Note a): Hedging Activities and Derivatives

The Company is exposed to certain risks relating to its External Commercial Borrowings and Non-Convertible Debentures. The primary risks managed using derivative instruments are foreign currency risk and interest rate risk. The Company's risk management strategy and how it is applied to manage risk is explained in Note 50.

Note b): Derivatives Designated as Hedging Instruments

(i) Cash Flow Hedges

The Company is exposed to foreign currency risk arising from its External Commercial Borrowings amounting to ? 5,646.44 crore. Interest on the borrowings is payable at a floating rate. The Company economically hedged the foreign currency risk arising from the debt with a 'receive floating pay fixed' cross currency interest rate swap ('swap'). The notional amount of swap is disclosed in the table below. The swap contract converts the cash outflows of the foreign currency borrowings as per the table below to cash outflows in INR with a notional amount of ? 5,609.16 crore at fixed interest rate.

There is an economic relationship between the hedged item and the hedging instrument as the terms of the cross currency swap contract match that of the foreign currency borrowings (notional amount, interest payment dates, principal repayment date, etc.). The Company has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the cross currency swap are identical to the hedged risk components. To test the hedge effectiveness, the Company uses the hypothetical derivative method and compares the changes in the fair value of the hedging instruments against the changes in fair value of the hedged items attributable to the hedged risks. The hedge ineffectiveness can arise mainly if there is a change in the credit risk of the Company or the counterparty.

(ii) Fair Value Hedge

Fair value hedges hedge the exposure to changes in the fair value of a recognised asset or liability, or an identified portion of such an asset or liability, that is attributable to a particular risk and could affect profit or loss. For designated and qualifying fair value hedges, the cumulative change in the fair value of a hedging derivative is recognised in the Statement of Profit and Loss under Net Gain on fair value changes. Meanwhile, the cumulative change in the fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item in the Balance Sheet, and is also recognised in the Statement of Profit and Loss under Net Gain on fair value changes. The Company classifies a fair value hedge relationship when the hedged item (or group of items) is a distinctively identifiable asset or liability hedged by one or a few hedging instruments.

The above disclosure has been prepared based on the impact of exposures transferred between stages during the period, or changes in items within the same stage. Hence, write-offs during the year (including settlements and technical write-offs) are reported according to the staging (i.e., Stage 1, 2, or 3) at the start of the year. The classification of fresh loan disbursements is based on the staging status at the end of the period.

The Company has carried out the valuation activity through a Registered Valuer in terms of the Companies Act, 2013, to assess fair value of its Investment Property. As per report provided by the valuer, the fair value is ? 20.45 crore as on 31^st March 2025 (31^st March 2024 ? 19.02 crore).

The fair value of Investment Property has been derived using the Direct Comparison Method based on recent market prices, without any significant adjustments being made in observable data. Accordingly, fair value estimates for Investment Property is classified as Level 3.

The Company has no restrictions on the realisability of its Investment Property, and has no contractual obligations to purchase, construct or develop Investment Property.

2) Terms/Rights Attached to Equity Shares

The Company has only one class of Equity Shares having a par value of ? 10 per Share. Each holder of Equity Shares is entitled to one vote per Share.

In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of the Equity Shares held by the shareholders.

Nature and Purpose of Reserves

(a) Special Reserve

The Company created a reserve pursuant to the Reserve Bank of India Act, 1934 (the "RBI Act"), in terms of Section 45-IC of the RBI Act by transferring the amount not less than 20 per cent of its net profit every year as disclosed in the Statement of Profit and Loss, and before any dividend is declared.

(b) Capital Reserve

Reserve is created on account of business combination transactions.

(c) Capital Redemption Reserve

Capital redemption reserve created on redemption of preference shares from retained earnings.

(d) Securities Premium Reserve

This is created on account of premium received upon issuance of Equity Shares.

(e) Share Options Outstanding

The reserve is created to recognise the fair value of the options issued to employees of the Company, Subsidiaries, Associates and Joint Ventures, under the Company's Employee Stock Options Scheme.

