Dear Member(s),

Your Board of Directors ("Board") is pleased to present the Fourteenth (14th) Board's Report of FSN E-Commerce Ventures Limited ("Your Company" or "the Company" or "Nykaa") together with the Audited Financial Statements of the Company, for the financial year ended March 31, 2026 ("the year under review" or "the year" or "FY 2025-26").

FINANCIAL PERFORMANCE – AN OVERVIEW

(Rs in Crore)

REVIEW OF OPERATIONS

During the year under review, the Standalone Income of your Company stood at Rs 545.84 crore as compared to Rs 577.28 crore in the previous year, registering a correction of 5.45%. The Standalone profit after tax for the year stood at Rs 87.86 crore as compared to Rs 97.36 crore in the previous year registering a correction of 9.75%.

During the year under review, the Consolidated Income of the Group increased to Rs 10,055.12 crore compared to Rs 7,977.08 crore in the previous year, registering growth of 26.05%. The Consolidated profit for the period for the Group was Rs 203.94 crore as compared to Rs 72.07 crore in the previous year registering an increase of 182.97 %.

The operating and financial performance of your Company has been covered in the Management Discussion and Analysis Report which forms part of the Board's Report.

DETAILS OF MATERIAL CHANGES AND COMMITMENTS FROM THE END OF THE FINANCIAL YEAR

There were no material changes and commitments affecting the financial position of your Company, which have occurred between the end of the FY 2025-26 and the date of this report.

RESERVES

Your Board has decided to retain the entire amount of profit for FY 2025-26 in the statement of profit and loss.

DIVIDEND

Your Board has not recommended any Dividend on the Equity Shares of the Company for financial year ended March 31, 2026.

DIVIDEND DISTRIBUTION POLICY

In terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the Listing Regulations"), your Company has formulated a Dividend Distribution Policy ("Policy"), with an objective to provide the dividend distribution framework to the stakeholders of the Company. The policy sets out various internal and external factors/parameters, which shall be considered by the Board in determining the dividend pay-out. The policy is available on the website of the Company at Dividend Distribution Policy.

SHARE CAPITAL

The details of changes in paid-up equity share capital during the year under review, are as under:

STANDALONE AND CONSOLIDATED FINANCIAL STATEMENTS

The Audited Standalone and Consolidated Financial Statements of the Company, for the financial year ended March 31, 2026, are prepared, in accordance with the requirements of the Companies (Indian Accounting Standards) Rules, 2015 (ind-AS) notified under Section 133 of the Companies Act, 2013 ("Act") read with relevant Rules and other accounting principles. The Consolidated Financial Statement has been prepared based on the financial statements received from subsidiaries, as approved by their respective Board of Directors.

STRATEGIC INITIATIVES DURING THE YEAR UNDER REVIEW AND TILL THE DATE OF THIS REPORT

Your Company strives to create and enhance the value for its stakeholders through synergising and optimising its business operations and thus, in line with your Company's value of "Be Better Everyday", the following strategic initiatives were taken during the year under review:

A. DEMERGER OF E-B2B BUSINESS FROM FSN DISTRIBUTION LIMITED TO NYKAA E-RETAIL LIMITED

Your Board, at its Meeting held on February 06, 2024, approved a Scheme of Arrangement between FSN Distribution Limited and Nykaa E-Retail Limited, wholly-owned subsidiaries of the Company, and their respective shareholders and creditors ("Scheme").

Nykaa E-Retail Limited primarily has an inventory led business model of selling beauty and personal care products of its own brands as well as third party brands through online channels i.e., its own online platforms and websites. FSN Distribution Limited has a B2B inventory led business model of selling beauty and personal care products through its distribution networks using online as well as offline sales channels. The Scheme contemplated of demerger of online B2B beauty business from FSN Distribution Limited to Nykaa E-Retail Limited. Post demerger, residual business of offline B2B business i.e. general / modern trade business continued in FSN Distribution Limited.

This demerger facilitated synergy in operations such as effective utilisation of warehouse and office space, synergy in technology cost and overheads. It further results in consolidation of online beauty business under one entity, leading to reduction in compliances and intercompany transactions and improved customer experience.

The Hon'ble National Company Law Tribunal, Mumbai approved the scheme of arrangement vide its order dated May 09, 2025. The Appointed date for the Scheme of Arrangement was April 01, 2024, and the Scheme has been operationalised with effect from May 29, 2025.

