Cholamandalam Financial Holdings Ltd

Dear Shareholders,

Your Directors take pleasure in presenting the 76^th Annual Report together with the audited financial statements of the Company for the financial year ('FY') ended March 31, 2025.

The world economy observed a steady growth of 3.3% in calendar year 2024 albeit at a slow pace characterized by regional disparities, political tensions and evolving inflation dynamics. Since the beginning of the year 2025, the economic landscape has been witnessing significant imbalances and vulnerabilities. Trade policy shocks, financial volatility and a surge in uncertainty pose major threats to the global outlook. Ongoing policy reforms to enhance growth potential and international cooperation are likely to support in navigating the challenges and bolster resilience. Looking ahead to 2025, the IMF has projected global GDP to drop to 2.8% in 2025 and 3% in 2026, following tariff measures being announced by the United States. While easing inflation and stabilizing input costs could create a more favourable environment for margin expansion and strategic investments in many markets, escalating trade tensions and financial market adjustments leading to elevated inflation and interest rates pose a downside risk to the growth potentially impacting business sentiments, employment conditions and consumer spending.

Amidst a volatile global economic environment, India remained the fastest-growing major economy in FY 25. The country's economy is expected to expand by 6.2% in FY 25 outpacing many of its global counterparts. Despite muted growth in the first three quarters of FY 25 due to momentary headwinds like election-led policy caution, erratic rainfall, and volatile global trade flows, the economy demonstrated resilience and stability with key indicators pointing to sustained growth momentum in the final quarter of FY 25. Public investments in infrastructure, continued government spending and robust private consumption and rising household investments in real estate continue to be key drivers of GDP growth. The buoyant manufacturing sector grew by 9.9 %, while services remained resilient, compensating for the underperformance in agriculture. On the fiscal side, the Union Budget 2025-2026 sets a bold agenda of focusing on inclusive development, digital innovation, and infrastructure, improving tax efficiency and rationalizing tax rates to further augment growth prospects. With inflation easing and risks to growth emerging, the RBI turned its stance accommodative, cutting rates by 50bps in 2025 thus far and signaled further easing ahead to remain supportive in the evolving global uncertainties.

Against this backdrop, the Indian economy is expected to remain buoyant in FY 26, backed by strong Government thrust on capital expenditure, and robust agricultural output supported by favourable monsoon. Easing inflation and decline in interest rates as monetary transmission gathers pace should provide a fillip to urban consumption demand in the coming quarters. Sustained higher capacity utilisation, strong government spending, healthy balance sheets of banks and corporates, and easing of financial conditions provide a conducive environment for recovery in private investment activity.

Cholamandalam Financial Holdings Limited ('CFHL) is primarily an investment company holding investments in group companies. CFHL is registered as a non-deposit taking Systemically Important Core Investment Company ('CIC') pursuant to the receipt of Certificate of Registration dated January 6, 2020, issued by the Reserve Bank of India ('RBI') under section 45-IA of the Reserve Bank of India Act, 1934. In terms of the Scale Based Regulatory Framework for NBFCs notified by RBI, the Company being a CIC falls under the category of Middle Layer NBFC ('NBFC-ML').

CFHL holds substantial investments in the following financial services/risk management companies of the Murugappa Group (hereinafter collectively referred as Rs the group / group companies').

• Cholamandalam Investment and Finance Company Limited ('CIFCL'), a non-banking finance company engaged in lending business offers vehicle finance, home loans, loan against property, SME loans, secured business and personal loans (SBPL), consumer & small enterprises loans (CSEL) and a variety of other financial services to customers;

• Cholamandalam MS General Insurance Company Limited ('CMSGICL'), engaged in general insurance business offers a wide range of insurance products that include Motor, Health, Property, Accident, Engineering, Liability, Marine, Travel and Crop insurance for individuals and corporates;

• Cholamandalam MS Risk Services Limited ('CMSRSL') offers comprehensive Risk Management and Engineering solutions.

The paid-up equity share capital of CFHL as on March 31, 2025 was Rs 18.78 Crore.

Corporate Overview

The Company being an investment company does not carry on any business other than holding investments in its group companies. Dividend receipts from investee companies are the primary source of income.

(Rs' in Crore)

The Board of Directors have recommended a final dividend at the rate of 130% i.e. Rs 1.30/- (previous year: Rs 0.55/- per share) per equity share of face value of Rs 1/- each for the year ended March 31, 2025.

The Company has transferred a sum of Rs Rs 12.89 Crore (previous year: Rs 12.35 Crore) to Statutory Reserve under section 45-IC of the Reserve Bank of India Act, 1934 for the year ended March 31, 2025.

CFHL earns revenue primarily by way of dividend income from investments held in group companies. An overview of the financial services sector in which the Company operates along with a business update of group companies in FY 25 is summarised in the following paragraphs.

India's financial sector is a highly diversified one comprising commercial banks, insurance companies, non-banking financial companies, co-operatives, pension funds, mutual funds and other smaller financial entities. The sector dominated by banking and non-banking financial companies ('NBFCs') has demonstrated remarkable growth largely driven by government initiatives, digital innovation and robust regulatory frameworks. The regulatory environment continues to play a significant role in shaping the sector's development, with the RBI's guidance and oversight being crucial. Digital / Technology advancements remains to be a key enabler for NBFCs, improving their efficiency and reach.

After a moderation in growth post the pandemic, NBFCs are back on track with an expected credit growth of 13~15% in FY 26. The sector has grown significantly, with a number of players

with heterogeneous business models starting operations. The increasing penetration of neo-banking, digital authentication, rise of UPI and mobile phone usage as well as mobile internet has resulted in the modularisation of financial services. The growth momentum is expected to continue in the current year also. The outlook for the industry remains positive as the country strides on its growth trajectory leading to higher credit demand. The growth in credit is expected to be broad based across products and segments with key risks being elevated interest rates and inflation.

