Fusion Finance Ltd

Dear members,

The Board of Directors are pleased to present the 31st Annual Report of your Company ("the Company" or "Fusion") along with the Audited Financial Statements, for the Financial Year ended March 31, 2025 ("Financial Statements").

1. FINANCIAL SUMMARY/STATE OF AFFAIRS

The financial statements of the Company for the year ended March 31, 2025 have been prepared in accordance with Indian Accounting Standards ("Ind AS") prescribed under section 133 of the Companies Act, 2013 (the "Act"), read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Schedule III to the Act, as amended from time to time and applicable guidelines issued by Securities and Exchange Board of India ("SEBI").

The financial results of the Company for the current Financial Year ended March 31, 2025, as compared to the previous Financial Year ended March 31, 2024, are as under:

During the Financial Year 2024-25, the Company's total revenue grew marginally by 0.13% to INR 2,319.76 crore. However, the Company reported a net loss of INR 1,224.54 crore for the year, in contrast to a net profit of INR 505.29 crore in the previous Financial Year 2023-24.

2. OPERATIONAL PERFORMANCE

Operational performance of the Company for the current Financial Year ended March 31, 2025 as compared to the previous Financial Year ended March 31, 2024 is summarized below:

The Company reached out to 32,08,248 active loan Borrowers as on March 31, 2025, which has decreased from 38,61,892 as on March 31, 2024. The reduction in active loan borrowers during the year was -16.93%.

The Company has 15,274 employees as on March 31, 2025, which was 13,807 as on March 31, 2024, through 1,571 Branches, across 22 states and 497 districts in India. During the year under review, the Company opened/split 274 new branches.

The Company already has borrowing arrangements with a large number of lenders and has started associations with a few more institutions to diversify its sources of borrowing.

3. CASH FLOW STATEMENT

The Cash Flow Statement for the Financial Year ended on March 31, 2025 prepared under the provisions of the Act is attached as a part of the Financial Statements of the Company.

4. ANNUAL RETURN

Pursuant to sub-section (3)(a) of Section 134 and sub-section (3) of Section 92 of the Act, read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the copy of the Annual Return as at March 31, 2025 is available on the website of the company at www.fusionfin.com

5. DEPOSITS

The Company is a non-deposit taking Non-Banking Financial Company - Micro Finance Institution (NBFC-MFI) and has not accepted any public deposits within the ambit of Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998 or Section 73 of the Act read with Companies (Acceptance of Deposits) Rules, 2014. Further the company continues to be a non-deposit taking Non-Banking Financial Company in conformity with the guidelines of the RBI.

6. TRANSFER TO RESERVES

During the Financial Year 2024-25, the Company has not transferred any amount to the statutory reserve pursuant to Section 45-IC of the Reserve Bank of India Act, 1934, due to loss during the Year.

7. DIVIDEND DISTRIBUTION POLICY

Pursuant to the provisions of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the ‘SEBIListing Regulations'), the Company had formulated a dividend distribution policy, which sets out the parameters and circumstances to be considered by the Board of Directors (‘Board') in determining the distribution of dividend to its shareholders and/or retaining profit earned. The said policy is also available on the website of the Company at https://fusionfin.com/wp-content/uploads/2024/11/11.- Dividend-Distribution-Policy-W.pdf

8. DIVIDEND

The Board of Directors is focused on driving sustainable business growth and enhancing longterm shareholder returns. In line with this objective, and considering the substantial resources required to support the Company's long-term strategic initiatives and losses during the financial year ended on March 31, 2025, the Board has not considered or recommended distribution of any dividend for the year under review.

9. TRANSFER OF UNCLAIMED DIVIDEND AND SHARES TO INVESTOR EDUCATION AND PROTECTION FUND

In terms of Section 125 of the Act, unclaimed dividends are required to be transferred to the Investors Education and Protection Fund. There has been no dividend declared in the last Seven (7) years and year under review and hence, there is no requirement of transferring the same to the Investors Education and Protection Fund for the year under review.

10. SCALE BASED REGULATIONS

With reference to the RBI circular dated October 22, 2021 on "Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs" (‘SBR Framework'), the NBFCs are categorised into four layers, NBFC - Base Layer (NBFC-BL), NBFC - Middle Layer (NBFC-ML), NBFC - Upper Layer (NBFC-UL) and NBFC - Top Layer (NBFC-TL)based on their size, activity, and perceived risk. Accordingly, the company is categorised as an NBFC -Middle Layer (NBFC-ML) and is in compliance with the applicable regulations.

11. NUMBER OF MEETINGS OF THE BOARD

During the Financial Year 2024-25, the Board met 9(Nine) times and details related to the board meetings of the Company are mentioned in the Corporate Governance Report annexed as "ANNEXURE -1", which forms part of this report. The intervening gap between the Board Meetings was within the period prescribed under the Act and SEBI Listing Regulations.

12. CHANGE IN THE NATURE OF BUSINESS

There was no change in the nature of business of the Company during the Financial Year ended March 31, 2025.

a. Changes in Directors and KMPs during the FY 2024-25

(i) The Shareholders in the Annual General Meeting of the Company held on September 27, 2024 approved the re-appointment of Mr. Narendra Ostawal (DIN: 06530414), retiring by rotation, as the Nominee Director of the Company.