Pursuant to the Scheme, 10,000 Equity Shares of Rs 10/- each (fully paid up) of Nykaa E-Retail Limited have been issued and allotted to the Company.

B. AMALGAMATION OF ILUMINAR MEDIA LIMITED WITH NYKAA FASHION LIMITED

Your Board, at its Meeting held on May 22, 2024, approved the Scheme of Amalgamation of Iluminar Media Limited with Nykaa Fashion Limited.

Iluminar Media Limited ("Transferor Company"), inter alia, had been engaged in the business of digital media marketing and advertising services on online portal. The Transferor Company is a wholly-owned subsidiary of Nykaa Fashion Limited. Nykaa Fashion Limited is engaged in the business of selling and distribution of fashion garments and fashion accessories through online channels i.e., its online platforms or websites, other online applications and retail outlets, general trade and modern trade. Nykaa Fashion Limited is a wholly-owned subsidiary of the Company.

The Scheme resulted in streamlining the corporate structure and consolidation of assets and liabilities, drove synergies in technology, infrastructure and collaboration with all the stakeholders of the companies, facilitated more efficient utilisation of capital for enhanced development and growth of the consolidated business in one entity, and allows easier implementation of corporate actions through simplified compliance structure, cost savings through legal entity rationalisation and consolidation of support functions & business processes, elimination of duplicate expenses, and also improved management oversight.

The Hon'ble National Company Law Tribunal, Mumbai approved the Scheme vide its order dated May 27, 2025. The Appointed date for the Scheme of Amalgamation was April 01, 2024, and the Scheme has been operationalised with effect from May 29, 2025.

As the Scheme of Amalgamation is between Nykaa Fashion Limited with its wholly-owned subsidiary company – Iluminar Media Limited, there has not been any issuance of shares pursuant to the Scheme. Post the Scheme becoming effective (i.e., from May 29, 2025), Iluminar Media Limited stood dissolved and ceased to exist as a separate legal entity.

C. INCREASED STAKE IN DOT & KEY WELLNESS LIMITED

During the year, the Company further acquired 3,163 Equity Shares on March 30, 2026. Accordingly, the Company holds 90.06% of Equity Shares in Dot & Key Wellness Limited.

D. INCREASED STAKE IN EARTH RHYTHM PRIVATE LIMITED

Your Board, at its Meeting held on August 13, 2024 approved entering into Share Subscription & Shareholders' Agreement ("SSHA") and Share Purchase Agreement ("SPA") with Earth Rhythm Private Limited ("Earth Rhythm") to acquire its issued and paid-up share capital by way of subscription and/or purchase of Compulsory Convertible Cumulative Preference Shares and/or Optionally Cumulative Redeemable Preference Shares and Share Warrants, through primary as well as secondary issuances. Post completion of the secondary subscription / second tranche, during the year under review, your Company holds ~75.83% of the issued and paid-up share capital of Earth Rhythm on a converted basis, in accordance with the terms and conditions of the above-mentioned SSHA and SPA.

E. ACQUISITION OF REMAINING 40% STAKE IN NUDGE WELLNESS PRIVATE LIMITED

Your Board, at its Meeting held on August 12, 2025 approved the acquisition of remaining 40% Equity stake in Nudge Wellness Private Limited ("Nudge"), a subsidiary of the Company from Onesto Labs Private Limited ("Onesto").

Pursuant to the Share Purchase Agreement ("SPA") and other transaction documents executed between the parties, the Company acquired the remaining 40% stake, comprising 24,00,100 equity shares of face value Rs 10/- each, from Onesto for total consideration of Rs 14.26 Crore through an off-market transaction. Consequent to this acquisition, Nudge has become a wholly-owned subsidiary of the Company.

SUBSIDIARIES, JOINT VENTURE AND ASSOCIATE COMPANIES

As on March 31, 2026, the Company continues to have eleven direct subsidiaries and ten step-down subsidiaries.

Pursuant to the provisions of Section 129(3) of the Act read with the Companies (Accounts) Rules, 2014 and in accordance with applicable accounting standards, a statement containing the salient features of financial statements of your Company's subsidiaries in Form No. AOC-1 is annexed as Annexure - I to this Report.

In accordance with the provisions of Section 136 of the Act and the amendments thereto, and the Listing Regulations, the Audited Financial Statements, including the Consolidated Financial Statements and related information of the Company and financial statements of your Company's subsidiaries have been placed on the website of your Company at Nykaa Investor Relations.