Cholamandalam Investment and Finance Company Limited ('CIFCL'), an associate company of CFHL, was incorporated in 1978 as the financial services arm of the Murugappa Group. CIFCL is registered with RBI as an NBFC- Investment and Credit Company and continues to be classified as an NBFC in Upper Layer ('NBFC-UL) under the Scale Based Regulatory Framework for NBFCs of RBI.

At the industry level, the Indian commercial vehicle ('CV') had a degrowth of 1% in FY 25 with the Heavy Commercial Vehicle degrowing by 3% in FY 25 due to the high base effect in the previous year and Small Commercial Vehicle degrew by 9% in FY 25, due to high inventory levels and rising vehicle costs due to BS VI transition. The Light Commercial Vehicle had a growth of 3% in FY 25. The Commercial Vehicle industry in India is poised for growth in FY 26, propelled by a surge in e-commerce, increasing infrastructure spending, and government initiatives to promote clean energy and domestic manufacturing. The Passenger Vehicle segment had a growth of 2% and the Two-Wheeler industry had a growth of 9% in FY 25. The Construction Equipment segment had a growth of 2% in FY 25 which is an all-time high sale. This segment is expected to grow at a moderate pace in FY 26 with single digit growth supported by higher coal and iron ore mining, healthy real estate demand and increased budgetary outlay by government. The tractor industry had a growth of 7% in FY 25. This segment is expected to grow aided by expectations of a normal monsoon, improved cash flows from Kharif output, robust rabi sowing and higher minimum support prices for the crops.

CIFCL's Vehicle Finance ('VF') business comprising diversified portfolio viz., Two-Wheelers, Three-Wheelers, Commercial Vehicles, Passenger Vehicles, Used Vehicles, Tractors and Construction Equipment, continues to be the major segment contributing 51% of its aggregate Assets under Management ('AUM') as of March 31, 2025. VF Disbursements in FY 25 were at Rs Rs 53,922 Crore (previous year: Rs 48,348 Crore) with a double-digit growth of 12% and profit before tax ('PBT') for the year was Rs Rs 2,824 Crore (previous year:' Rs 2,532 Crore), a growth of 12%. The growth in disbursements was predominantly from

the new passenger vehicle segment, which had a growth of 17% over last year followed by used vehicle segment with a growth of 13% and 11% in the new commercial vehicle segment. The vehicle finance business will continue to maintain a balanced mix of used and new vehicles loans to maintain marginal yields.

The credit ecosystem will be further reinforced with revamped, templated underwriting models and the use of alternate data to strengthen credit rule engines with the sole objective of reducing delinquencies at micro-cluster levels. The VF business will benefit from its expansions in Tier 4 & Tier 5 markets over the years, which will de-risk business concentration and enable last mile coverage for customer acquisition and collections. The business will realign its organizational structure with strategic business objectives to drive efficiency & effectiveness to handle higher volume growth. The business will continue to focus on increasing its existing customers base through preapproved loan offers using technology-based communication and social media platforms.

Industry's LAP portfolio is expected to grow by 21-23% in FY 26 driven by increasing property ownership, rising demand for financial products, and an expanding middle class. The market has been further propelled by the digitalization of lending processes and the growing number of NBFCs and banks offering tailored LAP products to meet diverse consumer needs.

CIFCL's LAP business achieved Rs 17,913 Crore of disbursements in FY 25, which is 32% higher than FY 24 disbursements. The AUM for business grew by 39% to 41,439 Crore in FY 25 compared to Rs 29,859 Crore in FY 24. Pan-India presence and geographical penetration into new markets, introduction of localized credit policy in line with market developments, increased contribution from rural branches have led to this growth. As of FY 25, LAP business has 630 branches in rural locations, which is 81% of total LAP branches across India. In FY 25, LAP business has disbursed Rs 6,809 Crore in rural locations, amounting to 38% of total disbursements. The business continues to focus on a systematic approach to build a healthy portfolio mix, with more than 77% of the portfolio being residential properties and an average loan ticket size of less than Rs 51 lakhs.

The asset quality of this business has shown steady improvement with the net credit losses and Stage 3 assets coming down significantly with consistent improvement in collection efficiency.

The outlook for India's housing sector continues to be positive, fueled by a combination of government initiatives, urbanization trends, and technological advancements. The recent budget announcements have provided a significant boost to the sector, particularly through the expansion of PMAY 2.0, which is set to enhance the availability of affordable housing for India's growing urban population. The housing finance (HF) services industry is expected to report a double-digit growth in revenues on the back of continued healthy demand for housing, particularly affordable housing. The housing finance services industry is likely to grow at a healthy pace on the back of a revival in demand for affordable housing and an increase in demand for mid-segment and premium-segment housing.

NBFC-HFCs' on-book portfolio grew by 14% YoY in 9 months of FY 25. Analysts expect disbursements portfolio of HFCs to grow by 20-22% in FY 25 as well as FY 26.

As of March 31, 2025, CIFCL's HL business had 1.5 lakh+ live accounts (39% growth Y-o-Y) with an AUM of Rs 18,427 Crore (37% growth Y-o-Y). The disbursements grew 16% to Rs 7404 Crore in FY 25 (previous year: Rs 6,362 Crore). The target group remains to be the lower middle income group customer. The HL business leverages CIFCL's strength in reaching out and underwriting lower and middle-income borrowers across the country, penetrating to the smallest villages and towns. CIFCL offers loans for self-construction, purchase of new flats/ independent houses, purchase of pre-owned flats/independent houses, balance transfer from other financiers, mortgage of existing houses for business use and shop loans. CIFCL continues to build a strong ecosystem of channel partners, coupled with its digital offerings for customer service and onboarding, making it a trustworthy choice for customers pan-India.

