ANNUAL REPORT OF HOME CREDIT FINANCE PRIVATE LIMITED FOR THE YEAR 2019-20 B S R & Associates LLP Chartered Accountants

Building No. 10, 8th Floor, Tower-B Telephone: +91 124 719 1000 DLF Cyber City, Phase - II Fax: +91 124 235 8613 Gurugram - 122 002, India

INDEPENDENT AUDITORS’ REPORT

To the Members of Home Credit India Finance Private Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Home Credit India Finance Private Limited (“the Company”), which comprise the balance sheet as at 31 March 2020, and the statement of profit and loss (including other comprehensive income/(loss)), statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as ‘financial statements’).

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 (“Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2020, and net loss and other comprehensive income/(loss), changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those SAs are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the financial statements.

Emphasis of Matter

We draw attention to Note 43.5 to the financial statements, in respect of loan accounts overdue but standard at 29 February 2020 where moratorium benefit has been granted, the staging of those accounts at 31 March 2020 is based on the days past due status as on 29 February 2020 in accordance with the Reserve Bank of India COVID-19 Regulatory Package.

We draw attention to Note 43.5 to the financial statements, the extent to which the COVID-19 pandemic will impact the Company’s financial performance is dependent on future developments, which are highly uncertain.

Our opinion is not modified in respect of the above matters.

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Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter How the matter was addressed in our audit Impairment of loans and advances to customers

Charge: INR 7,395.32 lakhs for year ended 31 March 2020 Provision: INR 81,399.17 at 31 March 2020 Refer to the accounting policies in “Note 3 to the Financial Statements: Impairment”, “Note 2.4 to the Financial Statements: Significant Accounting Policies- use of estimates” and “Note 7 to the Financial Statements: Loans and advances” Subjective estimate Our key audit procedures included:

Recognition and measurement of • Evaluated the appropriateness of the impairment impairment of loans and advances involve principles used by management based on the significant management judgement. requirements of Ind AS 109, our business understanding.

Under Ind AS 109, Financial Instruments, • Understood management’s processes, systems and allowance for loan losses are determined controls implemented in relation to impairment using expected credit loss (ECL) model. allowance process. The Company’s impairment allowance is derived from estimates including the • Involved our modelling specialist to understand the historical default and loss ratios. model methodology and reasonableness of assumptions Management exercises judgement in used, including management overlays. determining the quantum of loss based on a range of factors. • Tested key controls operating over the information technology in relation to loan impairment management The most significant areas are: systems, including system access and system change management, program development and computer - Segmentation of loan book operations in respect of the changes made to give effect - Determination of exposure at default to moratorium benefits policy approved by the Board. - Loan staging criteria - Calculation of probability of default / • Assessed the appropriateness of changes made in Loss given default macroeconomic factors and management overlays to - Consideration of probability weighted calibrate the risks that are not yet fully captured by the scenarios and forward looking macro- existing model. economic factors - Complexity of disclosures • Tested details over of calculation of impairment allowance for assessing the completeness, accuracy and The application of ECL model requires relevance of data. several data inputs. This increases the risk of completeness and accuracy of the data • Tested the accuracy of key input used in the calculation that has been used to create assumptions in and evaluated the reasonableness of the assumptions the model. In some cases, data is made. unavailable and reasonable alternatives have been applied to allow calculations to • Considered the adequacy of the Company’s disclosure on be performed. impairment loss and key assumptions. 2

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Impact of COVID-19

On 11 March 2020, the World Health Organisation declared the Novel Coronavirus (COVID-19) outbreak to be a pandemic.

We have identified the impact of, and uncertainty related to the COVID 19 pandemic as a key element and consideration for recognition and measurement of impairment of loans and advances on account of:

- Short and long term macroeconomic effect on businesses in the country and globally and its consequential first order and cascading negative impact on revenue and employment generation opportunities;

- impact of the pandemic on the Company’s customers and their ability to repay dues; and

- application of regulatory package announced by the Reserve Bank of India (RBI) on asset classification and provisioning.

Management has conducted a qualitative assessment of significant increase in credit risk (SICR) of the loan portfolio with respect to the moratorium benefit to borrowers prescribed by the RBI and considered updated macroeconomic scenarios and the use of management overlays to reflect potential impact of COVID-19 on expected credit losses on its loan portfolio.

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Key audit matter How the matter was addressed in our audit Information technology IT systems and controls Our key audit procedures included:

The Company’s key financial accounting General IT controls / user access management and reporting processes are dependent on the information systems including  We tested user access management, change and key automated controls in system, such that system application controls over key IT systems. Also, there exists a risk that gaps in the IT we have obtained a report from the parent company’s control environment could result in the auditor specialist for Homer and Loxon application for financial accounting and reporting records certain controls areas in user access management and being materially misstated. Amongst, its change management. multiple system, three systems namely System Applications and Products • We tested the design and operating effectiveness of key (‘SAP’), Homer and Loxon are key for its controls around General IT environment in relation to overall financial reporting. financial accounting and reporting systems, including system access and system change management, program We have identified “IT systems and development and computer operations. controls” as key audit matter because of high level of automation, significant • We tested the design and operating effectiveness of key number of systems being used by the controls over user access management which includes management and complexity of the IT granting access right, new user creation, removal of user architecture rights, user access review, privileged access, password controls etc.

• We have also reviewed design, implementation and operating effectiveness of significant accounts – related IT automated controls which are relevant to the accuracy of the system calculations, completeness and accuracy of reports and segregation of duties for critical access and rights.

Other Information

The Company’s management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company’s annual report, but does not include the financial statements and our auditors’ report thereon. The information is expected to be made available to us after the date of auditor’s report.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the information included in the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take actions under the applicable laws and regulations.

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Management's and Board of Directors’ Responsibility for the Financial Statements

The Company’s Management and Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the state of affairs, profit/loss and other comprehensive income/(loss), changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Management and Board of Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures in the financial statements made by the Management and Board of Directors.

 Conclude on the appropriateness of the Management and Board of Directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going 5

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concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

 Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors’ Report) Order, 2016 (“the Order”) issued by the Central Government in terms of section 143 (11) of the Act, we give in the “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. (A) As required by Section 143(3) of the Act, we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

c) The balance sheet, the statement of profit and loss (including other comprehensive income/(loss)), the statement of changes in equity and the statement of cash flows dealt with by this Report are in agreement with the books of account.

d) In our opinion, the aforesaid financial statements comply with the Ind AS specified under section 133 of the Act.

e) On the basis of the written representations received from the directors as on 31 March 2020 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2020 from being appointed as a director in terms of Section 164(2) of the Act.

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f) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”.

(B) With respect to the other matters to be included in the Auditors’ Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31 March 2020 on its financial position in its financial statements - Refer Note 34 to the financial statements;

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts- Refer Note 34 to the financial statements;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company; and

iv. The disclosures in the financial statements regarding holdings as well as dealings in specified bank notes during the period from 8 November 2016 to 30 December 2016 have not been made in these financial statements since they do not pertain to the financial year ended 31 March 2020.

(C) With respect to the matter to be included in the Auditors’ Report under section 197(16), in our opinion and according to the information and explanation given to us, the provisions of section 197 read with Schedule V of the Act are not applicable to the Company, as it is a private company.

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Annexure A to the Independent Auditor’s Report of even date on the financial statements of Home Credit India Finance Private Limited

(i) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified once in three years. In accordance with the programme, certain fixed assets were physically verified by the management in the current year. Also, with the block of 3 years ending in the current year, substantial portion of its tangible fixed assets were verified in the last 3 years. In our opinion, the periodicity of physical verification is reasonable having regards to the size of the Company and the nature of its fixed assets. According to the information and explanation given to us, no material discrepancies were noticed on such physical verification carried out during the year.

c) According to the information and explanation given to us and on the basis of our examination of books of accounts, title deed of an immovable property is held in the name of the Company.

(ii) The Company is a non-banking finance company in the business of providing retail finance. Accordingly, paragraph 3(ii) of the Order is not applicable.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies or other parties covered in the register maintained under Section 189 of the Companies Act, 2013 (the “Act”). According to the information and explanations given to us, we are of the opinion that there are no firms or limited liability partnerships covered in the register maintained under Section 189 of the Act.

(iv) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not undertaken any transactions in respect of loans, guarantees and securities covered under Section 185 of the Companies Act, 2013. The Company has not made any investment as referred in Section 186(1) of the Act and other requirements relating to Section 186 do not apply to the Company.

