Your Directors take pleasure in presenting the 41st Annual Report together with the audited financial statements of the Company for the financial ended March 31, 2025.

Your Company has adopted Indian Accounting Standards (IND AS) notified under Section 133 of the Companies Act, 2013 read with Companies

(Indian Accounting Standards) Rules 2015.

During the financial year 2024-25, the financial services industry had to navigate a challenging environment marked by regulatory tightening measures, particularly in response to concerns over overleveraging in retail finance. Additionally, the rising cost of capital, resulting out of tight liquidity conditions, posed further constraints. However, the tax proposals announced in the Union Budget coupled with the interest rate cuts by the Reserve Bank of India towards the end of the fiscal year are expected to stimulate consumption and enhance credit flow, particularly in sectors such as mortgage and vehicle financing. The Reserve Bank of India, in its Monetary Policy Committee (MPC) meeting held in April 2025, has also changed its stance from "neutral" to "accommodative" which effectively means that going forward, absent any shocks, the MPC would only consider two options – status quo or a rate cut. This is expected to augur well for the economy as a whole with a spur towards investment and consumption, and more specifically to the financial services sector since the interest rates would continue to drop, which will be beneficialfrom the perspectives .profitability growthand

The overleveraging concerns, which initially impacted the unsecured lendingsegment,havealsohadsomeimpactonsecuredlendingbusinesses towards the laterpartofthefinancialyear, prompting a cautious approach across the industry. In response, NBFCs are strategically recalibrating their business expansion plans to optimize risk-adjusted profitabilityand maintain financial stability over the medium term.

Your Company is a non-deposit taking Non-Banking Finance Company (NBFC) registered with the Reserve Bank of India and is a NBFC Investment and Credit Company (NBFC-ICC). Your Company has been classified as a NBFC in Middle Layer under the (Non- Banking Financial Company - Scale Based Regulation) Directions dated October 19, 2023, as amended from time to time.

Your Company has been listed on the National Stock Exchange of India

Limited and BSE Limited since November 21, 2022.

Your Company provides secured financial solutions to individuals carrying on small businesses and self-employed individuals who often lack access to formal credit channels and rely on informal sources for their financial needs. To bridge this gap, your Company has developed a proprietary underwriting model that effectively assesses borrowers' cash flows, supported by rigorous monitoring and robust recovery mechanisms. This approach enables your Company to cater to their credit requirements while ensuring responsible lending practices.

By extending access to financial services, your Company facilitates the transition of underserved borrowers into the formal financial ecosystem, thereby helping them access structured credit, potentially lower interest rates and flexible repayment options.

Your Company remains committed to fair and transparent lending and collection practices, fostering long-term partnerships that empower borrowers to achieve financial stability.

The detailed financial and operational performance of your Company is comprehensively discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report.

During the financial year ended March 31, 2025, your Company disbursed

INR 4,969.66 crores as compared to INR 4,881.41 crores in the previous financial year, reflecting a year-on-year (YOY) growth of approximately

1.81%. This reduction in disbursements was a conscious strategy adopted by your Company to moderate its growth for the current financial year primarily on account of the overleveraging concerns affecting the industry coupled with regulatory guidance provided by the Reserve Bank of India to all the lending institutions.

As of March 31, 2025, the average ticket size for disbursals stood at INR

3.58 lakh, compared to INR 3.42 lakh in the previous financial year. Reserve Bank of India

Your Company operates across 10 states and 1 union territory, namely Tamil Nadu, Puducherry, Karnataka, Andhra Pradesh, Telangana, Maharashtra, Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Rajasthan, and Gujarat. During the financial year ended March 31, 2025, your

Company expanded its branch network to 748 branches, up from 520 branches in the previous year. This includes the establishment of the first branch in Gujarat, contributing to the total number of newly added and split branches.

This financial year has seen your Company strengthening its split branch strategy wherein bigger branches with higher number of borrowers or larger AUM are split into multiple branches in order to ensure strong risk oversight. Out of the 228 Branches opened by your Company during the year, 80 are fresh branches and 148 are branches added consequent to the split branch strategy highlighted above.

To support future growth, your Company has strengthened its workforce, ensuring a well-equipped team to meet rising demand. The strategic implementation of the split-branch model has led to a stronger risk management framework.

Your Company follows a well-defined branch expansion strategy, carefully evaluating various risk parameters before establishing new locations.

The branch network details as of March 31, 2025, along with a comparative analysis of the previous financial year, are provided below:

As of March 31, 2025, your Company reported Assets Under Management

(AUM) of INR 11,877.04 Crores, compared to INR 9,640.59 Crores in the previous financial year, reflecting a year-on-year growth of 23.20%

Revenue from operations stood at INR 2,866.02 crores, marking a Y-o-Y growth of 30.56% compared to INR 2195.10 crores in FY 2024. The average ticket size of loans ranged between INR 3-5 lakh.

Your Company seeks to be a responsible lender and in line with this vision, during the Financial year ended March 31, 2025, your Company also dropped its interest rates on incremental loans onboarded from November 1, 2024. Interest rate on loans given for a 7-year tenure was reduced from 24.5% to 21.5% - 22.50% depending upon the risk profile of the borrower, as clearly outlined in the Interest Rate model approved by the Board. Your Company would continue to keep a tab on the cost of its borrowings and would accordingly decide the incremental lending rates in the years to come.