As of March 31, 2025, the CSEL business of CIFCL has been serving close to 14 lakh customers with an AUM close to Rs 14,600 Crore. The business has expanded across the country covering 25 states and 4 union territories with over 200+ area offices. The primary strengths of CSEL business encompass a transparent end-to-end digital process, an exceptional customer experience journey, robust data-driven underwriting, and risk management capabilities. Coupled with the trust instilled by the Chola brand, these factors position it favourably to emerge as a leading player in this segment.

As a vital contributor to India's industrial landscape, the MSME sector plays a crucial role in manufacturing, exports, and employment. With over 6 crore registered MSMEs employing more than 25 crore people, these enterprises generate a significant share of the country's economic output. FY 2023-24, MSME-related products accounted for 45.73% of India's total exports, reinforcing their role in positioning the country as a global manufacturing hub. The new budgetary provisions aim to build on this strong foundation by fostering innovation, enhancing competitiveness, and ensuring better access to resources. Through these steps, the government seeks

to equip MSMEs with the tools needed to expand their reach and strengthen their contribution to India's economic growth.

As of 31^st March 2025, CIFCL's SME business has around 9200 MSME customers with an AUM of Rs 6,628 Crore. With the growing Small and Medium Enterprises ecosystem, CIFCL's SME loans business division provides bouquets of products to meet the requirements of working capital and capex of SMEs. The SME division focuses on the following product segments:

• Secured Term loan: Secured Term Loans as offered to formal SME Segments with loan amounts ranging from Rs 50 Lacs to Rs 15 Crore, which are backed by land & building as primary collateral.

• Equipment funding: These are short-term loans provided to MSME clients against hypothecation of machinery with key targeted market segments including machine tools, plastic and packaging, textiles, medical equipment, DG sets and printing industries.

• Vendor Invoice discounting and Channel finance: These solutions provide short-term revolving credit facility of up to 90 days tenure with sanctions valid for one year backed by invoices to vendors or dealers.

• Loan Against Securities: Loan against securities offers loans to retail and HNI investors and promoters against the pledge of securities and mutual funds units.

The Indian lending landscape faces a unique challenge: a segment that remains largely untapped despite possessing collateral and repayment capacity. This segment, distinct from regular Loan Against Property (LAP) borrowers, encounters barriers due to financial, geographical, and profile-related norms set by prime LAP lending institutions. India faces high levels of financial exclusion due to factors such as low income, lack of financial literacy, high costs, and poor infrastructure. As a result, many people still rely on informal sources of credit, such as relatives, money lenders, and landlords. SBPL offers collateral backed business and personal loans based on the credit assessment and cashflow projections of these businesses.

As of March 31, 2025, CIFCL's SBPL business had crossed 62,000 live accounts with an AUM of Rs 2,422 Crore. The average ticket size is around Rs 4.30 lakhs with an average tenure of 6 years. Key differentiators include personalised doorstep service to customers, a unique assessed income program for business owners, a transparent end-to-end digital process and customised products focussing on new-to-credit customers.

CIFCL's CD lending business was launched in FY 24 through a tie up with a leading mobile phone manufacturer. In FY 25, the

business expanded to cover 22 states across 54,000 dealers and increased its market share. In late FY 25, the business also launched the Open Market consumer durables financing through direct associations with other OEMs and onboarded customers through a dedicated platform.

To target digitally savvy customers, CIFCL had introduced Direct to Customer (D2C) channel, to disburse loans directly to existing and new customers without any intermediaries. The business commenced in Q4 of FY 23 is currently focussed on a pre-approved loan journey servicing the existing customer base of other businesses.

In response to economic challenges, RBI reduced the repo rate to 6% by early 2025 and shifted its policy stance from neutral to accommodative. The combination of income-tax relief in the Union Budget for FY26, rate cuts leading to lower Equated Monthly Instalments (EMIs), and a moderation in food instalation is expected to boost household disposable incomes and urban consumption in FY26. However, the retail AUM of NBFCs (excluding HFCs) is projected to grow at a moderated pace of 16-18% in FY26. This growth rate is slightly lower than the levels seen in FY25, with potential downside risks arising from global macroeconomic uncertainty impacting domestic economic activity.

The general insurance industry began the financial year well, but growth tapered through the year with drop in automobile sales. The regulatory mandate with respect to change in method of reporting of gross premium on long term non-motor products which came into effect from October 1, 2024, reduced the reported GWP for all players in the industry stymying reported growth for the year. Competitive intensity in the industry continues to be high. While the inflation led cost-push in parts and labour charges in motor, medical costs and in re-instatement costs in fire losses led to hardening of claims ratios, climate change induced natural catastrophe events, though not of large magnitude, impacted all players in their risk retentions.

In this context, the gross direct premium of multi-line non-life insurers (excluding Standalone Health & Specialized insurers) was reported at around Rs 2,581 billion and registered a growth of around 5.2% over the previous year. The combined ratio of all players in the industry rose during the year underpinned by the natural catastrophe losses, compressed premium realization in motor own damage and the effect of inflation on claims. The rise in investment income aided by the interest rate environment and buoyant equity markets helped insurers to register overall operating profits.

Cholamandalam MS General Insurance Company Limited ('CMSGICL'), the insurance subsidiary of CFHL, is a joint venture between the Murugappa Group and Mitsui Sumitomo Insurance Company Limited, a leading insurer in Japan. CMSGICL registered with the Insurance Regulatory and Development Authority of India ('IRDA') to carry on general insurance business, offers a wide range of insurance coverage including motor, travel, health, accident, home and other types of insurance for individual and corporate customers.

CMSGICL grew its gross direct premium higher than industry growth, helping it grow its market share. On IGAAP basis, the motor insurance business of CMSGICL registered a growth of 9.4% as against industry growth of 7.9% with a market share of 5.5%. In the fire line of business, CMSGICL registered a de-growth of 7.5% as against the industry de-growth of 5.3% leading to a market share of 2.7%. CMSGICL's overall health, accident and travel volumes grew by 4.7% while industry grew at 6.3%. While growing its topline, a GWP of Rs 8,564 Crore in FY 25 (previous year: Rs 7,542 Crore) and absorbing costs upfront, the company held its underwriting loss stable. This, together with higher investment income for the year, augmented the profit before tax. Recoveries from written-off stressed investments also contributed to the company reporting a profit before tax of Rs 650 Crore for the year ended March 31, 2025 (previous year: Rs 590 Crore).