Your Company has formulated a Policy for determining Material Subsidiaries pursuant to the Listing Regulations. The said policy is available on the website of the Company at Policy for determining Material Subsidiary.

During the year under review, Nykaa E-Retail Limited and FSN Brands Marketing Private Limited were material subsidiaries of the Company as per Regulation 16 of the Listing Regulations and Nykaa E-Retail Limited was material subsidiary of the Company pursuant to Regulation 24 of the Listing Regulations.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review, pursuant to Regulation 3A and Schedule V of the Listing Regulations, is presented in a separate section, forming a part of the Integrated Annual Report.

In compliance with the SEBI circular dated February 06, 2017, your Company has voluntarily published the Integrated Annual Report, which includes both financial and non-financial information and is based on the International Integrated Reporting Framework. This report covers aspects such as organisation's strategy, governance framework, performance and prospects of value creation based on the seven forms of capitals viz. financial capital, manufactured capital, intellectual capital, human capital, social & relationship capital, digital capital and natural capital.

An Integrated Report provides investors and stakeholders with a complete view of the Company's performance and future outlook. Widely recognized as the next generation of corporate reporting, your Board acknowledges its responsibility for the integrity and accuracy of this report.

CORPORATE GOVERNANCE

Your Company embeds sound Corporate Governance practices and constantly strives to adopt emerging best practices. It has always been the Company's endeavour to excel through better Corporate Governance along with fair and transparent practices. A Report on Corporate Governance forms part of this Report as 'Annexure – II'.

M/s. S. N. Ananthasubramanian & Co., Company Secretaries, (Firm Registration No. P1991MH040400), the Secretarial Auditors of the Company vide their certificate dated May 21, 2026 have confirmed that the Company is compliant with the conditions stipulated in Chapter IV of the Listing Regulations. The said certificate is annexed as 'Annexure – III' to this Report.

ANNUAL RETURN

The Annual Return of the Company as on March 31, 2026 in Form MGT–7, in accordance with Section 92(3) and Section 134(3)(a) of the Act, as amended from time to time and the Companies (Management and Administration) Rules, 2014, has been uploaded on the website of the Company at Annual Report and Returns.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions under Section 134(5) of the Act, with respect to Directors' Responsibility Statement, the Directors of the Company confirm that:

(a) in the preparation of the annual accounts for the year ended March 31, 2026, the applicable accounting standards had been followed and there are no material departures from the same;

(b) they had 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, 2026 and of the profits of the Company for the year ended on that date;

(c) they had taken proper and sufficient care 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) they had prepared the annual accounts on a going concern basis;

(e) they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(f) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

AUDITORS AND THEIR REPORT

(i) Statutory Auditors

M/s. S. R. Batliboi & Associates LLP, Chartered Accountants (Firm Registration No. 101049W/E300004), were re-appointed as Statutory Auditors of the Company at the 9th AGM of the Company held on September 29, 2021 to hold office till the conclusion of the 14th AGM to be held for the FY 2025-26.

In terms of Section 139 and 141 of the Act and relevant Rules prescribed thereunder, M/s. S. R. Batliboi & Associates LLP, Chartered Accountants have confirmed that they are not disqualified from acting as Auditors of the Company. The Auditors have also confirmed that they have subjected themselves to the peer review process of Institute of Chartered Accountants of India (ICAI) and hold a valid certificate issued by the Peer Review Board of the ICAI.

The statutory auditors have expressed an unmodified opinion on the standalone and consolidated financial statements. They have, however, reported certain matters relating to audit-trail functionality under Rule 11(g) and certain observations under CARO, as set out in their reports.

(ii) Secretarial Auditors

In compliance with Regulation 24A of the Listing Regulations and Section 204 of the Act read with Rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Members at their 13th Annual General Meeting of the Company, approved the appointment of M/s. S. N. Ananthasubramanian & Co., Practicing Company Secretaries, a peer reviewed firm (Firm Registration No. P1991MH040400) as Secretarial Auditors of the Company for a term of five consecutive financial years commencing from FY 2025-26 till FY 2029-30.

Further, in compliance of Regulation 24A of the Listing Regulations, Company's unlisted material subsidiaries also undergo Secretarial Audit and the Secretarial Audit Reports of the Company and its unlisted material subsidiaries thereto, in the prescribed Form No. MR-3, have been attached as 'Annexure – IV, IV(A) and IV(B)' forming part of this Report. The Secretarial Auditors' Reports of the Company and the Material Subsidiaries do not contain any qualification, reservation, adverse remark or disclaimer.