To further enhance risk management and pricing efficiency, your Company implemented risk-based pricing model during the year. This approach considers multiple factors, including:

• Credit score of the primary applicant

• Customer leverage, as reflected in credit bureau reports

• Loan purpose, given its impact on risk weight

• Eligibility for priority sector benefits on borrowings

• Vintage of the collateral property offered

This structured approach ensures optimized risk-adjusted returns while supporting credit access for deserving borrowers.

Your Company maintains a robust collection and proactive recovery management system, ensuring strong asset quality for the financial year . ended March 31, 2025. Despite some impact of the overleverage crisis on secured loan lenders, your Company has ensured a strong asset quality, with the Gross Stage 3 Assets at 1.79% which will be one of the lowest among peers operating in this customer segment.

Your Company classifies assets into different stages based on expected performance, following all applicable regulatory guidelines. Exposure at

Default (EAD) represents the total outstanding amount, including accrued interest, as of the reporting date. For the financial year ended March 31,

2025, your Company reported Gross Stage 3 Assets and Net Stage 3

Assets (under the revised Income Recognition and Asset Classification norms) at 1.79% and 0.88% respectively, compared to 1.38% and 0.63% in the previous financial year.

While there is an uptick in the delinquency rate including NPA numbers, it needs to be looked at from a contexual perspective. The trickling effect of the overleverage crisis to secured lenders, especially during the second half of the year, led to some increase in delinquency rates. However, these numbers are significantly lower as compared unsecured lenders, and stand testimony to the robust underwriting model and strong collections focus.

The Indian credit significantgrowth market continues to offer opportunities, particularly in lending to micro-entrepreneurs and self-employed individuals, who often face barriers in accessing formal financial institutions. CRISIL estimates peg small ticket size secured (SORP - Self Occupied Residential Property) MSME lending market potential at

22 trillion. The number of players operating in this segment is less lending to a lot of headroom available for lenders to grow in this segment.

As of March 31, 2025, your Company's Assets Under Management (AUM) stood at INR 11,877.04 Crores, compared to INR 9,640.59 Crores in the previous financial year, reflecting a year-on-year growth of 23.20%. While the growth rate was slightly muted during the financial year ended March

31, 2025, it was primarily on account of other issues plaguing the industry such as overleverage, etc and not on account of lack of market demand.

Your Company maintains a well-diversified borrowing structure, leveraging multiple funding sources including capital market borrowings, borrowings banks. from financial

At the shareholders' meeting held on September 13, 2024, a special resolution under Section 180(1)(c) of the Companies Act, 2013, was passed, authorizing the Board of Directors to raise borrowings exceeding the aggregate of paid-up share capital and free paid-up share capital and free reserves and securities premium, up to INR 10,000 Crores.

As of March 31, 2025, your Company's total outstanding borrowings stood at INR 7,922 Crores, with the weighted average tenure of fresh loans raised during the year being approximately 60 months

Your Company follows a prudent Asset-Liability Management (ALM) strategy, ensuring optimal funding mix, loan tenures, and borrowing timing to minimize financing costs and maintain liquidity.

New lenders and developments during the Financial Year 2024-25: Total Borrowings and Term loan composition: During the financial year, your Company raised fresh borrowings aggregating to INR 3,545 Crores, including fresh term loans from banks and financial institutions amounting to INR 2,795 Crores. As of March 31, 2025, total outstanding borrowings stood at INR 7,922 Crores, with the weighted average tenure of fresh loans at ~60 months.

During the year, your Company onboarded new lenders such as CSB Bank Ltd., International Finance Corporation, SIDBI, HDFC Mutual Fund, HSBC

Mutual Fund, Kotak Mutual Fund and Nippon Mutual Fund. leading to a well-diversified borrowing profile. The liability profile of your Company has been structured in a way to support the business growth in the forthcoming years.

Securitization: Your Company actively leveraged the Securitization (PTC) market, enhancing liquidity, reducing the cost of funds and mitigating asset-liability mismatches.

During the year, your Company securitized receivables worth INR 852.32 Crores, realizing a sale consideration of INR 750 Crores. All securitization transactions complied with the RBI guidelines on the Securitization of Standard Assets and were accounted for in accordance with Indian

Accounting Standards (Ind AS).

Debentures: Your Company issued fresh debentures aggregating to INR 500 Crores via private placement during the year. Further, your Company has maintained timely servicing of interest and principal obligations for the financial year ended March 31, 2025, ensuring full compliance with the disclosure requirements under SEBI (LODR) Regulations, 2015.

Your Company did not issue any Commercial Papers or other short-term instruments during the financial year ended March 31, 2025.

Your Company remains committed to full compliance with all applicable regulatory provisions, including those set forth by the Reserve Bank of India (RBI), SEBI (LODR) Regulations, 2015, Companies Act, 2013, Foreign Exchange Management Act (FEMA), 1999, Income Tax Act, 1961 and the rules and regulations framed thereunder.

Additionally, your Company has adhered to the applicable provisions of Secretarial Standards issued by the Institute of Company Secretaries of

India (ICSI) for Board and General meetings held during the FY 2024-25.

During the financial year, your Company's credit ratings were reaffirmed at AA- (Double A Minus) with Stable outlook by ICRA, CARE Ratings Limited and India Ratings & Research (Fitch Group).