(ii) The tenure of Mr. Pankaj Vaish (DIN: 00367424), Independent Director of the Company was completed on September 21, 2024.

(iii) The Board, based on the recommendation of the Nomination and Remuneration Committee ("NRC"), appointed Mr. Puneet Gupta (DIN: 02728604), as an Additional Director in the category of an independent director w.e.f. October 5, 2024 to hold the office upto the date of AGM. Based on the recommendations of the NRC and Board of Directors, the shareholders in the Extra Ordinary General meeting of the Company held on October 30, 2024, approved the appointment of Mr. Puneet Gupta as an Independent Director, for a period of three consecutive years, w.e.f. October 5, 2024.

The Board is of the opinion that Mr. Puneet Gupta (DIN: 02728604) is a person of integrity, expertise, and is having competent experience and proficiency to serve the Company as an independent director that can strengthen the overall composition of the Board.

(iv) The Board has appointed Mr. Sanjay Garyali as the Chief Executive Officer of the Company w.e.f. March 17, 2025.

(v) The designation of Mr. Devesh Sachdev (DIN: 02547111) has been changed from "Managing Director & CEO" to "Managing Director" w.e.f. March 17, 2025.

b. Woman Director

In terms of the provisions of Section 149 of the Companies Act, 2013, and Regulation 17(1)(a) of the SEBI Listing Regulations read with secretarial standard-2, the Company shall have at least one Woman Director on the Board. Accordingly, the Company has Ms. Namrata Kaul and Ms. Ratna Dharashree Vishwanathan as Independent Woman Directors on the Board.

c. Director retiring by rotation

Mr.Devesh Sachdev (DIN: 02547111) shall retire by rotation as a director on the Board in terms of provisions of the Companies Act, 2013 at the ensuing Annual General Meeting of the Company and being eligible offers himself for reappointment. The Board recommends his reappointment as a director. As stipulated under Reg 36 (3) of the SEBIListing Regulations read with secretarial standard-2, a brief resume of Mr. Devesh Sachdev proposed to be reappointed is given in notice of the 31st AGM of the Company.

d. Key Managerial Personnel (KMP)

As per the provisions of the Act, Mr. Devesh Sachdev, Managing Director, Mr. Sanjay Garyali, Chief Executive Officer,Mr. Gaurav Maheshwari, Chief Financial Officer and Mr. Deepak Madaan, Company Secretary & Chief Compliance Officer are the KMPs of the Company.

14. DECLARATION OF INDEPENDENCE

The Company has received necessary declarations from each Independent Director as per the provisions of Section 149(7) of the Act read with Regulation 25(8) of SEBI Listing Regulations, that they meet the criteria of Independence as laid down in Section 149(6) of the Act and Regulation 16(1) (b) of the SEBI Listing Regulations.

There has been no change in the circumstances affecting their status as Independent Directors of the Company or to qualify under the Act and the relevant regulations.

In the opinion of the Board, all the Independent Directors are person of integrity and possess requisite qualification/ skill/ expertise required for their roles and they are independent of the Management.

15. CREDIT RATING

Further, CARE Edge Analytics & Advisory has assigned Grading of MFI 1(One).

16. CAPITAL ADEQUACY

The Capital Adequacy Ratio of the company was 22.42% as on March 31, 2025, as against the minimum capital adequacy requirements of 15% by Reserve Bank of India ("RBI").

17. FAIR PRACTICE CODE

The Company has in place a Fair Practice Code (FPC) approved by the Board in compliance with the guidelines issued by RBI, to ensure better service and provide necessary information to customers to

take informed decisions. The FPC is available on the website of the Company at www.fusionfin.com.

18. CUSTOMER GRIEVANCES

The Company has a dedicated Customer Grievance team for receiving and handling customer complaints/ grievances and ensuring that the customers are treated fairly and without any bias at all times. All issues raised by the customers are dealt with courtesy and redressed expeditiously.

a) Term Loan / Sub debt /Refinance

During the Financial Year ended March 31, 2025, the Company diversified its sources of funds and raised a sum of Rs. 4,030.13 Crore (Inclusive of Term Loan of Rs. 3,821.30 Crore, and ECB of Rs. 208.84 Crore).

b) Secured / Unsecured Non-convertible debentures

During the Financial Year ended March 31, 2025, the Company has not raised funds from unsecured NonConvertible Debentures and secured Non-Convertible Debenture.

c) Direct Assignment

During the Financial Year ended March 31, 2025, the Company raised resources to the extent of Rs. 1,010.00 Crore through Direct Assignment.

A. SHARE CAPITAL

The Authorized Share capital of the company was increased from INR 1,05,00,00,000 (Indian Rupees One Hundred and Five Crores only) divided into 10,50,00,000 (Ten Crore Fifty Lakh) equity shares of face value of INR 10/- (Indian Rupees Ten only) each to INR 2,00,00,00,000/- (Indian Rupees Two Hundred Crores Only) divided into 20,00,00,000 (Twenty Crores) equity shares of face value of INR 10/- (Indian Rupees Ten Only) each, as approved by the shareholders of the Company in the Extraordinary General Meeting held on October 30, 2024.