(v) According to the information and explanations given to us, the Company has not accepted any deposits as mentioned in the directives issued by the Reserve Bank of India and the provisions of Section 73 to 76 or any other relevant provisions of the Act and the rules framed there under.

(vi) The Central Government has not prescribed the maintenance of cost records under sub section (1) of Section 148 of the Act for any of the services rendered by the Company. Accordingly, the provision of clause 3(vi) of the Order is not applicable to the Company.

(vii) a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees’ State Insurance, Income-tax, Goods and Services tax, Cess and other material statutory dues have generally been regularly deposited during the year with the appropriate authorities. As explained to us, the Company did not have any dues on account of Duty of Customs during the year.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees’ State Insurance, Income-Tax, Goods and Services tax, Cess and other material statutory dues were in arrears as at 31 March 2020 for a period of more than six months from the date they became payable.

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b) According to the information and explanations given to us, there are no dues in respect of Income- tax and Goods and Services tax which have not been deposited with the appropriate authorities on account of dispute except as mentioned below. Further, there were no dues payable in respect of Duty of Customs.

Name of the Statute Nature of Amount Period to which Form where the Dues (Rs. the amount relates dispute is pending Lakhs) Income- tax Act, 1961 Income tax 646.31 Assessment Year CIT(A) 2016-17

As per order, Nil demand was raised by the department since the Company had tax losses in the AY 2016-17. However, since carried forward losses have been fully utilized by the Company in subsequent year against taxable income, potential tax amount on disputed amount is disclosed in above table as unpaid. (viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of loans or borrowings to financial institutions and banks and dues to debenture holders during the year. The Company did not have outstanding dues to Government during the year.

(ix) According to the information and explanations given to us the and our examination of the records of the Company, the term loans obtained and money raised through debt instruments during the year were applied for the purpose for which they were obtained. The Company has not raised money from initial public offer or further public offer.

(x) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the explanation and information given to us, we report that no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

(xi) According to the information and explanations given to us by the Company, the provisions of Section 197 read with Schedule V of the Act are not applicable to the Company since the Company is a private company. Thus paragraph 3(xi) of the Order is not applicable on the Company.

(xii) According to the information and explanations given to us, the Company is not a Nidhi Company, hence paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us, transactions with the related parties are in compliance with Section 188 of the Act where applicable and the details have been disclosed in the financial statements, as required by the applicable Accounting Standards. Also, the Company has complied with the provisions of Section 177 of the Act.

(xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, the provision of clause 3(xiv) of the Order is not applicable.

(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with them. Accordingly, paragraph 3(xv) of the Order is not applicable.

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(xvi) The Company is required to be registered under Section 45-1A of the Reserve Bank of India Act, 1934, and accordingly, the Company has obtained the registration certificate from the Reserve Bank of India.

For B S R & Associates LLP Chartered Accountants Firm's Registration No.: 116231W/W-100024

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Annexure B to the Independent Auditors’ report on the financial statements of Home Credit India Finance Private Limited for the year ended 31 March 2020.

Report on the internal financial controls with reference to the aforesaid financial statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013

(Referred to in paragraph (f) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)

Opinion

We have audited the internal financial controls with reference to financial statements of Home Credit India Finance Private Limited (“the Company”) as of 31 March 2020 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

In our opinion, the Company has, in all material respects, adequate internal financial controls with reference to financial statements and such internal financial controls were operating effectively as at 31 March 2020, based on the internal financial controls with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (the “Guidance Note”).

Emphasis of Matter

We draw attention to Emphasis of Matter paragraph of our report to the financial statements, the extent to which the COVID-19 pandemic will have impact on the Company’s internal financial controls with reference to financial statements is dependent on future developments, which are highly uncertain.

Our opinion is not modified in respect of the above matter.

Management’s Responsibility for Internal Financial Controls

The Company’s management and the Board of Directors are responsible for establishing and maintaining internal financial controls based on the internal financial controls with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013 (hereinafter referred to as “the Act”).

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company's internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to financial statements. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to financial statements were established and maintained and whether such controls operated effectively in all material respects.

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Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of such internal financial controls, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls with reference to financial statements.

Meaning of Internal Financial controls with Reference to Financial Statements

A company's internal financial controls with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial controls with reference to financial statements include those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial controls with Reference to Financial Statements

Because of the inherent limitations of internal financial controls with reference to financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to financial statements to future periods are subject to the risk that the internal financial controls with reference to financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

For B S R & Associates LLP Chartered Accountants Firm's Registration No. 116231W/W-100024

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Building No. 10, 8th Floor, Tower-B Telephone: +91 124 719 1000 DLF Cyber City, Phase - II Fax: +91 124 235 8613 Gurugram - 122 002, India

Auditor’s Additional Report

To the Board of Directors of Home Credit India Finance Private Limited

Report on the Financial Statements

1. In addition to the report made under section 143 of the Companies Act, 2013 (‘the Act’) on the financial statements of Home Credit India Finance Private Limited (‘the Company’) for the year ended 31 March 2020 and as required by Master Direction on Non-Banking Financial Companies Auditor’s Report (Reserve Bank) Directions, 2016 vide Master Direction DNBS. PPD.03/66.15.001/2016-17 dated 29 September 2016 (the ‘Direction’), we report as follows on the matters specified in paragraph 3 and 4 of the said Directions to the extent applicable.

Management’s and Board of Directors’ Responsibility for the financial statements

2. The Company’s management and Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the state of affairs, profit/loss and other comprehensive income/(loss), changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. The Company’s management is responsible for ensuring that the Company complies with the requirements of the Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 (the ‘Master Direction’). This responsibility includes the design, implementation and maintenance of internal control relevant to the compliance with the Master Directions.

Auditor’s Responsibility

4. Pursuant to the requirements of the Directions, it is our responsibility to provide reasonable assurance on whether the Company has complied with the matters specified in the Directions to the extent applicable to the Company.

5. We conducted our examination in accordance with the ‘Guidance Note on Reports or Certificates issued for Special Purposes (Revised 2016)’ issued by the Institute of Chartered Accountants of India. The Guidance Note requires that we comply with the ethical requirements of the Code of Ethics issued by the Institute of Chartered Accountants of India.

Registered Office: 5th Floor, Lodha Excelus Apollo Mills Compound N.M. Joshi Marg, Mahalaxmi Mumbai – 400 011

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6. We have complied with the relevant applicable requirements of the Standard on Quality Control (SQC) 1, ‘Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements.

Conclusion

7. Based on our examination of the financial statements as at and for the year ended 31 March 2020, books of accounts and records of the Company as produced for our examination and according to the information and explanations given to us, we further report that:

i. The Company is engaged in the business of non-banking financial institution and it has obtained a certificate of registration from Reserve Bank of India (‘RBI’) under registration no. 01.00317 dated 20 September 1999. Subsequent to name change of the Company to Home Credit India Finance Private Limited with effect from 15 June 2013, the Company received a fresh registration no. B.14.03292 dated 25 October 2013, granting the Company permission to carry on the business of non-banking financial institution;

ii. The Company is entitled to continue to hold such certificate of registration in terms of its asset/ income pattern as on/ for the year ended 31 March 2020;

iii. In our opinion and to the best of our information and according to the explanations given to us, the Company is meeting the required net owned fund requirement as laid down in the Master Direction;

iv. The Board of Directors of the Company has passed a resolution in its meeting held on 25 April 2019 for non-acceptance of public deposits during the year ended 31 March 2020;

v. The Company has not accepted any public deposits during year ended 31 March 2020;

vi. With effect from 1 April 2018, as per the roadmap issued by the Ministry of Corporate Affairs for Non-Banking Finance Companies vide notification no.G.S.R 365(E) dated 30 March 2016, for financial reporting purposes, the Company has followed the Accounting Standards issued by the ICAI specified under Section 133 of the Companies Act, 2013, read with Rule 3 of the Companies (Indian Accounting Standard) Rules, 2015 (Ind AS). In our opinion and to the best of our information and according to the explanations given to us, the Company has complied with the income recognition, accounting standards, asset classification and provisioning for bad and doubtful debts as per Ind AS in the preparation of the financial statements for the year ended 31 March 2020. Further, in respect of loan accounts overdue but standard at 29 February 2020 where moratorium benefit has been granted, the staging of those accounts at 31 March 2020 is based on the days past due status as on 29 February 2020 in accordance with the Reserve Bank of India COVID-19 Regulatory Package;

vii. In our opinion and to the best of our information and according to the explanations given to us, the Company being a Systemically Important Non-deposit taking NBFC as defined in paragraph 3 (xxxi) of the Master Direction, for the year ended 31 March 2020:

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a) the capital adequacy ratio as disclosed in the note 46.i of the financial statements for the year ended 31 March 2020 has been correctly arrived at and such ratio is in compliance with minimum capital to risk asset ratio (‘CRAR’) prescribed by RBI. Further, as informed to us, the Company is yet to file the annual return with RBI in the form NBS -7 as at 31 March 2020; and

b) the Company has furnished to RBI, the provisional annual statement of capital funds, risk assets/exposures and risk asset ratio (‘form NBS-7’) for the year ended 31 March 2020 on 24 April 2020 within the stipulated period.

viii. Based on the criteria set forth by RBI in paragraph 3 (xix) of the Master Direction for classification of NBFCs as NBFC – Micro Finance Institution (‘NBFC-MFI’), the Company does not meet the criteria to be classified as NBFC-MFI as defined in the aforesaid Master Direction, with reference to the business carried on by it during the year ended 31 March 2020.

Restrictions of use

8. This Report is addressed to and provided to the Board of Directors solely to comply with the aforesaid Direction and for submission to RBI, if required and may not be suitable for any other purpose. Accordingly, our Report should not be quoted or referred to in any other document or made available to any other person or persons without our prior written consent. Also, we neither accept nor assume any duty or liability for any other purpose or to any other party to whom our Report is shown or into whose hands it may come without our prior consent in writing.

For B S R & Associates LLP Chartered Accountants Firm's Registration No.: 116231W/W-100024

Rohit Alexander Partner Place: Bangalore Membership No.: 222515 Date: 25 June 2020 UDIN: 20222515AAAAAY9720

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32.1 Leases Transition to Ind AS 116

Ministry of Corporate Affairs ("MCA") through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian Accounting Standards) Second Amendment Rules, has notified Ind AS I 16 Leases which replaces the existing lease standard, Ind AS 17 leases, and other interpretations Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors It introduces a single, on-balance sheet lease accounting model for lessees

For transition, the Company has elected not to apply the requirements of Ind AS 116 to leases which are expiring within 12 months from the date of transition by class of asset and leases for which the underlying asset is of low value on a lease-by-lease basis. The Company has also used the practical expedient provided by the standard when applying Ind AS 116 to leases previously classified as operating leases under Ind AS 17 before the date of initial application as an alternative to perfonning an impainnent review, excluded initial direct costs frommeasuring the right of use asset at the date of initial application and used hindsight when detennining the lease tenn if the contract contains options to extend or tenninate the lease. The Company has used a single discount rate to a portfolio of leases with similar characteristics.

The Company has adopted Ind AS 116 - Leases and applied it to all lease contracts existing on April I, 2019 using the modified retrospective method Based on the same and as pennitted under the specific transitional provisions in the standard, the Company is not required to restate the comparative figures,

On transition, the adoption of the new standard resulted in recognition of Right-of-use asset of Rs 12,261 19 and a lease liability of Rs. 11,748.57 as at April I, 20 I 9 The effect of this adoption is not material to the profit/ (loss) for the period and earnings/(loss) per share.

On application of Ind AS 116, the nature of expenses has changed from lease rent in previous periods to depreciation cost for the right-to-use asset, and finance cost for interest accrued on lease liability.

The Company had total cash outflows for leases of Rs. 5,075,27 for the year ended March 31, 2020 (March 31, 2019: Rs 5,531 24) including expense of Rs 2 I 3 27 for the year ended March 31, 2020 relating to shorttenn leases. The Company does not have any lease restrictions and commitment towards variable rent as per the contract.

BOARD REPORT OF HOME CREDIT INDIA FINANCE PRIVATE LIMITED FOR THE YEAR 2019-20

DIRECTORS’ REPORT

Dear Members,

The Directors of your Company have pleasure in presenting you the 23rd Annual Report of your Company along with the Audited Accounts for the Financial Year (FY) from April 01, 2019 to March 31, 2020.

FINANCIAL SUMMARY/ HIGLIGHTS:

Particulars Year ended Year ended March 31, 2020 March 31, 2019 (INR In Lakhs) (INR In Lakhs) Revenue from operations 311,088.77 244,370.34 Other Income 425.92 1,520.88 Employee benefits expenses and Other expenses 108,174.97 114,785.56 Impairment on financial instruments 104,950.23 75,714.30 Profit/ Loss before Interest, Depreciation and Tax 97,963.57 53,870.48 Finance costs 70,623.25 53,044.65 Depreciation and amortization 16,062.18 10,981.11 Net Profit/ (Loss) before Tax 11,704.06 (8,634.40) Income tax 8,426.99 2,963.62 Deferred tax expense 7,791.49 (46,727.18) Net Profit/ (Loss) after Tax (4,514.42) 35,129.16 Other comprehensive income/ (loss) for the year, net of tax (285.28) (355.99) Total comprehensive income/ (loss) for the year, net of tax (4,799.70) 34,773.17 Surplus/(Deficit) b/f from previous year (93,540.21) (121,287.55) Amount available for appropriation (98,339.91) (86,514.38) Transfer from retained earnings to statutory reserve - 7,025.83 Balance c/f to Balance Sheet (98,339.91) (93,540.21)

Home Credit India has performed commendable in the FY 2019-20. Here are some key facts:

1. Income for the FY 2019-20 is INR 3,115.15 Crores as compared to INR 2,458.91 Crores in FY 2018- 19. 2. Revenue from operations for the FY 2019-20 is INR 3,110.89 Crores as compared to INR 2,443.70 Crores in FY 2018-19, depicting a growth of 27.30%. 3. Assets under management (AUM) grew by 24.02% to INR 7,997.08 Crores as of March 31, 2020. 4. Net interest income for FY 2019-20 was up by 28.32% to INR 2,026.61 Crores. 5. The overall disbursement registered a growth of 12% at INR 8,272 Crores as compared to INR 7,387 Crores in the previous year. 6. Interest income has increased by 29.53% from INR 2,109.74 Crores in FY 2018-19 to INR 2,732.84 Crores in FY 2019-20. 7. The Capital Adequacy Ratio (including Tier-II capital) as of March 31, 2020 stood at 27.14%. The Tier- I capital as of March 31, 2020 stood at 26.39%. 8. New loans booked during FY 2019-20 increased by 10% to INR 794.14 Crores.

STATEMENT OF COMPANY’S AFFAIRS:

Home Credit India enjoyed yet another strong year of performance aided by a diversified product mix, robust volume growth, prudent liability management, efficient operating costs and effective risk management. Being the leading player in sub INR 10,000 category, the Company has been able to establish a significant presence in the lending space and has emerged as one of the leading NBFCs in India, catering to the requirement of small/medium ticket size retail customers. Home Credit India has an employee base of close to 14,000 and has been consistently growing its operations since its entry in 2012, with geographical presence in over 350 cities across 22 States in India. The Company has a strong network of around 31,300 points-of-sale (POS) and is unceasingly growing with a customer base of around 11.6 million customers, driven by Pan-India expansion across major markets, a range of diversified and innovative products backed by superior customer experience.

During the FY ended March 31, 2020, the Company has reported Profit before tax (PBT) of INR 117 Crores as compared to Loss before tax of INR 86.34 Crores for the previous year which is mainly driven from higher sales volume and increased customer base of the Company. FY 2019-20 was another year of improved operating performance, financial growth and driving new initiatives for Home Credit. However, right around the close of financial year under review, the entire globe started getting into the COVID-19 pandemic and India was no different from the impact standpoint. Further, the financial sector was one of the most severely affected sectors owing to money supply disruption caused on account of the pandemic.

This also resulted in the Governments and Regulators to step up and introduce various measures to cope up with the unprecedented scenarios, including but not limited to introduction of new accounting methodology and provisioning requirements so as to build in the potential damage in the books of accounts, caused by the pandemic. As a result of this, the Company in consultation with its auditors was advised to create an additional impairment provision of INR 98 crore. Further, the Company recognized its Deferred Tax Assets during the ended March 31, 2019. However, on account of change in the corporate tax rates during financial 2019-20, the Company has written down the Deferred Tax Asset of Rs. 129 crores.