As of March 31, 2025, your Company's borrowings hold the following ratings:

There has been no change in the existing nature of business of your

Company during the financial year ended March 31, 2025.

The Board of Directors at its meeting held on April 29, 2025 has recommended a final dividend of INR 2/- per equity share (200% of face value of INR 1/- per equity share and translating to a dividend payout ratio of 5.5%) for the financial year ended March 31, 2025 to the shareholders of the Company for approval at the ensuing 41st Annual General Meeting.

Your Company has adopted a Dividend Distribution Policy, which provides a structured approach for determining dividend payouts. The policy considers various internal and external factors, including financial performance, growth strategy, regulatory requirements and prevailing market conditions as evaluated by the Board of Directors. The policy is available on our website at https://fivestargroup.in/investors/ .

In compliance with the requirements under the Reserve Bank of India Act,

1934, your Company has transferred a sum of INR 214.5 Crores to the statutory reserves during the financial year ended March 31, 2025.

Your Company operates as a non-deposit taking entity and has not accepted any public deposits during the financial year ended March 31,

2025, In accordance with applicable regulatory requirements.

As of March 31, 2025, your Company's Capital Adequacy Ratio stood at 50.10%, well above the minimum regulatory requirement of 15% as stipulated by the Reserve Bank of India (RBI).

Additionally, your Company has carried out an Internal Capital Adequacy and Assessment Process (ICAAP), confirming that it remains adequately capitalized to support its business objectives and risk profile.

During the financial year, there has been no change in the Authorised

Capital of the Company. The Company has only one class of equity shares and the authorised share capital of the Company as on March 31, 2025, was INR 55,00,00,000 divided into 55,00,00,000 equity shares of INR 1 each.

During the financial year under review, your Company has allotted

19,77,880 fully paid-up equity shares under various ASOP schemes. 4,060 fully paid -up equity shares under Five-Star Associate Stock Option Scheme 2015 and 19,73,820 fully paid -up equity shares under Five-Star

Associate Stock Option Scheme 2018 were allotted during the financial year under review.

Pursuant to the applicable provisions of the Companies Act 2013, SEBI (Issue of Capital and Disclosure Requirements), Regulations, 2018 and SEBI (Listing Obligations and Disclosure Requirements), 2015, the Board of Directors at its meeting held on August 17, 2024 and the

Shareholders at the Annual General Meeting held on September the implementation 13, 2024 of had approved the issuance of up to 410,000 convertible Share Warrants of INR 1.00 each at a premium of INR 769.00 on Preferential basis to Mr. Lakshmipathy Deenadayalan, Promoter and Chairman & Managing Director, Mr. Rangarajan Krishnan, Joint Managing Director & CEO and Mr.

Srikanth Gopalakrishnan, Joint Managing Director & CFO ("Allotees") . The Company had received the in-principle approval from BSE and NSE in this regard.

The Company has received upfront consideration of 25% of the issue proceeds and the Board had accordingly approved the allotment of Share warrants on Preferential basis to Allotees on October 24, 2024.

Your Company does not have any Subsidiary/Associate/ Joint Venture

Company. Also, during the financial year, your Company has not formed/ incorporated/become/ceased to be a Subsidiary/Associate/Joint Venture Company.

Your Company has in place a policy on related party transactions, as approved by the Board, which is available on the website of the Company at https://fivestargroup.in/investors/.

During the financial year, all related party transactions were entered into at arm's length and in the ordinary course of business. There were no materially significant transactions with Managerial Personnel (KMP) or other designated persons that could have potential conflicts of interest with the Company.

Further, no contracts or arrangements were entered into with related parties that require disclosure in Form AOC 2 under Section 188 (1) and 134 (3) (b) of the Companies Act, 2013.

All proposed transactions with the related partes were pre-approved by the Audit Committee at the beginning of each financial year/quarter and subsequently reviewed on a quarterly basis.

Your Company has adopted ASOP schemes in compliance with the

Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (SEBI (SBEB) Regulations) and the

Companies Act, 2013.

Currently, your Company has formulated following ASOP schemes:

1. Five-Star Associate Stock Option Scheme 2015 (ASOP 2015)

2. Five-Star Associate Stock Option Scheme 2018 (ASOP 2018) and

3. Five Star Associate Stock Option Scheme 2023 (ASOP 2023)

Approval and Implementation

• ASOP 2015 : Approved by the Board of Directors on September 18,

2015 and by the shareholders at the Extraordinary General Meeting

(EGM) on April 12, 2016 and later ratified in the Annual General Meeting held on September 16, 2023.

• ASOP 2018: Approved by the Board of Directors on February 28, 2018 and by the shareholders at the Extraordinary General Meeting held on

March 26, 2018. It was subsequently ratified at the Annual General

Meeting held on September 16, 2023.

• ASOP 2023: Approved by the Board of Directors on August 16, 2023 and by the shareholders at the Annual General Meeting held on September 16, 2023.

There have been no material changes to these schemes during the financial year ended March 31, 2025.

A certificate from secretarial auditor M/s S Sandeep & Associates, ASOP Practicing Company Secretaries confirming schemes in accordance with SEBI (SBEB) Regulations and shareholders resolutions, will be available for inspection of shareholders at the ensuing annual general meeting.

