Your directors have pleasure in presenting this board report along with the audited financial statements of the Company for the financial
year ended March 31, 2025 ("year under review”).

FINANCIAL HIGHLIGHTS:

The Key highlights of the audited financial statements are presented in the below table:

FINANCIAL PERFORMANCE:

During the year ended March 31, 2025, on a standalone
basis, your company generated total income of INR
2,296.51 crore, a growth of 24.52% over the earlier
year. Net Interest Income was INR 1,473.65 crore,
representing year-on-year increase of 31.77%.

On a consolidated basis, your company generated total income of
INR 2,355.74 crore, a growth of 23.59% over the earlier year. Net
Interest Income was INR 1,527.38 crore, representing year-on-
year increase of 29.48%.

There is no change in the nature of business of the Company for the
year under review. Further information on the business overview

and outlook and state of the affairs of the Company is mentioned in
detail in the Management Discussion and Analysis Report.

SHARE CAPITAL:

Authorized Share Capital:

The authorized share capital of the Company is INR 282,00,00,000/-
(Rupees Two Hundred and Eighty Two crore only) divided into
16,50,00,000/- equity shares of INR 10/- each and 5,85,00,000
compulsorily convertible preference shares of INR 20/- each.

Issued, Subscribed and paid-up share capital:

During the financial year, your company had allotted 3,11,966
equity shares under the Employees Stock Option Schemes
of the Company.

On April 22, 2024, your company had allotted compulsorily
convertible preference shares ("CCPS”) to the following investors:

Your Company had allotted 5,26,16,624 fully paid-up Equity shares
of INR 10 each on August 09, 2024 upon conversion of all the
existing CCPS issued by the Company. Further, your company had
allotted 1,90,65,326 Equity shares on September 20, 2024 through
the initial public offering of its Equity Shares.

After the allotment of the aforesaid equity shares and conversion
of CCPS into equity shares, the total issued, subscribed and
paid-up capital of the Company as on March 31, 2025 stood at
INR 1,61,37,93,360/- comprising of 16,13,79,336 equity shares
of INR 10 each.

Initial Public offer:

During the year under review, the Company successfully completed
its Initial Public Offering (IPO) aggregating to INR 777 crore in
September 2024. The IPO comprised a fresh issue of 1,90,65,326
equity shares, raising INR 500 crore, and an Offer for Sale (OFS)
of 1,05,32,320 existing equity shares amounting to INR 277 crore.
The equity shares of the Company were listed on both the National
Stock Exchange of India Limited (NSE) and BSE Limited (BSE) and
trading of the equity shares commenced on September 24, 2024.

DIVIDEND:

Due to the requirement of deploying the funds back into the
business for the growth of your Company, your directors have not
recommended any dividend for the year under review.

DIVIDEND DISTRIBUTION POLICY:

Since your Company is one of the top 1000 listed Companies as per
market capitalisation as on 31st March, 2025 and in accordance
with the Regulation 43A of Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations,
2015, the Company has formulated and adopted a Dividend
Distribution Policy, which was reviewed and approved by the
Board and the same is available on the website of the Company at
https://www.northernarc.com//assets/uploads/policies/Dividend
Distribution Policy.pdf

DEBENTURE:

During the year under review, your company had allotted 62,000
Senior, Secured, Rated, Listed, Redeemable Non-convertible
debentures of face value of INR 1,00,000/- amounting to INR 620
crore on 14th June 2024 and 5,000 Senior, Secured, Rated, Listed,
Redeemable Non-Convertible Debentures of face value of INR
1,00,000/- amounting to INR 50 crore on 13th August 2024.

TRANSFER TO STATUTORY RESERVES

Your Company has transferred an amount of INR 68.52 crore to the
statutory reserves in accordance with the requirements of Section
45-IC (1) of the Reserve Bank of India Act, 1934.

