Northern ARC Capital Ltd

2. Pragati Finserv has 41 training centres across the
country to train its employees

3. Started printing centralised Loan Cards with
enhanced security features and QR codes to
achieve One of the Best Digital collections of 33%
for march 2025 with no intermediaries or CSP's

regional CEO Interface "SAMPARK" for aligning the team
towards a common objective. INR 11.45 Lakhs spent
on CSR activities through Northern Arc Foundation for
the FY 2024-25.

(iii) Northern Arc Foundation ("NAF")

Northern Arc, beyond the regulatory compliance, believes in
giving back to the community and has embraced Corporate
Social Responsibility (CSR) to make a meaningful and
significant contribution to promote sustainable community
development. The company has a strong commitment
towards long term value creation through its social
investing; in recognition of which has established NAF to
implement CSR interventions for the group companies.
NAF has been dedicated to making social investment for
sustainable outcomes across the nation where Northern Arc
has its presence. The areas where NAF makes significant
contribution in FY 2024-25 are Education, Environment &
Sustainability, and Healthcare & Destitute Care.

4. Started a Tele Calling team from corporate office
to all new disbursements, missed collections
clients and PAR clients

5. Gave the field team a "Collection Planner" tool to
plan their daily activity

6. Developed Collection Modules with OD/Missed
collections details, Centre Monitoring and
Client Visit Reports

7. Through our Centre Monitoring Module, the
field managers are visiting more than 14,000
centres monthly

8. Each OD client is visited 2.5 times on average
during the month through the Client Visit Report

9. Strengthened the "Customer Grievance Redressal
Mechanism" by providing the required details on
the loan card, Website, SMS and Branch. We have
received over 3000 calls of which 2913 have been
addressed successfully with a TAT of 8 days.

During the FY 2024-25, Pragati Finserv has disbursed
1,40,690 loans with a value of 702 crore. The approval
rate has dropped from more than 40% to below 20%
due to the tighter underwriting norms, Guardrails and
increasing defaults in the market. Focus on disbursing
higher ticket loans to fewer customers with good
repayment track record; increased the average loan
ticket size from 48,000 to 51,000.

There are a total of 2,014 active employees in Pragati
with 1,738 filed employees (Loan Officers and Branch
Managers). Loan Officer Productivity stands at 277
clients and 73 lakhs while the branch productivity
stands at 1,364 customers and 3.60 crore. Pragati
Finserv has better in all productivity parameters
compared to the average medium size MFI's.

Technology is the backbone of Pragati Finserv and is the
key differentiator for our organization to grow. During
the FY Pragati has developed Aryabhatta 3.0, our new (v)
LOS system built with a simpler workflow and front-end
risk controls. The new application has reduced the Loan
Officer application TAT to below 30 minutes. Developed
a new QC and Credit underwriting web application
Dhruva2.0 with Video PD capability for better decision
making. Started implementing End Point Security, Patch
Management & CIS benchmarks along with conducting
VAPT (Vulnerability Assessment and Penetration
Testing) for better information security. Received MFR
"Gold Certification" by achieving a score of 97.2%.

Pragati Finserv being the Multi-Lingual and Multi-
Cultural company, people are at the centre of all the
decision-making policies. We have conducted our Third
Strategy and Planning workshop "SANKALP" and the

For FY 2024-25, the CSR budget of Northern Arc Capital
Limited amounted to ^6,09,07,000, of which 44% was
allocated towards Environment & Sustainability focused
projects, 25% directed towards Education-related programs,
and 31% was towards Health & Destitute Care initiatives.

Northern Arc Securities Private Limited (NAS)

NAS is emerging as a comprehensive wealth management
platform, offering a diverse suite of investment products
tailored to meet the evolving needs of retail, HNI, and
institutional clients. With a strong foundation in fixed-
income expertise, the platform has expanded to provide a
holistic financial ecosystem—encompassing bonds, mutual
funds, fixed deposits, insurance products, and curated
wealth solutions.

The business continues to be guided by a client-centricity,
with a focus on transparent communication, product
suitability, and goal-oriented advisory. Leveraging Northern
Arc's deep credit heritage and robust due diligence
frameworks, the platform ensures that every investment

(iv) Northern Arc CrediTech Solutions Private Limited

In alignment with the commitment to innovation and growth
in the evolving financial landscape, Northern Arc CrediTech
Solutions Private Limited (Formerly known as Northern Arc
Investment Adviser Services Private Limited) (NACT) has
strategically shifted its focus from being a SEBI-registered
Investment Adviser to providing advanced technological
solutions in credit delivery and management. In line with this
swift, NACT has voluntarily surrendered its SEBI Investment
Adviser Registration Certificate (Reg No: INA200000019),
leading to its cancellation by SEBI effective January 3,
2025 and the company has been renamed as Northern Arc
CrediTech Solutions Private Limited effective, May 27, 2025.

product is carefully evaluated for risk and aligned with
clients' financial objectives.