REGISTRAR AND SHARE TRANSFER AGENT

MUFG Intime India Private Limited (formerly "Link Intime India Private Limited") is the Registrar and Share Transfer Agent ("RTA") of the Company.

DISCLOSURES IN TERMS OF THE PROVISIONS OF THE ACT & THE LISTING REGULATIONS

A. Board of Directors

(i) Number of meetings

The Board met 6 (Six) times during the year under review. The details of such meetings are disclosed in the Corporate Governance Report forming part of this Integrated Annual Report. The maximum interval between any two meetings did not exceed 120 days.

(ii) Directors retiring by rotation

In accordance with the provisions of the Act and the Articles of Association of the Company, Mr.Sanjay Nayar (DIN: 00002615), Non-Executive (Non-Independent) Director and Mr. Milan Khakhar (DIN: 00394065), Non-Executive (Non-Independent) Director, are due to retire by rotation at the ensuing Annual General Meeting and being eligible, have offered themselves for re-appointment. The Board of Directors, based on the recommendation of the Nomination and Remuneration Committee ("NRC") has recommended their re-appointment.

Resolutions seeking their re-appointment along-with their brief profiles and other details as required under Regulation 36(3) of the Listing Regulations forms part of the Notice convening the Fourteenth (14th) Annual General Meeting.

(iii) Board evaluation

In sync with Nykaa's value of "Be Better Everyday", the Nomination and Remuneration Committee alongwith the Board of Directors, reviewed the Board evaluation framework and process for the FY 2025-26 to further strengthen the criteria, parameters and sharpness of rating/feedback for Board, its Committee(s) and its Individual Director(s).

Pursuant to applicable provisions of the Act and the Listing Regulations, the Board, in consultation with its Nomination and Remuneration Committee, has formulated a framework containing, inter alia, the criteria for performance evaluation of the entire Board of the Company, its Committee(s) and its Individual Director(s), including Independent Director(s). The framework is monitored, reviewed and updated by the Board, in consultation with the Nomination and Remuneration Committee, in accordance with the compliance requirements.

The annual performance evaluation of the Board, its Committees and each Director has been carried out for the FY 2025-26 in accordance with the framework. The details of evaluation process of the Board, its Committees and its Individual Director(s), including Independent Director(s) have been provided under the Corporate Governance Report which forms part of this Report.

The Policy on Board of Directors' Evaluation Framework can be accessed at: Board of Directors' Evaluation Framework.

(iv) Declaration of independence

The Company has received necessary declaration from each Independent Director of the Company stating that:

(i) they meet the criteria of independence as provided in Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations; and

(ii) as required vide Rule 6(1) & (2) of the Companies (Appointment and Qualifications of Directors) Rules, 2014, they have registered their names in the Independent Directors' Databank maintained by the Indian Institute of Corporate Affairs.

Based on the declarations received from the Directors, the Board confirms that there has been no change in the circumstances affecting their status as Independent Directors of the Company. In the opinion of the Board, the Independent Directors are competent, experienced, proficient and possess necessary expertise and integrity to discharge their duties and functions as Independent Directors.

(v) Familiarisation programme for Independent Directors

Disclosure pertaining to familiarisation programme for Independent Directors is provided in the Corporate Governance Report forming part of this Integrated Annual Report.

B. Committees of the Board

The Board has constituted various statutory committees as mandated by the Act and the Listing Regulations, viz.

i. Audit Committee;

ii. Nomination and Remuneration Committee;

iii. Stakeholders' Relationship Committee;

iv. Risk Management Committee;

v. Corporate Social Responsibility & Environmental, Social and Governance Committee.

In addition to the above-mentioned committees, the Board has also constituted Fundraise and Investment Committee. Further, the Board has constituted Governance Committee for Those Charged With Governance (constituted by the Board of Directors of the Company at their Meeting held on May 15, 2026 i.e., subsequent to the end of FY 2025-26).

During the year, all recommendations of the Committees operating during FY 2025-26 were approved by the Board. Details of all the Statutory Committees, along with their charters, composition and meetings held during the year, are provided in the Corporate Governance Report forming part of this Integrated Annual Report.