CREDIT RATING

The Credit ratings of the company as on March 31, 2025, are summarised below:

CAPITAL ADEQUACY

The Company's capital adequacy ratio as of March 31, 2025, was
24.72% as against 18.26% as at March 31, 2024. The minimum
capital adequacy ratio prescribed by Reserve Bank of India is 15%.

NOMINATION AND REMUNERATION POLICY

The Company has formulated Nomination and Remuneration Policy
under the provisions of section 178 of the Act and SEBI Listing
Regulations and RBI (Non-Banking Financial Company - Scale
Based Regulation) Directions, 2023 dated October 19, 2023 and the
same is uploaded on the website of the Company at https://www.
northernarc.com//assets/uploads/policies/Nomination and
Remuneration Policy.pdf

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The composition of the Board of Directors of the Company is
in accordance with the provisions of section 149 and 165 of the
Companies Act, 2013 read with Regulation 17 of the SEBI Listing
Regulations with an appropriate combination of Executive Director,
Non-Executive Directors and Independent Directors.

As on March 31, 2025, the Company has eight Directors of which
seven are Non-Executive Directors including Two (2) women
Directors. The Company has Three (3) Independent Directors one
of whom is a Woman Independent Director.

Pursuant to the provisions of Section 152 of the Companies Act,
2013, Mr. Michael Jude Fernandes (DIN: 00064088), retires by
rotation and being eligible, offers himself for re-appointment. The
resolutions seeking shareholders' approval for his re-appointment
forms part of the AGM Notice.

During the year under review, Ms. Monika Gurung was ceased to
be the Company Secretary and Compliance Officer and Mr. Prakash
Chandra Panda has been appointed as the Company Secretary and
Compliance Officer of the Company with effect from April 22, 2024.

Dr. Kshama Fernandes, is a Non-Executive Non-Independent
Director, who was initially appointed to the Board as Executive
Director with effect from August 1, 2012, and was re-designated
as Non-Executive Non-Independent Director and Vice-Chairperson
of the Company with effect from April 1, 2022. Pursuant to SEBI
notification dated June 14, 2023 read with regulation 17(1D)
of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, as amended ('SEBI Listing Regulation') effective
from July 15, 2023, the Board at its meeting held on August 06,
2024 and the shareholders at their meeting held on December 19,
2024 had approved the continuation of Dr. Kshama Fernandes as
a Vice-Chairperson (Non-Executive Non-Independent Director) of
the Company for a further period of one year till March 31, 2025.

The Board at its meeting held on February 14, 2025, and the
shareholders through postal ballot resolutions dated May 05,
2025, had approved the continuation of Dr. Kshama Fernandes as
a Non-Executive Non-Independent Director of the Company for a
further period of one year with effect from April 01, 2025.

During the year under review, Mr. N T Arunkumar ceased to be
Director of the Company w.e.f. February 13, 2025 upon completion
of his term as an Independent Director. The Board places on record
its appreciation for their invaluable contribution and guidance
provided to the Company.

Based on the recommendation of the Nomination and
Remuneration Committee, the Board of Directors of the Company
in its meeting held on May 07, 2025 has approved the appointment
of Mr. Sandeep Dhar (DIN: 00182797) as the Additional Director
(Non-Executive, Independent) of the Company for a period of 5
consecutive years with effect from May 07, 2025, subject to the
approval of shareholders.

Mr. Trikkur Seetharaman Anantharaman (DIN: 00480136) resigned
as the Non-Executive Nominee Director of the Company with effect
from June 23, 2025, representing 360 One Special Opportunities
Fund, subsequent to the sale of its stake in the Company.

During the year, Mr. Ashish Mehrotra, Managing Director & CEO,
Mr. Atul Tibrewal, Chief Financial Officer, Ms. Monika Gurung,
Company Secretary and Compliance Officer (upto April 22,
2024) and Mr. Prakash Chandra Panda, Company Secretary and
Compliance Officer (effective April 22, 2024) of the Company have
been designated as the Key Managerial Personnel of the Company
(KMP) pursuant to the provisions of Sections 2(51) and 203 of the

Companies Act, 2013 read with the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014.

