Star Housing Finance Ltd

To,

The Members

Star Housing Finance Limited

(Formerly known as "Akme Star Housing Finance Limited")

The Board of Directors are pleased to present the Company’s Nineteenth Director Report on the business & operations of the Company, together with the Audited Financial Statement for the financial year ended March 31, 2024.

The Company’s financial performance for the financial year ended March 31st, 2024, is summarized as below:

(INR in Lakh)

Note: Figures of the previous year/ period have been regrouped and/or reclassifiedwhenever necessary while preparing the statement as per IND-AS requirements.

The Company has in place a Dividend Distribution Policy formulated in accordance with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), which intends to ensure that a rationale decision is taken, with regard to the amount to be distributed to the shareholders as dividend, after retaining sufficient funds for the Company’s growth, to meet its long-term objective and other purposes. The Policy also lays down various parameters to be considered by the Board of Directors of the Company before recommendation of dividend to the Members of the Company. Considering the performance of the Company during the financial year 2023-2024, the Board of Directors felt the need to strike a balance between being prudent and conserving capital in the Company, while at the same time catering to the expectations of shareholders, and also considering the Dividend Distribution Policy and in terms of RBI Circular No. DOR.ACC.REC.No.23/21.02.067/2021-22 dated 24th June, 2021, have recommended payment of final dividend amounting to Rs. 0.075 per equity share of Rs.5/- for the financial year ended March 31, 2024 in its meeting held on 25th July, 2024. The dividend payable shall be subject to the approval of the Members at the 19th Annual General Meeting (‘AGM’). The dividend declared by the Company for the financial year ended 31st March, 2024 is in compliance with the Dividend Distribution Policy of the Company. The Dividend Distribution Policy is available on the website of the Company at https://www.starhfl.com/wp-content/uploads/2023/02/Dividend-Distribution-Policy.pdf

During the year under review, your Company appropriated Rs. 229.42 Lakhs to the Statutory Reserve under Section 36(1) (viii) of the income Tax Act, 1961 read with Section 29C of National Housing Bank (NHB) Act, 1987 out of the amount available for appropriation and an amount of Rs. 888.33 Lakhs is proposed to be retained in the Profit and Loss Account.

Following the amendment in the Finance Act, 2019 and the subsequent notification by the Reserve Bank of India (RBI) in August 2019, HFCs are being treated as one of the categories of Non-Banking Financial Companies (NBFCs) for regulatory purposes and accordingly come under RBI’s direct oversight. The National Housing Banks (NHB), however, would continue to carry out supervision of HFCs. In this regard Master Direction Non-Banking Financial Company Housing Finance Company (Reserve Bank) Directions, 2021 was notified on 17th February, 2021 in supersession of the regulations/ directions as given in Chapter XVII of these directions.

The Company has been following guidelines, circulars and directions issued by the RBI/ NHB, from time to time. The Company has complied with the Master Direction-Non-Banking Financial Company Housing Finance Company (Reserve Bank) Directions, 2021 including amendments thereof and other directions/guidelines prescribed by RBI regarding, accounting standards, prudential norms, capital adequacy, credit rating, corporate governance, liquidity, information technology framework, fraud monitoring, concentration of investments, risk management, capital market exposure norms, Know Your Customer, Anti-Money Laundering and the Company also adopted the guidelines on maintenance of Liquidity Coverage Ratio with effect from 1st December, 2021, as per RBI master directions.

The Company also has been following Directions / Guidelines / Circulars issued by SEBI, MCA, NHB and RBI from time to time, as applicable to a Listed Company.

Authorized Share Capital

During the year, the company’s Authorized share capital remain unchanged. Hence, the authorized share capital of the Company as at March 31, 2024 was Rs. 50,00,00,000 (Rupees Fifty Crore only) consisting of 10,00,00,000 (Ten Crore) equity shares of Rs. 5 (Rupees Five) each.

Issued and Paid-up Capital

The paid-up Equity Share Capital of the company as on March 31, 2024 is Rs. 39,36,03,080 (divided into 7,87,20,616 Equity Shares of Rs. 5/-each).

During the year under review: a) The Board of Directors of the Company in their meeting held on 27th June, 2023 allotted 60,000 fully paid up equity shares of face value Rs. 5/- each and on 08th November, 2023 allotted 15,02,350 fully paid up equity shares of face value Rs. 5/- each ESOP under "Akme Employee Stock Option Plan 2021."The disclosure with regard to ESOP as required under the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations 2021 is available on the website of the Company at: www.starhfl.com .

b) The company has issued & allotted 93,78,500 convertible warrants of Rs. 5/- each at Rs. 64 /- per warrant (including a premium of Rs. 59/- per share) under preferential allotment on a private placement basis for cash consideration through approval accorded by the shareholders at the Extra Ordinary General Meeting held on 06th December, 2023 . These warrants shall be converted into equity shares within 18 months from the date of the allotment. The resulting equity shares shall rank pari-passu with the existing equity shares of the company. Proceeds of the said Preferential Issue were utilized for expansion of business, general corporate purposes and working capital requirements. Therefore, there are no details to be disclosed as per Regulations 32(7A) of the SEBI Listing Regulations.

Changes after the Financial Year: a) The Board of Directors of the Company in their meeting held on 18th June, 2024 allotted 60,000 fully paid up equity shares of face value Rs. 5/- each ESOP under "Akme Employee Stock Option Plan 2021."

Apart from the above, there was no change in the structure of the paid up share capital.