During the year, NAS made significant strides in broadening
of distribution capabilities, onboarding new partners, and
enhancements to the digital interface. The product strategy
has been broadened to encompass debt, equity, protection,
and savings solutions enabling clients to build diversified
portfolios under a single platform.

Looking ahead, NAS remains committed to delivering long-
term value, combining innovation in financial products
with trusted relationships, thereby redefining the wealth
experience for Indian investors.

(vi) Finreach Solutions Private Limited (Finreach)

Finreach aims to improve access to credit for unserved/
underserved but viable Micro, Small & Medium Enterprises/
Entrepreneurs (MSMEs). The Company offers a wide
range of services to financial institutions to help expand
their geographical footprint, product offerings and
portfolio of assets.

The Company being non-deposit taking Non-Banking Financial
Company - Investment and Credit Company (NBFC-ICC), has not
accepted any deposits during the year under review. Further,
the Company had also passed a board resolution to the effect
that the company has neither accepted public deposit nor would
accept any public deposit during the year under review, as per
the requirements of Master Direction - Non-Banking Financial
Companies Acceptance of Public Deposits (Reserve Bank)
Directions, 2016.

There were no foreign exchange earnings during the year or the
previous year. Total foreign exchange outgo during the year under
review was INR 62.02 crore (previous year: INR 46.02 crore) under
the heads listed below:

(in crore)

In terms of Para VII of Schedule IV of the Companies Act, 2013, your
Company conducted a meeting of its Independent Directors on
March 28, 2025, without the presence of Non Independent Directors
and Executive Directors. The Independent Directors inter alia,:

a) reviewed the performance of Non Independent Directors and
the Board as a whole.

b) reviewed the performance of the Chairperson of the company,
taking into account the views of Executive directors and Non
- Executive directors.

c) assessed the quality, quantity, and timeliness of flow of
information between the company management and the
Board that is necessary for the Board to effectively and
reasonably perform their duties.

In terms of Section 139 of the Companies Act, 2013 and the rules
made thereunder, the Shareholders in the 16th Annual General
Meeting had appointed M/s. Walker Chandiok & Co LLP, Chartered
Accountants, having ICAI Firm Registration No.: 001076N/
N500013 as statutory auditors of the Company for a period 3
(three) consecutive terms, to hold office from the conclusion of
16th Annual General Meeting till the conclusion of 19th Annual
General Meeting.

There has been no qualification, reservation or adverse
remark given by the Statutory Auditors in their Report for the
year under review.

Pursuant to provisions of Section 204 of the Companies Act,
2013 and The Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, the Company had appointed
M.Damodaran & Associates LLP, Practicing Company Secretaries
to undertake the Secretarial Audit of the Company during the
year under review. The Report of the Secretarial Audit Report is
annexed herewith as "Annexure C". The Secretarial Audit Report
for the financial year ended March 31, 2025 does not contain
any qualification, reservation or adverse remark in their report.
However, there are certain observations which states that there is
a delay in filing under SEBI LODR Regulations and SEBI Circular
No. SEBI/HO/DDHS/PoD1/P/CIR/2023/119 dated August 10,
2021. The Secretarial observations are noted by the management
and had taken necessary steps to ensure timely compliance under
applicable SEBI LODR Regulations and SEBI Circular No. SEBI/HO/
DDHS/PoD1/P/CIR/2023/119 dated August 10, 2021.

Pursuant to Regulation 24A(1)(b) of SEBI LODR Regulations, the
Company is required to appoint the secretarial auditors for a term
of 5 consecutive years. In this regard, based on a review of the

profile, including the size, experience and area of specialization and
recommendation of the Audit Committee, the Board at its meeting
held on May 19, 2025 inter-alia, approved and recommended for
the approval of the members, the appointment of M/s. Alagar &
Associates LLP (Formerly known as M. Alagar & Associates),
Practicing Company Secretaries, Chennai (Firm Registration No.
L2025TN019200) as the secretarial auditors from the conclusion
of the 17th AGM until the conclusion of the 22nd AGM for the
purpose of secretarial audit of the Company.

The provisions of Cost Audit and Records as prescribed under
Section 148 of the Act, are not applicable to the Company.

During the year, the Auditors have not reported any instance of
fraud to the Audit Committee and Board as per Section 143 (12) of
the Companies Act, 2013.

