Your Directors take pleasure in presenting the 12^th Annual Report on the affairs of your Company together with the audited financial statements for the financial year ended March 31, 2021.

FINANCIAL HIGHLIGHTS

The key highlights of the audited standalone financial statements of your Company for the financial year ended March 31, 2021 and comparison with the previous financial year ended March 31, 2020 are summarized below:

FINANCIAL PERFORMANCE AND COMPANY’S STATE OF AFFAIRS

The Company utilized the lockdown period to ring-fence the business from potential stress arising out of the tough business environment, and build a scalable and sustainable future. The conservative approach of ring fencing the balance sheet since the first quarter of the financial year under review, has strenghthened the Company's position and placed it ideally to take advantage of future growth opportutunities. The Company is now looking to accelerate the buildup of the retail business. The combination of opening smart branches along with the digitization initiative will help the Company to enhance productivity and reduce operating expenses.

Pursuant to the requirement of the Reserve Bank of India (“RBI”) Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking

Company and Deposit taking Company (Reserve Bank) Directions, 2016, the circulars, directions, notifications issued by the RBI from time to time and provisions of the Companies Act, 2013 (the “Act”) read with Rules made thereunder, a provision of ' 74.87 crore (previous year: ' 151.58 crore) at the rate of 1.06% of outstanding standard assets of the Company was made as at March 31, 2021. For details of Reserves and Surplus of the Company, please refer Note 21 of the audited standalone financial statements of the Company for the financial year ended March 31, 2021.

Investment by Brookfield

On January 31, 2020, the Board of Directors of your Company approved (i) issue and allotment of 3,01,72,414 equity shares and 1,20,68,966 compulsorily convertible preference shares (“Subscription Securities”) to BCP V Multiple Holdings Pte. Ltd. (“Brookfield”), at ' 290 per share, aggregating to an approximate investment

of ' 1,225 crore in the share capital of the Company (“Preferential Allotment”); and (ii) execution of a share subscription agreement (“SSA”) and shareholders' agreement (“SHA”) among the Company, Brookfield and Indostar Capital (“ICM”). The SSA and SHA were executed on January 31, 2020 which had also triggered an obligation on Brookfield to make an open offer to the public shareholders of the Company in terms of Regulations 3(1) and 4 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“SEBI Takeover Regulations”) [“Open Offer”].

During the year under review, upon receipt of approval of the shareholders of the Company and regulatory authorities, Brookfield acquired 56.55% stake in the fully diluted share capital of the Company by way of (i) acquisition of Subscription Securities on May 27,

2020 under Preferential Allotment, (ii) acquisition of 2,92,41,258 equity shares of the Company on July 08, 2020, under the Open Offer, and (iii) acquisition of 50,00,000 equity shares of the Company on July 09, 2020, from ICM. Subsequent to completion of the abovementioned acquisitions, in terms of the SHA and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, Brookfield is in control of the Company and a promoter of the Company. ICM continues to be in control and be classified as a promoter of the Company. Funds raised pursuant to the Preferential Allotment have been utilized for the purpose for which it was raised.

This strategic investment by Brookfield will enable your Company to leverage Brookfield's expertise in the financial services domain globally to facilitate the raising of external finance, introduce operational improvements and continue to scale the business and will accelerate the pace of achieving your Company's objective of becoming a leading provider of financing and credit solutions for commercial vehicle owners, affordable home finance, small and medium enterprises and emerging businesses.

Details on performance of your Company has also been covered in the Management Discussion and Analysis Report which forms part of the Annual Report.

During the year under review, there has been no change in the nature of business of your Company. Pursuant to concious efforts of the Company towards its strategy to de-risk the balance sheet through retailisation, the share of retail AUM as on March 31,

2021 stood at 78% (as on March 31, 2020: 71%).

No material changes and commitments affecting the financial position of your Company have occurred between the end of year under review and date of this Board's Report.

IMPACT OF COVID-19

The year under review saw unprecedented economic and social distruption on account of the COVID-19 pandemic. The nation witnessed a complete lock-down at the start of the financial year which was gradually relaxed and tightened as and when the impact of the virus varied, which has contributed to a significant decline in economic activities and severely impacted the business and operations of your Company. The extent to which the COVID-19 pandemic will impact the Company's financial position will depend on future developments, which are highly uncertain.

During the pandemic, safety of employees has been your Company's priority. Further, your Company has collaborated with various non-governmental organisations to contribute towards the fight against COVID-19. Your Company and its employees have through their contribution supported various initiatives for providing PPE kits in hospitals, family essentials including dry ration for the underprivileged.

