and Regulation 24A of the SEBI Listing Regulations, the Company had appointed M/s Alwyn Jay & Co., Company Secretaries (Firm Registration Number: P2010MH021500) to undertake the Secretarial Audit of the Company for FY25.

Further, in terms of the regulatory requirements, M/s Alwyn Jay & Co. has issued the Annual Secretarial Compliance Report, confirming compliance by the Company of the applicable SEBI regulations and circulars/guidelines issued thereunder.

The Secretarial Audit Report is appended as Annexure B to the Board's Report. There is no adverse remark, qualification, reservation or disclaimer in the Secretarial Audit Report.

There were no frauds reported by the Auditors of the Company under Section 143(12) of the Act to the Audit Committee ("AC").

The information required pursuant to the provisions of Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company has been appended as Annexure C to the Board's Report.

In terms of second proviso to Section 136 of the Act, the Report and accounts are being sent to the Members and others entitled thereto, excluding the information on employees' particulars as required pursuant to provisions of Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The said information is available for inspection by the Members.

The Board affirms that the remuneration paid to the employees of the Company is as per the policy on Directors' appointment and remuneration/ compensation for Directors, Senior Management Personnel, Key Managerial Personnel and other employees and is in accordance with the requirements of the Act and SEBI Listing Regulations and none of the employees listed in the said Annexure are related to any Directors of the Company.

The details of conservation of energy, technology absorption and foreign exchange earnings and outgo of the Company are as follows:

a. Conservation of Energy:

The details regarding measures taken towards conservation of energy and capital investment thereof are covered as part of the Natural Capital section of the Report.

b. Technology Absorption:

The details pertaining to technology absorption at the Company (usage of digital and data analytics to build sustainable competitive advantage) are covered as part of the Management Discussion and Analysis section of the Report and Manufactured & Intellectual Capital section of the Report.

c. Foreign Exchange Earnings and Outgo:

There were no foreign exchange earnings during the year (previous year: Nil); while the expenditure in foreign currency by the Company during the year was r 193.02 Cr towards professional fees, license fees and finance cost (previous year: r 90.77 Cr towards professional fees)

The Company's equity shares are compulsorily tradable in electronic form. As on March 31, 2025, out of the Company's total equity paid-up share capital comprising of 2,49,48,68,101 equity shares, only 6,139 equity shares were in physical form the rest being in dematerialised form.

As per notifications issued by SEBI from time to time, requests for effecting transfer of securities are not processed unless the securities are held in the dematerialised form with the depositories.

Further, transmission or transposition of securities held in physical or dematerialised form is also effected only in dematerialised form.

Therefore, Members holding securities in physical form are requested to take necessary action to dematerialise their holdings.

As on March 31, 2025, the Company had 3 (three) subsidiaries. The list of the subsidiary companies is covered in the Corporate Governance section of the Report.

There is no material subsidiary of the Company as on March 31, 2025. Further, as required under Regulations 16(1 )(c) and 46 of the SEBI Listing Regulations, the Board has approved the policy for determining Material Subsidiaries which is available on the website of the Company at https://www.ltfinance.com/investors. Please refer to the section, Policy Compendium for accessing the policy.

L&T Infra Investment Partners ("AIF Fund") is a private investment fund focused on the Indian infrastructure sector. The AIF Fund is registered as a Category I Alternative Investment Fund Infrastructure Fund with SEBI under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012.

L&T Infra Investment Partners Advisory Private Limited acts as an Investment Manager to the AIF Fund, whereas, L&T Infra Investment Partners Trustee Private Limited acts as the Trustee to the AIF Fund. The Company is the sponsor of the AIF Fund.

L&T Financial Consultants Limited is inter alia engaged in the business of leasing of its own properties, rendering consultancy services and advising and assisting in due diligence, providing technical assistance, financing loans or advisory services.

The highlights of performance of the businesses of subsidiaries are available on the website of the Company at https://www. ltfinance.com/investors.

Further, as required under Rule 5 and Rule 8(1) of the Companies (Accounts) Rules, 2014, a report on the performance and financial position of each of the subsidiaries and associates of the Company has been appended as Annexure D to the Board's Report.

Pursuant to the provisions of Section 134(5) of the Act, the Board confirm that, to the best of its knowledge and belief:

1) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

2) the Directors 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 as at March 31, 2025 and of the profit of the Company for that period;

3) the Directors 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) the Directors have prepared the annual accounts on a going concern basis;

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

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

The Company has complied with all applicable Secretarial Standards issued by the ICSI on Board meetings and General meetings.

The Company has an internal control system, commensurate with the size, scale and complexity of its operations. Testing of such systems forms a part of review by the Internal Audit ("IA") function. The scope and authority of the IA function is defined in the IA Charter in line with the Board approved Risk Based Internal Audit Policy.

The IA function of the Company monitors and evaluates the efficacy and adequacy of the internal control system in the Company to ensure that financial reports are reliable, operations are effective and efficient and activities comply with applicable laws and regulations. Based on the report of the IA function, process owners undertake corrective action, if any, in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the AC of the Company from time to time.

