24. Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources and reliable estimate can be made of the amount of obligation. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the Standalone financial statements.

25. Expenses of Management-Basis of Apportionment: Expenses of management includes provision for bad and doubtful debts and exchange gain/loss, excluding GST Expenses. Expenses which are solely and exclusively attributable to a specific Segment i.e. Line of Business (LOB) and which are specifically identifiable to that particular segment, are allocated to that segment and the remaining value of expenses of management are apportioned to the revenue accounts on the basis of net premium.

26. Segregation of Policy Holders and Share Holders funds

Investment Assets includes policyholders as well as shareholders. Investment assets are bifurcated at the end of each quarter between shareholders and policyholders at 'fund' level on notional basis in accordance with IRDAI guidelines.

27. Income from Investments -Basis of Apportionment

Investment Income (net of expenses) is apportioned between shareholders' fund and policyholders' fund in proportion to the balance of these funds at the beginning of the year.

Investment income (net of expenses) belonging to Policyholders is further apportioned to Fire, Marine and Miscellaneous segments in proportion to respective technical reserves balance at the beginning of the year. Policy holders fund for this purpose consist of estimated liability for outstanding claims including IBNR and IBNER, unexpired risk reserve (URR), Premium deficiency (if any). catastrophe reserve (if any) and Other Liabilities net of Other Assets (relating to policy holders) as per the guidelines of IRDAI.The residual consists of the shareholder fund.

1. Reinsurance Acceptance Transactions: Reinsurance acceptance transactions pertaining to the year have been booked for advices received up to April 12, 2024.

2. Premium Deficiency Reserve:

a) Unexpired premium reserve at revenue segment level is found to be sufficient to cover the expected claim cost as certified by the appointed actuary and the claims related expenses as estimated by the management. Hence no premium deficiency reserve is required to be provided during the year.

b) The reserve against cancellation of policies during free-look period under retail health policies for the period ended 31st March 2024, as certified by the actuary, is ? 150 Lakhs (PY ?150 Lakhs).

3. Amortization of Pension liability as per IRDAI approval:

The Government of India by Gazette Notification no. S.O. 1627 (E) dated April 23, 2019 notified amendment under the General Insurance (Employees) Pension Scheme 1995, allowing one more pension option to the employees who have joined the Company before June 28, 1995. IRDAI vide its letter ref. -411/F&N(NL)Amort-EB/2019-20/124 dated July 07, 2020, had granted approval for the amortization of the pension liability on account of regular employees, over a period of not exceeding five years with effect from FY 2019-20. Accordingly, the balance of unamortized pension liability of ? 41,014.00 Lakhs as on April 1, 2023 has been fully charged to revenue during the year.

4. Taxation:

a) Income Tax: Provision for Tax ?33,114.80 Lakhs (PY. ?21,386.06 Lakhs) Current Tax shown in Profit and Loss Account includes ?1,959.06 Lakhs (PY. ?2,364.72 Lakhs) relating to foreign taxes.

b) In respect of profit on sale of investments, the company has been claiming exemption u/s 10(38) of the Income Tax Act, 1961 till FY 2017-18 and deduction under section 55(2)(ac) of the Income Tax Act, 1961(IT Act) from FY 2018-19 to FY2021-22. Both the above exemption and deduction claimed by the company are under dispute with the Income Tax Department and the company has favourable orders by Bombay High Court, ITAT Mumbai and CIT (Appeals) in respect of its claim u/s 10(38) and from CIT (Appeals) in the case of deduction u/s 55(2)(ac) of the IT Act. Effective FY 2022-23, the total income of the Company for the year has been computed as per the normal provisions of the IT Act.

From FY 2022-23, the company has been recognizing and utilizing the available MAT Credit of previous years to the extent required to be set off against tax computed as per the normal provisions of the Act which was not accounted for on account of prudence and absence of convincing evidence of utilizing it. Accordingly, MAT credit of ?18,414.74 Lakhs (previous year ?24,802.43 Lakhs) has

been recognized and utilized during the year and cumulative such utilization amounts to ? 43,217.18 lakhs.

c) The Income Tax Assessments of the Company have been completed up to assessment year 2022-23. Major disputed demands are in respect of profit on sale of investment, IBNR, expenses paid to Auto tie-up dealers. Based on the decisions of the appellate authority, the interpretations of the relevant provisions, the management of the Company is of the opinion that the demands are likely to be either deleted or substantially reduced and accordingly no provision has been made for the same. However, an amount of ? 68,482.00 lakhs has been disclosed as contingent liabilities. (Refer Note 16C).