During the year, the company grew its agency force, renewed all bancassurance relationships, added to its NBFC and OEM tie-ups. CMSGICL operated in its crop cluster and had a higher enrolment. All these contributed to the Company's GWP growth. The tailwinds were the pricing discounts across lines of business, inflationary impact on claims.

The premium pricing in motor own-damage witnessed severe pressure with discounts across vehicle categories staying at higher levels. In motor third party segment, the pricing remained static even as the industry witnessed inflation in medical costs as well as continuous increase of the minimum wage levels across all states in the country.

Marine and Group Accident lines of businesses witnessed improved performance with increase in the levels of economic activity and focused sourcing. CMSGICL continues to follow disciplined underwriting and prudent risk selection in the highly demanding environment.

CMSGICL's overall health, accident and travel volumes grew during the year with stronger growth in Group Health. Even as retail indemnity business continues to scale up, the bancassurance / NBFC led long term, credit linked health benefit and accident product was impacted arising from the 1/n accounting change effective October 1, 2024. Some indemnity products were repriced besides stepping up its distribution build of both POSP (point of sales person) as well as channel partners. The company continues to strengthen its underwriting framework with intelligent use of technology for its risk selection, upsell and cross-sell initiatives.

The company operates the crop insurance in a cluster in Maharashtra under the 80-110 loss corridor scheme. The loss ratios for the year in both Kharif and Rabi were good arising from a normal monsoon and efficient ground management. The company also wrote reinsurance inward business in crop on a risk-transfer basis which has performed reasonably.

Globally, there were multiple varied incidents of catastrophic losses, but the overall reinsurers' profitability remained strong. In the Indian context, the multiple natural catastrophic events by way of floods in Uttarakhand, Telangana & Andhra Pradesh, Gujarat, New Delhi, and Cyclone Dana in Odisha and Cyclone Fengal in Southern India had an impact on the industry at a gross level. In the wake of higher deductibles on insurers, the impact was marginal for reinsurers. Reinsurance renewals for FY 26 was marked by a soft market, availability of capacity for insurers with prudent underwriting giving scope for improvements in the commercial terms. The company's proportional and nonproportional treaties generated surpluses for the reinsurers during the year.

CMSGICL continues its journey in digitization of its claims processes across lines of businesses and will continue to focus on harnessing efficiencies for severity control across all lines, automation for speed and operational controls, and a proactive approach to servicing for building transparency and satisfaction levels of customers.

The general insurance industry is poised to grow in the context of strong economic growth of the country. Headwinds for the industry include the pricing pressures across product lines / segments, the possible impact from the detariff of fire / engineering / motor lines as to product wordings, the predicted slowdown in the automobile sector and withdrawal of universalisation by States in crop insurance due to fiscal constraints. Higher inflation in the context of geo-political conflicts could impact customer sentiment and claims costs. Amongst the tail winds are the infrastructure spend thrust from the Government, expected credit offtake from the banks, the prediction of a normal monsoon, the re-entry of a few more states into the PMFBY scheme and the lower level of insurance penetration.

CMSGICL will continue its strong growth path by adding new channel partners, expand into new markets, enhance its focus on renewals besides launching new products across lines of businesses. The company is committed to further tighten its expense of management levels by a judicious mix of channels, product subcategories and rationalise commission structures linked to inherent profitability. Besides, efforts towards thrust on productivity and efficiency improvements shall continue to enable the company to stick to its committed glide path of reducing expenses of management to prescribed regulatory levels.

Digital / Technology Initiatives

Technology has become ingrained as a key driver in connecting people across various walks of life. Aligned with the trend, digital transformation continues to be the focus area of the group. Various initiatives and technology tools are deployed for automation of repetitive activities across functions wherever opportunity exists. Digital/Technology initiatives implemented by CMSGICL during the year include - enablement of new product launches, enablement of digital journey and integrations with new bancassurance partners and NBFCs, OEM tie-ups, building of apps for ease of business transactions with customers / business partners and the revamp of business workflow tools and enablement of CIS (Customer Information Sheet). Further, several other operating measures were put in place relating to information security and running awareness campaigns for employees.

With regard to NBFC business, CIFCL has been on a rapid journey transforming the company that leverages technology to digitize its business processes into one that is fundamentally driven by digital innovation. Chola One and Gaadi Bazaar - our key customer facing and vehicle ecosystem related platforms - are being continuously enhanced to deliver more personalized, contextual, and efficient customer experiences. A two-pronged approach of using both in-house-developed and best-of-breed off-the-shelf solutions has been adopted to deliver a combination of agility and control across the different systems of engagement and records. Cyber guardrails continue to be a core area of activity to ensure infrastructure reliability, service continuity, and data integrity are maintained. Optimal mix on internal talent and external

cyber domain experts are engaged to manage and mitigate risk across the entire digital landscape. Further, the company maintains an unwavering focus on regulatory compliance and data privacy by continuously adapting tools & practices to align with evolving data protection laws and ensure responsible handling of customer information across the layers. By nurturing a digital workforce with future-relevant skills and designing intelligent scalable purpose-built solutions, the company aims to unlock sustained business growth using technology.

Cholamandalam MS Risk Services Limited ('CMSRSL), is a joint venture entity of the Murugappa Group and Mitsui Sumitomo Insurance Group, Japan. Established in the year 1994, CMSRSL provides risk management and engineering solutions in the areas of safety, health and environment. CMSRSL is part of the Inogen Alliance, a global network of environment, health, safety and sustainability consulting companies working together to provide one point of contact to guide multinational organizations to meet their global commitments locally.