Your Company is registered with Reserve Bank of India under
Section 45IA of the Reserve Bank of India Act, 1934. Further,
your Company has complied with and continues to comply with
all applicable laws, rules, circulars and regulations applicable
to the Company.

The Company at its Extra-ordinary general meeting held on
September 16, 2024 approved the increasing of authorized
share capital of the Company from INR 2,77,00,00,000/-
(Two Hundred Seventy Seven Crore Only) divided into

16.00. 00.000 equity shares of INR 10/- each and 5,85,00,000
compulsorily convertible preference shares of INR 20/- each
to INR 2,82,00,00,000 (Two Hundred and Eighty Two Crore
Only) divided into 16,50,00,000 equity shares of INR 10/-
each and 5,85,00,000 compulsorily convertible preference
shares of INR 20/- each by creation of additional Equity Share
capital of INR 5,00,00,000 ( Rupees Five Crore) divided into

50.00. 000 (Fifty Lakh ) Equity Shares of the face value of INR
10/- (Rupees ten) each, ranking pari-passu in all respects
with the existing equity shares of the Company.

The Articles of Association has been amended by the Company
to incorporate the terms of the amended shareholder's
agreement dated February 2, 2024 by inserting the terms
and conditions of the compulsorily convertible preference
shares with respect to new Series C CCPS and Series C2 CCPS

vide special resolutions passed by the members at its Extra-
ordinary general meeting held on April 15, 2024.

The Articles of Association are divided into Parts I and II which
parts shall, unless the context otherwise requires, co-exist with
each other, until the date of filing of the Red Herring Prospectus.
In this regard, Part II has been terminated automatically and
cease to be in force and effect from September 09, 2024 i.e.,
the date of filing of the Red Herring Prospectus and Part I shall
continue be in force and effect, without any further action by
the Company or its shareholders.

The Articles of Association has been amended by the
Company vide special resolutions passed by the members at
its Annual General Meeting held on December 19, 2024 by
insertion of new clause 103A of the Articles of Association
which enables each shareholder of the Company is permitted
to nominate Directors to the Board in accordance with the
threshold as set out in the Amended Articles of Association
of the Company.

No material changes and commitments affecting the financial
position of the Company have occurred between the financial year
ended 31st March 2025 till the date of this report.

In terms of Rule 11(2) of the Companies (Meetings of Board and
its Powers) Rules, 2014, NBFCs are excluded from the applicability
of Section 186 of the Act, 2013, where the loans, guarantees and
securities are provided in the ordinary course of its business.

Details of investments under Section 186 of the Act, 2013 for the
financial year 2024-25 are provided in the financial statements.

During the financial year 2024-25, 18 meetings of the Board of
Directors were held. The details of the composition of the Board
and its committees and of the Meetings held and attendance of
the Directors at such meetings and disclosure on acceptance of
Audit Committee recommendations by Board of Directors during
the year under review are provided in the Corporate Governance,
which is forming a part of this Board's Report.

The directors' responsibility statement as required under section
134(5) of the Companies Act, 2013, reporting the compliance

with the Accounting Standards is attached and forms a part of the
Board's Report.

The Directors accept the responsibility for the integrity and
objectivity of the Profit & Loss Account for the year ended March
31, 2025 and the Balance Sheet and Cash Flow Statement as at that
date ("financial statements") and confirm that:

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

b) the directors have selected such accounting policies
and applied them consistently and made judgments and
estimates that are reasonable and prudent so as to give a true
and fair view of the state of affairs of the company at the end
of the financial year and of the profit and loss of the company
for that period;

c) the directors 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) the directors have prepared the annual accounts on a
going concern basis;

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

The Board of Directors has carried out an annual evaluation of
its own performance, board committees, and individual directors
pursuant to the provisions of the Act and SEBI Listing Regulations.
The performance of the Board was evaluated by the Board after
seeking inputs from all the directors on the basis of criteria such
as the board composition and structure, effectiveness of board
processes, information and functioning, etc.

The above criteria are broadly based on the Guidance Note on Board
Evaluation issued by the Institute of Company Secretaries of India.
In a separate meeting of Independent Directors, performance of
Non-Independent Directors, the Board as a whole and Chairperson
of the Company was evaluated, taking into account the views of
Executive and Non-Executive Directors.

At the Board meeting that followed the meeting of the Independent
Directors, the performance of the Board, its committees, and
individual directors was also discussed. Performance evaluation of
Independent Directors was done by the entire Board.