In compliance with Regulation 14 of SEBI (SBEB) Regulations, disclosures regarding ASOP 2015, ASOP 2018 and ASOP 2023 have been provided on the website of the Company at www.fivestargroup.in.

The Annual Return in form MGT 7 referred to in Section 134(3)(a) and Section 92(3) of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014 and Regulation 62(1)(k) of the SEBI (LODR) Regulations, 2015 is available on the website of the Company at https://fivestargroup.in/investors/.

The Company being an NBFC, the disclosures regarding particulars of loans given, guarantees given and security provided is exempted under

Section 186(11) of the Companies Act, 2013. With regard to Investments made by the Company, the details are provided in note no.7 of the financial statements.

There are no material changes and commitments having an adverse bearing on the financialposition of the Company between March 31,

2025, and the date of this report.

The provisions related to and technology absorption under Section

134(3)(m) of the Companies Act, 2013 do not apply to our Company as your Company is not a manufacturing entity. However, Your Company is committed to increasing the use of information technology and promoting resource conservation in its operations.

During the financial year ended March 31, 2025, the Company incurred foreign currency expenditure of INR 4.58 crores with no foreign currency earnings.

There was no application made or any proceeding pending under the

Insolvency and Bankruptcy Code, 2016 during the financial year ended March 31, 2025. er (CRO) oversees risk

The Company has not entered into any one-time settlement with its lenders during the financialyear ended March 31, 2025, and therefore the requirements of clause (xii) of Rule 8(5) of the Companies (Accounts)

Rules, 2014 are not applicable.

There are no significant and material orders passed by the Regulators or

Courts or Tribunals impacting the going concern status of your Company's and its future operations.

There are no agreements between shareholders, promoters, related parties, Directors, or employees, either amongst themselves or with the Company, impacting management control, restrictions or liabilities that require disclosure to Stock Exchanges. This includes agreements with the listed entity, holding companies, subsidiaries, or associates.

Your Company has established a comprehensive Risk Management Framework designed to identify, assess, and mitigate risks associated with its operations. This framework is supported by a Risk Management Policy, which outlines the governance structure, risk classification, strategies, and the role of the Chief Risk Officer (CRO) in overseeing risk-related functions.

The Risk Management Committee (RMC) is responsible for monitoring and reviewing the Company's risk management initiatives. In compliance with the Reserve Bank of India (RBI) Master Directions and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the RMC regularly evaluates key risks and ensures the effective implementation of risk-mitigation strategies.

The adequacy of internal financial controls concerning financialstatements has been assessed, and details are provided in the Management Discussion and Analysis section of this Report.

Your Company acknowledges that a well-defined risk management approach is essential for sustainable growth. Accordingly, robust policies, systems, and processes have been implemented to manage various risk categories, including credit risk, operational risk, market risk (interest rate and liquidity), and reputational risk.

• A multi-layered underwriting process that includes comprehensive credit bureau checks, fieldinvestigations and adherence to the "3 Cs" framework verification of Character, Cash Flow and Collateral, before the sanction of a loan.

• Stringent verification procedures, prudent loan-to-value (LTV) ratios and a conservative debt service capacity analysis to ensure borrower creditworthiness.

• Legal due diligence and robust documentation to safeguard lending practices.

The Risk Management Committee (RMC) ensures continuous monitoring of credit risk, portfolio performance and operational risks, providing strategic direction to mitigate potential threats.

A dedicated Chief Risk measurement, and control, ensuring timely risk reporting to the RMC,

Board and the management.

The Asset Liability Committee (ALCO) actively manages liquidity risk and interest rate exposures to maintain financial stability.

A well-diversified funding strategy ensures optimal liquidity planning.

In accordance with RBI Master Directions, a Committee of Executives for monitoring and follow up of fraud cases (Fraud Risk Management Committee) has been constituted to proactively identify, monitor, and mitigate fraud risks by reviewing early warning signals and strengthening preventive mechanisms.

Your Company remains committed to enhancing its risk management framework to adapt to evolving business dynamics and regulatory landscapes. A continuous review mechanism ensures that risks are effectively mitigated while maintaining a resilient operational model

Your Company firmly believes that its employees are the cornerstone of its success. A dynamic and highly skilled workforce is critical to achieving business excellence and therefore, your Company remains committed tomitigation attracting, developing and retaining top talent through strategic initiatives, robust training programs and a competitive compensation structure.

Your Company places a strong emphasis on building a high-performing workforce by continuously identifying and onboarding skilled professionals across business verticals. A well-defined ensures that employees are offered growth opportunities, competitive pay packages with an appropriate mix of fixed and variable components, career progression pathways and an engaging work environment that fosters long-term commitment.

To enhance operational efficiency, your Company undertook a detailed workforce assessment, aligning staffing customer acquisition strategies and market demands. This data-driven approach ensures that every function—from frontline sales and credit assessment to collection and customer service— is optimally staffed while maintaining a lean and agile organizational structure.

Your Company remains deeply invested in employee capability-building initiatives, offering a blend of classroom training (as deemed appropriate), on-the-job learning and specialized certification programs. Training modules are tailored to strengthen customer engagement, credit evaluation, risk assessment, regulatory compliance (including KYC & Fair Practices Code certifications) and leadership development. Digital learning platforms and structured mentorship programs further reinforce the Company's commitment to nurturing future leaders.