During the year, the company broadened its service credentials by launching several long-term strategic projects focused on Cultural Transformation, Behavior-Based Safety, and other sustainability initiatives, and successfully executed projects in each of these areas. The company has further increased its order book with new orders amounting to Rs 124 Crore during the year.

CMSRSL strengthened its partnerships with key allies like Inogen, Tonkin & Taylor, BPC and EIC-Dubai and strengthened ties with JV partner MS&AD. The company also deployed digital EHs solution & took significant steps by developing six different EHS tools & modules as enhancement of its service offerings in FY 25. The company has also actively participated in various industry forums by presenting technical papers and making representations in panel discussions, as part of the efforts to strengthen brand presence and demonstrate technical excellence.

CMSRSL continues to serve Cholamandalam MS General Insurance Company Limited and its clients through value- added services like Thermography, Safety Audits, Cargo Loss minimization studies and BRSR Reporting. The Joint Venture Partner, Mitsui Sumitomo Insurance Company Limited, Japan, continues to support the company by introducing Japanese Companies in the Indian market for risk management services.

The company enters FY 26 with a strategic executable order book of about Rs 63 Crore, offering considerable revenue stability and forecasting visibility for the year ahead. As part of its strategic growth roadmap, the company will prioritize expansion by strengthening its presence in the Kingdom of Saudi Arabia through local partnerships and deepen presence in Middle East Market. In addition to geographical expansion, CMSRSL

will continue to promote a structural and forward-looking capability-building program across all verticals with specific budget allocation on skill development, and aim to strengthen technical depth, delivery readiness, and future leadership across the organization. To enhance execution excellence, the company is streamlining operations through a centralized resource pool dedicated to resource management and report writing.

CONSOLIDATED FINANCIAL RESULTS (Rs' in Crore)

A report on the performance and financial position of each of the group companies as per section 129(3) of the Act read with the Companies (Accounts) Rules, 2014, in the prescribed form AOC- 1 is annexed to this Report as Annexure I. The consolidated financial statements of the Company prepared in accordance with the Companies Act, 2013 ('the Act') and the relevant Accounting Standards, forms part of the annual report.

The annual report containing standalone and consolidated financial statements will be uploaded on the Company's website, www.cholafhl.com. Annual accounts of the group companies will also be uploaded on the Company's website and be made available for inspection by shareholders through electronic mode until the date of the Annual General Meeting ('AGM').

CFHL earned an income of Rs 86.20 Crore (previous year: Rs 86.00 Crore) and profit before tax was Rs 82.57 Crore (previous year: Rs 79.01 Crore) for the financial year ended March 31, 2025. Aggregate investments stood at Rs 1,290.72 Crore (previous year: Rs 1,279.31 Crore) as on March 31, 2025.

There has been no change in the nature of business of the company during the year.

The Company holds 44.34% in the paid-up equity share capital of CIFCL as on March 31, 2025 and has de-facto control as per the principles of Ind AS 110. Accordingly, CIFCL is treated

as a subsidiary for the purpose of consolidation of financial statements. The securities of CIFCL are listed and traded on the National Stock Exchange of India Limited (NSE) and the BSE Limited (BSE).

The Assets under Management ('AUM') grew 30% to Rs 1,99,876 Crore as at March 31, 2025 (previous year: Rs 1,53,718 Crore). Loan disbursements aggregated to Rs 1,00,869 Crore (previous year: Rs 88,725 Crore) registering a growth of 14%. Profit after tax grew 24% to Rs 4,259 Crore (previous year: Rs 3,423 Crore).

During the year CIFCL raised funds from banks/ Financial Institutions and from money markets to support the growth of its businesses at competitive interest rates without compromising the right mix of long and short-term borrowings, thereby maintaining a healthy asset liability position. In FY 25, the company raised Commercial Papers (CP) of Rs 13,200 Crore of which Rs 9,175 Crore were repaid in FY 25. CP outstanding at the end of the year was Rs 4,025 Crore. Medium and long-term secured NCDs to the tune of Rs 10,336 Crore by private placement were mobilised at competitive rates. At the end of FY 25, the outstanding NCD stood at Rs 22,989 Crore ('18,569 Crore by way of Private Placement and Rs 4,420 Crore by way of public placement) & CCD at Rs 2,000 Crore. Tier II borrowings raised during the year were Rs 1,000 Crore of Perpetual debt and Rs 4,760 Crore of Sub Debt. At the end of FY 25, Tier II borrowings stood at Rs 10,621 Crore. CIFCL's capital adequacy ratio stood at 19.75% as on March 31, 2025, as against the minimum regulatory requirement of 15%.

CIFCL paid an interim dividend of Rs 1.30 (65%) per equity share of face value of Rs 2/- each for FY 25. The Board of CIFCL has recommended a final dividend of Rs 0.70 (35%) per equity share for FY 25, subject to their shareholders' approval.

The subsidiary companies of CIFCL are Cholamandalam Securities Limited ('CSEC'), Cholamandalam Leasing Limited ('CLL') (Formerly, Rs Cholamandalam Home Finance Limited) and Payswiff Technologies Private Limited ('Payswiff'). CSEC is engaged in stock broking and investment advisory services. Payswiff is engaged in the business of offline payment aggregator services and provides e-commerce solutions. Vishvakarma Payments Private Limited is the associate company of CIFCL.

CSEC achieved a gross income of Rs 104.44 Crore (previous year: Rs 156.85 Crore) and profit before tax of Rs 10.85 Crore (previous year: Rs 84.20 Crore) for the year ended March 31, 2025. CLL recorded a gross income of Rs 3.45 Crore (previous year: Rs 186.05 Crore) and made a loss of Rs 0.45 Crore (previous year: Rs 63.25 Crore) for the year ended March 31, 2025. Payswiff recorded a gross consolidated income of Rs 110.87 Crore (previous year: Rs 135.57 Crore) and made a profit of Rs 6.27 Crore (previous year: loss Rs 2.17 Crore) for the year ended March 31, 2025.