C. Directors and Key Managerial Personnel

During the year under review, following were the changes in Directors and Key Managerial Personnel:

1. Based on recommendations of the NRC and the Board, Mr. Dipak Gupta (DIN: 00004771) was appointed as an Independent Director of the Company, for the first term of 5 (Five) consecutive years commencing from October 01, 2025 vide Special Resolution passed by the Members of the Company through Postal Ballot on December 26, 2025.

2. Based on recommendations of the NRC and the Board, Ms. Falguni Nayar (DIN: 00003633) was re-appointed as an Executive Chairperson, Managing Director & Chief Executive Officer of the Company for a term of 5 (Five) years with effect from February 12, 2026, vide Ordinary Resolution passed by the Members of the Company through Postal Ballot on January 28, 2026.

3. Mr. Neelabja Chakrabarty (Membership Number: A18075) ceased to be the Company Secretary, Compliance Officer and a Key Managerial Personnel of the Company with effect from closing of business hours on September 30, 2025.

4. Based on recommendations of the NRC and the Board, Dr. Chetan Sharma (Membership Number: F8532) was appointed as the Company Secretary, Compliance Officer and a Key Managerial Personnel of the Company with effect from November 26, 2025.

After the end of the year and up to the date of the Report, below were the changes in Directors and Key Managerial Personnel, as recommended by the NRC and Board of Director(s) of the Company, subject to the approval of the Members(s) of the Company through Postal Ballot:

1. Re-appointment of Ms. Adwaita Nayar (DIN: 07931382) as Whole-Time Director designated as Executive Director of the Company for a term of 5 consecutive years with effect from July 01, 2026.

2. Approval of payment of remuneration to Ms. Adwaita Nayar (DIN: 07931382) as the Whole-Time Director designated as Executive Director of Company for a term of 5 years

3. Re-appointment of Mr. Anchit Nayar (DIN: 08351358) as Whole-Time Director designated as Executive Director of the Company for a term of 5 consecutive years with effect from July 01, 2026.

4. Approval of payment of remuneration to Mr. Anchit Nayar (DIN: 08351358) as the Whole-Time Director designated as Executive Director of the Company for a term of 5 years

5. Re-appointment of Ms. Anita Ramachandran (DIN: 00118188) as an Independent Director for a second term of 5 consecutive years with effect from July 15, 2026 and approval for continuation after attaining the age of 75 years.

6. Re-appointment of Mr. Milind Sarwate (DIN: 00109854) as an Independent Director for a second term of 5 consecutive years with effect from July 15, 2026.

In accordance with the provisions of Sections 2(51) and 203 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the following are the Key Managerial Personnel of the Company as on March 31, 2026:

(a) Ms. Falguni Nayar – Executive Chairperson, Managing Director and Chief Executive Officer.

(b) Ms. Adwaita Nayar – Whole-Time Director designated as Executive Director of the Company.

(c) Mr. Anchit Nayar – Whole-Time Director designated as Executive Director of the Company.

(d) Mr. P Ganesh – Chief Financial Officer.

(e) Dr. Chetan Sharma – Company Secretary & Compliance Officer (with effect from November 26, 2025).

None of the Company's Directors are disqualified from being appointed or continuing as Director as specified in Section 164 of the Act. All Directors have further confirmed that they are not debarred from holding the office of a Director under any order from SEBI or any other authority.

During the year under review, the Non-Executive Directors (including Independent Directors) of the Company had no pecuniary relationship or transactions with the Company, other than receipt of sitting fees, commission, reimbursement of expenses incurred by them for the purpose of attending meetings of the Board and its Committees or other Company events and any other transactions as approved by the Audit Committee or the Board which have been disclosed under the Notes to Accounts. For more details about such transactions, please refer to the Corporate Governance Report.

D. Remuneration of Directors and Employees

Disclosure comprising particulars with respect to the remuneration of Directors and employees and other details, as required in terms of the provisions of Section 197(12) of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as 'Annexure - V' to this Report.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 statement showing the names of the top ten employees in terms of remuneration drawn and names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules forms part of this Report.

Pursuant to the provisions of the second proviso to Section 136(1) of the Act, the Integrated Annual Report, excluding the aforesaid information, is being sent to the Members of the Company. Any Member interested in obtaining such information may write to the Company Secretary at nykaacompanysecretary@nykaa.com.

Your Company has adopted "Remuneration Policy for Directors, Key Managerial Personnel and other Employees" which sets out criteria for the remuneration for Directors and Key Managerial Personnel and the same can be accessed at: Remuneration Policy for Directors, Key Managerial Personnel and Other Employees.