In support of the Government's initiatives to support general public in the wake of disruption caused by the pandemic, your Company provided its borrowers affected by the pandemic with moratorium on payment of loan instalments and has extended credit wherever deemed fit, to eligible borrowers under the Emergency Credit Line Guarantee Scheme (ECLGS). Your Company believes that this move has enabled borrowers, especially small and medium sized business who have availed the facility, to cope with the difficult business conditions caused by the pandemic.

Detailed information on initiatives taken by your Company to tackle COVID-19 has been included under the Management Discussion and Analysis Report which forms part of the Annual Report.

DIVIDEND AND DIVIDEND DISTRIBUTION POLICY

In terms of the Dividend Distribution Policy of the Company, dividend shall be declared / recommended on the equity shares of the Company, keeping in view the Company's objective of meeting the long term capital requirement for the business from internal cash accruals and appropriately rewarding shareholders. Details of the Dividend Distribution Policy have been provided in the Corporate Governance Report which is annexed to and forms an integral part of this Board's Report and is also available on the website of the Company at https://www.indostarcapital.com/invest ors-corner#investor-services.

With the intention to conserve cash in the Company inter-alia to meet the uncertainties arising out of COVID-19, the Board of Directors has not recommended final dividend on equity shares for financial year 2020-21.

Subsequent to the year under review, the Company paid dividend due on 1,20,68,966 complusorily convertible preference shares (“CCPS”) of the Company, at the rate of 10% p.a. calculated on the issue price of CCPS i.e. ' 290 per CCPS, in accordance with terms of the CCPS approved by the equity shareholders of the Company.

FINANCIAL STATEMENTS

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (“Ind AS”) notified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time.

In terms of Section 129 of the Act read with Rules framed thereunder, audited consolidated financial statements of the Company and its subsidiaries shall be laid before the ensuing Annual General Meeting of the Company along with the audited standalone financial statements of the Company for the financial year ended March 31, 2021.

The audited standalone and consolidated financial statements together with Auditor's Report(s) thereon along with the salient features of the financial statements of the subsidiaries of the Company in the prescribed Form AOC-1 forms part of the Annual Report and are also available on the website of the Company at https://www.indostarcapital.com/invest ors-corner#investor-relations.

SUBSIDIARY COMPANIES & THEIR FINANCIAL PERFORMANCE

Your Company has 2 (two) unlisted wholly-owned subsidiaries namely, IndoStar Home Finance Private Limited (“IHFPL”) and IndoStar Asset Advisory Private Limited (“IAAPL”). Your Company does not have any joint venture(s) / associate company(ies) within the meaning of Section 2(6) of the Act.

During the year under review, there has been no change in the nature of business of the subsidiary companies and there were no additions / deletions in the number of subsidiaries of your Company.

The audited standalone financial statements of each of the subsidiaries are available on the website of the Company at https://www.indostarcapital.com/ investors-corner. Members interested in obtaining a copy of the audited standalone financial statements of the subsidiaries may write to the Company Secretary at the Registered & Corporate Office of the Company or at investor.relations@indostarcapital.com.

In terms of Regulation 16(1)(c) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”) and Company's Policy for Determining

Material Subsidiary, subsequent to the year under review, IHFPL has become a material subsidiary of your Company. Further, in terms of explanation to Regulation 24(1) of the Listing Regulations, the requirement of appointing an Independent Director of the Company on the board of directors of IHFPL is currently not applicable.

The Audit Committee reviews the financial statements of subsidiaries of the Company, the investments made by its subsidiaries and the statement of all significant transactions and arrangements entered into by the subsidiaries, if any, in terms of the Listing Regulations. The minutes of board meetings of the unlisted subsidiary companies and detailed presentations on business performance of material subsidiary, are placed before the Board.

IndoStar Home Finance Private Limited

IHFPL is registered with the National Housing Bank to carry on the business as a housing finance institution without accepting public deposits and primarily focuses on providing affordable home finance. IHFPL commenced business operations in mid of 2017 and has built a quality and profitable portfolio of over '838.22 crore as on March 31, 2021. IHFPL operates in 10 states across India through various branches and has an employee base of over 270 employees as on March 31, 2021.

During the year under review, the total income of IHFPL was '134.06 crore (previous year: '97.14 crore). The operations of IHFPL during the year under review has resulted in profit after tax of '27.95 crore (previous year: loss after tax was '14.20 crore).

Subsequent to the year under review, your Company further capitalized IHFPL with ' 250 crore, subsequent to which your Company's investment in the equity share capital of IHFPL stands at ' 450 crore.