CFHL holds 60% of the paid-up equity share capital of CMSGICL. The IRDAI has deferred the implementation of Ind-AS for insurance companies. Therefore, the accounts of CMSGICL have been converted as per Ind-AS for consolidation purposes and figures of CMSGICL reported in this annual report are under Ind-AS.

CMSGICL achieved a gross written premium of Rs 8,564 Crore in FY 25 (previous year: Rs 7,542 Crore) and profit before tax was Rs 650 Crore (previous year: Rs 590 Crore). The investment portfolio of CMSGICL grew to Rs 18,601 Crore as at March 31, 2025 (previous year: Rs 16,538 Crore). The Company continued to deploy its accretion/maturing funds in such a manner that portfolio yields were higher than the previous year. The interest rates environment had a downward bias given the growth and inflation situation in the economy. As of March 31, 2025, the company had no non-performing assets in its investment portfolio. The solvency ratio of CMSGICL as on March 31, 2025, was 2.18 times as against the minimum regulatory requirement of 1.50 times. With a view to augment growth and solvency, the Board of CMSGICL has not recommended dividend for FY 25.

The Company holds 49.5% stake in CMSRSL. CMSRSL achieved an income of Rs 83.20 Crore (previous year: Rs 71.27 Crore) and profit before tax of Rs 9.52 Crore (previous year: Rs 8.18 Crore) for the year ended March 31, 2025. The Board of CMSRSL has recommended a final dividend of 30% i.e. Rs 3/- per equity share of face value of Rs 10/- each for FY 25.

Mrs. Vasudha Sundararaman (DIN:06609400) and Mr. K Balasubramanian (DIN: 00137260) were re-appointed as Independent Directors for a second term of three consecutive years each with effect from February 12, 2025 and March 17, 2025 respectively, vide special resolutions passed by the shareholders at the 75^th AGM held on August 9, 2024.

As per the provisions of section 152 of the Act, Mr. Sridharan Rangarajan (DIN: 01814413) retires by rotation at the ensuing AGM and being eligible offered himself for re-appointment. The Board recommends the re-appointment of Mr. Sridharan as a director liable to retire by rotation and the resolution in this regard forms part of the Notice convening the 76^th AGM. Information as required to be disclosed under regulation 36(3) of the SEBI Listing Regulations, for re-appointment of director is provided in the Notice convening the AGM.

The Independent Directors ('IDs'), Mr. B Ramaratnam, Mrs. Vasudha Sundararaman and Mr. K Balasubramanian have submitted declarations stating that they meet the criteria of independence as required under the provisions of section 149(6) of the Act and regulation 16(1)(b) of the SEBI Listing Regulations. In the opinion of the Board, all the IDs possess integrity, expertise and relevant experience in their respective fields including the proficiency required to effectively discharge their roles and responsibilities in directing and guiding the affairs of the Company.

In terms of section 150 of the Act read with the Companies (Appointment & Qualification of Directors) Rules, 2014, the IDs of the Company have registered their names in the independent directors' data bank, created and maintained by the Indian Institute of Corporate Affairs ('IICA'). The IDs are also required to pass an online proficiency self-assessment test conducted by the IICA within a period of two years from the date of inclusion of their names in the data bank, subject to exemption to individuals who fulfill the eligibility criteria prescribed under the said Rules. All the IDs are compliant with the requirement under the said Rules.

Pursuant to the provisions of section 203 of the Act, Mr. N Ganesh, Manager & Chief Financial Officer and Mrs. E Krithika, Company Secretary are the key managerial personnel of the Company and there were no changes during the year.

Risk management is a process to identify and manage threats that could have an impact on the operations of the Company. Generally, this involves reviewing business operations, identifying potential threats to the company and the likelihood of their occurrence and then taking appropriate actions to address the most likely threats. The Company adopts a systematic approach to mitigate risks associated with accomplishment of objectives, operations, revenues and regulations. The risk management framework of the Company comprises of the following key elements viz., a) Risk Assessment: study of threats and vulnerability and exposure to various risks; b) Risk Management and Monitoring: probability of risk assumption is estimated and monitored; and c) Risk Mitigation: measures adopted to mitigate risks by the Company.

The Risk Management Committee assists the Board in monitoring various risks, reviews and analyses risk exposures and mitigation plans related to the Company and its group companies. A Risk Management Policy has been approved by the Board of Directors which inter alia sets out risk strategy, approach and mitigation plans, liquidity risk management

and asset liability management. During the year the Risk Management Committee of CFHL reviewed key risk exposures of the Company along with mitigation measures, asset liability management, structural liquidity management besides review of key risk exposures and mitigation measures of group companies.

Key risk exposures of the Company along with risk mitigation measures are provided in the table below. The risks furnished below are not exhaustive and assessment of risk is based on management perception.

Further, risks arising out of NBFC and insurance business constitute the dominant risks of the Company on a consolidated basis. The group companies have their own risk management framework in line with its strategic business operations as appropriate to the industry in which they operate. The risk management framework of NBFC and insurance business are broadly based on: clear understanding and identification of various risks, disciplined risk assessment by evaluating the probability and impact of each risk, measurement and monitoring

of risks by establishing key risk indicators with thresholds for all critical risks and adequate review mechanism to monitor and control risks. The business operations of each group company, the risks faced by them, and the risk mitigation tools followed by them are reviewed periodically by the Risk Management Committees and the Boards of the respective companies.

The risk management process of CIFCL is driven by a strong organisational culture and sound operating procedures involving

corporate values, attitudes, competencies, internal control culture, effective internal reporting and contingency planning. The risks associated with the company's business and scale of operations are strategic, financial, operational, reputation, compliance, liquidity & capital, cyber security, credit, fraud, people, market, emerging risks and others. Business process mappings identify the key steps in business processes, activities and functions. The key risk points in the overall business process are documented. Process maps reveal individual risks, risk interdependencies, and areas of control. The company periodically revisits the risk universe and updates appropriately. In the event of product changes and additions, the respective teams appraise the Risk Management Team of the new risks faced.