E. Vigil Mechanism/Whistle-Blower

Your Company is committed to highest standards of business ethics and integrity and ensuring compliance to applicable laws. Your Company continues to believe in conducting its affairs in a fair and transparent manner by adopting highest standards of honesty, integrity, professionalism and ethical behaviour. Your Company has established a Vigil Mechanism/ Whistle-Blower Policy in accordance with the provisions of the Companies Act, 2013 and the Listing Regulations with a view to provide a platform and mechanism for Employees, Directors and other stakeholders of the Company to report actual or suspected unethical behavior, fraud or violation of the Company's Code of Conduct, ethics, principles and matters specified in the policy without any fear of retaliation, and also provides for direct access to the Chairman of the Audit Committee as the case may be, in exceptional cases. Your Company is committed to developing a culture where it is safe for all persons covered under the Code and enables access to raise concerns without any fear of retaliation regarding potential violation.

Employees and other stakeholders are encouraged to report actual or suspected concerns or violations of applicable laws and regulations and the Code of Conduct. Such genuine concerns or violations are called "Protected Disclosures" which can be raised by a Whistle-Blower to "Speak-up Helpline" (an external independent agency or agencies appointed by the Company to receive and attend to the Protected Disclosures through toll-free number / e-mail / web portal), established in terms of the Policy.

Your Company affirms compliance with the Whistle-Blower Policy/Vigil Mechanism. All Employees and Directors have access to the Chairman of the Audit Committee in appropriate and exceptional circumstances and it is affirmed that no person has been denied access to the Chairperson of the Audit Committee.

The policy is available on the Company's website and can be accessed at: Whistle-Blower Policy/ Vigil Mechanism.

F. Corporate Social Responsibility ("CSR")

A brief outline of the CSR Philosophy, salient features of the CSR Policy of the Company, the CSR initiatives undertaken during the financial year 2025-26 together with progress thereon and the report on CSR activities in the prescribed format, as required under Section 134(3)(o) read with Section 135 of the Act and the Companies (Corporate Social Responsibility Policy) Rules, 2014, are set out in 'Annexure – VI' to this Report and the CSR Policy can be accessed on the website of the Company at CSR Policy.

G. Employee Stock Option Scheme and Share Based Employee Benefits

Your Company grants employee stock options that would enable the employees to share the value they create for the Company in the years to come. Accordingly, pursuant to the approval of Board and Members of the Company and in terms of the provisions of applicable laws, your Company has formulated Employees Stock Options Scheme – 2012 ("ESOS 2012"), FSN Employees Stock Scheme – 2017 ("ESOS 2017"), FSN E- Commerce Ventures Limited – Employee Stock Option Plan 2022 ("ESOP 2022") and FSN E-Commerce Ventures Limited – Employee Stock Unit Plan 2022 ("RSU Scheme") for grant of stock options to eligible employees.

The Nomination and Remuneration Committee of the Company, inter alia, administers and monitors the ESOS & RSU Schemes, in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SBEB Regulations"). During the year under review, there was no material change in the ESOS & RSU Schemes, and they have been in compliance with the provisions of SBEB Regulations and other applicable provisions of law.

The applicable disclosures as stipulated under Regulation 14 of SBEB Regulations with regard to the ESOP & RSU Schemes of the Company are available on the website of the Company at Annual Reports and Returns.

A certificate from M/s. S. N. Ananthasubramanian & Co., Company Secretaries, the Secretarial Auditor of the Company, confirming that the aforesaid ESOP & RSU Schemes have been implemented in accordance with the SBEB Regulations, will be open for inspection at the ensuing Annual General Meeting.

H. Investor Education and Protection Fund ("IEPF")

Since the Company has not declared any dividend since its incorporation, there are no unpaid or unclaimed amounts that are required to be transferred to the IEPF under the provisions of the Companies Act, 2013 and the Rules made thereunder.

I. Related Party Transactions

During the year under review, all transactions with related parties were reviewed and approved by the Audit Committee and were in accordance with the Policy on Materiality of Related Party Transactions and on dealing with Related Party Transactions and the Related Party Framework, formulated and adopted by the Company. Prior omnibus approval is obtained for transactions which are of a repetitive nature and are in the Ordinary Course of business and at arm's length pricing.