IndoStar Asset Advisory Private Limited

IAAPL is enabled under its objects to carry on the business of inter-alia advising, managing, providing investment advisory services, financial advisory services, management and facilitation services. Currently, IAAPL acts as an investment manager to IndoStar Credit Fund and IndoStar Recurring Return Credit Fund, both, Category II Alternative Investment Funds registered with the Securities and Exchange Board of India (“SEBI”). Since IndoStar Recurring Return Credit Fund is not operational, IAAPL has applied to SEBI for surrendering the registration of IndoStar Recurring Return Credit Fund and the application is under process.

The tenor of IndoStar Credit Fund expired on June 09, 2019, and in accordance with the provisions of Securities and Exchange Board of India (Alternative

Investment Funds) Regulations, 2012, the Board of Directors of IndoStar Asset Advisory Private Limited have approved winding up of the fund which is in process.

During the year under review, the total income of IAAPL was ' 0.04 crore (previous year: ' 1.85 crore) and the loss after tax was ' 0.04 crore (previous year: profit after tax was ' 0.63 crore).

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of the Listing Regulations and the circulars, directions, notifications issued by RBI (“RBI Directions”), the Management Discussion and Analysis Report for the year under review is presented in a separate section forming part of the Annual Report.

AWARDS AND RECOGNITION

Your Company is a 'Great Place to Work' Certified organization. Being certified as a Great Place to Work means that the Company is committed to building and sustaining a culture that drives high performance and trust.

Every year, more than 10,000 organizations from over 60 countries partner with Great Place to Work Institute for assessment, benchmarking and planning actions to strengthen their workplace culture.

In order to get certified the Company undergoes a rigorous process by which Great Place to Work analyses suitability for certification:

• Culture Audit - which consists of organization demographic, key human resources (HR) matrices, detailed write ups and showcase of HR practices in predefined areas of HR intervention,

• Trust Index Survey - it consists of administering a “Trust Index Survey” to a 30% of the employee base selected on random basis, and

• Post Submission Audit - it includes conducting of telephonic interview to verify and validate the responses submitted during the abovementioned processes.

SHARE CAPITALIssued, Subscribed and Paid-up Share Capital

During the year under review, the Company issued and allotted (i) 3,01,72,414 equity shares and 1,20,68,966 compulsorily convertible preference shares to BCP V Multiple Holdings Pte. Ltd., by way of preferential allotment; and (ii) 11,07,000 equity shares pursuant to exercise of stock options under various Employee Stock Options Plans of the Company.

Subsequent to the year under review, your Company allotted 64,400 equity shares pursuant to exercise of stock options.

Consequent to the abovementioned allotments, the issued, subscribed and paid-up share capital of the Company as on the date of this report stands increased to ' 1,35,86,36,950/- divided into 12,37,94,729 equity shares and 1,20,68,966 compulsorily convertible preference shares.

Your Company has not issued any equity shares with differential rights as to voting, dividend or otherwise.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

At present, the Board of Directors of your Company comprises 8 (eight) Directors of which 3 (three) are Non-Executive Independent Directors, 4 (four) are Non-Executive Non-Independent Directors and 1 (one) is an Executive Director. The Chairman of the Board of Directors is a Non-Executive Independent Director. The Board composition is in compliance with the requirements of the Act, the Listing Regulations and the RBI Directions. Detailed composition of the Board of Directors of the Company has been provided in the Corporate Governance Report which is annexed to and forms an integral part of this Board's Report.

Appointments and Cessations:

All appointments of Directors are made in accordance with the relevant provisions of the Act, the Listing Regulations, the RBI Directions and other laws, rules, guidelines as may be applicable to the Company. The Nomination & Remuneration Committee (“NRC”) exercises due diligence inter-alia to ascertain the 'fit and proper' person status of person proposed to be appointed on the Board of Directors of the Company, and if deemed fit, recommends their candidature to the Board of Directors for consideration.

During the year under review, in terms of the SHA executed by the Company with Brookfield and ICM, the Board of Directors at its meeting held on July 10, 2020 approved appointment of Mr. Aditya Joshi and Mr. Sridhar Rengan (both nominated by Brookfield) and Mr. Vibhor Kumar Talreja (nominated by ICM), as Additional Directors in the category of Non-Executive Non-Independent Directors of the Company. Further, in terms of notice(s) received under Section 160 of the Act, proposing candidature of Mr. Joshi, Mr. Rengan and Mr. Talreja, the shareholders at the Annual General Meeting of the Company held on September 24, 2020 approved the appointment of Mr. Joshi, Mr. Rengan and Mr. Talreja, as Non-Executive Non-Independent Directors of the Company, liable to retire by rotation.

During the year under review, Mr. Bobby Parikh, Non-Executive Independent Director was appointed as

Chairman of the Board in place of Mr. Dhanpal Jhaveri with effect from July 10, 2020.