CORPORATE GOVERNANCE:

The Corporate Governance report which forms a part of Board's
Report which states that a detailed Company's corporate
governance practices, together with the certificate from the
secretarial auditors confirming compliance, as per the SEBI
Listing Regulations.

A certificate from the Secretarial auditors of the Company
regarding compliance of conditions of corporate governance is
annexed to this report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY
REPORTING (‘BRSR'):

Pursuant to Regulation 34(2)(f) of SEBI (LODR) Regulations, 2015,
the top one thousand listed entities based on market capitalisation
shall submit a Business Responsibility and Sustainability report in
the format as specified by the SEBI from time to time. Since your
Company is one of the top 1000 listed Companies as per market
capitalisation as on March 31, 2025, the Annual Report includes
a separate report on the BRSR, which outlines the Company's
environmental, social and governance initiatives.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

The brief outline of the Corporate Social Responsibility (CSR)
initiatives undertaken by the Company on CSR activities during
the year under review are set out in Annexure A of this report
in the format prescribed in the Companies (Corporate Social
Responsibility) Rules, 2014. The CSR Committee has formulated
and recommended to the Board, a Corporate Social Responsibility
Policy ("CSR Policy”) indicating the activities to be undertaken by
the Company, which has been approved by the Board. The CSR
Policy is available on the Company's website at https://www.
northernarc.com//assets/uploads/policies/CSR Policy.pdf

RBI GUIDELINES:

The Reserve Bank of India (RBI) granted the Certificate of
Registration to the Company in March 2018 under Registration No
B-07.00430, authorizing it to operate as a non-banking financial
institution without accepting public deposits. Your Company is
categorised as NBFC in Middle layer pursuant to Master Direction
- Reserve Bank of India (Non-Banking Financial Company -
Scale Based Regulation) Directions, 2023 and has complied with
and continues to comply with all the applicable regulations and
directions of the RBI.

DISCLOSURES OF AGREEMENTS BINDING THE LISTED
ENTITY:

The disclosure of agreements binding the listed entity are provided
in the Corporate Governance Report.

DETAILS OF UTILISATION OF FUNDS RAISED
THROUGH PREFERENTIAL ALLOTMENT OR
QUALIFIED INSTITUTIONS PLACEMENT AS SPECIFIED
UNDER REGULATION 32(7A) OF SEBI (LISTING
OBLIGATIONS AND DISCLOSURE REQUIREMENTS)
REGULATIONS, 2015:

The disclosure of utilization of funds raised through preferential
allotment or qualified institutions placement are provided in the
Corporate Governance Report.

EMPLOYEES STOCK OPTION SCHEME:

The Company had formulated the Northern Arc Employee Stock
Option Plan, 2016 (ESOP Plan), duly approved by the shareholders
of the Company to enable its employees to participate in the
future growth and financial success of the Company. The Company
also intends to use this ESOP Plan to attract and retain talent in
the organisation.

The ESOP Plan was formulated and amended in accordance with
the SEBI guidelines and the eligibility and number of options to
be granted to an employee is determined on the basis of various
parameters such as scale, designation, performance, grades, period
of service, criticality and such other parameters as may be decided
by the Nomination & Remuneration Committee of the Board from
time to time in its sole discretion.

The Shareholders of the Company had approved the ESOP Plan on
October 07, 2016. During the year under review, the ESOP Plan
was amended vide special resolution passed by the members in
their Extra Ordinary General Meeting on July 02, 2024 by increase
of pool to 90,07,758 options. Subsequently, post listing of equity
shares of the Company on September 24, 2024, in BSE and NSE,
in compliance with the regulatory requirements in terms of the
Securities and Exchange Board of India (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021, the ESOP Plan
was ratified by the members vide special resolution passed in the
General meeting held on December 19, 2024.