The Issued and Paid-up Equity Share Capital of the Company as on March 31, 2025, stood at INR 1,010,238,850 (Rupees One Hundred and One Crore Two Lakh Thirty Eight Thousand Eight Hundred Fifty only) consisting of 101,023,885 (Ten Crore Ten Lakh Twenty Three Thousand Eight Hundred and Eighty Five only) Equity Shares of INR 10/- each.

During the year the Board of Directors of the Company in its meeting held on December 04, 2024, has

considered and approved the raising of funds by way of issue of partly paid equity shares of the Company of face value INR 10 each through Rights Issue for an amount aggregating up to INR 800 crores to the eligible equity shareholders of the Company.

Pursuant to the above, the Company has successfully completed the Rights Issue and the Rights Issue Committee on May 02, 2025 has approved an issuance and allotment of 6,10,58,392 partly paid up equity shares at INR 131/- (Indian Rupees One Hundred and Thirty one only) per equity share (including face value of INR 10/-(Indian Rupees Ten only) each and a premium of INR 121/- (Indian Rupees One Hundred and Twenty one only) per equity share); out of which an amount of INR 65.50/- (Indian Rupees Sixty Five and fifty paisa only) per equity share (including face value of INR 5/- (Indian Rupees Five only each and a premium of INR 60.50/- per equity share), aggregating to an amount of INR 399.93 crore has been paid by the eligible equity shareholders of the Company. The remaining amount may be called in one or more subsequent call(s), with terms and conditions such as the number of calls and the timing and quantum of each call as may be decided by our Board/ Rights Issue Committee from time to time to be completed on or prior to March 31, 2027, or such other extended timeline.

Consequently, with effect from May 02, 2025, the Issued and Paid-up Equity Share Capital of the Company stood at INR 1,31,55,30,810 (Rupees One Hundred and Thirty One Crore Fifty Five Lakh Thirty Thousand Eight Hundred and Ten only) consisting of 10,10,23,885 (Ten Crore Ten Lakh Twenty Three Thousand Eight Hundred and Eighty Five only) fully paid up Equity Shares of INR 10/- each and 6,10,58,392(Six Crore Ten Lakh Fifty Eight Thousand Three Hundred and Ninety Two only) partly paid-up Equity Shares of INR 5/- each.

Further, the Company has not bought back any of its securities during the year under review.

B. EMPLOYEE STOCK OPTION SCHEME

In order to motivate, incentivize and reward employees, your Company instituted Fusion Employee Stock Plan, 2016 ("ESOP 2016) and Fusion Employee Stock Option Plan, 2023 ("ESOP 2023")

The NRC monitors the implementation of ESOP 2016 and ESOP 2023, which are in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SEBI SBEB Regulations").

Relevant disclosures pursuant to SEBISBEB Regulations, as on March 31, 2025, are available on the website of the Company at https://fusionfin.com/ employee-benefit-scheme-docs/.

During the year under review, the Board of Directors, based on the recommendation of NRC,in its meetings held on March 14, 2025 approved the increase of ESOP pool from 10,00,000 stock options to 60,00,000 stock options in ESOP 2023 scheme and some other amendements, which was further approved by the shareholders on April 23, 2025 vide postal ballot. The company has also received in-principle approval for the additional pool of 50,00,000 options from BSE vide letter No. DCS/IPO/AK/ESOP-IP/3649/2025-26 and NSE vide letter no. NSE/LIST/48565, both dated June 04, 2025.

21. NON CONVERTIBLE DEBENTURES

During the financial year ended March 31, 2025, the Company has not raised any funds by issuance of unsecured Non-Convertible Debenture and secured Non-Convertible Debenture respectively. The total fully redeemed NCDs in FY25 is INR 56.67 Crores. The outstanding NCDs including subordinated liabilities in form of NCDs as on March 31, 2025, was Rs. 198.78 Crores.

22. COMMITTEES DETAILS

As on March 31, 2025, the Company has 10 committees which govern and oversee different areas of the Company's operations ensuring regular guidance and monitoring.

For further details, please refer to Corporate Governance Report, which forms part of Directors' Report as "Annexure - 1".

23. RELATED PARTY TRANSACTIONS

During the Financial Year 2024-25, there were no material related party transactions entered by the Company that were required to be disclosed in form AOC-2. The details of the related party transactions are provided in the notes to the Financial Statements.

The policy on Related Party Transactions, as approved by the Board, is displayed on the website of the Company i.e. www.fusionfin.com.