During the year under review, Mr. Shailesh Shirali, Whole-time Director, Mr. Dinesh Kumar Mehrotra, Non-Executive Independent Director and Mr. Alok Oberoi, Non-Executive Non-Independent Director, resigned from the Board of Directors of the Company with effect from July 10, 2020. Further, Mr. Sridhar Rengan resigned from the Board of Directors of the Company with effect from February 04, 2021. The Board of Directors places on record its sincere appreciation for the valuable contribution and guidance provided by Mr. Shirali, Mr. Mehrotra, Mr. Oberoi and Mr. Rengan, during their association with the Company.

Subsequent to resignation of Mr. Regan, upon nomination by Brookfield in terms of the SHA, the Board of Directors at its meeting held on February 04, 2021, approved appointment of Mr. Munish Dayal as Additional Non-Executive Non-Independent Director, to hold office up to the date of the ensuing Annual General Meeting of the Company. Further, notice in terms of Section 160 of the Act has been received from a Member of the Company, proposing the candidature of Mr. Dayal, as Non-Executive Non-Independent Director of the Company, which shall be considered by the shareholders at the ensuing Annual General Meeting of the Company. The Board of Directors recommends appointment of Mr. Dayal as Non-Executive NonIndependent Director of the Company, at the ensuing Annual General Meeting of the Company. Brief profile of Mr. Dayal has been included in the notice convening the ensuing Annual General Meeting of the Company.

Director(s) Retiring by Rotation

In terms of Section 152(6) of the Act read with the Articles of Association of the Company, Mr. R. Sridhar, Executive Director of the Company, shall retire by rotation and being eligible, has offered himself for re-appointment at the ensuing Annual General Meeting of the Company. A brief profile of Mr. Sridhar has been included in the notice convening the ensuing Annual General Meeting.

Director(s) Declaration and Disclosures

Based on the declarations and confirmations received in terms of the provisions of the Act, the Listing Regulations and the RBI Directions, none of the Directors on the Board of your Company are disqualified from being appointed / continuing as Directors.

A certificate from H Choudhary & Associates, Practicing Company Secretary, confirming that none of the Directors on the Board of the Company as on March 31, 2021 have been debarred or disqualified from being appointed or continuing as Director on the Board of the Company by the Securities and Exchange Board of India, the Ministry of Corporate Affairs or any

RBI DIRECTIONS

Your Company complies with the direction(s), circular(s), notification(s) and guideline(s) issued by the Reserve Bank of India as applicable to your Company as a systemically important non-deposit taking non-banking financial company (“NBFC”).

Your Company has complied with the provisions of the extant circulars, regulations and guidelines related to foreign investment in India, with respect to the downstream investments.

COMPLIANCE WITH SECRETARIAL STANDARDS

In terms of provisions of Section 118 of the Act, your Company is in compliance with Secretarial Standards on Meetings of the Board of Directors and Secretarial Standards on General Meeting issued by the Institute of Company Secretaries of India.

DEPOSITS

Your Company has not accepted any public deposits during the year under review and shall not accept any deposits from the public without obtaining prior approval of the RBI. Further, your Company being an NBFC disclosure requirements under Chapter V of the Act read with Rule 8(5)(v) and 8(5)(vi) of the Companies (Accounts) Rules, 2014 are not applicable to your Company.

RESOURCES AND LIQUIDITY

Your Company has diversified funding sources including public sector banks, private sector banks, mutual funds, insurance companies and financial institutions. Funds were raised through various modes including bank borrowings, issuance of

non-convertible debentures on private placement basis and sale / assignment / securitisation of loan assets of the Company.

During the year under review, your Company has raised funds from inter-alia following sources (i) ' 1,225 crore by way of issue and allotment of 3,01,72,414 equity shares and 1,20,68,966 compulsorily convertible preference shares, at ' 290 per share, on private placement basis; (ii) ' 829.39 crore as bank borrowings (outstanding as on March 31, 2021: ' 2,776.14 crore);

(iii) ' 550 crore through issuance of non-convertible debentures (outstanding as on March 31, 2021: ' 1,889.64 crore); and (iv) ' 373.39 crore by sale /

assignment / securitisation of loan assets of the Company. Funds raised through private placement of debentures were utilised for the purpose mentioned in the respective offer documents.

Capital Infusion by Brookfield has strengthened the Company's liquidity position and the Company is operating with low debt: equity ratio of 1.57:1 as on March 31, 2021. The investment not only provides capital funding but also access to new debt financing via Brookfield's relationships with financial institutions. This positions the Company well to further accelerate its retailisation strategy in a challenging market environment and equips it with the ability to use capital for both organic and inorganic growth.