The Company has received declaration from each Director on
fulfilling the fit and proper criteria in terms of the provisions of
Master Direction - Reserve Bank of India (Non-Banking Financial
Company - Scale Based Regulation) Directions, 2023 ("RBI NBFC
Master Directions"). The Board of Directors has confirmed that
all the existing Directors are fit and proper to continue to hold
the appointment as Directors on the Board, as reviewed and
recommended by the Nomination and Remuneration Committee
on fit and proper criteria under RBI NBFC Master Directions.

The Company has in place a Policy for prevention of Sexual
Harassment, in line with the requirements of the "Sexual
Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013." Internal Complaints Committee (ICC) has
been set up to redress complaints, as and when received, regarding
sexual harassment and all employees are covered under this Policy.

The Policy has been hosted on the Company's website: https://
www.northernarc.com

There were no referrals received by the Committee, during the FY
2024-25 and the details are as follows:

(a) No. of complaints received in the year - Nil

(b) No. of complaints disposed off during the year - Nil

(c) No. of cases pending for more than ninety days - Nil

Pursuant to the provisions of Section 92(3) and 134(3) (a) of
the Companies Act, 2013 read with Rule 12(1) of the Companies
(Management and Administration) Rules, 2014, draft Annual
return is uploaded on Company's website link https://www.
northernarc.com and a copy of the Annual Return will be uploaded
on the Company's website link as and when the same is filed with
the Registrar of Companies, Chennai.

The Company has received a certificate of registration from the
Insurance Regulatory and Development Authority of India ('IRDAI')
to act as corporate agent (composite) with validity of three years
from 14th June 2024 to 13th June 2027.

The Company was granted a Certificate of Registration by the
Reserve Bank of India (RBI) on 28th May 2025, permitting it to
commence and carry on the business of factoring.

During the Year, the Company has made an application to the
Registrar of Companies (ROC), seeking approval for extension of
time for convening of AGM for a further period of three months, i.e.,
up to 31st December 2024 for the financial year ended 31st March
2024. In this regard, the ROC, vide its letter dated September 24,
2024, had granted an extension of three (3) months, allowing the
Company to conduct its AGM on or before December 31, 2024, for
the financial year ended March 31, 2024 and the AGM has been
convened on December 19, 2024 which is within the extension of
time approved by the ROC.

No significant or material orders were passed by the Regulators
or Courts or Tribunals which impact the going concern status
operations of your Company in future.

The Company has adopted a policy on related party transactions
for the purpose of identification, monitoring and approving
of such transactions. The Related party policy is available on
website of the Company and the weblink for the same is https://
www.northernarc.com//assets/uploads/policies/Policy on
materiality of Related Party Transactions and dealing with
Related Party Transactions.pdf. During the year, your Company

has not entered into any transactions with Related Parties which
are not in the ordinary course of its business or not on an arm's
length basis and which require disclosure in this Report in terms
of the provisions of Section 188(1) of the Companies Act, 2013.
Form AOC-2 is enclosed with this report as Annexure D.

Nil

Pursuant to Rule 23(6) of the Foreign Exchange Management
(Non-Debt Instruments) Rules, 2019, the Board hereby confirms
that the Company has complied with the provisions relating to
downstream investment made during the financial year.

The downstream investment has been made in accordance with the
applicable provisions of the Foreign Exchange Management Act,
1999, the Foreign Exchange Management (Non-Debt Instruments)
Rules, 2019, and the Consolidated FDI Policy issued by the
Department for Promotion of Industry and Internal Trade (DPIIT).
The necessary statutory filings with the Reserve Bank of India and
other regulatory authorities, as applicable, have been completed
within the prescribed timelines.

Disclosure to be made under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
are given below:

Ratio of remuneration of each director to the median employee's remuneration for the financial year:

Percentage increase in remuneration of each director, Chief Executive Officer, Chief Financial Officer, Company Secretary in the Financial
Year vis-a-vis last financial year:

Percentage increase in the median remuneration of
employees in the financial year: 16%

? Number of permanent employees on the rolls of the company:
1104 (as of 31st March 2025)

? Average percentage increase in the salaries of employees
other than the KMP in FY 2024-25 is 11.9%* and its
comparison with the percentile increase in the managerial
remuneration is 14%.

? Affirmation that the remuneration is as per the remuneration
policy of the company: The Company affirms that
remuneration of directors and employees of the company is
in accordance with the Nomination and Remuneration policy
of the company.

* the average increase in salaries of employees based on performance appraisal
during the last year.

The statement containing particulars of employees as required under
section 197(12) of the Act read with Rule 5(2) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014,
is in a separate Annexure E forming part of this report. A copy of the
Board's Report is being sent to all the members excluding Annexure E.
The said Annexure is available for inspection by the members at the
Registered Office of the Company during business hours on working
days. Any member interested in obtaining a copy of the same may write
to the Company Secretary at the Registered Office of the Company.