Also, during the year, the policy for write off has been revised from 361 days to 271 Days Past Due (DPD) due to which there is an additional write off impact of INR 44.14 Crores. This is over and above the additional provision for impairment, created for INR 146 Crores due to increase in business volumes. On account of these adjustments, the Company has incurred post tax losses during the FY 2019-20. Despite all these, the Company was maintaining healthy statutory ratios with adequate Capital adequacy ratio of 27.14% as at March 31,2020.

Your Company has earned the trust and confidence of its customers with its consistent, transparent and reliable services and as a result, customer satisfaction and confidence across its network continues to grow. Your Company has cumulatively financed the aspirations of over eleven million customers since its inception, most of whom had no prior credit history. Your Company’s nationwide network of branches and locally recruited employees has facilitated in catering to the diverse financial requirements of its customers by identifying and understanding the needs and aspirations of the people. With its strong presence across the country, your Company is providing flexible financing opportunities to aspiring individuals to realize their dreams and helping them to grow. Your Company believes that incessantly serving its customers, channel partners and enhancing customer relationship is the corner stone of a great successful journey.

The Company is making continuous endeavour to excellence its market offerings by introducing new products to meet the diverse financial needs of our retail customers. The Company has launched first of its kind arrangement of “Joint lending/ Co-origination of loans”, pioneering the same with a key player in the retail lending space viz. Karur Vysya Bank (KVB), and similar arrangement is under discussion with other partners. The joint lending arrangement entails facilitating the sourcing and servicing of loans jointly on a real time basis and sharing of risks and rewards. With this partnership and by leveraging the lower cost of funds of the partner, the Company will be able to reach out to a new segment of customer. The Company has also launched Ujjwal Card (known as EMI card in the industry parlance), which is an offering of a pre-approved and uncommitted consumer durables loan limit for the purchase of smart phones/ other consumer durables to existing as well new customers. The Ujjwal Card has been launched with the idea to help reduce attrition rate (customers going to another service provider) and build prolonged relationship with customer, and hence maintain a better competitive position in our target segment as well as our POS business.

The Company is also in the process of evaluating various other new products and offering channels. The Company has already initiated offering various value-added services as also the novel channels of offering various loan products. The Company is aggressively working developing online Risk Based pricing model which shall enable the customers to avail services from the Company through various digital channels. In order to support this exponential growth, your Company has ensured immense focus on systems, controls and infrastructure especially on Information Technology. The Company has set up a robust IT infrastructure which is capable to meeting the business needs as of now and going forward as well.

In pursuit of its endeavour of offering bouquet of services to the customer, Your Company decided to venture into the business of Insurance and accordingly has obtained the Certificate of Registration for Corporate agency business from Insurance Regulatory Development Authority of India (‘IRDAI’) and has started offering general and/or life insurance products to its customers on standalone basis. Your Company has built long term association with leading Insurance players like HDFC Ergo General Insurance Company Ltd and Bajaj Allianz Life Insurance Company Ltd to optimize the opportunity of serving large customer base and diversify the existing portfolio of product suite in the Company. Insurance still continues to remain highly under penetrated business and your Company perceives significant growth and expansion opportunity this particular segment.

Your Company continued to focus on managing cash efficiently and ensured that it had adequate liquidity and back-up lines of credit. There has been increase in finance cost by INR 175.79 Crores consistent with the average borrowings of the Company which increased from INR 4,018 Crores to INR 5,403 Crores during the year as compared to year ended March 31, 2019. However, the average cost of funds has reduced from 13.20% p.a. to 13.07% p.a. While concerns around low liquidity and asset–liability mismatch impacted the sector, at Home Credit, we continued to grow with a focus on building a healthy book.

During the year under review, your Company continued with its diverse methods of sourcing funds in addition to regular borrowings like Non-Convertible Debentures, Term Loans, Fixed Deposits, Commercial Papers Securitisation Transactions and External Commercial Borrowings etc. and has maintained prudential Asset/ Liability match throughout the year. Your Company has also sourced loans from banks and other institutions at attractive rates and reduced the average cost of funding. Home Credit India was successful in managing its asset liability management (ALM) prudently with a strategy of raising long-term borrowings and maintaining a judicious mix of borrowings.

Your Company has a comprehensive liquidity management framework and maintains an abundant liquidity buffer to manage liquidity risk. This has enabled Home Credit India to overcome past and current liquidity stresses. To strengthen the liquidity situation of the sector, RBI introduced a liquidity coverage ratio (LCR) requirement for all NBFCs with AUM of 5,000 Crore and above. The LCR regulation mandates NBFCs to maintain a minimum level of high-quality liquid assets to cover expected net cash outflows in a stressed scenario. It is a convivial regulatory change and will significantly strengthen Liquidity profile of the NBFC sector. Home Credit's liquidity buffer is well above the mandatory LCR requirement even during current crisis and demonstrates its strong orientation towards liquidity management.

Your Company and its Board wish to place on record their heartiest thanks to our shareholders for their continued support for the regular sourcing of funds and guidance.

COVID-19 PANDEMIC

The World Health Organization (WHO) on March 11, 2020 declared the outbreak of Coronavirus (COVID-19) as a global “Pandemic”. Like some of the other countries in the World, the virus impact led the Hon’ble Prime Minister of India, Shri Narendra Modi to announce lockdown across the country from March 25, 2020 to restrict it from spreading further and to break the cycle of infection. As a result, the Country’s economic activities came to a standstill.

The coronavirus pandemic is the most serious challenge to Banks and NBFCs in nearly a century as they will be coping with a long-term slowdown in the coming time. At the backdrop the economic fallout being witnessed by the global/domestic economy, the Company continues to believe that it’s overall financial profile,

capitalization levels, promoter support and optimised risk management systems should maintain a well- managed ALM and remain compliant with statutory ratios. We at Home Credit India, stand together in our battle to combat the COVID-19 pandemic. We are committed to provide requisite support to our customers, employees, stakeholders, vendors, government agencies and the community at large in responding to the unprecedented health crisis. We have designed COVID-specific strategies as a part of our business continuity plan to manage this force majeure situation:  During the lockdown, we took an initiative to provide support to our customers through regular interaction.  In line with the guidance issued by RBI, moratorium option was provided to all eligible customers.  The wellbeing of our people is always our utmost priority. We undertook several initiatives for their safety and awareness during the COVID-19 outbreak. All employees were advised to strictly follow lockdown guidelines issued by the Government,  As a small contribution in the time of this pandemic, the Company also imported few N95 masks and respirators which were distributed to the needy individuals with the support of government agency and also made arrangements for ration distribution for approximately 10000 people  Engaging all business partners digitally and through Work from Home (WFH) protocol for business continuity.

Further, the Company also taken pride in the submitting that it was able to implement the Business Continuity Plan within very small time after the outbreak of pandemic and announcement of lock down. This ensured that Company was able to maintain the constant connect with its customers and vendors even during the lock down. As we speak now, although the pandemic still continues to grip the world and everyone is waiting curiously for development of vaccine, the Company is confident that owing to its strong fundamentals, comfortable liquidity position and statutory ratios under control, Your Company shall be able to sail through during these turbulent times, though the intermittent hiccups arising out of the unprecedented scenarios cannot be ruled out completely.

Despite overall macro-economic scenario due to COVID-19, we believe that your Company will continue to perform well in FY 2020-21.

SHARE CAPITAL

Capital Structure

The Authorised Share Capital of the Company as on March 31, 2020 was INR 21,000,000,000/- (Indian Rupees Twenty-One Billion Only) comprising of 2,100,000,000 (Two Billion One Hundred Million) equity shares of INR 10/- (Indian Rupees Ten only).

The issued and paid-up Equity Share Capital as on March 31, 2020 was INR 9,765,831,830/- (Nine Billion Seven Hundred Sixty-Five Million Eight Hundred Thirty-One Thousand Eight Hundred Thirty Only).

The Company has neither issued any equity shares including shares with differential rights as to dividend, voting or otherwise, nor has issued any sweat equity, Employee Stock Options, during the year under review.