All contracts/arrangements/transactions entered by the Company during the year under review with related parties were in the Ordinary Course of business and on arm's length pricing. During the year under review, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the Policy of the Company, the Act and the Listing Regulations or which are required to be reported in Form AOC-2 in terms of Section 134(3) (h) read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014. Accordingly, Form AOC-2 has not been annexed to this report.

The Company's Policy on Materiality of Related Party Transactions and on dealing with Related Party Transactions is available on the website of the Company at Related Party Transaction Policy.

The details of the related party transactions as per Indian Accounting Standards (IND AS) - 24 are set out in the Standalone Financial Statement of the Company. Your Company, in terms of Regulation 23 of the Listing Regulations submits, within the stipulated time, disclosures of related party transactions, in the specified format to the stock exchanges. The said disclosures can be accessed on the website of the Company at RPT Disclosure.

J. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

Considering the nature of business of your Company, the particulars with respect to conservation of energy and technology absorption as required pursuant to the provisions of Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are not applicable to the Company.

The foreign exchange earnings and outgo are as below:

(Rs in Crore)

K. Risk Management

Your Company has a risk management framework which proactively identifies, assesses and mitigates risks, supporting decision-making across various levels of the Company.

To effectively mitigate risks that impact our strategic business objectives, we have employed an Enterprise-wide Risk Management framework ("ERM") by adapting the frameworks of COSO Enterprise Risk Management (ERM) framework 2017 and also ISO 31000 Risk Management framework, to support proactive identification, assessment, prioritisation, management and monitoring of risks that could have a material impact on the achievement of Company's business objectives, while also formulating relevant risk mitigation strategies which helps protecting our assets, and support informed decision making which will reduce the impact of any adverse events.

The Company continuously evaluates existing and emerging risks, works closely with business functions to ensure appropriate mitigation plans are in place, and monitors the effectiveness of risk responses to support the smooth and efficient conduct of business operations.

The Board of Directors of the Company has a Risk Management Committee to frame, implement, and monitor the risk management plan for the Company. The Committee is responsible for reviewing the Company's risk profile, the effectiveness of mitigation measures, and emerging risks that may impact the Company's medium-and long-term strategic objectives, including risks of a reputational nature.

The Company endeavours to continually strengthen its Risk Management systems and processes in line with a rapidly changing business environment. There were no risks which in the opinion of the Board threaten the existence of the Company. Details of various risks faced by your Company are provided in the Management Discussion & Analysis Report.

Your Company has framed and implemented a Risk Management Policy in terms of the provisions of Regulation 21 of the Listing Regulations, for assessment and minimisation of risk, including identification of elements of risk, if any which may threaten the existence of the Company. The policy can be accessed at Risk Management Policy.

L. Internal Financial Control

According to Section 134(5)(e) of the Act the term Internal Financial Control ("IFC") means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to company's policies, safeguarding of its assets, prevention and detection of fraud and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information. The Act also mandates the need for an effective internal financial control system in the Company which should be adequate and shall operate effectively. Rule 8(5) (viii) of Companies (Accounts) Rules, 2014 requires the information regarding adequacy of internal financial control with reference to the financial statements to be disclosed in the Board's report.

The Company has adequate internal financial control system over financial reporting ensuring that all transactions are authorised, recorded, and reported correctly in a timely manner in order to provide reliable financial information and to comply with applicable accounting standards which is commensurate with the size and volume of business of the Company.

The key internal financial controls have been documented, automated wherever possible and embedded in the respective business processes. Assurance to the Board on the effectiveness of internal financial controls is obtained through 3 Lines of defence which include:

a) Management reviews and self-assessment;

b) Continuous control monitoring by functional experts; and

c) Independent design and operational testing by an external professional firm.

The Company believes that these systems provide reasonable assurance that the Company's internal financial controls are adequate and are operating effectively as intended. During the year under review, such controls were tested by the Statutory Auditors of the Company and no material weaknesses or significant deficiencies in the design or operations were observed and reported by the Statutory Auditors. Details of the internal controls system are provided in the Management Discussion & Analysis Report.

M. Policy on Directors' Appointment and Remuneration

In terms of Section 178 of the Act and Regulation 19 of the Listing Regulations, the Board of your Company, on recommendation of the Nomination and Remuneration Committee of the Company, had adopted a "Remuneration Policy for Directors, Key Managerial Personnel and other employees" ("Remuneration Policy") and "Policy on Board Diversity".