The details of the Board meetings held during FY25 are disclosed in the Corporate Governance Report.

The Company has constituted an AC in terms of the requirements of the Act, Regulation 18 of the SEBI Listing Regulations and RBI regulations. The details of the same are disclosed in the Corporate Governance Report.

In accordance with the requirements of the provisions of Section 135 of the Act, the Company has constituted a Corporate Social Responsibility ("CSR") and ESG Committee. The composition and terms of reference of the CSR and ESG Committee are covered in the Corporate Governance Report.

The Company has also formulated a CSR policy ("CSR Policy") in accordance with the requirements of the Act containing details specified therein. The CSR Policy along with details of the projects approved by the Board are available on the website of the Company at https://www.ltfinance.com. Please refer to the section, Policy Compendium for accessing the CSR Policy.

The Company has a strong commitment towards promoting inclusive social transformation in rural communities through its CSR efforts. The CSR interventions are aligned with the Sustainable Development Goals ("SDGs"), which indicate a holistic approach towards social responsibility. The project-based accountability approach with a focus on social impact, scale, and sustainability reflects the Company's commitment to creating shared value for all stakeholders.

During the year under review, no changes were made to the CSR Policy.

During the year, the overall CSR spend at L&T Finance (including its subsidiaries) was R 30 Cr. The Company spent R 26.18 Cr in excess of its CSR obligations and the excess amount will be set off against the required 2% CSR budget over the next immediate succeeding financial years.

The Company's CSR efforts are well-aligned with its business objectives, regulatory requirements, and social responsibility principles.

An annual report on activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 has been appended as Annexure E to the Board's Report.

Pursuant to Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 read with Section 177(9) of the Act and Regulation 22 of the SEBI Listing Regulations, the Company has adopted a Vigil Mechanism Framework, under which the Whistle Blower Investigation Committee has been set up. The objective of the framework is to establish a redressal forum, which addresses all concerns raised on questionable practices and through which all the stakeholders such as Employees, Directors and service providers (agency, vendor, contractor or any outsourced partner) can raise actual or suspected violations. The Vigil Mechanism Framework provides for adequate safeguards against victimization of the persons who use such mechanism and make provisions for direct access to chairman of AC.

The effectiveness of the vigil mechanism is regularly reviewed by the AC, which ensures that all grievances are handled promptly and judiciously. The AC's oversight ensures that the framework is accessible to all stakeholders and that it aligns with best practices.

Necessary details pertaining to the framework are disclosed in the Corporate Governance Report.

The particulars of loans, guarantees, security and investments as per Section 186 of the Act by the Company, as applicable, have been disclosed in the financial statements.

The Board has approved the policy on transactions with related parties ("RPT Policy"), pursuant to the recommendation of the AC. In line with the requirements of the Act, RBI regulations and the SEBI Listing Regulations, the Company has formulated the RPT Policy. The RPT Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and the related parties. The RPT Policy is available on the website of the Company at https://www.ltfinance.com/investors. Please refer to the section, Policy Compendium for accessing the RPT Policy.

Key features of the RPT Policy are as under:

• All transactions with related parties ("RPTs") irrespective of its materiality and any subsequent material modification to any existing RPTs are referred to the AC of the Company for prior approval. The process of approval of RPTs by the AC, Board and shareholders is as under:

a) Audit Committee:

All RPTs and subsequent material modification, irrespective of whether they are in the ordinary course of business or at an arm's length basis require prior approval of AC.

Only those members of the AC who are independent directors approve the RPTs.

RPTs to which the subsidiary of the Company is a party but the Company is not a party, require prior approval of the AC if the value of such transaction whether entered into individually or taken together with previous transactions during a financial year exceeds 10 (ten) per cent of the annual standalone turnover, as per the last audited financial statements of the subsidiary of the Company.

Transaction between the Company or its subsidiaries with unrelated parties, the purpose and effect of which is to benefit the related party of the Company or any of its subsidiaries is an RPT and require prior approval of the AC.

b) Board:

Generally, all RPTs are in the ordinary course of business and at arm's length price.

RPTs which are not at arm's length and which are not in the ordinary course of business and/or which requires shareholders' approval, are approved by the Board.

c) Shareholders:

All material RPTs and subsequent material modification thereof, require approval of the shareholders, based on recommendation of the Board, through ordinary resolution passed at the general meeting.

Where any contract or arrangement is entered into by a Director or any other employee without obtaining the consent of the Board or approval by an ordinary resolution in the general meeting, it is required to be ratified by the Board or the shareholders at a meeting, as the case may be, within 3 (three) months from the date on which such contract or arrangement was entered into.