FUND RAISED DURING THE YEAR

Debentures:

During the year under review, the Company has issued and allotted the below Non-Convertible Debentures (NCD), through private placement basis -

S. Debenture No. of Face Amount Issue Price Date of Date of No Holder Debentures Value (INR) and Issue Maturity and (INR) Discount payment terms 1 JM 650 10,00,000 650,000,000 Issue Price: July 10, January 07, Financial 9,86,767 2019 2021 (floating Products Discount: coupon rate Limited 13,233 payable at the time of redemption)

Commercial Papers:

During the year under review, the Company has made following issue of Commercial Paper-

S. No Investor Units Face value per Amount (INR) Date of Issue unit (INR) 1 JM Financial Products 200 5,00,000 10,00,00,000 June 28, 2019 Limited 2 Northern Arc Money 160 5,00,000 8,00,00,000 August 07, 2019 Market Alpha Trust 3 Northern Arc Money 140 5,00,000 7,00,00,000 September 25, 2019 Market Alpha Trust 4 Northern Arc Money 140 5,00,000 7,00,00,000 October 11, 2019 Market Alpha Trust 5 Northern Arc Money 120 5,00,000 6,00,00,000 November 22, 2019 Market Alpha Trust 6 Northern Arc Money 140 5,00,000 7,00,00,000 December 03, 2019 Market Alpha Trust

However, the Company has redeemed all the Commercial papers on their respective maturity date, during the year under review.

External Commercial Borrowings:

During the year under review, the Company has raised funds through below External Commercial Borrowings (ECBs) through automatic route from the Group Company with common overseas parent for the purpose of on-lending to customer base of the Company:

S. No Lender Amount (INR) Tenure from the date of drawdown 1 AB 4 B.V. 1,750,000,000 3 years 15 days 2 AB 4 B.V. 3,500,000,000 3 years 16 days 3 PPF CO3 B.V. 3,000,000,000 3 years 15 days 4 AB 4 B.V. 3,000,000,000 3 years 16 days 5 PPF CO3 B.V. 5,000,000,000 3 years 15 days 6 AB 4 B.V. 5,500,000,000 3 years 15 days 7 PPF Co3 B.V. 4,400,000,000 3 years 15 days

Securitization:

During the year under review, the Company has securitised the following receivables arising from its pool:

S. Securitization Pool Pool Principal Amount Date of Execution No (INR) 1 Cash Loan 77,33,27,706 June 27, 2019 2 Consumer Durable Loan 63,86,61,296 June 28, 2019 3 Consumer Durable Loan 66,24,04,904 September 27, 2019 4 Cash Loan 76,23,14,242 October 25, 2019 5 Consumer Durable Loan and Cash Loan 5,71,37,19,881 December 13, 2019

HOLDING /SUBSIDIARY / ASSOCIATE COMPANIES:

Your Company is the subsidiary of Home Credit India B. V. having its registered seat at Strawinskylaan 933, 1077 XX , The .

The Company has no subsidiary or associate company in India as defined in the Companies Act, 2013 (the “Act”).

BOARD OF DIRECTORS

As on March 31, 2020, the Board of the Company comprises of 6 (Six) Directors, consisting of two Executive Directors and four Non-Executive Directors out of which two are Independent Directors. The composition of the Board is in conformity with the Act and other applicable laws.

Changes in the Board of Directors during the FY 2019-20:

During the FY 2019-20, following changes took place in the composition of Board of Directors of the Company.

Basis the recommendation of Nomination and Remuneration Committee and opinion of the Board with regard to his integrity, expertise and experience, Mr. Kapoor was appointed as an Additional Independent Director by the Board of Directors of the Company on January 16, 2020. Mr. Rakesh Kapoor has done Diploma in Management from All India Management Association and B.Sc. (Hons. Chemistry) from Hindu College, University of Delhi. Mr. Kapoor has also completed Post Graduate Diploma in Sugar Technology from National Sugar Institute, Kanpur and Certification Course in International Marketing from Indian Institute of Foreign Trade. Mr. Kapoor is a Dynamic Techno-Finance Professional with strong experience of more than 32 years in financial services sector and 10 years in corporate sector. He has previously worked as Chief General Manager at IFCI Ltd. and Managing Director at IFCI Factors Ltd., New Delhi, besides having worked with DCM Ltd., Triveni Engineering & Industries Ltd. and Cimmco International Ltd. for about 10 years. Mr. Rakesh Kapoor also worked as CEO & Whole-time Director in New Habitat Housing Finance & Development Limited and is presently working there as advisor and Director since October 2019.

Further, Mr. Vijay Dhingra, who was re-appointed as a Whole-time Director of the Company for a further term of 3 years in the Board meeting held on January 25, 2019, his appointment was approved by the shareholders of the Company at the 22nd Annual General Meeting of the Company held on September 30, 2019.

During the year, Mr. Pramod Kumar Panda has resigned from the position of the Independent Director of the Company with effect from July 25, 2019. The Board would like to extend its heartiest thanks for guidance and support extended by Mr. Pramod Kumar Panda during his tenure as Independent Director of the Company.

During the year, Mr. Pavel Krbec has also resigned from the position of the Non-Executive Director of the Company, with effect from February 10, 2020. The Board would like to extend its heartiest thanks for guidance and support extended by Mr. Pavel Krbec during his tenure as Non-Executive Director of the Company.

Changes in the Board of Directors after the end of the financial year and up to the date of the report:

Basis the recommendation of Nomination and Remuneration Committee, Mr. Jean Lafontaine was appointed as an Additional Non-Executive Director by the Board of Directors of the Company on May 22, 2020. Mr. Lafontaine has done B.A. with Honors in Business Administration and Economics from Richmond College (1990 - 1992). He has completed M.S. in accounting from Pace University, Lubin School of Business (1993-95). Mr. Lafontaine has worked with Deloitte & Touche LLP as Consultant in Treasury and Financial Risk Management Services (Jan 1995 – May 1997) and with Citigroup Global Markets Limited on numerous positions on Capital Markets, Merger & Acquisitions, Capital Raising, Banking Insurance, Assets Management, Initial Public Offering, listing of equity and restructuring of financial system (May 1997-Sept 2019). At present, Mr. Lafontaine is working with Home Credit Group since October 2019 as Group Head of Funding, M&A and Investor Relations and responsible for the execution of Funding, M&A and Investor Relation Strategy.

Basis the recommendation of Nomination and Remuneration Committee, Mr. Anirban Majumder was appointed as a Whole-time Director by the Board of Directors of the Company on May 22, 2020. Mr. Anirban Majumder has completed BS in Mathematics from Jamia Millia Islamia University and has also completed MBA in Finance from Jamnalal Bajaj Institute of Management Studies. He has worked with the General Electric group for 17 years on various positions and at various locations all over the world in the area of auditing, controllership and financial planning & analysis. Presently, he has been associated with the Company since December 2017 as Chief Financial Officer and responsible for managing Finance and Treasury Function.

Mr. David Minol has also resigned from the position of the Non-Executive Director of the Company, with effect from June 16, 2020. The Board would like to extend its heartiest thanks for guidance and support extended by Mr. David Minol during his tenure as Non-Executive Director of the Company.

Number of Meetings of the Board of Directors during the FY 2019-20

During the year ended March 31, 2020, 7 (Seven) meetings of the Board of Directors were held (i.e. on 25.04.2019, 14.05.2019, 24.06.2019, 17.09.2019, 06.11.2019, 16.01.2020 and 06.03.2020). The intervening gap between the two continuous meetings was within the period prescribed under the Act. The details of number of Board meetings attended by respective Directors are tabulated below:

S. Name of Director Designation Number of Board No. meetings attended during the FY 2019- 2020 1 Mr. Ondrej Kubik Whole-time Director & Chief 6(Six) Executive Officer 2 Mr. Pavel Rozehnal Non-executive Director 1(One) 3 Mr. David Minol Non-executive Director 3(Three) 4 Mr. Vijay Dhingra Whole-time Director 7(Seven) 5 Dr. Tamali Sen Gupta Woman Independent Director 7(Seven) 6 Mr. Rakesh Kapoor Additional Independent Director 1(One)

(appointed w.e.f. January 16, 2020) 7 Mr. Pramod Kumar Panda Independent Director 2(Two) (resigned w.e.f. July 25, 2019) 8 Mr. Pavel Krbec Non-executive Director 3(Three) (resigned w.e.f. February 10, 2020)

KEY MANAGERIAL PERSONNEL

Pursuant to the provisions of Section 203 of the Act, following employees of the Company have been designated as the Key Managerial Personnel of the Company by the Board of Directors of the Company as on March 31, 2020:

1. Mr. Ondrej Kubik (Chief Executive Officer) 2. Mr. Anirban Majumder (Chief Financial Officer) 3. Mr. Gaurav Sharma (Company Secretary)

CORPORATE GOVERNANCE

Effective corporate governance practice constitutes the strong foundation, on which successful commercial enterprises are built to last. The Company’s philosophy on corporate governance superintends business strategies and ensures accountability, ethical corporate behaviour and fairness to all stakeholders comprising regulators, employees, customers, vendors, investors and the society at large.