DEBT EQUITY RATIO

Your Company's Debt Equity ratio as on March 31, 2021 stood at 1.57:1.

CAPITAL ADEQUACY RATIO

Your Company is well capitalised to provide adequate capital for its continued growth. As on March 31, 2021, the Capital to Risk Assets Ratio (“CRAR”) of your Company stood at 34.6%, well above the regulatory limit of 15% as prescribed by the RBI for NBFCs.

NET OWNED FUNDS

The Net Owned Funds of your Company as on March 31, 2021 stood at ' 2,716.04 crore.

AUDITORSStatutory Auditors & their Report

In terms of provisions of the Act, M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, having ICAI Firm Registration No. 117366W/W-100018, were appointed as the Statutory Auditors of the Company at the 11^th Annual General Meeting of the Company held on September 24, 2020 for a term of five years and they held office till the conclusion of the 16^th Annual General Meeting of the Company.

Subsequent to year under review, the RBI has issued guidelines on April 27, 2021 for appointment of statutory auditors for NBFCs applicable from second half of financial year 2021-22 which inter-alia mandates tenure of statutory auditors to be for a continuous period of three years subject to satisfying the eligibility criteria each year. The Company will be taking necessary steps to comply with the said RBI guidelines.

M/s. Deloitte Haskins & Sells LLP, Statutory Auditors in their report(s) on the audited standalone and consolidated financial statements of your Company for the financial year ended March 31, 2021, have not submitted any qualifications, reservations, adverse remarks or disclaimers.

During the year under review, the Statutory Auditors have not reported any instances of fraud in the Company committed by officers or employees of the Company to the Audit Committee.

Secretarial Auditors & their Report

In terms of Section 204 of the Act and Regulation 24A(1) of the Listing Regulations, secretarial audit report from M Siroya and Company, Practicing Company Secretary in the prescribed format for the financial year ended March 31, 2021 is enclosed herewith at Annexure I to this Board's Report.

M Siroya and Company, Practicing Company Secretary, in their report on the secretarial audit of your Company for the financial year ended March 31, 2021 have not

submitted any qualifications, reservations, adverse remarks or disclaimers.

MAINTENANCE OF COST RECORDS

Your Company is not required to maintain cost records in terms of Section 148(1) of the Act.

REPORT ON CORPORATE GOVERNANCE

The Corporate Governance Report for the year under review, including disclosures as stipulated under Regulation 34 read with Schedule V of the Listing Regulations and the RBI Directions is annexed to and forms an integral part of this Board's Report.

A certificate from H Choudhary & Associates, Practicing Company Secretary, confirming compliance with the conditions of Corporate Governance as prescribed under the Listing Regulations is annexed to the Corporate Governance Report.

Meetings

The Board and Committees meet at regular intervals inter-alia to discuss, review and consider various matters including business performance, strategies, policies and regulatory updates and impact. During the year under review, the Board met 6 (six) times and several meetings of Committees including the Audit Committee were held. Details with respect to the meetings of the Board of Directors and Committees held during the year under review, including attendance by Directors / Members at such meetings have been provided in the Corporate Governance Report which is annexed to and forms an integral part of this Board's Report.

Board Committees

The Board of Directors, in compliance with the requirements of various laws applicable to the Company, as part of good corporate governance practices and for operational convenience, has constituted several committees to deal with specific matters and has delegated powers for different functional areas to different committees.

The Board of Directors has amongst others, constituted Audit Committee, Credit Committee, Asset Liability Management Committee, Risk Management Committee, Nomination & Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders Relationship Committee, IT Strategy Committee, Debenture Committee, Internal Complaints Committee(s), Banking Committee, Investment Committee and Grievances Redressal Committee.

Details with respect to the composition, terms of reference, number of meeting(s) held and attended by respective member(s), roles, powers and responsibilities of the Committee(s) have been

provided in the Corporate Governance Report which is annexed to and forms an integral part of this Board's Report.

PERFORMANCE EVALUATION

In terms of the provisions of the Act and the Listing Regulations, the Board of Directors adopted a Board Performance Evaluation Policy to set out a formal mechanism for evaluating performance of the Board, that of its Committee(s) and individual Directors including the Chairperson. Additionally, in order to outline detailed process and criteria to be considered for performance evaluation, the Nomination & Remuneration Committee has put in place the 'Performance Evaluation Process - Board, Committees and Directors', which forms an integral part of the Board Performance Evaluation Policy.

In terms of the requirement of Schedule IV of the Act and Regulation 25 of the Listing Regulations, a separate meeting of the Independent Directors was held on March 23, 2021 to review the performance of the Non-Independent Directors including the Chairman and the Board, as a collective entity.