24. AUDITOR'S AND AUDITORS' REPORT STATUTORY AUDITOR

Pursuant to the provisions of Section 139 of the Companies Act, 2013 read with rules made thereunder and RBI notification no. DoS.CO.ARG/ SEC.01/08.91.001/2021-22 dated April 27, 2021, M/s Deloitte Haskins and Sells, Chartered Accountants were appointed as Statutory Auditors of the Company to hold office for a period of three years from the conclusion of the 28th Annual General Meeting till the conclusion of the 31st Annual General Meeting of the Company to be held in the Financial Year 202526. The tenure of office of M/s. Deloitte Haskins and Sells, Chartered Accountants (Firm Registration No. 015125N), as Statutory Auditors of the Company will expire with the conclusion of 31st AGM of the Company. The Board places on record its sincere appreciation for the services rendered by M/s. Deloitte Haskins and Sells, during their tenure as Statutory Auditors of the Company.

In order to ensure smooth transition and handover and In terms of Section 139 of the Act read with rules made thereunder and guidelines issued by RBI on April 27, 2021, the Audit Committee of the Board, after assessing the qualifications and experience of M/s. B.K. Khare & Co., Chartered Accountants (Firm Registration No. 105102W), recommended their appointment as the Statutory Auditors of the Company for a period of 3 (three) consecutive years from the conclusion of the ensuing 31st AGM till the conclusion of the 34th AGM of the Company. The Board of Directors at its meeting held on June 10, 2025, based on the recommendations of the Audit Committee and subject to approval of the members at the ensuing 31st AGM, approved the appointment of M/s. B.K. Khare & Co., Chartered Accountants (Firm Registration No. 105102W), as the Statutory Auditors of the Company for a period of 3 (three) consecutive years from the conclusion of the ensuing 31st AGM till the conclusion of the 34th AGM of the Company. Appropriate resolution seeking approval of the members for appointment and remuneration of M/s. B.K. Khare & Co, Chartered Accountants, is appearing in the Notice convening the 31st AGM of the Company.

The Company has received written consent(s) and certificate(s) of eligibility and other relevant documents in accordance with Sections 139, 141 of the Act read with Guidelines issued by RBI on April 27, 2021, and other applicable provisions Rules made thereunder (including any statutory modification(s) or re-enactment(s) for the time being in force), from M/s. B.K. Khare & Co., Chartered Accountants.

Qualified Opinion on Financial Statements:

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion section below, the aforesaid financial statements give the information required by the Companies Act, 2013 (the "Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March 2025, and its loss, total comprehensive loss, its cash flows and the changes in equity for the year ended on that date.

Basis for Qualified Opinion on Financial Statements:

As stated in Note 60 to the financial statements, the Company has not evaluated whether any of the expected credit allowances recognised in the year ended March 31, 2025 should be retrospectively adjusted to the previously reported amounts in the prior year presented because of impracticability as described in Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors. In the absence of sufficient and appropriate evidence, we are unable to comment on the Company's basis of impracticability to evaluate and determine whether any retrospective adjustment should have been made to previously reported amounts in the prior year presented."

Qualified Opinion on Internal Financial Controls:

In our opinion, to the best of our information and according to the explanations given to us, except for the possible effects of the material weakness described in the Basis for Qualified Opinion paragraph above on the achievement of the objectives of the control criteria, the Company has maintained, in all material respects, an adequate internal financial controls with reference to the financial statements and such internal financial controls with reference to the financial statements were operating effectively as at March 31, 2025, based on the criteria for internal financial control with reference to financial statements established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

Basis for Qualified Opinion on Internal Financial Controls:

According to the information and explanations given to us and based on our audit, the following material weakness has been identified in the Company's internal financial controls with reference to the financial statements as at March 31, 2025.

The Company has concluded that it was impracticable to evaluate and determine any amounts for retrospective recognition and measurement in those prior periods on account of expected credit loss allowance as explained in note 60 of the financial statements of the Company. As a result, we are unable to determine whether any adjustments were required for prior period(s) relating to the impairment charge recorded for the year ended March 31, 2025.

Because of the deficiency in financial closing and reporting process, in respect of information as aforesaid, we are unable to assess whether or not the current year's figures are comparable to those of the previous year.

A ‘material weakness' is a deficiency, or a combination of deficiencies, in internal financial control with reference to the financial statements, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.

Directors' responseto QualifiedOpiniononFinancial Statements and Internal Financial Controls: With respect to Auditor's Qualified Opinion on Financial Statements and Internal Financial Controls and in reference to the explanation given in Note 60 to the Financial Statements, the Board has taken note of the statutory auditor's remarks and wishes to clarify that the microfinance sector experienced significant dislocation during FY25, which resulted in sharp deterioration in borrower credit quality. The Company has evaluated whether any of the expected credit loss (ECL) allowances recognized during FY25 should have been attributed to prior periods. However, consistent with the principles set out in Ind AS 8 (Accounting Policies, Changes in Accounting Estimates and Errors), and given the limitations in objectively determining information relating to assumptions and circumstances as it existed in those prior periods, the Company concluded that it was impracticable to evaluate and determine any amounts for retrospective recognition and measurement in those prior periods. This is because significant judgments had been applied in determining the staging of the loan assets and related impairment allowance for events and conditions existing as at the earlier reporting dates. The Company believes it would not be appropriate to apply those judgments retrospectively without the benefit of hindsight.