d) Deferred Taxes:

The components of temporary differences resulting into Deferred Tax Assets/(Liabilities) are as under:

1) A sum of ? 1,500.22 Lakhs (PY. ? 2,403.19 Lakhs) has been credited to the Profit and Loss Account on account of creation of deferred assets during the year.

ii) Deferred Tax Asset in respect of foreign branches does not have any timing difference other than fixed asset.

iii) The Company continues to recognise the deferred tax asset in respect of temporary difference mentioned in the above table, as in the opinion of the management there are sufficient evidence to establish the reasonable certainty of realisation of the deferred tax assets from the future taxable profits.

e) Taxation Laws (Amendment) Act, 2019 -

The Taxation Laws (Amendment) Act, 2019 was enacted on 11th December 2019 which amended the Income Tax Act, 1961 and the Finance Act (No.

2) Act, 2019. It provides domestic companies with an option to opt for lower tax rate, provided they do not claim certain deductions. The Company has not exercised the option to opt for lower tax rate and has presently considered the rate existing prior to the amendment. The management is in the process of evaluating the option to opt for lower tax rate once

it utilises the entire carried forward losses and MAT credit available under the Income Tax Act.

5. Statutory Reserves relating to Foreign Branches:

The Company, in accordance with Oman Insurance Company Law, has created contingency reserve for claims for Muscat agency for 5 million Omani Riyal. The reserve closing balance as on March 31, 2024 is f 10,825.25 Lakhs (P.Y. f 10,672.12 Lakhs). There is change in closing balance of f 153.13 Lakhs (P.Y. f 836.37 Lakhs) reserve as compared to previous year due to change in foreign currency closing rate as on March 31, 2024.

6. Title deeds of immovable properties:

I. Following are the immovable properties title deeds which are pending to be registered in the name of the Company:

a) Sixty seven properties having book value (Gross block) f 2062.18 Lakhs (P.Y. Sixty Nine Freehold properties having book value f 2049.81 Lakhs) for which registration formalities are yet to be completed /in process.

i. Out of which title deeds of Twenty-Eight properties having book value of f162.70 Lakhs (P.Y. f162.70 Lakhs) are in the name of GIC and the Company is in the process to get it transferred in its name.

ii. Out of which Three properties having book value of f 336.02 Lakhs (P.Y. f 336.02 Lakhs) were received from Tariff Advisory Committee (TAC) and the registration formalities are still pending.

b) One Office property having book value f 216.91 Lakhs (P.Y. f 216.91 Lakhs) for which agreement registration formality is pending.

c) One Office freehold property having book value f 752.33 lakhs (P.Y. f 752.33) for which agreement registration formality is pending.

d) One open plot having book value f 23.84 Lakhs (P.Y. f 23.84 Lakhs) jointly owned by four PSU Companies and title deed is in the name of GIC, is under litigation and Special Civil Application is pending before the Hon'ble Gujarat High Court.

e) 34 properties having book value f 164.66 lakhs (P.Y. f156.66 lakhs) are treated as having clear title based on the advocates opinion in view of documents like gazette notification issued by the Government, share certificate, municipal tax, property tax, registered/unregistered agreement being available in the records of the company.

II. One leasehold property having book value of f 2.77 Lakhs (P.Y. f 2.77 Lakhs) where lease term expired and renewal process is pending with the concerned Government Authorities.

III. Following are the properties for which legal proceedings are initiated by the Company for acquiring Physical Possession:

a) Out of total 26 properties owned by the Company, 11 properties are occupied by corporate tenants and 15 are occupied by Individual Tenants. Legal proceedings are in process against all 11 corporate tenants. Out of 15 Individual Tenants; legal proceedings are in process against 11. For remaining 4 Individual tenants' eviction proceeding is contemplated.

b) One Lease hold property consisting of 123 tenements and 6 Godowns having book value of f 3.42 Lakhs (P.Y. f 3.42 Lakhs) is in the possession of the Company but occupied by inherent tenants.