The following ratings have been reaffirmed/assigned to the Company for its Bank Loan and Non-Convertible Debentures (NCDs) during the Year by India Ratings & Research Agency & CareEdge Ratings Agency:

The following ratings have been reaffirmed/assigned to the Company for its bank facilities after the Closure of financial Year by India Ratings

During the financial year 2023-24 your company raised term loans of Rs. 193. 42 crores from the following institutions:

The Outstanding Borrowings (other then debt securities) as on 31.03.2024 stood at Rs.292.16 Crores.

Your Company has issued Secured Non-Convertible Debentures (NCDs) of Rs. 31 Crores during the year under review, on private placement basis. The details of the same are as follows:

The total secured Non-Convertible Debentures outstanding as on March 31, 2024 is 28.14 Crores.

Your company affirms that there has been no deviation or variation in the utilization of proceeds of NCDs issue, from the objects stated in offer document(s).

Pursuant to NBFC-HFCs (RBI) Master Directions, 2021, the following statement is provided

Your Company is registered as a Housing Finance Company (HFC) with RBI to carry out the housing finance activities in India.

In accordance with the Master Direction Non-Banking Financial Company Housing Finance Company (Reserve Bank) Directions, 2021, Housing finance company" shall mean a company incorporated under the Companies Act, 2013 that fulfils the following conditions: a) It is an NBFC whose financial assets, in the business of providing finance for housing, constitute at least 60% of its total assets (netted off by intangible assets).

b) Out of the total assets (netted off by intangible assets), not less than 50% should be by way of housing financing for individuals.

The Company meets the aforesaid principal business criteria for HFCs.

To build a quality loan book, your Company endeavors to adopt superior underwriting practices backed by robust monitoring and recovery mechanism. Your Company is committed towards improving efficiency in all its processes and service levels for its customers.

Your Company’s thrust continues to be the affordable housing segment, with its focus on catering to the aspirations of low and middle-income Indian families who dream to own their homes. Your Company has been facilitating credit access to the low and middle-income self-employed customers in semi-urban and rural areas in India. The majority of your Company’s customers have limited access to formal banking credit facilities.

During the Financial Year under review, your Company delivered a resilient performance, which is reflected in the following financial snapshot:

Income & Profits

Total Revenue from operations increased by 65.49 % to Rs. 6,163.55 Lakhs for the Financial Year ended March 31, 2024 as compared to Rs. 3,724.31 Lakhs for the previous Financial Year. Profit before Tax (PBT) was 43.10 % higher at Rs. 1,147.12 Lakhs as compared to Rs. 801.63 Lakhs for the previous Financial Year. The Total Comprehensive Income for the Financial Year 2023-24 increased by 48.11% from Rs. 593.75 in the Financial Year to Rs. 879.39 Lakhs in the Previous Financial Year.

Sanctions

During the Financial Year under review, your Company sanctioned housing loans of Rs. 23,796.11 Lakhs as compared to Rs. 19,901.83 Lakhs sanctioned in the previous Financial Year registering a growth of 19.57 % .The cumulative loan sanctions since inception of your Company stood at Rs. 63,324.95 Lakhs as at March 31, 2024.

Disbursements

During the Financial Year under review, your Company disbursed loans of Rs. 24,072.63 Lakhs (including off balance sheet disbursement of Rs. 3,592.33 lacs) as compared to Rs 20,750.91 Lakhs (including off balance sheet disbursement of Rs.2,071.09 Lakhs) disbursed in the previous Financial Year and recorded growth of 16.01%.

Capital Adequacy

The Company has been maintaining the Capital Adequacy Ratio (CAR) above the minimum required level prescribed by National Housing Bank (NHB) / Reserve Bank of India (RBI) from time to time.

The Capital Adequacy Ratio of the Company as at March 31, 2024 is 54.65 % as against 77.88 % as at March 31, 2023.

Assets Under Management (AUM)

The AUM of your company stood at Rs. 42,686.39 Lakhs (including off balance sheet AUM of Rs.4,396.10 Lakhs) as at March 31, 2024 as against Rs. 24,600.10 Lakhs (including off balance sheet AUM of Rs.1891.60 Lakhs) in the previous financial year, registering a growth of 73.52%.

A discussion paper titled ‘Revised Regulatory Framework for NBFCs - A Scale-based Approach’ was issued for public comments on January 22, 2021. Based on the inputs received, the RBI has put in place a revised regulatory framework for NBFCs on October 22, 2021.

Regulatory structure for NBFCs shall comprise of four layers based on their size, activity, and perceived risk. NBFCs in the lowest layer shall be known as NBFC - Base Layer (NBFC-BL). NBFCs in middle layer and upper layer shall be known as NBFC - Middle Layer (NBFC-ML) and NBFC - Upper Layer (NBFC-UL) respectively. The Top Layer is ideally expected to be empty and will be known as NBFC - Top Layer (NBFC-TL).

As the SBR framework encompasses different facets of regulation of NBFCs covering capital requirements, governance standards, prudential regulation, etc., RBI issued an integrated regulatory framework for NBFCs under SBR providing a holistic view of the SBR structure. These revised regulatory framework has come into effect from October 01, 2023. According to these Directions, all HFCs fall under the category of Middle layer for the purpose of regulation and supervision. The company has put in place all the necessary steps in this direction to comply with the new Regulatory framework.

The RBI has come out with certain clarificationson Income Recognition, Asset Classifications and a view to have a uniformity across all the lending institutions including HFCs vide their notificationdated November, 12 2021. As per the notification, all the NBFCs have to specify the exact due dates of loan repayment alongwith the methodolory of SMA/NPA classifications reckoning from the due dates, in their loan to STANDARD may be done only if entire arrears of interest and principal are paid by the borrower. Further, the companies would also provide consumer education literature on their websites explaining with examples, the concepts of overdue SMA and NPA classification and upgradation of accounts. The company has been complying with these instructions meticulously.