With respect to the statutory auditor's observation regarding controls over historical ECL provisioning, it is important to highlight that targeted remedial actions have since been undertaken, following the commissioning of multiple independent external reviews. These include: (a) investments in technology upgrades, (b) revision of underwriting policies, and (c) enhancements to the ECL methodology based on recommendations from external review, among others.

Auditors' Remark on Material uncertainty related to Going Concern:

"We draw attention to Note 61 to the financial statements which describes the material uncertainty in relation to the going concern assumption used in the preparation of the financial statements. This condition and other matters stated in the Note indicate the existence of material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern. However, the financial statements of the Company have been prepared on a going concern basis for the reasons stated in the said Note."

Our Opinion is not modified in respect of this matter."

Directors' response to Auditors' Remark on Material uncertainty related to Going Concern:

With respect to remark on material uncertainty on going concern and in reference to the explanation given in Note 61 to the Financial Statements, the Board confirms that the financial statements have been appropriately prepared on a going concern basis. As at March 31, 2025, the Company had breached various financial covenants (in respect of borrowings amounting to I NR 4,762.62 crore as at March 31, 2025), resulting in these borrowings technically becoming repayable on demand. However, the Company has obtained extension, of less than 12 months and equal to or more than 12 months from testing date for said breaches from lenders whose borrowings as of March 31, 2025 aggregate INR 3,748.90 crore and INR 331.02 crore respectively. This aggregates to a total waived amount of INR 4,079.92 crore (~86% of the breached amount). The Company is in discussion with the remaining lenders to obtain similar extensions. It is further clarified that no demand for accelerated repayment of borrowed funds has been received from

any lender as on date, and the lenders have continued to extend their support to the Company. Additionally, the Company holds Cash and Cash equivalents and liquid assets aggregating to INR 798.36 crore as at March 31, 2025, and INR 877.73 crore as at May 31, 2025. To further strengthen liquidity and balance sheet resilience, the Company successfully completed a rights issue of partly paid-up equity shares of INR 799.86 crores which was subscribed 1.5x, with the Share Application Money of INR 399.93 Crores completed in May 2025, and the remaining INR 399.93 Crores callable at the Company's discretion.

The Company has demonstrated continued support from its lending partners through all quarters in FY25, and the Board believes that with the corrective actions taken and strengthening of the balance sheet, Fusion is well positioned to continue to operate as a going concern.

Further, during the year, no incidence of fraud as defined under Section 143(12) of the Companies Act, 2013, which is required to be disclosed under Section 134(3) (ca) of the Companies Act, 2013, has been reported by the Auditors to the Board of directors of the Company.

SECRETARIAL AUDITOR

The Board of Directors at its meeting held on June 10, 2025, based on the recommendations of the Audit Committee and subject to approval of members at the ensuing 31st AGM, approved the appointment of M/s. Navneet K Arora & Co LLP, Company Secretary (Firm Registration No. P2009DE061500), for a first term of 5 (five) consecutive years beginning from Financial Year 2025-26 i.e. from the 31st AGM till the conclusion of the 36th AGM.

Secretarial Audit Report

As required under Section 204 of the Act and the Rules made thereunder, M/s. Harish Popli & Associates was appointed as the Secretarial Auditor of the Company to conduct Secretarial Audit in Form No. MR-3 of the Company for the period under review.

The Secretarial Audit Report for Financial Year ended on March 31, 2025 does not contain any qualification, reservation, adverse remark or disclaimer, except as contained therein, and forms part of Board Report as "ANNEXURE - 2". The management response to the same is given as follows:

Annual Secretarial Compliance Report

A Secretarial Compliance Report for the Financial Year ended March 31, 2025 on compliance of all applicable Acts and SEBI Regulations and circulars/ guidelines issued thereunder, was obtained from M/s. Harish Popli & Associates, Company Secretaries, Secretarial Auditor of the Company. The same was submitted to the stock exchanges in due course.

25. PARTCULARS OF LOANS, GUARANTEES OR INVESTMENTS

During the year under review, in terms of the provisions of Section 186(1) of the Act, the Company did not make any investment through more than two layers of investment companies.

Since, the Company is Non-Banking Financial Company, the disclosures regarding particulars of the loan or guarantee given and security provided is exempt under the provisions of Section 186(11) of the Act read with rules made thereunder, as amended. Further, the details of investments made by the Company are given in the Notes to the Financial Statements.

26. COMPENSATION AND REMUNERATION POLICY

Pursuant to the provisions of Section 178 of the Act read with applicable rules thereunder, and Regulation

19 of SEBI(Listing Obligations and Disclosure Requirements) Regulations, 2015 and in accordance with the RBI Guidelines, the Board of directors has approved the Compensation and Remuneration Policy.

This Policy is directed towards a structure that provides adequate rewards and compensation to the employees, as specified therein. This policy formulates the criteria for determining qualifications, competencies, positive attributes, and independence for the appointment of a director (executive/non- executive) and also the criteria for determining the remuneration of the directors, key managerial personnel (KMPs) and other employees.

This Policy is available on our website at www.fusionfin. com.

27. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF THE REPORT Rights Issue

During the year the Board of Directors of the Company in its meeting held on December 04, 2024, has considered and approved the raising of funds by way of issue of partly paid equity shares

of the Company of face value INR 10 each through Rights Issue for an amount aggregating up to INR 800 crores to the eligible equity shareholders of the Company.

Pursuant to the above, the Company has successfully completed the Rights Issue and the Rights Issue Committee on May 02, 2025 has approved an issuance and allotment of 6,10,58,392 partly paid up equity shares at INR 131/- per share (including face value of INR 10/- each and a premium of INR 121/- per share); out of which an amount of INR 65.50/- per share (including face value of INR 5 each and a premiumof INR 60.50 per share), aggregating to an amount of INR 399.93 crore has been paid by the eligible equity shareholders of the Company. The remaining amount may be called in one or more subsequent call(s), with terms and conditions such as the number of calls and the timing and quantum of each call as may be decided by our Board/ Rights Issue Committee from time to time to be completed on or prior to March 31, 2027, or such other extended timeline.

Employee Stock Options Plan

During the year, the Board vide its meetings dated March 14, 2025 approved the increase of ESOP pool from 10,00,000 stock options to 60,00,000 stock options in ESOP 2023 scheme, which was further approved by the shareholders on April 23, 2025 vide postal ballot. The company has also received in-principle approval for the additional pool of 50,00,000 options from BSE vide letter No. DCS/IPO/ AK/ESOP-IP/3649/2025-26 and NSE vide letter no. NSE/LIST/48565, both dated June 04, 2025.

28. AMENDMENT IN THE MEMORANDUM OF ASSOCIATION ("MOA") AND ARTICLES OF

During the Financial Year ended March 31, 2025, the Company's MOA and AOA were amended , pursuant to the change in the name of the company from "Fusion Micro Finance Limited" to "Fusion Finance Limited".

Further, the Board of directors in its meeting held on June 10, 2025 approved the amendment in Articles of Associations of the Company, subject to the approval of the members, in order to enable the Board of directors to make call on partly paid up shares up to one half or 50% of the nominal value and premium amount of the share. The Company is seeking approval of the members in the ensuing AGM of the Company.

a. Information Relating to Conservation of Energy, Technology Absorption

The operations of our Company are not energy-intensive. The Company has, however, used information technology extensively in its operations and continuously invests in energy-efficient office equipment at all office locations.

b. Foreign Exchange Earnings and Outgo

There has an foreign exchange inflow of INR 208.84 crores on account of external commercial borrowings while outgo during the year under review is INR 101.96 crores towards Interest Payment on ECB, professional fees against ECB and Rights Issue & other operating expenses.

30. RISK MANAGEMENT

Our Enterprise Risk Management (ERM) framework encompasses practices relating to the identification, analysis, evaluation, treatment, mitigation, and monitoring of the Credit, Market, liquidity, Operational, compliance risks to achieving our key business objectives. ERM at Fusion seeks to minimize the adverse impact of these risks, thus enabling the Company to leverage market opportunities effectively and enhance its long-term competitive advantage.

The Board of Directors of the Company has formed a Board Risk Management Committee ("BRMC") to frame, implement, and monitor the enterprise risk management plan for the Company.

Pursuant to Section 134(3)(n) of the Companies Act, 2013, the BRMC is responsible for reviewing the enterprise risk management plan, ensuring its effectiveness, and verifying adherence to various risk parameters. The Company's Enterprise Risk Management strategy is based on clear understanding of various risks, disciplined Enterprise risk assessment and continuous monitoring. The BRMC reviews various risks with which the organization is exposed including Credit Risk, Interest Rate Risk, Liquidity Risk and Operational Risk. The development and implementation of risk management policy has been covered in the Management Discussion and Analysis Report attached as "ANNEXURE 3".

31. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company strives to meet its commitment towards the community by committing its resources and energies to social development. The CSR Committee of the Company has formulated a CSR Policy which describes the multiple lines around which the CSR activities of the Company are positioned being education and skills development, social and

economic welfare, environmental sustainability and such other activities included in Schedule VII of the Act as may be identified by the CSR Committee from time to time.

The Policy is available on the website of the company at www.fusionfin.com.

Further, the composition of the CSR Committee, terms of reference of the committee and the details of meetings attended by the Committee members are provided in Corporate Governance Report attached as "ANNEXURE 1".

The Annual Report on the CSR activities for the Financial Year 2024-25 containing salient features of CSR Policy and other relevant details is attached as "ANNEXURE 4" to this Report.

32. BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT

A detailed Business Responsibility & Sustainability Report (BRSR) has been prepared and is made available on the website of the company at https://fusionfin.com/brsr/

33. PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

In compliance with the Companies Act, 2013, and SEBI Listing Regulations, the Company has a structured assessment process for evaluation of performance of the Board, its committees and individual performance of each Director including the Chairperson. The evaluations are carried out in a confidential manner and the Directors provide their feedback by categorising them in Good, Average, and Below Average categories, and after evaluation, the same is compiled by Nomination & Remuneration Committee (NRC) Chairperson. Further,the Company has also appointed an independent third party for carrying out the evaluation process in fair manner.