The Company does not view Corporate Governance principles as set of binding obligations but believes in using it as a framework to be followed in true spirit. The Company makes a constant endeavour to adopt the best practices and the highest standards of corporate governance through transparency in business ethics, accountability to its customers, Government and others. The Company’s activities are carried out in accordance with good corporate practices and the Company is constantly striving to finer these practices by adopting best practices.

The Company believes that governance practices enable the Management to direct and control the affairs of the Company in an efficient manner and to achieve the Company’s goal of maximising value for all its stakeholders. The Company will continue to focus its resources, strengths and strategies to achieve its vision of becoming a leading financial services company in India. As a part of the Home Credit Group, Home Credit India has a strong legacy of fair, transparent and ethical governance practices.

COMMITTEES OF THE BOARD

The Board has constituted Committees with specific terms of reference to focus on specific issues and ensure expedient resolution of diverse matters.

AUDIT COMMITTEE

Pursuant to the requirement of the NBFC Regulations and the Act, the Company has constituted an Audit Committee. The Board reviews the terms of reference and working of the Committee from time to time. i. Composition

The Composition of Audit Committee as on March 31, 2020 is as under:

S. No Name of Director Category 1 Mr. Ondrej Kubik Whole-time Director 2 Dr. Tamali Sen Gupta Woman Independent Director 3 Mr. Rakesh Kapoor Additional Independent Director ii. Meeting and attendance during the year

During the FY 2019-20, the Committee met 3 (three) times on May 14, 2019, June 24, 2019 and November 6, 2019. The attendances of Members at the meetings of the Committee held during the year are as follows:

S. No Name of Member Number of meetings attended during the FY 2019-20 1 Mr. Ondrej Kubik 2 (Two) 2 Dr. Tamali Sen Gupta 3 (Three) 3 Mr. David Minol* 1 (One) 4 Mr. Pramod Kumar Panda** 2 (Two) 5 Mr. Rakesh Kapoor*** Not Applicable

*Mr. David Minol ceased to be a member of Audit Committee subsequent to reconstitution of Committee on March 06, 2020. **Mr. Pramod Kumar Panda, Independent Director of the Company has resigned from the Board w.e.f. July 25, 2019 and consequently from the Audit Committee. ***Mr. Rakesh Kapoor, Additional Independent Director of the Company has been appointed as the member of the Audit Committee w.e.f. March 06, 2020.

NOMINATION COMMITTEE

Pursuant to the requirement under NBFC Regulations, the Company has constituted a Nomination Committee*. The Board reviews the terms of reference and working of the Committee from time to time. i. Composition:

The Composition of Nomination Committee as on March 31, 2020 is as under:

S. No Name of Director Category 1. Dr. Tamali Sen Gupta Woman Independent Director 2. Mr. David Minol Non- executive Director 3. Mr. Rakesh Kapoor Additional Independent Director

*The nomenclature of the Nomination & Remuneration Committee has been changed to Nomination Committee by the Board in its meeting on June 25, 2020. ii. Meeting and attendance during the year:

During the FY 2019-20, no Nomination Committee meeting was held.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

In compliance with the requirements of Section 135 of the Act, , read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended from time to time, the Board of Directors have constituted a Corporate Social Responsibility (CSR) Committee. The CSR Policy of the Company has been approved by the

Board on the basis of the recommendations of the CSR Committee. your Company is committed to spend towards the CSR activities in terms of the applicable guidelines as and when the Company achieves the profitability. However, during the period under review, the Company was not required to take any initiative under CSR due to absence of profit. i. Composition:

Following is the Composition of Corporate Social Responsibility (CSR) Committee as on March 31, 2020.

S. No. Name of Director Category 1 Mr. Ondrej Kubik Whole-time Director 2 Mr. David Minol Non- executive Director 3 Mr. Vijay Dhingra Whole-time Director 4 Dr. Tamali Sen Gupta Woman Independent Director ii. Meeting and attendance during the year:

In terms of the applicable provisions, the Company is not required to make any contributions towards CSR activities. As a result of this, during the FY 2019- 20, no Corporate Social Responsibility Committee meeting was held.

INDEPENDENT DIRECTORS MEETING

In compliance with Schedule IV of the Act, the Independent Directors held their separate meeting on March 06,2020 inter alia, for the following:

1. To review the performance of Non-Independent Directors and the Board as a whole. 2. To assess the quality, quantity and timeliness of flow of information between the Company management and the Board.

Both the Independent Directors were present at the meeting. The Independent Directors present at the meeting elected Dr. Tamali Sen Gupta as the Chairperson for the meeting, deliberated on the above and expressed their satisfaction on all matters.

COMPLIANCE OF INFORMATION TECHNOLOGY FRAMEWORK FOR THE NBFC SECTOR

Pursuant to RBI Master Direction-Information Technology Framework for the NBFC sector, the Company has constituted an IT Strategy Committee and IT Steering Committee to review the IT strategies in line with its corporate strategies, cyber security arrangements and any other matter related to IT governance.

DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Act, the Board of Directors hereby confirms that: a. In preparation of the Annual Accounts for the FY ended March 31, 2020, the applicable Accounting Standards had been followed along with proper explanation to material departures; b. The Directors had selected such Accounting Policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the FY and of the profit or loss of the Company for that period.

c. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. d. The Directors had 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. f. The Directors had devised proper systems to ensure compliance with the provisions of all the applicable laws and that such systems were adequate and operating effectively.

DECLARATION BY INDEPENDENT DIRECTORS

The Independent Directors have submitted a declaration of independence, stating that they meet the criteria of independence provided under section 149(6) of the Act, as amended and have complied with the Code for Independent Directors prescribed in Schedule IV of the Act.

The Board took on record the declaration and confirmation submitted by the independent directors of adhering the prescribed criteria of independence.

FORMAL ANNUAL EVALUATION

Pursuant to the provisions of Sec 134(3)(p) read with Sec 178 of the Act, a formal evaluation of the performance of the Board, it’s Committees, Individual Directors and the Chairperson was carried out for FY 2019-20.

1. The evaluation was carried out using questionnaire covering, amongst others, composition of board, effective decision making, advice and necessary guidance, open communication, meaningful participation, knowledge & expertise of Directors, contribution at Board meetings etc. Further, Individual Directors (Executive, Non- Executive and Independent) were evaluated in terms of participation in the meetings of Board and Committees, Education & Qualification, effective examination of the financial and other information related to the operations of the Company, raising of valid concerns, impartial & meaningful participation and adequate deliberations in the meeting.

2. As part of the evaluation process, the performance evaluation of the respective Committees and that of Independent and Non-Independent Directors was done by the Board excluding the Director being evaluated. The performance of Non-Independent Directors, the Chairman and the Board was conducted by the Independent Directors in its meetings. The feedback of the Independent Director on their review of the performance of Non-Independent Directors, Chairman of the Board and the Board as a whole and the assessment of the quality, quantity and timeliness of flow of information between the Company, the Management and the Board was taken into consideration by the Board in carrying out the performance evaluation.

3. Qualitative comments and suggestions of Directors were taken into consideration by the Chairman of the Board. The actions emerging from the Board evaluation process were collated and on consolidated basis, the summary of the ratings was prepared, and the report of performance evaluation so arrived at, was then noted and discussed by the Board at their meeting held on October 09, 2020. The performance evaluation concluded on the note that each of the individual directors, Committees and the Board as a whole, were performing efficiently and effectively and shared a common vision to turning organization goals into reality. The entire performance evaluation process was completed to the satisfaction of Board.

EMPLOYEES

To Home Credit India, our people are our key assets, in an increasingly competitive market for talent, the Company continues to focus on attracting and retaining right talent and fostering a work culture that is always

committed to providing the best opportunities to employees to realise their potential. Our constant endeavour is to invest in people and processes to improve human capital for the organisation and service delivery to our customers. Given growth plans of the Company, an important strategic focus of the Company is to continue to not only nurture its human capital, but also proactively focus on preparing all employees for the challenges of the future. The Company strives to provide a conducive and competitive work environment to help the employees excel and create new benchmarks of productivity, efficiency and customer delight. The Company has adopted remuneration policy. There are no material changes proposed in the policy during the year. The salient features of the same is displayed on the website (www.homecredit.co.in) of the Company.