During the financial year under review, your Company also launched an Employee Learning Platform, which is designed to empower the employees with knowledge and skills that would enhance their work experience and career growth. This platform would be enhanced with learning modules from various functions which will help employees get an all-round experience of the various functional areas within the Company.

To attract and retain top-tier professionals, your Company continuously benchmarks its compensation and benefits standards. A well-structured performance-linked incentive framework motivates employees to excel, while initiatives focused on work-life balance, career advancement and employee well-being enhance overall job satisfaction.

As of March 31, 2025, your Company had 11,934 employees across its branches, regional offices and corporate headquarters, each playing a pivotal role in driving the Company's growth trajectory.

Your Company remains committed to fostering a culture of collaboration, innovation and excellence, ensuring that its people continue to be the driving withbusinessexpansion, force behind its sustained success.

Your Company maintains a well-balanced and diverse Board in compliance with Section 149 of the Companies Act, 2013 and Regulation

17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Board comprises an optimal mix of executive, non-executive and Independent Directors, including a Woman Independent Director, ensuring a broad spectrum of expertise, strategic insight, and corporate governance best practices.

The Board members bring extensive industry experience, leadership acumen and a commitment to upholding the highest standards of integrity and governance. Their collective expertise spans diverse domains, enabling well-informed decision-making that aligns with the Company's long-term vision and stakeholder interests.

To facilitate seamless participation, the Company provides video conferencing and other audio-visual means for Board meetings, in accordance with Section 173(2) of the Companies Act, 2013, read with Rule 3 of the Companies (Meetings of Board and its Powers) Rules, 2014.

This ensures that Directors can actively contribute to discussions and deliberations, even when unable to attend meetings in person.

Your Company remains committed to fostering an engaged, forward-thinking and highly effective Board that drives sustainable growth and structure against industry governance excellence.

The Board of Directors comprises 8 (eight) Directors, including 4 (four) Independent Directors (one of whom is a woman), [1 (one)] Non-Executive Director, and 3 (three) Executive Directors (Chairman & Managing Director, Joint Manging Director &CEO and Joint Managing Director & CFO), as of March 31, 2025. Details on the Board composition are provided below:

The following changes took place in the composition of the Board of

Directors during the Financial Year 2024-25 under review.

Based on recommendation of Nomination and Remuneration Committee, Mr Rangarajan Krishnan (DIN: 07289972) has been appointed as an additional Director in the category of Joint Managing Director of the Company by the Board at its meeting held on August 17, 2024.

Subsequently the shareholders of the Company at the Annual General Meeting held on September 13, 2024 approved the appointment as Joint

Managing Director for a period 5 years effective from August 17, 2024. Further Mr. Rangarajan Krishnan was re-designated as Joint Managing Director & CEO.

Based on recommendation of Nomination and Remuneration Committee, Mr Srikanth Gopalakrishnan (DIN:10636810) has been appointed as an additional Director in the category of Joint Managing Director of the Company by the Board at its meeting held on August 17, 2024.

Subsequently the shareholders of the Company at the Annual General Meeting held on September 13, 2024 approved the appointment as Joint Managing Director for a period of 5 years effective from August 17, 2024.

Further Mr. Srikanth Gopalakrishnan was re-designated as Joint Managing Director & CFO

Details relating to their appointments are available on the website of the

Company www.fivestargroup.in and stock exchanges viz www.bseindia. com and www.nseindia.com.

Mr Vikram Vaidyanathan (DIN: 06764019), non-executive Director representing Matrix Partners India Investment Holdings II, LLC had stepped down from the Directorship with effect from the close of the business hours of April 30, 2024. There are no other material reasons other than what has been stated in his resignation letter.

During the financial year under review, Mr G V Ravishankar (DIN: 02604007), non-executive director representing Peak XV Partners

Investments V had stepped down from the Directorship with effect from the close of the business hours of April 30, 2024. There are no other material reasons other than what has been stated in his resignation letter.

Details relating to their resignations are available on the website of the

Company www.fivestargroup.in and stock exchanges viz www.bseindia. com and www.nseindia.com.

There was no changes in the Composition of Board between the end of

Financial Year 2024-25 and the date of this report.

In accordance with Section 152(6) of the Companies Act, 2013 and the

Articles of Association of the Company, at least one-third of the Directors, excluding Independent Directors, are required to retire by rotation at every Annual General Meeting (AGM).

Pursuant to said provision , Mr Thirulokchand Vasan (DIN: 07679930) is liable to retire at the 41st Annual General Meeting (AGM) and being eligible, has offered himself for reappointment. The Board recommends his reappointment for the approval of the shareholders.

During the financial year under review, Ms Shalini Baskaran had resigned as Head-Compliance & Company Secretary and Compliance Officer of the

Company, with effect from the close of business hours of February 26, 2025 and Mr Vigneshkumar SM was appointed as the Company Secretary and Compliance Officer with effect from February 27, 2025. There are no other material reasons other than what has been stated in her resignation letter.

Pursuant to the provisions of Section 203 of the Companies Act, 2013 read with the rules made there under, the following employees are the whole- time key managerial personnel of the Company as on March 31, 2025: a) Mr Lakshmipathy Deenadayalan, Chairman and Managing Director (DIN: 01723269) b) Mr Rangarajan Krishnan, Joint Managing Director and Chief Executive Officer (DIN: 07289972) c) Mr Srikanth Gopalakrishnan, Joint Managing Director and Chief Financial Officer (DIN: 10636810) d) Mr. Vigneshkumar SM, Company Secretary and Compliance Officer There was no changes in the composition of Key Managerial Personnel (KMP) between the end of Financial Year 2024-25 and the date of this report.