During the year under review, 3,11,966 equity shares of face value
of INR 10 each were allotted to employees pursuant to exercise of
stock options by the employees of the Company under ESOP Plan.

During the year under review, there were no material changes
to the ESOP Schemes, except for modifications made to comply
with the regulatory requirements under the SEBI (Share Based
Employee Benefits and Sweat Equity) Regulations, 2021 ("SBEB
& SE Regulations”). These changes are not prejudicial to the
interest of the employees. The ESOP Schemes remain fully
compliant with the SBEB & SE Regulations. Additionally, all
statutory disclosures required under Regulation 14 of the SBEB &
SE Regulations and Rule 12 of the Companies (Share Capital and
Debentures) Rules, 2014 are available on the Company's website at
https://www.northernarc.com/annual-rRport.

DECLARATION OF INDEPENDENCE UNDER SECTION
149(6) OF THE COMPANIES ACT, 2013

The Independent Directors of the Company have submitted a
declaration that each of them meets the criteria of independence
as provided in Section 149(6) of the Companies Act, 2013 along
with Rules framed thereunder and Regulation 16(1)(b) of the
SEBI Listing Regulations and there has been no change in the
circumstances which may affect their status as independent
director during the year.

The Independent Directors have confirmed that they are not aware
of any circumstance or situation, which exists or may be reasonably
anticipated, that could impair or impact their ability to discharge
their duties with an objective independent judgment and without
any external influence.

In the opinion of Board, all the Independent Directors are
possessing integrity, expertise and experience (including the
proficiency) in their respective domains.

Pecuniary Transactions with non-executive directors

Details of remuneration to non-executive directors are provided in
the Corporate Governance Report.

SUBSIDIARIES AND ASSOCIATES:

Your Company has 5 subsidiary companies, i.e., Northern Arc
Investment Managers Private Limited; Pragati Finserv Private
Limited, Northern Arc Foundation (a company incorporated under
section 8 of the Act), Northern Arc CrediTech Solutions Private
Limited (Formerly known as Northern Arc Investment Adviser
Services Private Limited) and Northern Arc Securities Private
Limited and one (1) associate company, i.e., Finreach Solutions
Private Limited, as on March 31, 2025.

On May 12, 2025, the Company has diluted its stake in FinReach
Solutions Private Limited from 24.55% to 11.16%. As a result,
FinReach Solutions Private Limited ceased to be an associate of the
Company effective May 13, 2025.

The name of Northern Arc Investment Adviser Services Private
Limited was changed to Northern Arc CrediTech Solutions Private
Limited with effect from May 27, 2025.

Information on the performance and financial position of the
subsidiaries and associate company as on March 31, 2025 are
provided in form AOC 1 enclosed as Annexure - B.

The details of subsidiaries and associate are as follows:

(i) Northern Arc Investment Managers Private Limited
(NAIM)

A Decade of Purpose, Powered by Performance:

Over the last decade, Northern Arc Investment Managers
Private Limited (NAIM) has carved a distinctive path in
India's private credit landscape. Born as a niche platform
in FY 2013-14 with a vision to bridge the yawning credit

gap for mid-market enterprises, we have evolved into a
pioneering fund management institution with a reputation
for innovative, structured, and impact-aligned debt solutions.

We began our journey with a ^100 crore microfinance-
focused fund. Today, we manage ^3,152 crore in AUM across
six active funds and 2 PMS strategies. Behind these numbers
lies a deeper story of resilience, relevance, and relentless
pursuit of financial inclusion and sustainable returns.

Our investment philosophy integrates two powerful engines:

Performing Credit: Delivering strong risk-adjusted
returns through disciplined underwriting and robust
portfolio construction.

? Impact Investing: Catalyzing real-world change by
directing capital to enterprises often overlooked by
formal finance early-stage, undercollateralized, or high-
potential businesses driving inclusive growth.