7. Investments:

a) As certified by the Custodian, securities are held by the Company as on March 31, 2024. Variations and other differences, which include shortages, have been provided for.

b) Provision for standard assets @ 0.40% amounting to f 6,022.63 Lakhs (P.Y. f 4,355.17 Lakhs) has been made as per Insurance Regulatory and Development Authority guidelines on (i) Term Loan (PFPS/DTL), (ii) Debentures, (iii) Infrastructure Investments, (iv) Bonds/Debentures of HUDCO, (v) Bonds/Debentures of Institutions accredited to NHB, (vi) Govt. Guaranteed Bonds/Securities and (vii) Housing and Fire fighting Loans to State Governments.

e) Short-term Investments (Schedule - 8) in debentures and other guaranteed securities include those, which are fully repayable in the next year. As regards those debentures and other guaranteed securities, which have fallen due and remain unpaid as on March 31, 2024, these have been shown under long-term investments, as their realisability is unascertainable. Necessary provision, wherever required, has been made.

f) Pursuant to the IRDAI regulations the company has recognised impairment loss of ?10965.51 Lakhs in the profit and loss account for the year on its equity investment in one of the subsidiary namely Prestige Assurance PLC, Nigeria, which is a listed company in Nigeria. Impairment has resulted due to defacto devaluation by the Central Bank of the country in current FY 2023-24 by sudden and steep fall of Nigerian currency Niara. The impairment loss has been considered as other than temporary therefore, the same is not accounted for as Fair Value change. Accordingly, amount previously recognized as Fair Value Change has been reversed upon impairment as aforesaid.

8. Reinsurance, Coinsurance, Inter Office, GST and

PMFBY Balances and old credit /debit balances:

a) The net balances due to/due from in respect of re-insurance activities of the company amounting to ?177,804.89 lakhs (Dr.) out of total reinsurance receivable balance of ?5,24,754.31 lakhs are subject to confirmation, compilation/age-wise analysis and necessary reconciliation. Also, there are migration differences which need to be reconciled. Pending all such activities, the impact on the financial Statements is unascertainable.

The Company has maintained provisions of ? 13,967.33 Lakhs (P.Y. ? 14,744.96 Lakhs) towards doubtful debts from reinsurers as on March 31, 2024 in accordance with the Board approved policy.

Pursuant to the policy, a sum ? 1058.88 Lakhs (net debit) (PY ? 2,465.37 Lakhs) has been written-off.

b) In respect of Coinsurance business, the balances with various Co-insurers represent a receivable of ?88,390.26 lakhs and payable of ? 47,567.04 lakhs, which included balances relating to PMFBY amounting to ?14,839.34 lakhs (Net). The process of obtaining confirmations and reconciliation of balances is at different stages and entries remaining to be reconciled based on the confirmation are also being attended to. Age-wise breakup of the outstanding entries has been compiled based on available information.

Based on the Board approved policy depending on the age of outstanding, the company has made additional provision of ? 242,47.89 lakhs during the year (Previous year ? 9,827.30 lakhs ). The cumulative provision held amounts to ? 340,75.19 lakhs as against the net coinsurance balance of ? 40,823.22 lakhs as on March 31, 2024.

c) The reconciliation of various accounts relating to inter-office accounts of domestic and foreign operations amounting to ? 10,45.10 Lakhs (Net Debit) [P.Y. 10,126.60 Lakhs (Net Debit)], Control Accounts, certain banking transactions, loans and advances including those given to employees and other accounts including direct and indirect tax related balances is under progress, the impact of the above, if any, on the Standalone Financial statements is unascertainable.

d) As per the consistent practice followed by the Company, interest accrued on employee loans is recognized to the extent recovered from the employee instead accrued to the account of the employee. The impact, if any, arising out of the above may not be material though the same is not identified.

e) Old balances other than policy holder dues mainly relating to various control accounts amounting to f 13,779.05 Lakhs (Net debit) (P.Y. f 4,906.92 Net credit) outstanding for more than three years has been debited to Profit & Loss Account during the year. Necessary accounting adjustments in the books of operating offices would be carried out in due course.

f) In view of various accounts being reconciled and balances under confirmation, the effect of such pending reconciliation on compliance of tax laws has been ensured to the extent of available information and necessary adjustments /payments of any liability arising out of such reconciliation is to be done in due course.