• Ratification of RPTs:

The members of the AC, who are Independent Directors, may ratify RPTs within 3 (three) months from the date of the transaction or in the immediate next meeting of the AC, whichever is earlier, subject to the following conditions:

a. The value of the ratified transaction(s) with a related party, whether entered into individually or taken together, during a financial year does not exceed R 1 Cr;

b. The transaction is not material in terms of the provisions of Regulation 23(1) of the SEBI Listing Regulations;

c. Rationale for inability to seek prior approval for the transaction is placed before the AC at the time of seeking ratification;

d. Details of ratification is disclosed along with the disclosures of related party transactions in terms of the provisions of Regulation 23(9) of the SEBI Listing Regulations;

e. Any other condition as may be specified by the AC.

Provided that failure to seek ratification of the AC would render the transaction voidable at the option of the AC and if the transaction is with a related party to any Director, or is authorised by any other Director, the Director(s) concerned is required to indemnify the Company against any loss incurred by it.

The following are inter alia exempted from the approval requirements as per SEBI Listing Regulations and/or the Act:

• transactions between Company and its wholly-owned subsidiary whose accounts are consolidated with the Company;

• 2 (two) wholly-owned subsidiaries of the Company, whose accounts are consolidated with the Company;

• transactions which are in the nature of payment of statutory dues, statutory fees or statutory charges entered into between the Company on one hand and the Central Government or any State Government or any combination thereof on the other hand.

All RPTs that were entered into during FY25 were on an arm's length basis and in the ordinary course of business and disclosed in the Financial Statements. There were no materially significant RPTs made by the Company with Promoters, Directors, KMPs or body corporate(s), which had a potential conflict with the interest of the Company at large. Accordingly, the disclosure of RPTs as required under the provisions of Section 134(3) (h) of the Act in Form AOC-2 is not applicable. The Directors draw attention of the Members to notes to the Financial Statements which sets out related party disclosures.

The Company has constituted a Risk Management Committee ("RMC") in terms of requirements of Regulation 21 of the SEBI Listing Regulations and RBI regulations and has also adopted an Enterprise Risk Management Policy. The details are covered as part of the Corporate Governance Report.

The Company has a risk management framework and Board members are informed about risk assessment and minimization procedures and periodical review to ensure management controls risk by means of a properly designed framework. The AC and the Board are kept apprised of the proceedings of the meetings of the RMC. The Company, as it advances towards its business objectives and goals, is often subjected to various risks. Credit risk, market risk, liquidity risk, climate risk, transition risk, model risk, reputation risk, strategic risk and operational risk are some of the risks that your Company is exposed to and details of the same are covered in the Management Discussion and Analysis and Corporate Governance section of the Report.

The Company has in place a policy for prevention, prohibition and redressal of sexual harassment at workplace. Further, the Company has constituted an Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, where complaints in the nature of sexual harassment can be registered. Appropriate reporting mechanisms are in place for ensuring protection against sexual harassment and the right to work with dignity.

During the year under review, the Company had received 10 (ten) complaints in this regard out of which 1 (one) complaint was pending as on March 31, 2025 which has also been resolved as at the date of the Board's Report. All complaints were satisfactorily resolved.

The Annual Return in Form MGT-7 as required under Section 92(3) of the Act is available on the website of the Company at https://www.ltfinance.com/investors (click - Annual Return).

There are no significant and material orders passed by the regulators/courts which would impact the going concern status of the Company and its future operations.

The Company has complied with the applicable regulations of RBI.

During the year under review, the Company has received an in-principle approval for appointment as User Agency and e-KYC User Agency, pending receipt of the license key from Unique Identification Authority of India.

Subsequent to the merger of its subsidiaries with the Company, the Company had applied for registration as a NBFC-ICC. The Company continued to comply with the guidelines as applicable to NBFC- ICC in accordance with no-objection letter issued by RBI dated March 24, 2023 until the receipt by the Company of Certificate of Registration as NBFC-ICC dated August 2, 2024.

The Company has not obtained any other registration/ license/authorisation, by whatever name called from any other financial sector regulators.

The Directors express their sincere gratitude and appreciation towards all those who have contributed to the success of the Company during the past year. It is through the collective effort and dedication of many stakeholders that we have achieved our goals and milestones.

We express our sincere gratitude to RBI, SEBI, BSE Limited, National Stock Exchange of India Limited, Ministry of Finance, Ministry of Corporate Affairs, Registrar of Companies, other government and regulatory authorities, lenders, financial institutions and the Company's bankers for the ongoing support extended by them.

We would also like to thank our esteemed customers and shareholders. As we reflect on the accomplishments of the past year, we are deeply grateful for your unwavering support and partnership. Your loyalty and trust have been the cornerstone of our success, empowering us to overcome challenges and pursue new opportunities with confidence. We recognize the importance of your continued commitment, and we remain steadfast in our dedication to delivering value and excellence in all that we do.

Lastly, we extend our deepest appreciation to our employees, whose hard work, commitment, and innovative ideas have been instrumental in driving our growth and success. Their unwavering dedication and professionalism have played a significant role in overcoming challenges and seizing opportunities.