Pursuant to Section 149(7) of the Companies Act, 2013 read along with Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 of the Companies Act, 2013 and Regulation 25(8) of the SEBI (LODR) Regulations, 2015, the Company has received necessary declarations/ disclosures from each of the Independent Directors of the Company stating that he/she meets the criteria of independence as required under Section 149(6) of the Companies Act, 2013 and that he/ she has a valid certificate of registration for his/her enrollment into data bank for Independent Directors.

In the opinion of the Board of Directors, the Independent Directors of your Company satisfy the necessary attributes as to integrity, experience

(including proficiency) and high levels of skill and expertise.

During the Financial year under review, the Company has complied with all applicable Secretarial Standards issued by The Institute of Company Secretaries of India and adopted under the Act.

In compliance with the Companies Act, 2013, SEBI (LODR) Regulations,

2015 and the Company's Directors Appointment, Remuneration and

Evaluation Policy, the Board carried out a formal annual evaluation of its own performance as well as the performance of individual Directors, including the Chairman and its various Committees.

This structured assessment was carried out based on the predefined evaluation criteria set forth in the Directors Appointment, Remuneration and Evaluation Policy. The said policy is available on the website of the Company at https://fivestargroup.in/investors/.

Additionally, the performance evaluation of Independent Directors was carried out by the entire Board. The Independent Directors in a separate meeting held during the year, reviewed the performance of Non-

Independent Directors (including Chairman) and assessed the overall effectiveness of the Board. Key areas of evaluation included the quality, timelines and adequacy of information exchange between Management and the Board. The evaluation process was conducted through a secure digital platform, ensuring transparency and confidentiality.

Your Company maintains a comprehensive Internal Financial Control

(IFC) framework , supported by well-defined uphold the highest standards of integrity, transparency and corporate governance. These controls are designed to :

• Facilitate efficient business operations and policy compliance.

• Safeguard corporate assets against misuse or unauthorized access.

• Prevent and detect fraud and Financial irregularities.

• Ensure accurate and complete financial records.

• Ensure timely preparation of reliable financial information.

To strengthen its control environment, the Company has established clear delegations of authority, standard operating procedures (SOPs) and risk control matrices. These measures are regularly reviewed at multiple levels. Independent testing of control measures is conducted periodically to ensure continued compliance with regulatory and operational requirements.

An independent consulting firm provides ongoing support in updating risk control metrics, test plans and independent assessment procedures. The findings and recommendations from these evaluations are periodically presented to the Audit Committee for review and necessary action.

Additionally, the Company has built a robust Internal Audit mechanism, with regular audits conducted by both in- house Internal Audit team and

External Internal Auditors. The Audit Committee closely monitors financial controls, risk management, compliance and operational procedures, reviews audit findings and ensures implementation of corrective actions wherever necessary.

During the financial year under review, the tenure of M/s S R Batliboi &

Associates LLP as Statutory Auditor of the Company concluded at the 40th

Annual General meeting (AGM) held on September 13, 2024.

In compliance with the Reserve Bank of India's Guidelines on appointment of Statutory Auditor by Non-Banking Financial Company vide Circular RBI/ 2021-22/25 Ref. No. DoS. CD.ARG/ SEC.01/ 08.91.001/ 2021-22 dated 27th April, 2021 and pursuant to Section 139 of the Act and the

Companies (Audit and Auditors) Rules, 2014, the shareholders approved the appointment of M/s Deloitte Haskins & Sells, Chartered Accountants

(FRN:008072S) as the new Statutory Auditors at the AGM held on September 13, 2024 for a term of three consecutive financial years viz. 2024-25, 2025-26 and 2026-27 (i.e from the conclusion of the 40th AGM till the conclusion of the 43rd AGM). The appointment remains subject to the satisfaction of eligibility criteria on annual basis.

The statutory audit report is annexed with the financial statements and forms a part of this report. The report indicates a clean audit with no qualifications, reservations, adverse remarks, or disclaimers.

There were no instances of frauds reported by the Statutory Auditors during the financial year ended March 31, 2025 under Section 143(12) the Companies Act, 2013.

Effective April 1, 2023, Sections 128 and 143(3)(j) of the Companies Act, 2013 rule 3(1) of Companies (Accounts) Rules, 2014 and rule 11(g) of Companies (Audit and Auditors) Rules, 2011 require the auditor of a

Company to report whether the accounting software used by the Company to maintain books of account has an audit trail feature.

An audit trail is a chronological, date, and time-stamped record of a specific transaction from the time its entry is made in the accounting software through various changes to it.

Your Company has 2 software in respect of which audit trail reporting becomes applicable – the accounting software and the customer loan management software.

Your Company uses Oracle Fusion as its accounting software and Finnone

Neo as its Customer Loan Management software. Both these are very well acclaimed software; Oracle Fusion is used by many players for their

General Ledger requirements, both in the financial services industry and outside. Finnone Neo is an LMS that is used by large NBFCs and banks to manage their loan portfolios. These software come with lots of inbuilt controls to ensure that the transactions made reflect the financial and loan positions accurately.