(f) Surplus in Profit and Loss Account

Retained earnings represent the amount of accumulated earnings of the Company.

(g) General Reserve

Created upon unexercised employee stock options that have expired.

(h) Other Comprehensive Income

The Company has elected to recognise changes in the fair value of certain instruments in equity securities and debt instruments in other comprehensive income. These changes are accumulated with the FVTOCI reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

The Company uses hedging instruments as part of its management of foreign currency risk and interest rate risk associated on borrowings. For hedging foreign currency and interest rate risk, the Company uses foreign currency forward contracts and cross currency interest rate swaps. To the extent these hedges are effective, the change in fair value of the hedging instrument is recognised in the cash flow hedging reserve. Amount recognised in the cash flow hedging reserve is reclassified to the Statement of Profit and Loss, when the hedged item affects profit or loss (e.g., interest payments).

Note 1: Nature of CSR Activities

For FY 2024-25: Promoting education including providing education in Anganwadi Centres and Government Schools and remedial classes for tribal students, health care, training to support athletes qualifying in Asian games and empowering women.

For FY 2023-24: Promoting education including providing education in Anganwadi Centres and Government Schools and remedial classes for tribal students, health care, ensuring environment sustainability by increasing water availability and livelihoods, training to support athletes qualifying in Asian games and empowering women.

Note 2: The total amount spent for CSR activity includes amount paid to Aditya Birla Capital Foundation

*There is a change in the Regulation stating that if the CSR contribution of the Company lying in the bank account of the respective NGO is unspent at the end of a FY, the same is required to be returned to the Company, and has to be maintained in a separate bank account by the Company. The balance shown here is the same unspent amounts transferred back by NGOs.

Basic Earnings Per Share (EPS) is calculated by dividing the profit after tax for the year by the weighted-average number of equity shares outstanding during the year.

Diluted EPS is calculated by dividing the profit after tax for the year by the weighted-average number of equity shares outstanding during the year plus the weighted-average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares of the Company.

The Company has a defined benefit gratuity plan (funded). The Company's defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member's length of service and last drawn salary.

The following tables summarises the components of net benefit expense recognised in the Statement of Profit and Loss, and the funded status and amounts recognised in the Balance Sheet for the gratuity plan.

The Company makes Provident Fund, Pension Fund, Employee State Insurance Scheme, Maharashtra Labour Welfare Fund, and National Pension Scheme contributions, which are defined contribution plans for qualifying employees. Under the schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions payable to these plans by the Company are at rates specified in the rules of the Schemes.

NOTE: 42 DISCLOSURE UNDER EMPLOYEE STOCK OPTIONS SCHEME (A) Stock Options Scheme 2017

At the Annual General Meeting held on 19^th July 2017, the shareholders of the Company approved the grant of not more than 3,22,86,062 Equity Shares by way of grant of Stock Options ("ESOPs") and Restricted Stock Units ("RSUs"). The Scheme allows the Grant of Stock Options to employees of the Company, and its Group Company(ies), including its Holding Company, Subsidiary Company(ies) and Associate Company(ies) (whether working in India or outside India) that meet the eligibility criteria. Each Stock Option confers a right upon the Grantee to apply for 1 (one) Equity Share.

B) Stock Option and Performance Stock Unit Scheme 2022

The shareholders of the Company, vide a special resolution passed through Postal Ballot on 16^th October 2022, approved the Scheme titled "Aditya Birla Capital Limited Employee Stock Options and Performance Stock Unit Scheme 2022" ("ABCL Scheme 2022") for granting Employee Stock Options ("Options") and Employee Performance Stock Units ("PSUs") (collectively referred to as the "Stock Options"), exercisable into not more than 4,10,71,270 Equity Shares. ABCL Scheme 2022 allows the grant of Stock Options to employees of the Company, and its Group Company(ies), including its Holding Company, Subsidiary Company(ies) and Associate Company(ies) (whether working in India or outside India) that meet the eligibility criteria. Each Stock Option confers a right upon the Grantee to apply for 1 (one) Equity Share.