The Company has reinforced a culture of performance and meritocracy by deploying transparent and agreed goals. These agreed goals cascade from the Company’s growth strategy and plans. Appraisals are also completed based on these goals and objectives filled by the employees. Attracting and retaining bright talent and improvement in the quality of manpower are identified as key challenge and being addressed accordingly through product training and retention initiatives.

Home Credit’s mission on creating a high-performance culture has been further strengthened through areas like building a capability model (identification of critical competencies), nurturing talent through interventions such as mentoring, competency-based training programs and cross functional projects.

The Company has responded swiftly to COVID-19 outbreak by adopting various safety measures for all the employees of the Company. As soon as the nation-wide lock down was announced, , the focus of the Company immediately shifted to ensuring the health and well-being of all employees together with making necessary arrangement for minimizing disruption to services for all our customers. Accordingly, the Company proactively took following measures to ensure safety of our employees: a. All zonal offices (5) and city offices (41) were closed as only essential service providers were allowed to operate during the nation vide lockdown and the resumption started very recently basis the un lockdown guidelines issued by MHA b. Work from home was enabled for most of the employees by providing laptops, desktops and other IT assets at residence of employees. c. For all the employees, a COVID insurance to the tune of INR 5,00,000 per employee was made available.

During the lock down period, the Company arranged certain N95 masks and respirators for distribution.

The Company also cancelled all international trips, all physical trainings and conferences, curtailed domestic travels, and ensured implementation of social distancing measures at all workplace for the safety of our employees. We have built necessary infrastructure in our offices to further ensure health protocols. The continuous communication on protection and social distancing norms, precautions like sanitisation of offices, availability of hand sanitisers and masks and self-declaration surveys for employees on their health status are being incessantly done for ensuring wellbeing and safety of our employees.

Your Directors wish to place on record the appreciation for the efforts and dedication of the employees in achieving good results during the year.

The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of particulars of employees of the Company, are set out in the “Annexure A” & “Annexure B” to this report.

PUBLIC DEPOSITS

During the FY 2019-2020, the Company has not accepted any public deposit. The resolution has been passed by the Board of Directors on April 05, 2020 confirming that the Company has neither accepted nor held any public deposit as defined in RBI Master Direction - Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016, as amended from time to time and that the Company shall neither

accept nor hold in FY 2020-2021 any public deposit as defined in Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016, as amended from time to time.

AUDITORS AND AUDITORS’ REPORT

STATUTORY AUDITORS

Pursuant to the provisions of Section 139 of the Act, the shareholders of the Company at the Annual General Meeting held on September 28, 2016 has on the recommendations of the Board of Directors, appointed M/s. B S R & Associates LLP, Chartered Accountants as the Statutory Auditors of the Company for a consecutive term of 5 years (2016-17 to 2020-21) subject to ratification by members at each subsequent Annual General Meeting. Pursuant to the Notification issued by the Ministry of Corporate Affairs on May 7, 2018 amending Section 139 of the Act, and the applicable Rules, the mandatory requirement for ratification of appointment of Auditors by the Members at every AGM has been omitted. However, as good corporate governance practice, ratification of appointment of Statutory Auditors is being sought from the members of the Company at the ensuing Annual General meeting of the Company.

The Company has received from M/s. B S R & Associates LLP, a certificate dated May 11, 2020 to the effect that they are eligible to continue with their appointment and that they have not been disqualified in any manner from continuing as Statutory Auditors.

STATUTORY AUDITORS’ REPORT

The Auditors’ Report to the shareholders does not contain any qualification, reservation or adverse remark. The notes to the Accounts referred to in the Auditors’ Report are self-explanatory and do not call for further comments.

SECRETARIAL AUDITOR

The Board of Directors appointed M/s Anjali Yadav & Associates, Practicing Company Secretaries, as Secretarial Auditor of the Company for FY 2019-2020 for conducting the audit of the secretarial and related records of the Company.

SECRETARIAL AUDITORS’ REPORT

Pursuant to the provisions of Section 204 of the Act, every listed company is required to annex with its Board’s Report, a Secretarial Audit Report given by a Company Secretary in practice, in the prescribed format.

Their report is annexed to this Board Report as Annexure D. There are no qualifications, reservations or adverse remarks made in the Secretarial Audit Report

REPORTING OF FRAUD BY AUDITORS

During the year under review, neither the statutory auditor nor the secretarial auditor has reported to the audit committee, under section 143(12) of the Act, any instances of the fraud committed against the committee by its officers or employees, the details of which would need to be mentioned in the Board report.

DEBENTURE TRUSTEE

During the year, the Company has issued non-convertible debentures to the domestic investor. As per the requirement under the Act and SEBI regulations, the Company has appointed Catalyst Trusteeship Limited (formerly known as GDA Trusteeship Limited) with CIN U74999PN1997PLC110262 and having its registered office at GDA House, Plot No. 85, Bhusari Colony, Paud Road, Pune - 411 038 and branch office at Windsor, 6th floor, Office No. 604, C.S.T. Road, Kalina, Santacruz (East), Mumbai 400098, India as the Debenture Trustee for the non-convertible debentures issued by the Company.

LOAN, GUARANTEES & INVESTMENT

The Company, being a non-banking finance company registered with the Reserve Bank of India and engaged in the business of granting loans and finance in the ordinary course of its business, is exempt from complying with the provisions of Section 186 of the Act, in respect of loans and guarantees. Accordingly, the disclosures of the loans as required under the aforesaid section have not been given in this report.

CREDIT RATINGS

As on March 31, 2020, the Non-Convertible Debentures issued, and other borrowings raised by the Company retained the below ratings –

Non-Convertible Debentures*

Rating ISIN Outstanding as Rating as at Rating as at Agency at March 31, 2020 March 31, 2019 March 31, 2020 (INR In Lakhs) CRISIL INE172V07061 35,000 BBB+/STABLE BBB+/POSITIVE CRISIL INE172V07079 37,500 BBB+/STABLE BBB+/POSITIVE CRISIL INE172V07087 22,500 BBB+/STABLE BBB+/POSITIVE CRISIL INE172V07103 22,200 BBB+/STABLE BBB+/POSITIVE CRISIL INE172V07111 40,000 BBB+/STABLE BBB+/POSITIVE CRISIL INE172V08051 5,000 BBB+/STABLE BBB+/POSITIVE CRISIL INE172V07129 2,500 BBB+/STABLE BBB+/POSITIVE India INE172V07137 1,500 IND A-/STABLE IND A-/STABLE Ratings India INE172V07160 5,000 IND A-/STABLE IND A-/STABLE Ratings India INE172V07178 6,500 IND A-/STABLE Not Applicable Ratings

*The Company has made intimation regarding change in credit rating of NCDs to stock exchange, debeture trustee and RBI within the stipulated time.

Other Borrowings*

Brickwork India Ratings Facility CARE CRISIL s Long term bank facilities A-/STABLE BBB+/STABLE - - Short term Debt/Commercial Paper - - - IND A1 Commercial papers - - A1 - Bank Loans - - - IND A-/STABLE *The Company has made intimation regarding change in credit rating with respect to term loan borrowing to RBI within the stipulated time.

RELATED PARTY TRANSACTIONS

All Related Party Transactions (RPTs) entered by the Company during the year under review, were on arms’ length basis and in the ordinary course of business and did not attract provisions of section 188 of the Act. During the FY 2019-20, as required under section 177 of the Act, all RPTs were approved by the Audit Committee and the Company has not entered into any transactions with Related Parties which are not in its ordinary course of 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 Act. A statement on “Related Party Disclosures” showing the disclosure of transactions with related parties as required under Indian Accounting Standard 24 (Ind AS 24) issued by Institute of Chartered Accountants of India, read with the Companies (Indian Accounting standards) Rules, 2015, are given in the Notes to the Financial Statements.

The Company has framed policy on related party transactions in compliance with RBI directions. There were no materially significant related party transactions made by your Company with its Promoters, Directors, Key Managerial Personnel’s or other designated persons which might have a potential conflict with the interest of the Company at large. None of the Directors has any pecuniary relationships or transactions vis-à-vis the Company.

SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATOR OR COURT OR TRIBUNALS:

There were no significant/material orders passed by any Regulator or Court or Tribunal which would impact the going concern status of the Company and its future operations.

TRANSFER TO RESERVES

Pursuant to guidelines issued by Reserve Bank of India, the Company is required to transfer 20% of its profits to the Reserves in terms of section 45-IC (1) of the Reserve Bank of India Act, 1934. In the absence for any profits for the FY ended March 31, 2020, your Directors express their inability to transfer any amounts to the General Reserve.

DIVIDEND

In the absence of adequate profits for FY 2019-2020, no dividend is permitted to be paid to the members as per the provisions of the Act and rules made thereunder.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCUURED BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT

There have been no material changes and commitments, affecting the financial position of the Company, which have occurred between the end of the financial year of the Company and the date of this Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014 is given below: A. Conservation of Energy: The operations of your Company are not energy intensive. Adequate measures have, however, been taken to reduce energy consumption, wherever possible. As energy costs form a very small part of the cost, the impact on cost is not material. Your Company is primarily involved in providing services which do not result in significant consumption of power and energy; hence energy conservation measures are not very relevant. Also, the loans and financing business is

not covered under the list of industries, which should furnish this information in Form A annexed to the aforesaid Rules. B. Technology Absorption: Your Company is primarily engaged in the business of loans and financing. There is no usage of any particular technology or process. Hence, the Company is not required to provide any specific information/ inputs on technology absorption. C. Foreign exchange earnings and outgo:

Sr. No. Particulars Year ended Year ended March 31, 2020 March 31, 2019 (INR In Lakhs) (INR In Lakhs) 1. Expenditure in foreign currency 13,199.46 13,737.40 2. Earning in foreign currency - -

RISK MANAGEMENT

The Board of Directors has adopted and reviewed Risk Acceptance Policy for the Company on a regular basis which provides for identification, assessment and control of risks. The risk identification is an ongoing process to identify risks that company is or may be exposed to. This helps in establishing an appropriate risk management response to proactively identify risks and keep their impact minimal.

Risk department has developed and implemented methodologies for risk measurement of all people, processes, technology and vendor related risks it faces. The risk management framework is followed for all functions and processes and captures risks that can impact people, process or technology. The Management identifies and controls risks through a properly defined framework in terms of the aforesaid policy. For continual review of risk events and its impact, the Board of Directors of the Company has formed an Integrated Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

Based on the outcomes from the risk measurement via various methodologies, HCIN within its risk management strategies, deploy adequate risk response (risk acceptance, risk elimination, risk reduction or risk transfer) and highlight critical and high risks in appropriate forums.

i. Composition:

The Composition of Integrated Risk Management Committee as on March 31, 2020 is as under:

S. No Members Position held by

1. Chief Executive Officer Mr. Ondrej Kubik 2. Chief Financial Officer Mr. Anirban Majumder 3. Chief Risk Officer Mr. Marcin Trusz 4. Chief People Officer Mr. Sandip Mallik 5. Head-Legal Mr. Vijay Dhingra 6. Head-Operations Risk Management Mr. Amit Singh ii. Terms of reference:

Terms of Reference of Integrated Risk Management Committee includes: i. To review and assess the type and nature of the different risks, i.e. credit risk, liquidity risk, market risk, operational risk, financial risk, legal risk and/or any other risk as may be decided by the Board of Directors of the Company.

ii. To review and assess the quality, integrity and effectiveness of the risk management systems; iii. To review and govern the functions of the sub-committee on operational risk and credit risk of the Company; iv. To ensure that the Company has implemented an effective ongoing process to identify various risks, to measure its potential impact against a broad set of assumptions and then to activate what is necessary to pro-actively manage these risks, and to decide the Company’s appetite or tolerance for risk; v. To review processes and procedures to ensure the effectiveness of internal systems of control so that decision-making capability and accuracy of reporting and financial results are always maintained at an optimal level; vi. To monitor external developments relating to the practice of corporate accountability and the reporting of specifically associated risk, including emerging and prospective impacts; and vii. To review the risk bearing capacity of the Company in light of its reserves, insurance coverage or other such financial structures;

VIGIL MECHANISM

The Company has a vigil mechanism policy to deal with instances of fraud, unethical behaviour and mismanagement, if any. Vigil mechanism policy ensures that the activities of the Company and its employees are conducted in a fair and transparent manner by adoption of highest standards of professionalism. The vigil mechanism provides for adequate safeguards against victimization of persons and ensures that any employee, officer and director who violates the requirements of this policy will be subject to disciplinary action.

INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY

Your Company has aligned its current systems of internal financial control with the requirement of the Act. The Company is continuing to monitor the efficacy of Internal Controls through a comprehensive Internal Control Framework which had been designed to ensure transparency and accountability in an organisation’s process of designing and implementing a system of internal control. Through this framework risks in the company are identified and analysed and appropriate responses are managed. Moreover, the audit committee reviews the audit reports submitted by internal auditors and statutory auditors of the Company. Suggestions for improvement are considered and the audit committee follows up on corrective action.

The Company’s internal controls systems are commensurate with its size and the nature of its operations. These have been designed as well as operating effectively to provide a reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use, executing transactions with proper authorisation, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures and ensuring compliance of corporate policies.

INTERNAL AUDIT

At the beginning of each financial year, an audit plan is rolled out after the same has been approved by the Audit Committee. The audit plan is aimed at evaluation of the efficacy and adequacy of internal control systems and compliance thereof, robustness of internal processes, policies and accounting procedures, compliance with laws and regulations. Based on the reports of internal audit, function process owners undertake corrective action in their respective areas. Significant audit observations and corrective actions thereon are presented to the Audit Committee of Board on time to time basis.

SAFE ENVIRONMENT FOR WOMEN AT WORKPLACE

Your Company is committed to ensure safe and secure environment for women employees of the Company at all the levels and at all the offices of the Company. Accordingly, the Company has duly constituted Internal Committee in compliance of the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 which ensures immediate response to the complaints of harassment and fast track procedure disposal for such complaints. During the FY ended March 31, 2020, 07 (Seven) complaints have been received by the Committee against which necessary actions has been taken and all of them has been resolved.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as “Annexure C” and is also hosted on the Company's website at https://www.homecredit.co.in/

COMPLIANCE WITH REGULATIONS/ DIRECTIONS OF RESERVE BANK OF INDIA APPLICABLE TO NON- BANKING FINANCIAL COMPANIES:

The Company continues to comply with applicable regulations/ directions and other instructions issued by Reserve Bank of India (RBI) from time to time and continues to fulfil all the norms and standards laid down by the RBI in Master Direction – Non Banking Financial Company–Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 issued by Department of Non-Banking Supervision, Reserve Bank of India on September 29, 2016.

NON-BANKING FINANCIAL COMPANIES AUDITORS’ REPORT (RESERVE BANK) DIRECTIONS, 2016:

Pursuant to the Non-Banking Financial Companies Auditors’ Report (Reserve Bank) Directions, 2016, a report from the statutory auditors to the Board of Directors has been received by the Company. The Company continues to fulfil all the norms and standards laid down by the Reserve Bank of India (RBI) as applicable to the Company.

POLICY ON PREVENTION OF INSIDER TRADING:

In terms of the SEBI (Prohibition of Insider Trading) Regulations, 2015, the Company has framed a) Code of Internal Procedures and Conduct for Regulating, Monitoring and Reporting of Trading by Insiders and b) Code of Fair Disclosure. The Company’s Code, inter alia, prohibits dealing in the securities of the Company by the Designated Persons, while in possession of unpublished price sensitive information in relation to the Company and also during certain prohibited periods.

COMPLIANCE WITH SECRETARIAL STANDARDS:

Pursuant to the approval from the Ministry of Corporate Affairs, the Institute of Company Secretaries of India (ICSI) has, on April 23, 2015, notified the Secretarial Standards on Meetings of the Board of Directors (SS–1) and General Meetings (SS–2) effective from July 1, 2015 and revised version effective from October 1, 2017. The Company is in fully compliant with the same.

ACKNOWLEDGEMENT:

Your Company maintained cordial relationships with Reserve Bank of India, Registrar of Companies, Trustees for Debenture holders and other regulatory authorities, Financial Institutions, Banks, Vendors, Suppliers and