Both these software have an in-built audit trail feature which had been enabled both application and database level for the financial

March 31, 2025. There was a brief period i.e. from April 1, 2024 to May 23, 2024 when the audit trail in respect of accounting software was not enabled at the database level. There was no issue with respect to the enablement of audit trail for the accounting software at an application level and that was enabled and operated effectively throughout the year.

This has also been brought out by the Statutory Auditor in their Auditors' report of the financial statements.

Notwithstanding the above, the Auditors Report does not contain any qualifications, and they have also confirmed adequacy of Internal

Financial Controls in your Company.

To ensure the effectiveness of internal control systems, your Company maintains a robust internal audit system, combining an external audit firmviz. M/s Sundaram & Srinivasan, Chartered Accountants with an in-house team. This comprehensive approach ensures thorough review of all operations of the Company regularly. The audit teams regularly assess the adequacy of control measures and recommend improvements as needed. The Audit Committee oversees the internal audit functions, scope of internal audit and reviews its effectiveness.

M/s S Sandeep & Associates, Practicing Company Secretaries were appointed to conduct the secretarial audit of the Company for the financial year 2024-25, as required under Section 204 of Act, 2013 and rules made thereunder and Regulation 24A of SEBI (LODR) Regulations, 2015. The secretarial audit report for the financial year ended March 31, 2025, forms part of this report as Annexure A and does not contain any qualification, reservation or adverse remarks.

Further, pursuant to Regulation 24A of SEBI (LODR) Regulations 2015, the of Board of Directors, based on recommendation of the Audit Committee, has recommended to the shareholders for approval, the appointment of M/s S Sandeep & Associates, Practicing Company Secretaries, as Secretarial

Auditors of the Company for a term of 5 (five) consecutive years from FY

2025-26 to FY 2029-30. The resolution seeking approval of Members forms part of the Notice of AGM.

The provisions for maintaining cost records and undergoing a cost audit, as per Section 148(1) of the Companies Act, 2013 are not applicable to your Company's business activities.

Technology plays a vital role in every Company's business strategy and operations. In line with this, your Company has implemented a robust IT framework that supports seamless business processes across all functions—from sourcing, underwriting, loan approvals, disbursements, collections and back-office operations, providing a unique experience to all stakeholders along with high levels of security and privacy

Your Company has made significant investments committed to ongoing investments in technology, enabling higher levels of efficiency, effectiveness, regulatory compliance, competitive and innovation. This includes deploying world-class software for all core operations of the Company and for frictionless scaling, leveraging third party API infrastructure for digitization and interoperability, using data analytics and machine learning for underwriting and portfolio analysis in addition to building a robust credit scoring model, and investing in tools for appropriate business continuity and security. These initiatives have enabled us in making faster and more effective decisions, improved our customer engagement and shortened turnaround times.

Further, as of the financial year ended March 31, 2025, your Company has implemented state of the art systems for Loan Origination and Underwriting, Accounting and General Ledger, Human Resources, Treasury and Compliance. These systems bring in enhanced operational efficiency, sophisticated financial reporting framework, completely automated compliance structure, strong HR Management systems, and have brought in system-based controls & efficiencies to treasury operations. Your

Company would continue to constantly evaluate these systems and their appropriateness to the Company's operations. Necessary enhancements and upgrades would be done periodically to ensure that these systems remain robust enough to take care of the fast paced changes taking place in the technology domain.

As stated above, your Company would continue to make necessary investments in technology towards the following areas:

• Deploying the most appropriate software and applications to drive higher automation and operational efficiencies, digitization of the value chain and enhanced user experience.

• Leveraging data of high quality and integrity for analysing patterns and aiding strategic and operational decision making

• Using newer digital technologies, including Machine Learning, AI and language models for customer scoring which will all aid in better risk management.

More details have been provided in the Management Discussion and Analysis report.

On the infrastructure part, the IT Strategy Committee of the Company has established comprehensive policies related to IT governance, asset management, business continuity, outsourcing, information security and cybersecurity, and incident management, among others. Given the heterogenous footprint of technologies and IT systems as well as integration of systems with external partners, the IT Strategy Committee periodically reviews the enterprise architecture for dependencies and interoperability and conducts regular vulnerability assessments and penetration testing to identify and minimize any internal or external threats. An independent information systems audit was also conducted during the year, the findings of which are elaborately discussed, and actions are taken within defined timelines.

Your Company is committed to fulfilling its social

Your Company has adopted a CSR Policy as mandated by the Companies

Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy is available on the on the 'website of the Company at https://fivestargroup.in/investors/.

As per aforesaid provisions of the Companies Act, 2013, your Company was required to spend INR 17.03 crores towards CSR initiatives, representing 2% of the average net profits of the Company from the past three financial years. by contributing INR 17.04 crores towards CSR during the financial year ended March 31, 2025.

The Annual Report on CSR activities for the financial year ended March 31,

2025, is attached as Annexure B to this Report.

The Company has in place the Appointment, Remuneration & Evaluation Policy that is recommended by the Nomination and Remuneration

Committee and approved by the Board. The salient features of the policy include a) role of Nomination and Remuneration Committee b)

Appointment and removal of Director, Key Managerial Personnel and Senior

Management c) Remuneration of Executive/Non-Executive Directors and Key Managerial Personnels and Senior Management d) Principles of pay structures and e) malus and claw back provisions. The policy is being reviewed and approved by the Nomination and Remuneration Committee and the Board of Directors annually. The policy is available on the website of the Company at https://fivestargroup.in/investors/ .