Subsequent to the year under review, the Board of Directors evaluated the performance of the Directors including Independent Directors, Committee(s) of the Board and the Board as a collective entity, during the year under review.

A statement indicating the manner in which formal evaluation of the performance of the Board, Committee(s) of the Board, individual Directors including the Chairman during the year under review was carried out, is provided in the Corporate Governance Report which is annexed to and forms an integral part of this Board's Report.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

In compliance with the requirements of the Listing Regulations the Company has adopted and put in place a Familiarisation Programme for Independent Directors to familiarize Independent Directors inter-alia with the industry in which your Company and its subsidiaries operate, the Company's business model and its operations in order to give them an insight into the Company's business and its functioning. A formal letter of appointment is given to Independent Directors at the time of their appointment which lays down the fiduciary duties, roles and responsibilities of an Independent Director. The terms and conditions of appointment of Independent Directors is available on the website of the Company at https://www.indostarcapital.com/ in vestors-corner#investor-services.

Details of familiarisation programmes imparted to the Independent Directors during the year under review including details of number of programmes and number of hours spent by each Independent Director are hosted on the website of the Company at https://www.indostarcapital.com/investors-corner #investor-services.

POLICY ON APPOINTMENT OF DIRECTORS AND SENIOR MANAGEMENT PERSONNEL

In terms of Section 178 of the Act, the Listing Regulations and the RBI Directions, the Board of Directors adopted a 'Policy on Selection Criteria / “Fit & Proper” Person Criteria' inter-alia setting out parameters to be considered for appointment of Directors and Senior Management Personnel of the Company.

Details of the Policy on Selection Criteria / “Fit & Proper” Person Criteria have been provided in the Corporate Governance Report which is annexed to and forms an integral part of this Board's Report and is also available on the website of the Company at https://www.indostarcapital.com/investors-corner# investor-services.

REMUNERATION POLICY, DISCLOSURE OF REMUNERATION & PARTICULARS OF EMPLOYEESRemuneration Policy

In terms of Section 178 of the Act and the Listing Regulations, the Board of Directors adopted a Remuneration Policy inter-alia setting out the criteria for determining remuneration of Executive Directors, Non-Executive Directors, Senior Management and other employees of the Company.

Details of the Remuneration Policy have been provided in the Corporate Governance Report which is annexed to and forms an integral part of this Board's Report. The Remuneration Policy is also available on the website of the Company at https://www.indostarcapital.com/ investors-corner#investor-services.

Employee Remuneration

In terms of Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the disclosures with respect to the remuneration of Directors, Key Managerial Personnel and employees of the Company have been provided at Annexure II to this Board's Report.

Statement containing details of employees as required in terms of Section 197 of the Act read with Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is available for inspection at the Registered & Corporate Office of the Company during working hours for a period of 21 days before the date of the ensuing

Annual General Meeting. A copy of the statement may be obtained by shareholders by writing to the Company Secretary at the Registered & Corporate Office of the Company or at investor.relations@ indostarcapital.com.

The Board of Directors confirm that remuneration paid to the Directors was as per the Remuneration Policy of the Company.

WHISTLE BLOWER POLICY/VIGIL MECHANISM

In terms of Section 177(9) and Section 177(10) of the Act and the Listing Regulations, the Board of Directors adopted a Whistle Blower Policy / Vigil Mechanism, inter-alia to provide a mechanism for Directors and employees of the Company to approach the Audit Committee of the Company and to report genuine concerns related to the Company. The Whistle Blower Policy/Vigil Mechanism provides for adequate safeguards against victimization of Director(s) or employee(s) who report genuine concerns under the mechanism.

Details of the Whistle Blower Policy / Vigil Mechanism have been provided in the Corporate Governance Report which is annexed to and forms an integral part of this Board's Report.

CORPORATE SOCIAL RESPONSIBILITY

In terms of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 (“CSR Rules”), the Board of Directors have constituted a Corporate Social Responsibility (CSR) Committee and in light of your Company's philosophy of being a responsible corporate citizen, the Board of Directors adopted a CSR Policy which lays down the principles and mechanism for undertaking various projects / programs as part of Company's CSR activities. During the year under review, the CSR Policy of the Company was amended in order to inter-alia align the policy with amendments in the Act and the CSR Rules. In terms of the CSR Policy, during the year under review your Company's CSR activities were focused in the fields of education, women empowerment, environment and sanitation.

Details of the composition of the CSR Committee and the CSR Policy have been provided in the Corporate Governance Report which is annexed to and forms an integral part of this Board's Report.