There is a very huge market to be served, which needs an efficient last mile delivery of credit, thus creating enormous opportunity for all the financial institutions and HFCs in special. The Company multi-product and multi-location, thus giving the distinct edge from the risk management and scalability perspective. The focus across the product is of catering to the lower and the middle income segment, which are the key drivers of our economy.

The Company aims at serving the middle income and the lower income sector of the economy, especially in the semi urban and rural areas, which are reckoned to be the key drivers of the sector in the coming decades. Full-fledged efforts are on to execute efficiently, as per the detail planning. Being aware of the challenges involved in serving this class of the society, a very cautious approach is adopted in building up volumes. Nevertheless, Company is quite confident of building substantial volumes in the near future. The Company’s rural initiative will also start yielding results shortly. It is worth mentioning that despite the creditworthy customer class, ascertaining the title of the property remains a challenging job. The Company is actively involved with all the stakeholders to smoothen the process and is assertive in getting the right set of documents. We continue to endeavor relentlessly and are confident of creating a quality portfolio and add value to the ecosystem we work in.

Your company has been successful in continuous expansion of its branch network with a view to support its disbursement growth, deeper penetration in the states in which the Company operates and enhancing customer reach. During the

Financial Year under review, the Company has expanded its branch network to 6 states with 34 branches as on March 31, 2024. Your Company operates in Akola, Baramati, Chennai, Hingoli, Indore, Jaipur, Jalgoan, Mahad, Nashik, Pune, Udaipur, Rajsamand, Surat. Devas, Ahmednagar, Vapi,Vyara, Pithampur, Khargone, Chalisgaon, Kalyan,Kolhapur,Washim, Panvel, Vashi, Buldhan,Hapur,Meerut, Ghazibad, Dudu,Kanchipuram, Sholinghur,Vellore and Udaipur RO.

During the year, the HR continued to provide timely on-board experienced resources across all locations, imparting functional and system training to develop productive resources for all the functional teams. The Company also gives an opportunity to identify and develop the internal talent pool. The Company hired professionals at senior positions as Functional Heads for heading the various Departments of the Company, having relevant industry experience and expertise to strengthen and grow the housing finance business of the Company The Company’s success depends largely upon the quality and competence of its Management team and key personnel. Attracting and retaining talented professionals is therefore a key element of the Company’s strategy and a significant source of competitive advantage. The Company has a diverse workforce of 256 employees as on March 31, 2024.

Human resource development is considered vital for effective implementation of business plans. Constant endeavors are being made to offer professional growth opportunities and recognition, apart from imparting training to the employees at all levels. Your Company has also provided the sales training to the new recruits to provide them better understanding of the Company and align them towards the working culture of the Company.

Your Company will always strive to strengthen this most important resource in its quest to have enabling human capital.

The Company in tandem with its philosophy of pursuing the mission of "Excellence through Endeavors" will strive to maximize the shareholders’ value. The Company continues to pursue an efficient capital management policy, which aims at maximizing the return on capital employed and at the same time adhering to the prudential guidelines laid down by RBI/NHB from time to time.

The Company by virtue of its performance over the years enjoys very good relationships with many leading banks and financial institutions. The Company could raise the required resources from various banks and financial institutions easily. We anticipate the same response from all our lending partners for the coming years too. The Company anticipates credit lines from few more banks and financial institutions besides the existing ones.

During the year passed by when the whole sector was looked upon as a risky proposition the Company could not only manage to raise the required resources but also obtained credit lines for the coming year. Your Company continues to command the respect and the confidence of Bankers as their extended channel in their task of providing efficient delivery of credit. The company acknowledges the constructive support of the Investors and Banks.

Your Company’s borrowing policy is under the control of the Board. The Company has vide special resolution passed on 10th August, 2023, under Section 180 (1) (a) & 180(1)(c) of the Companies Act, 2013, authorized the Board of Directors to borrow money upon such terms and conditions as the Board may think fit in excess of aggregate of paid up share capital, free reserves, security premium of the Company up to an amount of Rs. 700 crore and the total amount so borrowed shall be within the limits as prescribed under the regulatory directions issued from time to time. The prevalent relevant directions issued by RBI under Master Direction Non-Banking Financial Company Housing Finance Company (Reserve Bank) Directions, 2021are being complied with.

Your Company continued to use a variety of funding sources to optimize funding costs, protect interest margins and maintain a diverse funding portfolio which further strengthened its funding stability and liquidity needs. Your Company continued to keep tight control over the cost of borrowings through negotiations with lenders and thus, raised resources at competitive rates from its lenders while ensuring proper asset liability match.

Your Company continued to diversify its funding sources by exploring the Capital Market through private placement to Financial Institution, Banks, NHB Refinance, NHB SRF (Special Refinance Facility Assistance), NHB’s LIFT (Liquidity infusion scheme).

The details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013, apart from the loans made, guarantee given or security provided by the Company in the ordinary course of business are given in the Notes to accounts forming part of the Audited Financial Statements for the year ended March 31, 2024.

The Company has made alteration in the Object Clause of the Memorandum of Association of the Company in accordance with the provisions of Companies Act, 2013 by passing Special Resolution through Postal Ballot on 21st February, 2024, as follows:

The Company deleted below the mentioned Clause of the Article of Association of the Company in accordance with the provisions of Companies Act, 2013 by passing Special Resolution in the Annual General Meeting held on 10th August, 2023.

156 The Board shall provide a common seal of the Company and shall have power from time to time to destroy the same and substitute a new seal in lieu thereof. The common seal shall be kept at the Registered Office of the Company and committed to the custody of the Directors.