This dual-lens approach financial rigor fused with social
purpose has enabled us to deliver a weighted average XIRR of
14.57% across matured funds, all without a single instance of
capital loss for our esteemed underlying investors.

A Platform Built on Scale, Trust, and Innovation

Our growth journey is defined by diversification, governance,
and track record:

? 14 investment products launched to date 12 AIFs and 2
discretionary PMS mandates.

? 6 funds successfully closed, all delivering ahead of
target returns.

? Cumulative deployment exceeding ^12,000 crore.

? Over 1000 unique investors served, spanning HNIs,
corporates, family offices, DFIs, and offshore investors.

? In all exited funds, Zero capital loss to ay underlying
investors. No fund extension. 100% on-time
distributions over the last decade.

Our offerings span a broad spectrum from open-ended
Category III funds and Cat II debt structures to bespoke
accounts through PMS strategies, leveraged fund strategy,
and offshore solutions, including our landmark GIFT City
platform for global investors.

FY 2024-25: Consolidation, Innovation, Momentum

This fiscal year marked a strategic inflection point
in our journey.

? 6 active funds under management, with strong inflows
across all strategies.

? Raised over ^200 crore for the Northern Arc Finserv
Fund, nearing its final close.

? Landmark offshore raise of ^245 crore from DFC,
doubling our offshore footprint.

? ^520 crore in the pipeline for our upcoming leveraged
GIFT City fund, the Northern Arc Blue Horizon Fund.

? Four new AIFs launched, reinforcing our ambition
to lead across risk-return spectra from stable
performing credit to selective special situations and
asset-backed lending.

Looking Ahead: The Decade of Global Credit Leadership

We now stand on the cusp of an exciting future one that goes
beyond managing capital to mobilizing transformation.

Our vision for the next decade is clear: for India bound
global credit assets, we aspire to become their gateway to
India, and for domestic investors, we plan to be a preferred
and reliable credit solutions provider. We aspire to redefine
credit fund management in India by setting new standards
in transparency, diversification, credit governance, and
purpose-driven investing.

Strategic Priorities for the Future:

1. Deepen Core Strengths

? Expand in performing credit through diversified,
sector-specific funds with gross return targets
across 10%, 12.5%, 15%, and 17.5%.

? Explore measured entry into special situations
and asset-backed finance, while steering clear of
distressed and real estate exposure.

2. Amplify Impact

? Double down on impact-oriented funds in financial
inclusion, MSME lending, education, healthcare,
clean energy, and sustainable livelihoods.

3. Go Global

? Build offshore investor access through GIFT
City, with leveraged fund structures tailored for
international LPs.

? Strengthen institutional ties, following our
breakthrough collaboration with DFIs and larger
offshore investors.

4. Fuel Innovation & Resilience

? Leverage tech-enabled credit underwriting and
ESG-aligned monitoring.

? Invest in internal capabilities for more agile, data-
driven investing with global relevance.

Final Word: From Credit Capital to Capital for Change

At NAIM, credit is not merely a product it is an enabler of
growth, resilience, and empowerment. As a platform, we are
uniquely positioned at the intersection of financial markets,
real economy enterprises, and impact-driven capital.

Our investors place their trust in us for one reason we don't
just promise yield, we deliver certainty, integrity, and purpose.

As we begin this new chapter, we carry forward a powerful
legacy—and an even more powerful ambition: to scale
with integrity, to perform with conscience, and to become
a globally admired credit institution where impact is not a
trade-off, but a multiplier.

(ii) Pragati Finserv Private Limited (Pragati Finserv)

Pragati Finserv the rural Finance subsidiary of Northern
Arc Capital was incorporated in FY 2020-21 to offer small
ticket loans to under-served rural and semi-urban areas
of the country. Pragati Finserv serves the diverse needs of
customers belonging to low-income households of rural and
semi-urban areas. It aims to become a one stop lending shop
for its borrowers covering income-generating micro loans
and household loans.