CMSGICL has put in place an appropriate risk management system covering various risks the company is exposed to. Risk management activities of CMSGICL are aligned to its corporate objectives, organisational priorities and designed to protect and enhance its reputation. During the year, the Risk Management Committee of CMSGICL reviewed strategic risks that have the ability to affect the organization's overall operating framework, operational risks that stem solely from the internal processes within the organization, risk management initiatives undertaken and its effectiveness, the status of the overall risk appetite framework and the asset liability management framework.

The Company has not accepted any fixed deposits under Chapter V of the Companies Act, 2013 and as such no amount of principal and interest were outstanding as on March 31, 2025.

During the year the Company has not made any investments in group companies. The provisions of section 186 of the Act pertaining to investment and lending activities is not applicable to CFHL since the Company is an NBFC whose principal business is acquisition of securities. Information regarding investments made during the year is given in the financial statements. During the year the Company has not given any loans or guarantees under the provisions of section 186 of the Act.

The Company has in place adequate internal financial controls to ensure reliability of financial and operational information and regulatory and statutory compliances. The Company's business processes are equipped with monitoring and reporting processes to ensure financial discipline and accountability. The internal financial control systems are monitored both by internal and statutory auditors of the Company. The statutory auditors of the Company have also certified the existence and operating effectiveness of the internal financial controls as on March 31, 2025.

Key ratios relevant to the Company's operations are given in the table below:

The Company being a holding investment company and not having debt obligations, ratios viz., debtors turnover, inventory turnover and interest coverage ratios are not applicable. The increase in adjusted networth is on account of an increase in unrealised gains on investment in subsidiaries. The leverage ratio (maximum regulatory requirement: 2.5 times) and adjusted networth ratio (minimum regulatory requirement: 30%) are computed in accordance with the Master Directions - Core Investment Companies (Reserve Bank) Directions, 2016 ('Master Directions of RBI'). There was no significant change in other key ratios applicable to the Company.

Internal control system of an organisation is looked at as the key to its effective functioning. The Company has internal control systems in place commensurate with the nature of business and size of its operations, to ensure compliance with internal policies, regulatory matters and to safeguard reliability of financial reporting and its disclosures. An audit of systems and processes is conducted by the internal auditor of the Company.

The internal audit is performed based on the audit plan approved by the Audit Committee annually. The internal audit report along with the observations and recommendations from the audit review are discussed and reviewed in the quarterly meetings of the Audit Committee. The Audit Committee evaluates the adequacy and effectiveness of the internal controls, performance of the internal audit, recommends improvements and reviews the action taken.

M/s Sharp & Tannan Associates, having completed their term, retired at the conclusion of the 75^th AGM held on August 9, 2024. The shareholders at the 75^th AGM held on August 9, 2024, appointed M/s. R G N Price & Co., ('RGNP'), Chartered

Accountants (Firm Registration No. 002785S) as the statutory auditors of the Company for a period of three years commencing from the conclusion of the 75^th AGM till the conclusion of the 78^th AGM. RGNP have confirmed their eligibility to continue as statutory auditors for FY 26.

The Auditors' Report issued by RGNP for the year under review is unmodified and does not contain any qualification, reservation, or adverse remark. The statutory auditors have not reported any incident of fraud to the Audit Committee or the Board of Directors under section 143(12) of the Act during the year.

Pursuant to Regulation 24A(1)(b) notified vide SEBI (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2024 dated December 12, 2024, on the basis of recommendation of board of directors, a listed entity shall appoint or re-appoint: (i) an individual as Secretarial Auditor for not more than one term of 5 consecutive years; or (ii) a Secretarial Audit firm as Secretarial Auditor for not more than two terms of 5 consecutive years, with the approval of its shareholders in its Annual General Meeting.

Accordingly, based on the recommendation of the Audit Committee, the Board recommends the appointment of M/s. Sridharan & Sridharan Associates, Company Secretaries (Firm Registration No. P2022TN093500) as secretarial auditor of the Company for a period of five consecutive years commencing from the financial year 2025-26 till the financial year 2029-30. M/s. Sridharan & Sridharan Associates fulfills the eligibility criteria for secretarial auditors prescribed under the SEBI Listing Regulations. Necessary resolution for appointment of secretarial auditor forms part of the Notice convening the 76^th Annual General Meeting.

The Company firmly believes in committing itself to maintaining high standards of corporate governance. A report on corporate governance of the Company together with a certificate from practicing company secretaries in accordance with the SEBI Listing Regulations is annexed to this Report as Annexure II. The Report further contains other details which are required to be provided in the Board's Report.

Five meetings of the Board were held during the year ended March 31, 2025. Further details on the Board meetings are disclosed in the Report on Corporate Governance.

The Board has constituted an Audit Committee in terms of the applicable provisions of the Act, the SEBI Listing Regulations

and the Master Directions of RBI. Details of terms of reference, composition and meetings of the committee are disclosed in the Report on Corporate Governance.

Pursuant to the provisions of section 134 of the Act and regulation 17 of the SEBI Listing Regulations, the Board of Directors have carried out an annual performance evaluation of the Board itself, the individual directors, various committees of the Board and the Chairman for FY 25. The manner in which the evaluation has been carried out is provided in the Report on Corporate Governance.

The Board has formulated a policy for selection and appointment of directors, senior management and their remuneration. Details of which are furnished in the Report on Corporate Governance.

With the enactment of Corporate Social Responsibility (CSR) provisions in the Companies Act, 2013, the Company has framed a CSR Policy and the policy is available on the Company's website at https://files.cholamandalam.com/cholafhl/csr-policy.pdf. Pursuant to the provisions of section 135(5) of the Act, every company shall spend at least two percentage of its average net profits made during the three immediately preceding financial year in pursuance of its CSR Policy. The Company does not have CSR obligations for FY 25 and hence the annual report on CSR activities as required under the Act is not required to be attached to this Report.