157 The Common Seal of the Company. If required to be affix, shall be affixed to any instrument(s) in the presence of any of the Director or of the company and/or Chief Financial officer and/or Company secretary and/or such person(s) as the authorized by the Board or Committee or aforesaid persons may appoint for them purpose and who shall sign every instrument which the seal of the company is so affixed in their presence.

The Gross NPA of your Company as on March 31, 2024 was Rs.572.56 Lakhs; 1.50 % (previous year 381.12 Lakhs; 1.68 %). The Net NPA as on March 31, 2024 was Rs. 388.90 Lakhs; 1.02 % (previous year 282.44 Lakhs; 1.25 %). The regulatory and compliance reporting, has been done in accordance with the prudential guidelines for Non-Performing Assets (NPAs) issued by the Reserve Bank of India under Master Direction - Non Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021.

A detailed comparison of asset classification as per the Ind AS provisions and IRACP norms has been provided under Point No. 9 of Disclosures required by Reserve Bank of India/National Housing Bank forming part of the Financial Statements. Your Company has made adequate provision for the assets on which installments are overdue for more than 90 days and on other assets, as required. For details on the impairment provisioning, please refer to annexure no.9 of disclosures required by RBI/NHB to the financial statements. By way of prudence and abundant caution, Company has provided additional provision over and above the RBI guidelines as on March 31, 2024.

The Company has maintained cumulative NPA provision of Rs. 183.66 lakhs against the required provision of Rs. 143.57 lakhs. Further for standard assets Company carries provision of Rs. 65.99 lakhs.

The Company has been granted registration by the Reserve Bank of India as a non-deposit taking Housing Finance Company. Being so, the Company has neither accepted in the past nor has any future plans to accept any public deposits, by whatever name called.

The master directions issued by the RBI on 17 February 2021 are expected to bring in greater discipline by way of detailed regulatory requirements which will bring about more transparency and compliance in the housing finance sector. The central bank’s mandate regarding liquidity buffer with respect to liquidity coverage ratio (LCR) is expected to enhance HFCs’ resilience to potential disruptions to liquidity. This will be on account of HFCs maintaining sufficient high-quality liquid assets to mitigate any acute liquidity stress scenarios lasting 30 days.

The RBI’s master directions on HFCs detailed the purview of housing finance to include reconstruction/repairs and renovation of housing dwelling units. With this, the RBI brought companies engaged in construction finance also under the ambit of these directions thereby increasing the transparency across the construction value chain.

The regulations pertaining to HFCs were with the extant NBFC regulations. The RBI maintained the flexibility of the HFCs with respect to risk weights, as NBFCs generally have lesser flexibility for risk weights, which are broadly classified 20% and 100%. As the flexibility has been continued, the HFCs would not require additional capital to service the same Loan Book and can maintain the current levels, subject of course to minimum capital requirements.

As the larger HFCs already meet the above guidelines, they are unlikely to face significant challenges when HFC regulations are further harmonized with NBFCs going forward.

The Company has submitted compliances as required quarterly/half yearly/ yearly in accordance with the prescribed guidelines.

The Company received nil investor complaint during the year and the same was submitted to BSE pursuant to SEBI (LODR) Regulations, 2015.

In accordance with the provisions of Sections 124, 125 and other applicable provisions, if any, of the Act, read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (hereinafter referred to as ‘IEPF Rules’) (includinganystatutorymodification(s)or re-enactment(s) thereof for the time being in force), the amount of dividend remaining unclaimed or unpaid for a period of 7 (Seven) years from the date of transfer to the Unpaid Dividend Account is required to be transferred to the Investor Education and Protection Fund (IEPF) maintained by the Central Government. Further as per the provisions of Section 124(6) of the Act read with IEPF Rules, the shares in respect of which dividend has not been paid or claimed by the Shareholders for 7 (Seven) consecutive years or more are also required to be transferred to the designated demat account created by the IEPF Authority.

Your Company does not have any funds lying unpaid or unclaimed for a period of seven years. Therefore, there are no funds which were required to be transferred to IEPF till the date of this Report.

Following changes took place from the end of financial year till the date of report:>

1. Mr. Kalpesh Dave-Chief Executive Officer of the Company has been appointed as Chief Executive Officer and Executive Director (Additional) vide Board Meeting dated 18.06.2024 subject to RBI approval.

2. Mr. Ajit Kumar Satpathy has been appointed as Chief Risk Officer of the Company vide Board Meeting dated 18.06.2024 for a tenure of 3 years wef 1st July, 2024.

3. Mr. Ashish Jain has resigned from the position of Managing Director & Chairman of the Company with effect from 30.06.2024 vide his letter dated 28.06.2024 and accepted by Board of Directors of the Company vide dated July 25, 2024 subject to RBI Approval.

The company has not provided any financial assistance to its employees as per Section 67 of the Companies Act, 2013 (the ‘Act") for the purchase of its own shares.

As on March 31, 2024 the Company does not have any Subsidiary Company or Joint Venture Company or Associate Company.

In terms of Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the disclosures with respect to the remuneration of Directors, Key Managerial Personnel and Employees of the Company have been provided in Annexure VIII to this Board’s Report. Further, statement containing details of employees as required in terms of Section 197 of the Act read with Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is available for inspection at the Registered Office of the Company during working hours for a period of 21 days before the date of the ensuing Annual General Meeting. A copy of the statement may be obtained by shareholders by writing to the Company Secretary at the Registered & Corporate Office of the Company or at compliance@starhfl.com.