The current product offering of Pragati Finserv is Krushi
JLG loan for rural women customers with a ticket size of
INR 30,000 to 75,000. Pragati Finserv has 287 operational
branches across 8 states and 1 UT. During the FY 2024-25,
15 New branches have been inaugurated in the unpenetrated
districts of south Tamil Nadu.

As of March 31, 2025 the Portfolio Outstanding of Pragati
Finserv is 1032 crore with 3.91 lakh Active Clients and
4.03 lakh Active Loans. The DPD 90-180 portfolio of Pragati
Finserv is INR 45.18 crore which is 4.38% of the total
portfolio outstanding.

The Microfinance industry has faced severe headwinds
during the FY 2024-25 led by multiple factors resulting in
14% drop in AUM and 45% decline in disbursements. Due
to the increasing defaults in the industry the Microfinance
SRO's (Self-Regulatory Organisations) MFIN and Sa-Dhan
have introduced Guardrails to minimise the impact. The
Guardrails had a sudden impact on the cash flow of the
customers leading to even higher defaults in the short term.

1. Severe Climatic conditions like floods, heatwaves and
cyclones etc - Tamil Nadu, UP, Bihar and Jharkhand are
among states impacted due to these climatic conditions

2. Operational challenges including Multiple KYC's,
limited data for cashflow/income assessment, low
centre attendance and increasing door-step collections

3. Borrower Overleveraging - Increasing number of
lenders and overall indebtedness are the major reason

forcnstomerstressanddefanlts

a. Pragati Finserv has given Loans to only 4.2%
clients who were having 5 or more lenders at the
time of disbursement; the number of clients with
5 or more lenders as on March 2025 was 15.7%

b. Pragati Finserv has given Loans to only 0.05%
clients who were having 2 Lakhs or more total
outstanding at the time of disbursement; the
number of clients with 2 lakhs or more outstanding
as on March 2025 was 8%

c. With the introduction of Guardrails from SRO's
the indebtedness is under control with clients
having 5 more clients coming down from 26% in
June 2024 to 16% in March 2025

4. Socio Political Factors including the Karnataka

Ordinance & karza Mukti Abhiyan

a. The Karnataka microfinance crisis which started
in Tumkur and Mandya spread across all the
districts which in a short period of time.

b. With the increasing number of cases and
complaints, a media uproar started in the last
week of January

c. The Government of Karnataka brought

an ordinance in February to control the
unregulated lenders and control any coercive
practices on the field

d. The crisis impacted the collections in Karnataka
for lenders including Pragati which was having a
significant share in the state.

e. Due to the continuous trainings and stakeholder
engagements there were no Police cases on
employees of Pragati in Karnataka

f. The Karza Mukti movement has impacted
the collections in and around branches of
Gorakhpur districts.

Pragati Finserv has developed and implemented several

Practices and processes to ensure maximum collections.

1. Pragati Finserv has introduced a "Family Connect”
program where the field managers visit the
field employee's family at their house. This has
increased the employee morale.

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

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

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

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

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

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

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

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

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

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

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

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

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

(iii) Northern Arc Foundation ("NAF")

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

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

(iv) Northern Arc CrediTech Solutions Private Limited

In alignment with the commitment to innovation and growth
in the evolving financial landscape, Northern Arc CrediTech
Solutions Private Limited (Formerly known as Northern Arc
Investment Adviser Services Private Limited) (NACT) has
strategically shifted its focus from being a SEBl-registered
Investment Adviser to providing advanced technological
solutions in credit delivery and management. In line with this
swift, NACT has voluntarily surrendered its SEBl Investment
Adviser Registration Certificate (Reg No: 1NA200000019),
leading to its cancellation by SEBl effective January 3,
2025 and the company has been renamed as Northern Arc
CrediTech Solutions Private Limited effective, May 27, 2025.