Disclosures in terms of Section 134(3)(o) and Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, with respect to CSR activities undertaken by the Company during the year under review, have been provided at Annexure III to this Board's Report.

RISK MANAGEMENT FRAMEWORK

Your Company has in place a mechanism to identify, assess, monitor and mitigate various risks associated with the business of the Company. Major risks identified by the business and functions, if any, are systematically addressed through mitigating actions on a continuing basis. The Board of Directors have adopted a Risk Management Framework and Policy which inter-alia integrates various elements of risk management into a unified enterprise-wide policy.

The Risk Management Committee of the Company has not identified any elements of risk which in their opinion may threaten the existence of your Company. Details of the risks and concerns relevant to the Company are discussed in detail in the Management Discussion and Analysis Report which forms part of the Annual Report.

In terms of the RBI Directions and in order to further strengthen the risk management framework, the Company appointed a Chief Risk Officer (“CRO”) and adopted a policy on Independence of the CRO. In order to ensure that the Company maintains high standards of risk management practices, the CRO functions independently with no relationship with business verticals of the Company. The CRO is inter-alia entrusted with the responsibility of identifying, measuring and mitigating risks which may affect the Company and putting in place and monitoring the risk management policies and practices of the Company.

Details of the Risk Management Framework and Policy have been provided in the Corporate Governance Report which is annexed to and forms an integral part of this Board's Report.

INTERNAL CONTROL / INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company's well-defined organizational structure, documented policies, defined authority matrix and internal controls ensure efficiency of operations, compliance with internal system / policies and applicable laws. The internal control system / policies of your Company are supplemented with internal audits, regular reviews by the management and checks by external auditors. The Audit Committee and the Board of Directors monitor the internal controls system / policies of your Company. The Risk Management Committee and the Audit Committee periodically review various risks associated with the business of the Company along with risk mitigants and ensure that they have an integrated view of risks faced by the Company. The Board of Directors is of a view that your Company's internal control systems are commensurate with the nature of its business, size and complexity of operations.

The Company has set up an in-house Internal Audit Department, which will be instrumental in further strengthening the internal control systems and processes already adopted, developed and implemented by the Company.

To the best of our knowledge and belief, and according to the information and explanations obtained by us, and based on the report(s) of Statutory Auditors and submission(s) by Internal Auditors of the Company for the financial year under review, the Board of Directors is of the view that the internal financial controls with reference to the financial statements of the Company were adequate and operating efficiently and further confirm that:

(i) the Company has comprehensive internal financial control systems that are commensurate with the size and nature of its business;

(ii) the Company has laid down standards, processes and structures which enable implementation of internal financial control systems across the organisation and ensure that the same are adequate and operating effectively;

(iii) the systems are designed in a manner to provide reasonable assurance about the integrity and reliability of the financial statements;

(iv) the Company adopts prudent lending policies and exercises due diligence to safeguard its loan asset portfolio; and

(v) the loan approval process involves origination and sourcing of business leads, credit appraisal and credit approval in accordance with approved processes / matrix.

CEO & CFO CERTIFICATE

Compliance Certificate in terms of Regulation 17(8) of the Listing Regulations on the audited financial statements and other matters prescribed therein, submitted to the Board of Directors by the Executive Vice-Chairman & CEO and the Chief Financial Officer of the Company, for financial year ended March 31, 2021 is enclosed herewith at Annexure IV to this Board's Report.

BUSINESS RESPONSIBILITY REPORT

In terms of Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility Report (BRR) of your Company detailing initiatives undertaken by the Company on environmental, social and governance front during the year under review, forms part of this Annual Report and has been provided at Annexure V to this Board's Report and is also available on the website of the Company at https://www.indostarcapital.com/ investors-corner#investor-relations.

CONTRACTS / ARRANGEMENTS WITH RELATED PARTIES AND RELATED PARTY TRANSACTION POLICY

In terms of the provisions of the Act, the Listing Regulations and the RBI Directions, the Board of Directors adopted 'Related Party Transaction Policy' to ensure obtaining of proper approvals and reporting of transactions with related parties.

In terms of Section 177 of the Act and Regulation 23 of the Listing Regulations read with the Related Party Transaction Policy of the Company, transactions with related parties were placed before the Audit Committee for its approval and omnibus approval of the Audit Committee was obtained for related party transactions of repetitive nature, within the limits prescribed by the Board of Directors. The Audit Committee is periodically updated with respect to related party transactions executed under omnibus approval.