In accordance with the provision of sec 134(3) (m) of the Act, read with Rule 8 of the Companies(Accounts) Rules 2014 the requisite information relating to your Company are as under:-

A. Conservation of energy:

The Company does not fall under any of the industries covered by the Companies (Disclosure of particulars of Directors) Rules, 1988.

B. Technology absorption:

Your company has implemented a next generation, core housing virtual solution, with the purpose of aligning itself with the fast growing technology evolution and leveraging operational capabilities, while reducing the time taken for whole loan process. The company has inter-connected different branches with the head office in a safe, secure and reliable 360 degree cloud platform. For the aforesaid purpose, your company has signed-up with Jaguar Software India & IXL (Mobility Solutions) in 2019-2020 and customized it with the practical needs to area of operation of company, which results in following benefits:

Digitization of documents

Centralization of all branches with corporate /registered office Speed-up the loan process Single- Click Report Generation "Inter-departmental solution (robust the collaboration)

Android / iOs app based system for field staff to submit initial documents and verification remarks Saving cost in logistics, handling, printing, and mitigating risk of physical movements. Improves the quality of credit analysis.

Secured and Safe cloud based system with end to end encryption.

Predefined roles with maker-checker concept, with final approval authority to Managing director/ Authorized Personnel Keeping of Digital trails which can keep the whole loan process details in one click and useful during audit(s) and tracing purpose.

Simplification of work flow, with regular MIS.

Jaguar Software India as a service provider / software vendor provides applicable upgrades and latest security protocols as and when needed.

The RBI vide its Master Direction - Information Technology Framework for the NBFC Sector dated November 7, 2023, which shall apply mutatis mutandis to all HFCs also, had notified Information technology framework (guidelines) for all NBFCs including Housing Finance companies (‘HFCs’) to enhance safety, security, efficiency in process leading to benefitfor HFCs and their customer.

Your company is in compliance with the aforesaid guidelines.

Your company does not have any foreign exchange earnings and outgo during the year under review.

With the challenging macroeconomic conditions and uncertainties, there are heightened risks faced by the Company which can be inherent or market-related risks. There has been a continuous focus on identifying, measuring and mitigating risks by the Company. As a housing finance company, the Company is exposed to various risks like credit risk, market risk (interest rate and currency risk), liquidity risk and operational risk (technology, employee, transaction and reputation risk). A key risk in the competitive home loans, and mortgage-backed funding in general is losing customers that transfer out their loans for small gains in interest rates, this represents a significant loss of opportunity to the Company given the long-term nature of mortgage loans. To identify and mitigate all these risks, the Company has an effective Risk Management Control Framework that has been developed compassing all the above areas.

The Company has a Risk Management Committee (RMC). The RMC has met three times during the year and kept an active watch on the emergent risks the Company come across during the course of business. The Risk Management Committee oversees the process of identification, measurement and mitigation of risks.

During the Financial Year under review, the Risk Management Committee reviewed the risks associated with the business of your Company, undertook its root cause analysis and monitored the efficacy of the measures taken to mitigate the same.

The Board of Directors in its meeting held on 18.06.2024 has appointed Mr. Ajit Kumar Satpathy as Chief Risk Officer of the Company for a tenure of 3 years w.e.f. 01.07.2024 to function independently and ensure highest standards of risk management. The Company has a Risk Management Policy in place and the same can be accessed on the website of the Company at https://www.starhfl.com/wp-content/uploads/2023/12/1.-Risk-Management-Policy.pdf .

The Asset Liability Management Committee (ALCO) lays down policies and quantitative limits that involve assessment of various types of risks and shifts in assets and liabilities to manage such risks. ALCO ensures that the liquidity and interest Rate risks are contained within the limits laid down by the Board. The Company has duly implemented the RBI’s Asset Liability Management Guidelines.

Pursuant to the provisions of Section 177 (9) & (10) of the Companies Act, 2013 read with Rule 7 of Companies (Meetings of Board and its Powers) Rules, 2014 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has in place a Whistle Blower Policy, which provides for a framework to report the genuine concerns against the suspected or confirmed fraudulent activities, allegations of corruption, violation of the Company’s Code of Conduct.

The Company will provide adequate safeguards against victimisation of persons who use this mechanism. Such persons shall have direct access to the Chairman of the Audit Committee when appropriate.

The whistle blower policy is placed on the website of the Company and can be accessed at https://www.starhfl.com/wp-content/uploads/2024/02/Vigil-Mechanism-Whistle-Blower-Policy.pdf

Your Company has formulated various policies and codes in compliance with provisions of Directions and Guidelines issued by the Reserve Bank of India, Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and to ensure high ethical standards in the overall functioning of the organization. The said policies and codes are periodically reviewed by the Board of Directors. The key policies and codes as approved by the Board of Directors and the respective compliance thereunder are detailed herein below:

Your Company has approved Know Your Customer & Anti Money Laundering Measure Policy (KYC & AML Policy) in place and adheres to the said Policy. The said Policy is in line with the Reserve Bank of India Master Directions 2016 on KYC and AML applicable to all regulated entities. The Company has also adhered to the compliance requirement in terms of the said policy relating to the monitoring and reporting of cash / suspicious transactions. The Company furnishes to Financial Intelligence Unit (FIU), India, in the electronic medium, information of all cash transactions of the value of more than Rupees ten lakh or its equivalent in foreign currency and suspicious transactions whether or not made in cash, in terms of the said policy. The policy is placed on the website of the Company and can be accessed at https://www.starhfl.com/wp-content/uploads/2024/03/Star KYC-And-AML-Policy 1.0.pdf