The Company's Remuneration Policy is directed towards designing remuneration so as to attract, retain, and reward talent who will contribute to long-term success of the Company and build value for its shareholders. Objective of Board Diversity Policy is to ensure that the Board is fully diversified and comprises of an ideal combination of Executive(s) and Non-Executive Director(s), including Independent Director(s), with diverse backgrounds.

The salient features of the policies are outlined in the Corporate Governance Report, and the policies are made available on the Company's website, which can be accessed at Nykaa policies.

N. Particulars of Loans, Guarantees and Investments

Particulars of loans given, investments made, guarantees given and securities provided under Section 186 of Companies Act, 2013 along with the purpose for which the loan or guarantee or security provided is proposed to be utilised by the recipient has been provided in the Standalone Financial Statements.

O. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

In compliance with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and rules made thereunder, your Company has adopted a Prevention of Sexual Harassment Policy for the prevention of sexual harassment and constituted Internal Complaints Committee (ICC) to deal with complaints relating to sexual harassment at workplace. For details of complaints received during the FY 2025-26, kindly refer to relevant disclosures in the Corporate Governance Report which forms part of the Integrated Annual Report.

FSN E-Commerce Ventures Limited

P. Environment & Safety

Your Company is conscious of the importance of environmentally clean and safe operations and has accordingly framed and adopted Health, Safety and Environment (HSE) Policy which can be accessed at Health, Safety and Environment Policy. The Company's policy requires conduct of operations in such a manner that it ensures safety of all concerned, compliances of environmental regulations and preservation of natural resources.

Your Company is committed to the highest standards of health, safety and environment practices within the organisation and the extended areas within our influence, with an aim to provide safe and healthy working environment to our employees, customers, business partners, suppliers and visitors.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT (BRSR)

The BRSR, including BRSR Core consisting of Key Performance Indicators and the reasonable assurance statement by TUV India Private Limited, for the year under review, as stipulated under Regulation 34(2)(f) of the Listing Regulations, describing the initiatives taken by your Company from social and governance perspective, forms an integral part of the Integrated Annual Report as 'Annexure – VII'.

GENERAL

Your Director(s) state that no disclosure or reporting is required in respect of the following items as there were no transactions/ events on these items during the year under review:

- There was no change in the nature of business of your Company as stipulated under Rule 8(5)(ii) of Companies (Accounts) Rules, 2014.

- Your Company has not accepted any deposits from the public falling under Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014.

- No significant or material orders were passed by the Regulators or Courts or Tribunals, which impact the going concern status and Company's operations in future.

- No issuance of shares (including sweat equity shares) to employees of the Company under any scheme save and except Employees' Stock Options Schemes referred to in this Report.

- No fraud has been reported for your Company by the Auditors to the Audit Committee or the Board under Section 143(12) of the Act.

- There is no application made or proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the FY 2025-26.

- The Company has not made any one-time settlement for the loans taken from the Banks or Financial institutions.

- Your Company has not issued Equity shares with differential rights as to dividend, voting or otherwise; and

- Your Company has not raised funds through preferential allotment or qualified institutions placement as per Regulation 32(7A) of the Listing Regulations.

SECRETARIAL STANDARDS

During the year under review, your Company has complied with the Secretarial Standards 1 and 2, relating to "Meetings of the Board of Directors" and "General Meetings", respectively, issued by the Institute of the Company Secretaries of India and notified by the Ministry of Corporate Affairs. In terms of Section 118(10) of the Act.

MAINTENANCE OF COST RECORDS

Your Company is not engaged in the business of production of goods or providing of services as specified in Rule 3 of the Companies (Cost Records and Audit) Rules, 2014 ("Rules"). Accordingly, the requirement of maintaining cost records in accordance with Section 148(1) of the Act read with the Rules is not applicable to the Company for the period under review.

MATERNITY BENEFIT

Your Company affirms that it has duly complied with all provisions of the Maternity Benefit Act, 1961.

ACKNOWLEDGEMENT

The Board wishes to place on record its appreciation for the assistance, co-operation and encouragement extended to the Company by its customers, business partners, brands, bankers and other stakeholders.

The Directors take this opportunity to place on record their warm appreciation for the valuable contribution, untiring efforts and spirit of dedication demonstrated by the employees and officers at all levels, in ensuring an excellent all-around operational performance. We applaud them for their superior levels of competence, solidarity, and commitment to the Company. The Directors would also like to thank the shareholders for their wholehearted support and contribution. We look forward to their continued support in future.