C) ABCL Incentive Plan 2017

The Scheme titled as "ABCL Incentive Scheme for Stock Options and Restricted Stock Units - 2017 (ABCL Incentive Scheme)" was approved by the shareholders through postal ballot on 10^th April 2017. The Nomination, Remuneration and Compensation Committee of the Company, at its meeting held on 15^th January 2018, granted 14,65,927 ESOPs and 2,52,310 Restricted Stock Units (RSUs) (collectively called as "Stock Options") to the eligible grantees pursuant to the Composite Scheme of Arrangement between erstwhile Aditya Birla Nuvo Limited (now merged with Grasim Industries Limited), Grasim Industries Limited and Aditya Birla Capital Limited. The Stock Options allotted under the Scheme are convertible into equal number of Equity Shares.

The vesting conditions and the vesting dates under the ABCL Incentive Scheme shall follow the same vesting conditions, as applicable to the Grantees, under the corresponding Grasim Employee Benefit Schemes 2006 and 2013.

Note: Interest and consequential changes, if any, arising on settlement of those contingent liabilities are not ascertainable.

^(b) (i) Show Cause-cum-Demand Notice No. ST/Audit-NI/P-3/Gr-7/Aditya Birla/SCN/2016 dated 9^th May 2017 was issued to the

Company demanding service tax of ? 0.70 crore on penal/default interest.

(ii) Show Cause-cum-Demand Notice issued under GST as on 31^st March 2025 on various date in multiple states issued to the Company ? 9.19 crore.

^(c) The Company has issued corporate guarantees to the National Housing Bank on behalf of its subsidiary, Aditya Birla Housing Finance Limited (ABHFL), of ? 3,500 crore upto 31^st March 2025 (31^st March 2024: ? 3,500 crore) for ABHFL borrowing, against which the amount outstanding in the books of ABHFL as at 31^st March 2025 is ? 1,234.45 crore (31^st March 2024: ? 1,607.52 crore). As per the terms of the Guarantee, the Company's liability is capped at the outstanding amount on invocation.

B) Capital and Other Commitments

(i) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) on account of property, plant and equipment is ? 11.00 crore (31^st March 2024: ? 7.63 crore) and on account of intangible assets is ? 12.35 crore (31^st March 2024: ? 19.45 crore ).

(ii) Undisbursed commitments where the Company does not have an unconditional rights to cancel the undrawn/unavailed/ unused portion of the loan at any time during the subsistence of the loan is Nil.

(iii) Pursuant to the Shareholders' Agreement entered into with Sun Life Financial (India) Insurance Investments Inc. and its holding Company Sun Life Assurance Company of Canada by Aditya Birla Capital Limited, in respect of Aditya Birla Sun Life Insurance Company Limited (ABSLI), the Company will infuse its share of capital in ABSLI from time to time to meet the solvency requirement, prescribed by the regulatory authority. Transfer of investments in ABSLI is restricted by the terms contained in Shareholders' Agreements entered into by the Aditya Birla Capital Limited.

(iv) Pursuant to the Shareholders' Agreement entered into with Momentum Metropolitian Strategic Investments (Proprietary) Limited and Platinum Jasmine A 2018 Trust by Aditya Birla Capital Limited, in respect of Aditya Birla Health Insurance Co. Limited (ABHI), the Company will infuse its share of capital in ABHI from time to time to meet the solvency requirement, prescribed by the regulatory authority.

(IX) Corporate Guarantees Issued:

The Company has issued corporate guarantees to the National Housing Bank on behalf of its subsidiary, Aditya Birla

Housing Finance Limited (ABHFL), of ? 3,500 crore upto 31^st March 2025 (31^st March 2024: ? 3,500 crore) for ABHFL

borrowing, against which the amount outstanding in the books of ABHFL as at 31^st March 2025 is ? 1,234.45 crore

(31^st March 2024: ? 1,607.52 crore). As per the terms of the Guarantee, the Company's liability is capped at the

outstanding amount on invocation.