Your Company has in place a Fair Practice Code (FPC), which includes guidelines on appropriate staff conduct when dealing with the customers and on the organization’s policies vis-a-vis client protection. The FPC captures the spirit of the Reserve Bank of India guidelines on fair practices for Housing Finance Companies. During the year under review, FPC was modified by the Board and the grievance redressal mechanism within the Company was further strengthened. The policy is placed on the website of the Company and can be accessed at https://www.starhfl.com/wp-content/uploads/2024/03/Star Fair-

Practices-Code 1.0.pdf

During the year under review, your Company has adopted the Policy on Disclosure of Material Events and Information, in accordance with Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 to determine the events and information which are material in nature and are required to be disclosed to the Stock Exchanges. The policy is placed on the website of the Company and can be accessed at https://www.starhfl.com/wp-content/uploads/2024/02/Disclosure-of-policy-for-determination-of-materiality-of-events-or-information.pdf

The Company has adopted Code of Conduct for the Board of Directors and the Senior Management Personnel to set forth the guiding principles on which the Company and its Board and Senior Management Personnel shall operate and conduct themselves with multitudinous stakeholders, government and regulatory agencies, media and anyone else with whom it is connected. The policy is placed on the website of the Company and can be accessed at https://www.starhfl.com/wp-content/uploads/2024/02/Code-of-conduct-of-Board-of-Directors-and-Senior-Management-Personnel.pdf

The Chief Executive Officer(CEO) and Chief Financial Officer (CFO) have certified to the Board in accordance with Regulation 17(8) read with Part B of Schedule II of the Listing Regulations pertaining to CEO/CFO certification for the financial year ended March 31, 2024, which is annexed hereto as Annexure VII.

The Company has formulated and adopted a Code for Prevention of Insider Trading Practices in accordance with the model code of conduct as prescribed under the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2018, as amended. The code lays down guidelines, which includes procedures to be followed and disclosures to be made while dealing in the shares of the Company. The code is applicable to the promoters, directors, senior designated employees and their dependents and the said persons are restricted from dealing in the securities of the Company during the ‘restricted trading periods’ notified by the Company, from time to time.

The Company has adopted a Code of Business Ethics (COBE) which lays down the principles and standards that govern the activities of the Company and its employees to ensure and promote ethical behavior within the legal framework of the organization.

The Company has a Policy on Prevention, Prohibition & Redressal of Sexual Harassment of Women at Workplace and an Internal Complaints Committee (ICC) has been constituted there under. The Policy’s primary objective is to protect the women employees from sexual harassment at the place of work and also provides for punishment in case of false and malicious representations. During the year no complaint was received in this regard.

The policy is placed on the website of the Company and can be accessed at https://www.starhfl.com/wp-content/ uploads/2023/03/Star Anti-Sexual-Harrasment-Policy 1.0.pdf.

The Company is committed to manage its risk in a proactive manner and has adopted a structured and disciplined approach to risk management by developing and implementing risk management framework. With a view to manage its risk effectively your Company has in place a Comprehensive Risk Management Policy which covers a formalized Risk Management Structure, along with other aspects of risk management i.e. credit risk management, operational risk management, market risk management and enterprise risk management. The Risk Management Committee of the Board, on periodic basis, oversees the risk management systems, processes and minimization procedures of the Company.

The Company has Corporate Social Responsibility Policy (CSR Policy), as per the provisions of the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, which, inter-alia, lays down the guidelines and mechanism for undertaking socially useful projects for welfare and sustainable development of the community at large. As per the provisions of Section 135 of the Companies Act, 2013, the Company has constituted a Corporate Social Responsibility Committee. The Committee assists the Board in fulfilling its duty towards the community and society at large by identifying the activities and programmers that can be undertaken by the Company, in terms of the Company’s CSR Policy. The composition of the CSR Committee and its terms of reference are given in the Corporate Governance Report forming part of this Annual Report. The brief outline on CSR activities is mentioned in Notes to Financial Statements forming part of the Annual Report. The policy is available on the Company’s website https://www.starhfl.com/wp-content/uploads/2024/08/CG-Policy.pdf

The Nomination and Remuneration Committee had laid down criteria for determining Director’s Qualification, Attributes and Independence of a Director, remuneration of Directors, Key Managerial Personnel and other employees and criteria for evaluation of Directors, Chairperson, Non-Executive Directors and Board and the evaluation process of the same. In this respect the Company framed the Remuneration Policy in order to align with various provisions under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and RBI Circular DOR.GOV.REC.No.29/18.10.002/2022-23 dated 29th April, 2022. The policy may be accessed on the Company’s website at https://www.starhfl.com/wp-content/ uploads/2023/06/Remuneration-Policy.pdf

The Company has a Related Party Transaction Policy, intended to ensure requisite approval, reporting and disclosure of transactions between the Company and its related parties. The said policy also defines the materiality of related party transactions and lays down the procedures of dealing with related party transactions. During the year under review, the Related Party Transaction Policy was amended to align the same with the requirements of Companies (Amendment) Act, 2015 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The policy is placed on the website of the Company and can be accessed at https://www.starhfl.com/wp-content/ uploads/2023/02/Policy-on-dealing-with-Related-Party-Transactions.pdf

The objective of a familiarization programme is to ensure that the non-executive directors are updated on the business environment and overall operations of the Company. This enables the non-executive directors to make better informed decisions in the interest of the Company and its stakeholders. The policy is placed on the website of the Company and can be accessed at https://www.starhfl.com/wp-content/uploads/2023/02/2.-Familiarization-Programmes-imparted-to-Independent-Directors.pdf

The Board of Directors of the Company comprises of Seven [7] directors of which one [1] is Executive Director; One [1] is Chairman & Managing Director & Five [5] are Non- Executive Independent Directors including one woman director as on March 31, 2024 who brings in a wide range of skills and experience to the Board.