The Independent Directors at their separate meeting reviewed the performance of Non-Independent Directors and the Board as a whole. The Chairman of the Company after taking into account the views of other Non-Executive Directors, 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.

The overall performance evaluation exercise was completed to the satisfaction of the Board. The outcome of the evaluation was presented to the Board

of Directors of the Company.

34. VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Vigil Mechanism system/Whistle Blower Policy has been established with a view to provide a tool for directors and employees of the Company to report to the management genuine concerns including unethical behavior, actual or suspected fraud. The Policy ensures adequate safeguards to protect directors and employees from any form of retaliation or victimization for raising such concerns. The Company has not received any complaints under the said policy during the year.

The Company has formulated a codified Vigil Mechanism System/Whistle-Blower Policy incorporating the provisions relating to Vigil Mechanism in terms of Section 177 of the Companies Act, 2013 and Regulation 22 of SEBIListing Regulations, in order to encourage Directors and Employees of the Company to escalate to the level of the Audit Committee any issue or concerns impacting and compromising with the interest of the Company and its stakeholders in any way. The Company is committed to adhere to highest possible standards of ethical, moral and legal business conduct and to open communication and to provide necessary safeguards for protection of employees from reprisals or victimisation, for whistle blowing in good faith. The Company has not received any complaints under the said policy during the year.

The said Policy is available on the Company's website at www.fusionfin.com.

35. AUDIT COMMITTEE

The Company has an Audit Committee constituted in accordance with the provisions of Section 177 of the Companies Act, 2013, RBI Guidelines and Regulation 18 of SEBI(Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended. The composition of the Audit Committee and the details of meetings attended by the Committee members are provided in Corporate Governance Report attached as "ANNEXURE 1".

36. CODE OF CONDUCT FOR INSIDER TRADING

The Company has duly formulated and adopted the Code of Conduct for Prohibition of Insider Trading in accordance with SEBI (Prohibition of Insider Trading) Regulations, 2015. The objective of this Code is to prescribe the procedure for trading in securities of the Company and the disclosures to be made by the designated persons covered under the Insider

Trading Policy with respect to their shareholding in the Company, both direct and indirect. The Code of Conduct for Prohibition of Insider Trading is available on the website of the Company at www.fusionfin.com.

37. RBI OMBUDSMAN

The company has a dedicated team which deals with the concerns or complaints raised by the customers. Further, in accordance with the RBI Circular dated November 15, 2021 on "Appointment of Internal Ombudsman by Non-Banking Financial Companies(NBFCs)" the Company has an Internal Ombudsman (IO) being the apex of the grievance redressal mechanism of the Company. The IO deals with the complaints of its customers which are partly or wholly rejected by the Company.

In addition, the Company has a system of periodic reporting of the information to RBI as per the prescribed guidelines.

38.SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The Company has no subsidiary/joint venture/ associate company and hence consolidation and the provisions relating to the same under the Companies Act, 2013 and rules made thereunder are not applicable to the Company.

39.SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE

During the Financial Year 2024-25, there are no such orders passed by the regulators/courts/tribunals impacting the going concern status and the Company's operations in future.

40. INTERNAL FINANCIAL CONTROLS

As per Section 134(5)(e) of the Companies Act, 2013, the Directors have an overall responsibility for ensuring that the Company has implemented a robust system and framework of Internal Financial Controls. This provides the Directors with reasonable assurance regarding the adequacy and operating effectiveness of controls with regards to reporting, operational and compliance risks. The Company has devised appropriate systems and framework including proper delegation of authority, policies and procedures, effective IT systems aligned to business requirements, risk based internal audits as per RBI guidelines on Risk Based Internal Audit, risk management framework and whistle blower mechanism. The Company had

already developed and implemented a framework for ensuring internal controls over financial reporting.

The Internal Audit team monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action(s) in their respective area(s) and thereby strengthen the controls. Significant audit observations and corrective action(s) thereon are presented to the Audit Committee.

The Audit Committee reviews the reports submitted by the Internal Auditors in each of its meeting. Also, the Audit Committee at frequent intervals has independent sessions with the management to discuss the adequacy and effectiveness of internal financial controls.

41. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

As per requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013, the Company has a policy and framework for employees to report sexual harassment cases at workplace and our process ensures complete anonymity and confidentiality of information. Adequate workshops and awareness programmes against sexual harassment are conducted across the organization.

Further, the Company has the Internal Complaint Committee in place as per the requirement of Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 to address the sexual harassment cases. The Annual Report of ICC Committee for the period commencing from January 01, 2024, till December 31, 2024, was submitted to the office of District Collector, Gurugram on February 21, 2025. The details pertaining to complaints received on matters pertaining to sexual harassment during the Financial Year 2024-25, are as below:

(a) number of complaints of sexual harassment received in the year: None

(b) number of complaints disposed off during the year: None

(b) number of complaints pending for more than ninety days: NA

Further, the Company has complied with the provisions relating to the Maternity Benefit Act, 1961.