9. Bhavishya Arogya Scheme:

The Company has under one of its old run-off schemes namely Bhavishya Arogya Scheme received premium in prior year amounting to f 4,037.86 Lakhs which have been recognised as premium during the year ended March 31, 2021 in revenue account. As the claims pay out pattern has not yet stabilised under the said Scheme, the Company has maintained provision for claims liability amounting to f 4,000.00 Lakhs (P.Y. f 4,000.00 Lakhs) as IBNR for the year ended March 31, 2024.

10. Receipts & Payments Account:

Receipts & Payments Account is subject to reconciliation of various inter office accounts.

21. Liability under Micro, Small and Medium Enterprise Development Act, 2006:

The Company has initiated the process of capturing the data relating to enterprises which have been providing goods and services to the Company, falling within the purview of Micro, Small and Medium Enterprises Development Act, 2006, in the accounting system. Pending system augmentation, the disclosure in respect of the amount payable to such Micro, and Small Enterprises as at March 31, 2024 has not been made in the standalone financial statements. In view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material.

22. Penalty:

As per IRDAI Circular No 005/IRDAI/F&A/CIR/MAY-09 dated May 07, 2009, below table mentions the details of the penalty imposed by various regulators and Government authorities during the year:

Note 1 : The company has received an adjudication order from the Goods and Services Tax Department towards non-payment of GST amounting to f 1,93,012.78 lakhs on co-insurance premium accepted and towards nonpayment of GST amounting to f 44,900.70 lakhs on reinsurance commission earned on reinsurance ceded to various Indian and Foreign Reinsurance companies plus interest and penalty thereon. The matter is industry wide and as per opinion received the company has merits in defending the notice. The Company with other General Insurance companies filed a writ in the Hon'ble Bombay High Court challenging the Order vide writ petition no 4099 of 2024 date of hearing for admission is yet to notified.

Note 2 : The Company received an order from Competition Commission of India (CCI) imposing a penalty of f 25,107.00 Lakhs in 2015-16. The Company contested against the order in Competition Appeal Tribunal and the Tribunal awarded penalty of f 20.00 Lakhs as against f 25,107.00 Lakhs of CCI order. The penalty was paid in January 2017. CCI has appealed against the order of the Tribunal at the Apex Court and the case has been admitted in the Apex Court in March 2017. As of the latest information available, the case has been awaiting a hearing since the 10th of August, 2017.Counter-affidavit/ reply has already been filed by the company.

23. Internal Controls:

The Company has a fairly adequate internal control and appropriate validations in the system. The Company is in the continuous process of further strengthening internal controls in other areas of its operations, by bringing more controls and validation in system. The Internal Audit System including that relating to Foreign offices is also being Strengthened and under comprehensive review.

24. Fraud Monitoring Cell:

The Company has a Fraud Monitoring Cell which monitors external frauds reported and a Vigilance Department which monitors matters related to employees. The said fraud cell compiles data based on inputs from operating offices. As per the assessment made by the Cell, there were no matters related to external frauds reported during the year, which required any disclosure or adjustments to the standalone financial statements of the Company except as under:

a) During FY 2022-23, In Digital Hub third-party frauds were detected whereby certain third parties/insured have committed offences/fraud by modifying 17261 policies issued by the digital hub. During the FY 202324 compliant has been lodged and statement has been recorded by the police on 13/07/2023. In the view of management this requires no adjustments to the standalone financial statements as the said

fraud has no material financial impact.

b) In case of 4 operating offices Online Frauds using Broker Portal has been reported where Motor Insurance policies for four wheelers were issued through the portal as two-wheelers consisting of 7699 policies. The Company has filed FIR in cases of 3 offices out 4 and is in the process of filing FIR for the remaining 1 office. In the view of management this requires no adjustments to the standalone financial statements as the said fraud has no material financial impact.

c) In case of 1 operating office each under Mumbai RO-1 and Jaipur RO, fraudulent Motor policies were found to have been issued from online portals and the same has been cancelled ab initio without any refund and the concerned RTO's were informed by registered Ad post under the relevant rules and guidelines of the Company. The premium amount has been forfeited and there is no revenue loss to the Company.

d) In case of 2 operating offices Online Frauds using Customer Portal has been reported where Motor Insurance policies for four wheelers were issued through the portal as two-wheelers consisting of 111 policies. The Company is in the process of filing FIR for both the offices and in the view of management this requires no adjustments to the standalone financial statements as the said fraud has no material financial impact.

e) In case of policy bazar operating offices Online Frauds using Customer Portal has been reported where Motor Insurance policies for four wheelers were issued through the portal as two-wheelers consisting of 1716 policies. The Company has filled the FIR against the concerned POS and in the view of management this requires no adjustments to the standalone financial statements as the said fraud has no material financial impact.