In accordance with the provisions of Section 152(6) of the Companies Act, 2013 and Articles of Association of the company, Mr. Kavish Jain, Executive Director of the Company liable to retire by rotation, has offered himself for re-appointment at the ensuing 19th Annual General Meeting of the Company. A resolution for his reappointment is being proposed at the 19th Annual General Meeting and his Profile is included in the Notice.

Composition of the Board as on March 31, 2024

Based on the confirmations received, none of the Directors are disqualified from being appointed/re-appointed as a director in terms of Section 164 the Companies Act, 2013, a Certificate from M/s. Ronak Jhuthawat & Co., Practicing Company Secretaries regarding the Non-disqualification of Directors from being appointed/continue for the office of Director in your Company is placed as Annexure VI.

Declaration from Independent Directors on Annual Basis:

The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 that he or she meets the criteria of his or her Independence as laid down in Section 149(6) and the provisions of Regulation 16(1)(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

During the year Company has allotted 15,62,350 Equity Shares under the "Akme Employee Stock Option Plan 2021" to the eligible Employees of the Company on 26th June, 2023 & 08th November, 2023.

Further, the members of the Company have approved "Star Housing Finance Limited Employee Stock Option Scheme II 2023" in its Annual General Meeting held on 10th August, 2023 and the Company has received in-principle approval dated 4th October, 2023 from Bombay Stock Exchange for 77,00,000 Equity shares of Rs.5/- each to be issued under the same scheme.

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 and Part D of Schedule II to the Listing Regulations, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as working of its Audit, Nomination and Remuneration, Stakeholders’ Relationship and Corporate Social Responsibility Committees. A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board’s functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specified duties, obligations and governance.

The exercise was carried out to evaluate the performance of individual Directors, who were evaluated on parameters such as level of engagement and contribution, independence of judgement, safeguarding the interest of the Company, etc. The Independent Directors of the Company met on February 19, 2024 without the presence of Non-Independent Directors and members of the management to review the performance of Non Independent Directors and the Board of Directors as a whole; to review the performance of the Chairman and Managing Director of the Company and to assess the quality, quantity and timeliness of flow of information between the management and the Board of Directors. The performance evaluation of the Independent Directors was carried out by the entire Board.

The Board met Thirteen (13) times during the year under review. The details of the number of meetings of the Board held during the Financial Year 2023-24 and the attendance therein forms part of the Report on Corporate Governance which forms part of the Annual Report.

The Board of Directors has the following Committees: a) Audit Committee b) Nomination and Remuneration Committee c) Stakeholders’ Relationship Committee d) Corporate Social Responsibility Committee e) Risk Management Committee

The details of the required Committees of the Board along with their composition, number of meetings and attendance at the meetings are provided in the Report on Corporate Governance as required under Schedule V of the Listing Regulations.

During the financial year ended March 31, 2024, 3 (Three) General Meetings were held. Further, details of the meetings are given in the Corporate Governance Report, which forms part of the Annual Report.

In accordance with the provisions of Section 188 of the Act and rules made thereunder and Considering the nature of the industry in which the Company operates, all the transactions entered with related parties are in the ordinary course of business and on an arm’s length basis, the details with respect to the related party transactions are mentioned in the notes to the audited financial statements. During the financial year under review, the company has not entered into material contract, arrangement or transaction with related party, as defined under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Related Party Transaction Policy of the Company. The Related Party Transactions Policy and Procedures, as amended from time to time, as reviewed by the Audit Committee and approved by Board of Directors is uploaded on the website of the Company at https://www.starhfl.com/wp-content/uploads/2024/02/Policy-on-dealing-with-Related-Party-Transactions.pdf Form AOC-2 pursuant to clause (h) of sub-section (3) of Section 134 of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014 is annexed as "Annexure I" to this Report and forms a part of it.

As per the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, your Company has in place a Policy on Prevention Prohibition & Redressal of Sexual Harassment of Women at Workplace and has a robust mechanism to redress the complaints reported thereunder. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. Pursuant to the provisions of Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the complaints received thereunder and the details relating thereto are as follows: (a) Number of complaints at the beginning of the year: Nil (b) Number of complaints received during the year: Nil (c) Number of complaints disposed of during the year: Nil (d) Number of complaints pending at the end of the year: Nil Your Company on a regular basis sensitises its employees on prevention of sexual harassment through various workshops, awareness programmes. It may be mentioned here that the Company has Zero tolerance towards any action on the part of any executive / staff which may fall under the ambit of ‘Sexual Harassment’ at workplace, and is fully committed to uphold and maintain the dignity of every women working in the Company.

During the year there has been no such significant and material order impacting the going concern status and company’s operations in future.

Your Company has paid requisite annual listing fees to Bombay Stock Exchange (BSE) where it’s equity shares are listed.

There has been no change in the nature of business of the Company during the year under review.

The Company being a Housing finance Company is not required to maintain cost records as prescribed under section 148(1) of the Companies Act, 2013.

During the year under review, the Company has complied with the applicable secretarial standards issued by the Institute of Company Secretaries of India.

M/S Nyati Mundra & Co., Chartered Accountants (Firm Registration No. 008153C) were appointed as Statutory Auditors of the Company for a period of 5 (five) consecutive years, at the Annual General Meeting of Members held on September 29, 2021 on a remuneration mutually agreed upon by the Board of Directors and the Statutory Auditors. They have confirmed their eligibility and qualifications required under the Act for holding office as Statutory Auditors of the Company. The Statutory Auditor’s Report forms part of the Annual Report. There is no audit qualification, reservation or adverse remark for the year under review. There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and/ or Board under Section 143(12) of Act and Rules framed thereunder. The Statutory Auditors have also submitted a separate Auditor’s Report on Regulatory compliance to the Board to comply with the requirement under chapter XII of the Master Directions. The copy of the Auditor Report is annexed herewith.