(v) Northern Arc Securities Private Limited (NAS)

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

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

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

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

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

(vi) Finreach Solutions Private Limited (Finreach)

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

FIXED DEPOSITS

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

FOREIGN EXCHANGE EARNINGS AND OUTGO

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

MEETING OF INDEPENDENT DIRECTORS

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

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

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

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

AUDITORS:

STATUTORY AUDITORS

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

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

SECRETARIAL AUDITORS

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

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

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

COST RECORDS AND COST AUDITORS

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

REPORTING OF FRAUDS BY THE AUDITORS TO THE
COMPANY

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

COMPLIANCE

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

CHANGES TO THE CONSTITUTIONAL DOCUMENTS
DURING THE YEAR UNDER REVIEW

a. Memorandum of Association:

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

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

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

b. Articles of Association:

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

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

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

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

MATERIALCHANGES AND COMMITMENTSAFFECTING
THE FINANCIAL POSITION OF THE COMPANY THAT
OCCURRED BETWEEN THE END OF THE FINANCIAL
YEAR TO WHICH THIS FINANCIAL STATEMENT
RELATE TILL THE DATE OF THIS REPORT:

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

PARTICULARS OF LOANS, GUARANTEES OR
INVESTMENTS IN SECURITIES

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

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

BOARD AND COMMITTEE MEETINGS

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

DIRECTORS' RESPONSIBILITY STATEMENT

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

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

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

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

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

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

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

e) the directors have laid down internal financial controls to
be followed by the company and that such internal financial
controls are adequate and were operating effectively; and

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

BOARD EVALUATION

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

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

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

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

DISCLOSURE UNDER THE SEXUAL HARASSMENT
OF WOMEN AT WORKPLACE (PREVENTION,
PROHIBITION AND REDRESSAL) ACT, 2013

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

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

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

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

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

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

EXTRACT OF ANNUAL RETURN

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

CORPORATE AGENT

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

APPROVAL FOR FACTORING BUSINESS

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

APPROVAL FOR EXTENSION OF TIME FOR CONVENING
OF THE ANNUAL GENERAL MEETING

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

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS OR COURTS OR
TRIBUNALS IMPACTING THE GOING CONCERN
STATUS AND COMPANY'S OPERATION IN FUTURE

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

RELATED PARTY TRANSACTIONS

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

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

COMPANIES WHICH HAVE BECOME OR CEASED TO BE
SUBSIDIARIES, JOINT VENTURES, OR ASSOCIATES OF
THE COMPANY DURING THE YEAR.

Nil

COMPLIANCE WITH DOWNSTREAM INVESTMENT
REGULATIONS PURSUANT TO RULE 23(6) OF THE
FOREIGN EXCHANGE MANAGEMENT (NON-DEBT
INSTRUMENTS) RULES, 2019

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

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

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

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

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

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

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

PARTICULARS OF EMPLOYEES UNDER RULE
5(2) OF THE COMPANIES (APPOINTMENT AND
REMUNERATION OF MANAGERIAL PERSONNEL)
RULES, 2014

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

DETAILS OF THE TRANSFER/S TO THE INVESTOR
EDUCATION AND PROTECTION FUND (IEPF) MADE
DURING THE YEAR:

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

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

CODE OF CONDUCT

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

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

VIGIL MECHANISM AND WHISTLE BLOWER POLICY

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

SECRETARIAL STANDARDS COMPLIANCES

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

THE CHANGE IN THE NATURE OF BUSINESS, IF ANY

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

CONSERVATION OF ENERGY, TECHNOLOGY AND
ABSORPTION

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

INTERNAL FINANCIALS CONTROLS

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

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

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

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

OTHER DISCLOSURE:

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

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

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

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

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

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

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

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

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

ACKNOWLEDGEMENT

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

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

For and on behalf of the Board of Directors
Northern Arc Capital Limited

P S Jayakumar Ashish Mehrotra

Independent Director & Chairman Managing Director & CEO

DIN: 01173236 DIN: 07277318

Date: July 2, 2025
Place: Chennai