As per the provisions of Section 177(9) of the Companies Act, 2013, and Regulation 22 of the SEBI (LODR) Regulations, 2015, your Company has established a Vigil Mechanism and has adopted a Whistle Blower Policy for Directors and employees to report their genuine concerns. The Whistle

Blower Policy has been formulated with a view to providing a mechanism for employees and Directors to approach the Audit Committee of the Company. The said policy is available on the website of the Company at https://fivestargroup.in/investors/ .

The Vigil mechanism of the Company is overseen by the Audit Committee and provides adequate safeguard against victimization of employees and Directors and also provides direct access to the Chairperson of the Audit Committee in exceptional circumstances.

During the financial year, no complaints were received by the Company and no complaints are outstanding as on March 31, 2025

During the financial year ended March 31, 2025, 7 (Seven) Board Meetings were held on April 30, 2024, July 31, 2024, August 17, 2024, October 29, 2024, December 24, 2024, January 31, 2025, and March 17, 2025, and not more than 120 days elapsed between any two meetings.

The details of the composition of the Board and its Committees, terms of reference of the Committees and the details of meetings held during the financial year are furnished in the Corporate Governance Report.

The Management Discussion and Analysis (MDA) Report, providing a comprehensive overview of the Company's business performance, industry trends, opportunities and risks , is attached as Annexure C and forms an integral part of this report. .

Your Company remains steadfast in its commitment to upholding the highest standards of Corporate Governance, ensuring adherence to all applicable laws and regulations. A detailed Corporate Governance report is enclosed as Annexure D and forms part of this report.

As required under Regulation 17 (8) of SEBI (LODR) Regulations, 2015, the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) have Companyhasexceededthisrequirement submitted a compliance certificate to the Board, confirmingthe accuracy of financial statements and compliance with regulatory requirements.

Additionally, a Certificate from a Practicing Company Secretary, affirming the compliance with Corporate Governance norms under SEBI (LODR)

Regulations, 2015, is annexed to the Corporate Governance report.

As per Regulation 34(2)(f) of SEBI (LODR) Regulations, 2015, the top 1,000 (one thousand) listed entities based on market capitalization shall attach a Business Responsibility and Sustainability Report (BRSR) as part of their Annual Report, describing the environmental, social and governance initiatives undertaken by the listed entities.

In line with this regulation, your Company has put together a BRSR report (along with an Environmental, Social & Governance (ESG) report) which outline the initiatives undertaken by your Company across these 3 key parameters. The BRSR report also forms part of this report as Annexure E.

As per the applicable criteria, BRSR Core & Assurance is not applicable to your Company for FY 2025.

The Company has in place a policy for Prevention of Sexual Harassment at the workplace in accordance with the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act). This policy is available on the website of the Company at https://fivestargroup.in/investors/.

The Company has constituted Internal Complaints Committees (ICC) as mandated by the POSH Act to address and resolve any complaints related to workplace harassment.

During the financial year, no complaints were received and no outstanding complaints as on March 31, 2025.

In accordance with Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, disclosures related to the remuneration of Directors, Key Managerial Personnel and employees are provided in Annexure F of this report.

Further, details of employees as required in terms of Section 197 of the

Act read with Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are available for inspection at the Registered Office of the Company during working hours for a period of 21 days prior to the Annual General Meeting. In accordance with Section 136 of the Act read with the said Rule, this statement is not included in the Directors' Report sent to the shareholders. However, members interested in obtaining a copy may request for the same by e-mailing the Company secretary.

Your Company remains committed to transparent communication and proactive engagement with investors, analysts and stakeholders. By fostering an open and informed dialogue, your Company ensures clarity and accessibility in financial and operational disclosures.

Key investor engagement initiatives include:

• Website Disclosures: All relevant investor-related information are promptly published on the Company's website to ensure easy and unrestricted access.

• Stock Exchange Notifications: Timely and proactive disclosures to stock exchanges regarding earnings calls, quarterly and annual financial results and material developments that could impact the value of securities.

• Investor and Analyst Meetings: The Company regularly discloses to stock exchanges details of scheduled interactions with investors and analysts who wish to engage with the management team of the Company.

Your Company strongly believes that informed investors contribute to a well-functioning capital market and remains dedicated to equipping stakeholders with the information needed to make sound investment decisions.

The Board of Directors have instituted / put in place a framework of internal financial controls and compliance systems, which is reviewed by the management and the relevant Board Committees, including the Audit

Committee and independently reviewed by the auditors.

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, confirm that: a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; b) the Directors 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 of the

Company for that period; c) the Directors have taken proper and sufficientcare for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) the Directors have prepared the annual accounts on a going concern basis; e) the Directors have laid down internal financial controls, which are adequate and operating effectively and f) 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.

Your Directors wish to thank the shareholders, customers, employees, bankers, non-bank lenders, mutual funds, financial institutions, debenture trustees, R&T agents, credit rating agencies and auditors for their cooperation and continued support to the Company. The Directors also thank the employees for their contribution during the financial year ended

March 31, 2025.