25. a) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).

b) The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or

on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

26. The Code on Social Security, 2020 (“Code”) relating to employee benefits during the employment and postemployment benefits has been published in the Gazette of India on September 28, 2020. The Ministry of Labour and Employment has released draft rules for the Code on November 13, 2020. The effective date from which these changes are applicable is yet to be notified. The Company will assess and record the impact, if any, when the rules are notified, and the Code becomes effective.

27. Wage revision for employees of PSU GIC is due w.e.f. Aug-22. The company has made provision @7% of wage bill based on management assessment amounting to ? 155,67.67 Lakhs towards wage revision for the year ended March 31, 2024 and the total provision as on March 31, 2024 is amounting to ? 252,87.67 Lakhs.

28. Provision towards Claims Incurred but Not Reported (IBNR) and those Incurred but Not Enough Reported (IBNER) as on March 31, 2024 has been determined by Appointed Actuary, which is in accordance with accepted actuarial practice and IRDAI regulations in this regard.

29. Based on the advisory from IRDAI, the Company has set up a Committee for IND-AS implementation and appointed knowledge partner who has completed GAAP analysis and submitted GAAP assessment report. For phase-II (solution and system design), the company is in the process of floating RFP for procurement of sub ledger solution and engagement of implementation partner.

30. In accordance with Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, the accounting software used by the company for maintaining its books of account have a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of account along with the date when such

changes were made and ensuring that the audit trail cannot be disabled except in the case of 1 office where such compliance was pending for a part of the year and certain processes of preparation of final accounts which are carried out of such softwares. Further the company is in the process of compliance of proviso to Rule 3(5) read with Section 128 of the Companies Act 2013, regarding maintenance of books of accounts and papers maintained in electronic mode at Foreign branches of the company to be accessible in India at all times and maintenance of back up of its books of accounts and papers at servers physically located India on a daily basis.

31. Pursuant to IRDAI (Expenses of Management of Insurers transacting General or Health Insurance Business) Regulations, 2023, the Company has changed its policy for Expense of Management which shall henceforth exclude GST Expenses. Consequent to this, allocation of expenses to the Fire Insurance Revenue Account, Marine Insurance Revenue Account and Miscellaneous Insurance Revenue Account is lower by ? 852.53 lakhs, ? 154.51 lakhs and ? 314.36 lakhs respectively.

32. Proposed Dividend for current year:

The Board of Directors of the Company proposed a final dividend of ? 33,948.80 lakhs being 41.20% of the Paid-up share Capital of the company, subject to the approval of the members at the Annual General meeting. In terms of Revised Accounting Standard (AS) 4, Contingencies and events occurring after the Balance sheet date as notified by the Ministry of Corporate affairs through the amendments to the Companies (Accounting Standard) Rules, 2016, as amended, the company has not appropriated proposed dividend from the standalone Profit and Loss account for the year ended March 31, 2024.

33. Previous year figures have been regrouped / rearranged, wherever necessary.

20 Investment income (Net of Expenses) is apportioned between Revenue Accounts and Profit and Loss account in proportion to the balance in the Shareholders' funds and Policyholders' funds at the beginning of the year. The same is further apportioned to fire, marine and miscellaneous Revenue Accounts in proportion to the technical reserve balance at the beginning of the year.

21 The Unexpired Premium Reserve (UPR) at a revenue segment level was found to be sufficient to cover the expected claims cost as certified by the Appointed Actuary and the claim related expenses as estimated by the management . Hence no premium deficiency reserve is required to be provided.

22 Previous year figures have been regrouped / rearranged, wherever necessary.

Jyoti Rawat Vimal Kumar Jain Smita Srivastava Titus Francis

Company Secretary Chief Financial Officer Executive Director Executive Director

DIN: 09250237 DIN: 10124446

As per our report of even date

For R. Devendra Kumar & Associates O P Bagla & Co LLP

Chartered Accountants Chartered Accountants

Firm Reg. No. 114207W Firm Reg. No. 000018N/N500091

Anand Golas Ninad Mulay

Partner - Membership No. 400322 Partner - Membership No. 161822

May 22, 2024

Mumbai