The Company has formulated a policy on related party transactions. All transactions that were entered into by the Company with related parties during the financial year were in the ordinary course of business and on an arm's length basis. There were no materially significant related party transactions during the year which had potential conflict with the interests of the Company at large. Pursuant to section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014, there were no transactions during the year to be reported under section 188(1) of the Act in Form AOC-2.

Necessary disclosures on related party transactions have been made in the notes to the financial statements. None of the Directors had any pecuniary relationships or transactions vis-a-vis the Company.

Human Resources ('HR') are the valuable assets for the group. CFHL along with its group companies has a workforce of more than 48,400 employees as of March 31, 2025. The group

companies have robust HR management practices enabling the achievement of organizational goals and key milestones through people. The safety and well- being of the employees continue to be a focus area. The group continues to emphasize on resourcing and talent planning strategies based on their functional and general management requirements in preparing the organisation for the future.

As on March 31, 2025, there were two employees on the rolls of CFHL. The information required to be disclosed under the provisions of section 197 of the Act read with rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is appended as Annexure III to this Report.

The Company has no activity relating to consumption of energy or technology absorption etc. and does not have any foreign exchange earnings. There was a foreign exchange outgo during the year by way of repatriation of dividend amounting to Rs 0.31Lakh (previous year: Rs 0.31 Lakh).

In compliance with the provisions of section 177(9) of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014, regulation 22 of the SEBI Listing Regulations and the Scale Based Regulations of RBI, the Company has established a whistleblower/vigil mechanism for directors and employees to report genuine concerns. The mechanism provides for adequate safeguards against victimisation of persons using the mechanism and makes provision for direct access to the Chairman of the Audit Committee in appropriate or exceptional cases. The policy is available on the Company's website at https:// files.cholamandalam.com/cholafhl/whistle-blower-policv.pdf

Pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013, the Company has formulated a policy for prevention of sexual harassment at workplace. An internal complaints committee ('ICC') is in place to redress complaints received regarding sexual harassment. The policy extends to all employees (permanent, contractual, temporary and trainees). During the calendar year 2024 no referrals were received under the policy and no complaints were pending at the beginning and end of the year.

Maintenance of cost records and requirements of cost audit as prescribed under the provisions of section 148(1) of the Act is not applicable to the Company.

Pursuant to the provisions of section 92(3) and section 134(3) (a) of the Companies Act, 2013, the annual return for the year ended March 31, 2025 is available on the Company's website at https://www.cholafhl.com/investors/annual-return.

The Company has complied with the Secretarial Standards on Meetings of the Board of Directors (SS-1) and Secretarial Standards on General Meetings (SS-2) issued by the Institute of Company Secretaries of India.

Pursuant to the provisions of section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and regulation 24A of the SEBI Listing Regulations, the Board appointed M/s. Srinidhi Sridharan & Associates, Company Secretaries, to conduct the secretarial audit for the year ended March 31, 2025. The Report issued by the secretarial auditor in the prescribed form MR-3 is annexed to this Report as Annexure IV. The secretarial audit report does not contain any qualification, reservation or adverse remark by the secretarial auditor.

In compliance with regulation 24A of the SEBI Listing Regulations, the secretarial audit report of the Company's material subsidiary, Cholamandalam MS General Insurance Company Limited, for the year ended March 31, 2025 is annexed to this Report as Annexure V.

There are no material changes and commitments affecting the financial position of the Company which occurred between March 31, 2025, and the date of this Report.

In terms of regulation 34(2)(f) of the SEBI Listing Regulations, the annual report of top one thousand listed entities based on market capitalization, shall contain the Business Responsibility and Sustainability Report ('BRSR') describing the initiatives taken by the entity from an environmental, social and governance perspective. Accordingly, the Company has prepared BRSR, which indicates the consolidated performance of group entities against the principles of the National Guidelines on Responsible Business Conduct. A copy of the BRSR is annexed to this Report as Annexure VI.

The Board of Directors confirm that the Company has in place a framework of internal financial control and compliance system, which is reviewed by the Audit Committee and the Board and

independently reviewed by the internal auditors, statutory auditors and secretarial auditors. Further, pursuant to section 134(5) of the Companies Act, 2013, the Board of Directors confirm that:

a) i n the preparation of the annual financial statements for the year ended March 31, 2025, the applicable accounting standards have been followed and that there were no material departures therefrom;

b) they have, in the selection of the accounting policies, consulted the statutory auditors and have applied their recommendations consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2025 and of the profit of the Company for the year ended on that date;

c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) they have prepared the annual financial statements on a going concern basis;

e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively during the year ended March 31, 2025; and

f) proper system has been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively during the year ended March 31, 2025.

• There was no significant material orders passed by the regulators or courts or tribunals impacting the Company's going concern status and its operations in future.

• The Company does not carry on any activities other than those specifically permitted by the RBI for CICs.

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

Neither is there any provision in law to keep, nor does the Company keep any part of the deposits with RBI and by issuing a Certificate of Registration to the Company, RBI neither accepts any responsibility nor guarantees the payment of deposits to any depositor or any person who has lent any sum to the Company.

• There are no applications made or any proceedings pending under the Insolvency and Bankruptcy Code, 2016 during the year.

• During the year, the Company had not made any one-time settlement with banks or financial institutions.

The Directors express their gratitude for the support and co-operation extended by the Ministry of Corporate Affairs, Securities and Exchange Board of India, Reserve Bank of India, Stock Exchanges and other statutory authorities. The Directors also wish to thank all investors, vendors, financial institutions, banks and joint venture partners for their continued support and faith reposed in the Company. The Board places on record its appreciation for the contribution made by the employees of the Company and its group companies across all levels.