As per the provisions outlined in Regulation 61A of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations,
2015 ("Listing Regulations"), the Company is required to transfer
unclaimed dividend/interest, if any, to an escrow account
maintained by the Company. Details regarding such transfers are
available on the Company's website, in compliance with the SEBI
Circular dated November 08, 2023. The Company has also published
the procedure for claiming unclaimed amounts on its website at
the weblink https://www.northernarc.com/assRts/uploads/pdf/
Statement-of-Unpaid-Dividend-on-Preference-Shares-1591269762.

. Upon completion of seven years from the date of transfer to the
escrow account, the unclaimed amounts, if any, will be transferred
to the Investor Education and Protection Fund ("IEPF"). During the
reporting year, no transfer to the Investor Education and Protection
Fund (IEPF) was required to be made. The Company Secretary of
the Company has been designated as the Nodal Officer for handling
investor queries related to unclaimed amounts.

The SEBI Listing Regulations requires listed companies to lay
down a code of conduct for its directors and senior management,
incorporating duties of directors prescribed in the Act. Accordingly,
the Company has a Board approved code of conduct for Board
members and senior management of the Company and the details
are mentioned in the Corporate Governance Report.

All the Board members and senior management personnel have
affirmed compliance with the code for the for the FY 2025-26.

Adequate vigil mechanism for directors and employees to report their
genuine concerns about unethical behaviour, actual or suspected
fraud or violation of the Company's code of conduct is in place and
the same have been disclosed on the website of the company, www.
northernarc.com. No references under the whistle blower policy were
received during the Financial Year 2024-25. The same has also been
affirmed by the Audit Committee of the Board on a quarterly basis.

The company has complied with the applicable Secretarial
Standards issued by The Institute of Company Secretaries of India.

There was no change in the nature of business of the company
during the year under review.

Being a Non-Banking Finance Company and not involved in any
industrial or manufacturing activities, the Company's activities
involve low energy consumption and has no particulars to report
regarding conservation of energy, technology and absorption.

The Board of Directors confirms that your Company has laid
down set of standards, processes and structure which enables
to implement Internal Financial controls across the organization
with reference to Financial Statements and that such controls are
adequate and operating effectively. During the year under review,
no material or serious deviation has been observed for inefficiency
or inadequacy of such controls.

A statement indicating development and implementation of a
risk management policy for the company including identification
therein of elements of risk, if any, which in the opinion of the Board
may threaten the existence of the company.

The Board affirms that the company has developed and
implemented a comprehensive Risk Management Policy.
This policy outlines a structured and proactive approach to
identifying, assessing, mitigating, and monitoring various risks
that could potentially impact the company's operations, financial
performance, and long-term sustainability.

Details of identification, assessment, mitigations, monitoring and
the management of these risks are mentioned in the Management's
Discussion and Analysis Report appended to this Report.

In terms of applicable provisions of the act, the company discloses
that during the year under review:

(i) The company has not issued any shares with Differential
rights and hence no information as per Provisions of section
43(a)(ii) of the act read with rule 4(4) of the companies
(share capital and debenture) Rules, 2014 is furnished.

(ii) The company has not issued any sweat equity shares and
hence disclosure as per section 54(1)(d) of the act Read with
rule 8(13) of the companies (share capital and debenture)
rules, 2014 is not provided.

(iii) There were no instances of non-exercising of voting Rights
directly by Employees in respect of shares to which the
scheme relates, hence no information Pursuant to section
67(3) of the act read with rule 16(4) of companies (share
capital and debentures) Rules, 2014 is furnished.

(iv) There were no amounts required to be transferred to investor
education and protection fund (IEPF) pursuant to section
124 and 125 of the companies act,2013 read with rules
made thereunder.

(v) The Company is complying of the provisions relating to the
Maternity Benefit Act 1961

(vi) There are no significant and material orders passed by the
regulators or courts or tribunals that would impact the going
concern status of the company and its future operations.

(vii) Neither any application was made, nor any proceedings are
pending under the insolvency and bankruptcy code, 2016
against the Company.

(viii) There were no instances of one-time settlement for any loans
taken from the banks or financial institutions.

The Directors wish to thank the Reserve Bank of India, SEBI, Stock
Exchanges and other statutory authorities for their continued
support and guidance. The Directors also place on record their
sincere thanks for the support and co-operation extended by the
bankers and shareholders of the Company.

The Directors also thank the employees of the Company for their
contribution toward the performance of the Company during the
year under review.