42. CORPORATE GOVERNANCE

Corporate governance is the system of rules, practices and processes by which a company is directed and controlled. Corporate governance essentially involves balancing the interests of a company's stakeholders and the community at large. Sound governance practices and responsible corporate behavior contribute to superior long-term performance of organisations. Corporate Governance requires everyone to raise their level of competency and capability to meet the expectations in managing the enterprise and its resources optimally with prudent ethical standards.

The Company's corporate governance framework ensures that it is aligned to good corporate governance philosophy and that timely disclosures are made and accurate information regarding the financials and performance is shared, as well as the leadership and governance of the Company. The Company has an adequate system of control in place to ensure that the executive decisions taken should result in optimum growth and development which benefits all the stakeholders.

A detailed report on the Company's commitment at adopting good Corporate Governance Practices is enclosed as "ANNEXURE 1".

43. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

In terms of the provisions of Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, including any statutory modification(s) thereof for the time being in force, the details of remuneration etc. of Directors, Key Managerial Personnel and employees covered under the said Rules and other details is attached as "ANNEXURE 5" which forms part of this report.

44. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Act the Directors of the Company hereby state and confirm that:

a. In the preparation of the annual financial statements for the year ended March 31, 2025, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

b. The directors 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, 2025 and of the profits of the Company for year ended on that date;

c. The Directors 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 otherirregularities;

d. The Directors had prepared the annual accounts on a going concern basis;

e. The directors had laid down internal financial controls to be followed by the company, and that such internal financial controls are adequate and were operating effectively.

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

45. RBI GUIDELINES

The Company is registered with the Reserve Bank of India as a NBFC within the provisions of the NBFC (Reserve Bank of India) Directions, 1998. The Company continues to comply with all the requirements prescribed by the Reserve Bank of India as applicable to it, from time to time.

46. DISCLOSURE IN ACCORDANCE WITH REGULATION 30A OF SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015

No such agreements as specified under clause 5A to para A of part A of schedule II, are required to be disclosed in accordance with Regulation 30A of SEBI Listing Regulations, in the Financial Year 2024-2025.

47. LISTING

The equity shares of the Company are listed on BSE Limited ("BSE") and National Stock Exchange of India Limited ("NSE"). The listing fees to BSE & NSE for the Financial Year 2025-26 has been duly paid.

48. MAINTENANCE OF COST RECORDS

The provisions of Section 148 of the Companies Act, 2013, read with the Companies (Cost Records and Audit) Rules, 2014 relating to Cost Audit and maintaining cost audit records are not applicable to the Company.

49. EMPLOYEES STOCK OPTION SCHEME

The Company has two (2) stock option plans namely Fusion Employee Stock Option Plan 2016 ("ESOP

2016") and Fusion Employee Stock Option Plan 2023 ("ESOP 2023") and they are in compliance with SEBI (Share Based Employee Benefits & Sweat Equity) Regulations, 2021, as amended from time to time (the ‘SBEB Regulation').

The members vide postal ballot dated April 23, 2025, approved the amendments in the ESOP 2023. The amendments are aimed at enhancing employee engagement, recognizing their contributions and performance, and motivating them to actively support the growth and profitability of the Company.

The disclosures required under Regulation 14, read with Part F of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, are available on the Company's website at https://fusionfin.com/employee-benefit- scheme-docs/

50. SECRETARIAL STANDARDS

The Company has duly complied with the applicable provisions of "Secretarial Standard -1" on meetings of Board of Directors and "Secretarial Standard - 2" on General Meetings issued by the Institute of Company Secretaries of India ("ICSI").

51. INSOLVENCY PROCEEDINGS

There was no application made by the Company initiating insolvency proceedings against any another entity nor are any proceedings pending against the Company under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year under review.

52. ONE-TIME SETTLEMENTS

The Company has not entered into a one-time settlement with any of the banks or financial institutions. Accordingly, there are no details regarding difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions.

53. EQUITY SHARES IN THE DEMAT SUSPENSE ACCOUNT

In accordance with the requirement of Regulation 34(3) and Schedule V Part F of SEBI Listing Regulations, the Company reports that as on March 31, 2025, there are no equity shares lying in the demat suspense account which were issued in dematerialized form pursuant to the public issue of the Company.

54. SUSPENSION OF TRADING

The securities of the Company have not been suspended from trading during the period under review.

55. CAUTIONARY STATEMENT

Statements in the Board's Report and the Management Discussion & Analysis describing the Company's objectives, expectations or forecasts may be forward looking within the meaning of applicable Laws and Regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company's operations include global and domestic demand and supply conditions, changes in Government Regulations, Tax Laws, Economic Developments within the country and other factors such as litigation and industrial relations.

56. ACKNOWLEDGEMENTS

The directors take this opportunity to express their deep and sincere gratitude for the support and co-operation from the Borrowers, Banks, Financial Institutions, Investors, and Employees of the Company, for their consistent support and encouragement to the Company. The directors also place on record theirsincere appreciation of the commitment and hard work put in by the Management and the employees of the Company and thank them for yet another excellent year. Their dedication and competence have ensured that the Company continues to be a significant player in the Micro finance industry.