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and Pursuant to Reg. 24A of Securities Exchange Board of India (Listing Obligation & Disclosure Requirement) (Amendments) Regulations, 2018, the Board of Directors of the Company appointed M/s Ronak Jhuthawat & Co., Practicing Company Secretaries, Udaipur, to undertake the Secretarial Audit of the Company for the financial year 2023-24. The Secretarial Audit Report & Annual secretarial Compliance Report for the financial year ended March 31, 2024, is annexed as "Annexure II" and "Annexure III " forms an integral part of this Report.

The said report, does not contain any qualification, reservation or adverse remark, and thus do not call for any further comments.

Your Company has adequate internal control procedures commensurate with its size and nature of business. Your Company has clearly laid down policies, guidelines, and procedures that form a part of the internal control systems. The adequacy of the internal control systems encompasses the Company’s business processes and financial reporting systems and is examined by the management as well as by its internal auditors at regular intervals.

The internal auditors conduct audits at regular intervals to identify the weaknesses and suggest improvements for better functioning. The observations and recommendations of the internal auditors are discussed by the Audit Committee to ensure timely and corrective action.

Your Company has appointed M/s. KVU & Associates, Chartered Accountants as an Internal Auditor of the Company, who reports to the Audit Committee and to the Board of Directors of the Company. The Internal Auditor conducts comprehensive audit of functional areas and operations of the Company to examine the adequacy of and compliance with policies, procedures, statutory and regulatory requirements. Significant audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee reviews adequacy and effectiveness of the Company’s internal control environment and monitors the implementation of audit recommendations.

The audit function maintains its independence and objectivity while carrying out assignments. It evaluates on a continuous basis, the adequacy and effectiveness of internal control mechanism. The function also proactively recommends improvement in policies and processes, suggests streamlining of controls against various risks.

Your Company has laid down set of standards, processes and structure, which enables it to implement internal financial control across the Company and ensure that the same are adequate and operating effectively.

During the year under review, neither the Statutory Auditors nor the Secretarial Auditor has reported to the Audit Committee under Section 143(12) of the Act any instance of fraud committed against the Company by its officers or employees.

As required under Section 134(5) of the Act, for the financial year ended on March 31, 2024, the Directors hereby confirm that: In the preparation of the annual financial statements for the year ended March 31, 2024, the applicable accounting standards read with the requirements set out under Schedule III to the Act have been followed and there were no material departures from the same; 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 and of the profit of the Company for the year ended on that date; The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; The Directors have prepared the annual accounts on a going concern basis; The Directors have laid down internal financial controls to be followed by the Company and that the financial controls were adequate and were operating effectively; The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and were adequate and operating effectively.

The Company has taken adequate steps to adhere to all the stipulations laid down in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Chapter IX (Corporate Governance) of Master Directions Non-Banking Financial Company Housing Finance Company (Reserve Bank) Directions, 2021 and the Companies Act, 2013 and Rules thereto, as amended from time to time.

Pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, RBI Directions and disclosures as required under The Companies Act, 2013 and the Rules thereto, a separate Section titled ‘Report on Corporate Governance’ forms part of this Annual Report as Annexure IV.

The certificate issued by Mr. Ronak Jhuthawat & Co. complies with the conditions of Corporate Governance as stipulated in the SEBI (LODR) Regulations, 2015 & forms part of this report as Annexure V.

The said certificate for financial year 2023-24 does not contain any qualification, reservation or adverse remarks. In terms of Section 136 of The Companies Act, 2013, the reports and accounts are being sent to the members and others entitled thereto.

Pursuant to Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management’s Discussion and Analysis Report, for the year under review, is presented in as separate section forming part of this Annual Report.

Pursuant to section 92(3) read with Section 134(3)(a) of the Act, the Annual Return is available on the Company’s website and can be accessed under the annual return tab at https://www.starhfl.com/disclosure-under-regulation-46-of-sebi-lodr-2015/

Your Company believes that its Members are among its most important stakeholders. Accordingly, your Company’s operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development.

Focus on growth of Individual home loans segment.

Making online loan application more effective and enhance its contribution towards the incremental business. Strengthening marketing offices opened during the last 3 years and making them high growth centers. To grow business qualitatively by consolidating position and strengthening the competitiveness on service delivery. Understanding the inherent risks to the business and managing it effectively.

Widespread market studies assisting modelling of loan products to suit customer needs. Making use of information provided by marketing offices about ground market conditions.

The Company has not made any application or no proceeding is pending under the Insolvency and Bankruptcy Code, 2016 during the Financial Year and hence not being commented upon.

During the Financial Year under review, there has been no incident of one time settlement for loan taken from the banks of financial institutions and hence not being commented upon.

Your Board of Directors take this opportunity to express their appreciation to all stakeholders of the Company including the Reserve Bank of India, National Housing Bank, the Ministry of Corporate Affairs, Securities and Exchange Board of India, the Government of India, Stock Exchanges and other Regulatory Authorities, Bankers, Lenders, Financial Institutions, Members, Credit Rating agencies, Customers of the Company for their continued support and trust. Your directors would like to express deep appreciation for the commitment shown by the employees in supporting the Company in achieving continued robust performance on all fronts.

In closing, we would like to thank all the investors as well as the communities we operate in who have reposed their trust in us and supported us in our journey.