During the year under review, no material related party transactions as prescribed in Section 188 of the Act read with Companies (Meetings of the Board and its Powers) Rules, 2014, were entered by your Company. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable to the Company. Further, during the year under review, the Company had not entered into transactions with related parties which could be considered to be 'material' in accordance with the Related Party Transaction Policy of the Company. All other transactions with related parties, during the year under review, were in compliance with the Related Party Transaction Policy of the Company. Further, the Company has not entered into transactions requiring disclosures in terms of Regulation 53(f) of the Listing Regulations.

Disclosure of the related party transactions as required under IndAS - 24 are reported in Note 32 of the audited standalone financial statements of the Company for the financial year ended March 31, 2021.

Details of the Related Party Transaction Policy have been provided in the Corporate Governance Report which is annexed to and forms an integral part of this Board's Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

In terms of Section 186(11) of the Act read with Companies (Meetings of Board and its Powers) Rules, 2014, the provisions of Section 186 in respect of loans made, guarantees given or securities provided or any investment made by the Company are not applicable to the Company.

ANNUAL RETURN

In terms of Section 134(3)(a) and Section 92(3) of the Act read with the Companies (Management and Administration) Rules, 2014, the Annual Return as at financial year ended March 31, 2021 is available on the website of the Company at https://www.indostarcapital.com/investors-corner# investor-services.

EMPLOYEE STOCK OPTION PLANS (“ESOP PLANS”)

Your Company believes that its success and ability to achieve its objectives is largely determined by the quality of its workforce and recognises that not only good employment opportunities but also additional motivating mechanisms are needed to incentivise employees and aligning their interest with the interest of the Company. In recognition of the said objective, the Company adopted and implemented IndoStar ESOP Plan 2012 (“ESOP 2012”), IndoStar ESOP Plan 2016 (“ESOP 2016”), IndoStar ESOP Plan 2016-II (“ESOP 2016-II”), IndoStar ESOP Plan 2017 (“ESOP 2017”) and IndoStar ESOP Plan 2018 (“ESOP 2018”) (collectively referred to as “ESOP Plans”) to attract, retain, motivate and incentivise employees of the Company and its holding / subsidiary companies.

The ESOP Plans of the Company are implemented and administered by the Nomination & Remuneration Committee.

The Board of Directors confirms that the ESOP Plans are in compliance with the provisions of the Act and the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, as amended (“SEBI ESOP Regulations”).

Disclosures in terms of Regulation 14 of the SEBI ESOP Regulations read with SEBI Circular No. CIR/ CFD/POLICY CELL/2/2015 dated June 16, 2015 are available on the website of the Company at https://www.indostarcapital.com/investors-corner# investor-services.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013

Consistent with its core values, your Company is committed to create an environment in which all individuals are treated with respect and dignity and promote a gender sensitive and safe work environment. Accordingly, the Board of Directors adopted a Care & Dignity Policy and also constituted an Internal Complaints Committee, in compliance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013.

Considering geographic diversification across the country and increase in number of employees,

the Board of Directors have constituted Regional Internal Complaints Committees for North, West and South regions.

During the year under review, no complaints related to sexual harassment were received by the Internal Complaints Committee and the Regional Internal Complaints Committees.

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

Since your Company is engaged in financial services activities, its operations are not energy intensive nor does it require adoption of specific technology and hence information in terms of Section 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014 is not provided in this Board's Report. Your Company is vigilant on the need for conservation of energy.

During the year under review, your Company did not have any foreign exchange earnings and incurred foreign currency expenditure of ' 0.59 crore (Previous year foreign exchange expenditure: ' 1.04 crore).

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

During the year under review, no orders have been passed against your Company by any regulator(s) or court(s) or tribunal(s) which would impact the going concern status and / or the future operations of your Company.

DIRECTORS RESPONSIBILITY STATEMENT

To the best of our knowledge and belief and according to the information and explanations obtained by us, pursuant to the provisions of Section 134(3)(c) read with Section 134(5) of the Act, the Directors hereby confirm that:

a) in the preparation of the annual accounts for the year ended March 31, 2021, the applicable accounting standards have been followed and no material departures have been made from the same;

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

c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

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

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

APPRECIATION AND ACKNOWLEDGEMENT

The Directors take this opportunity to express their appreciation to all stakeholders of the Company including the Reserve Bank of India, the National Housing Bank, the Ministry of Corporate Affairs, the Securities

and Exchange Board of India, the Government of India and other Regulatory Authorities, the BSE Limited, the National Stock Exchange of India Limited, the Depositories, Bankers, Financial Institutions, Members and Customers of the Company for their continued support and trust. Your Directors would like to express deep appreciation for the commitment shown by the employees in supporting the Company in achieving continued robust performance on all fronts.

By the Order of the Board of Directors

For IndoStar Capital Finance Limited Bobby Parikh

Place: Mumbai Chairman

Date: August 25, 2021 DIN: 00019437