Notes:

a) Figures of ? 50,000 or less have been denoted by ft.

b) The related party relationships have been as identified by the Management on the basis of the requirements of the Indian Accounting Standard Ind AS-24 'Related Party Disclosures', and the same have been relied upon by the Auditors.

c) The relationships disclosed above are for the entities where control exists and with whom transactions have taken place during the year.

d) Remuneration to Key Managerial Personnel excludes provision for gratuity, pension and compensated absences, since it is provided on actuarial basis for the Company as a whole.

e) The Non-Convertible Debentures' balance shown above includes purchase and sale from secondary market, and are held by related party as on reporting dates.

NOTE: 48 CAPITAL MANAGEMENT

For the purpose of the Company's capital management, capital includes issued equity capital, share premium and all other reserves attributable to the equity holders of the Company. The primary objective of the Company's capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Company monitors capital using a capital adequacy ratio, which is weighted assets divided by total capital derived as per the RBI requirements. As per the RBI guidelines, the Company, being a Non-Banking Finance Company, has to maintain 15% of capital adequacy ratio.

For Capital to Risk (Weighted) Assets Ratio (CRAR), refer Note No. 72(B).

In order to achieve this overall objective, the Company's capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interestbearing loans and borrowings in the current year.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31^st March 2025 and 31^st March 2024.

NOTE: 49 FINANCIAL INSTRUMENTSNote 49.1: Other Disclosure Pursuant to Ind AS 107 “Financial Instruments: Disclosures"

Valuation Methodologies of Financial Instruments Not Measured at Fair Value: Below are the methodologies and assumptions used to determine fair values for the above financial instruments, which are not recorded and measured at fair value in the Company's financial statements. These fair values were calculated for disclosure purposes only.

Short-Term Financial Assets and Liabilities: The carrying amounts of cash and cash equivalents, bank balance, trade receivables, other financial assets, trade payables and other financial liabilities are considered to be the same as their fair values, due to their short-term nature.

Borrowings

Floating Rate Borrowings: Floating rate borrowings are valued on the basis of Applicable Benchmark (viz., Tenor-Linked T-Bill, Repo Rate, Tenor-Linked MCLR, or any external benchmark, as the case may be) Spread, if applicable.

Fixed Rate Borrowings: Fixed rated borrowings are valued on the basis of valuation report shared by ICRA.

Note 49.2: Disclosure Pursuant to Ind AS 113 "Fair Value Measurement"

The fair value of a financial instrument on initial recognition is normally the transaction price (fair value of the consideration given or received). Subsequent to initial recognition, the Company determines the fair value of financial instruments that are quoted in active markets using the quoted bid prices (financial assets held) or quoted ask prices (financial liabilities held) and using valuation techniques for other instruments. Valuation techniques include discounted cash flow method, market comparable method, recent transactions happened in the Company and other valuation models.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e., an exit price), regardless of whether that price is directly observable or estimated using a valuation technique. In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques, as explained below:

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, units of mutual funds (open ended) and traded bonds that have quoted price. The fair value of all equity instruments (including bonds), which are traded in the stock exchanges, is valued using the closing price as at the reporting period.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques, which maximise the use of observable market data and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

(e) Valuation Techniques

Equity Instruments: The majority of equity instruments are actively traded on stock exchanges with readily available active prices on a regular basis. Such instruments are classified as Level 1. Unlisted equity securities are classified at Level 3.

Investment in Preference Shares: Investment made in preference share is not actively traded on stock exchange, and such instruments are classified as Level 2.

Investment in Government Securities: The fair values of investments made in Government Securities is based on valuation report from Financial Benchmarks India Private Limited, as at the reporting period, and the same are classified under Level 2.

Investment in Alternate Funds, Mutual Funds and Security Receipts: Investment in Alternate Funds, Mutual Funds and Security Receipts: Such instruments are measured based on their published net asset value (NAV), taking into account redemption and/or other restrictions. Such instruments are generally Level 2. NAV represents the price at which the issuer will issue further units, and the price at which issuers will redeem such units from the investors.

Investment in Debt Securities: Fair value of these instruments is derived based on the indicative quote of price and yields prevailing in the market as at reporting date. The Company has used quoted price of national stock exchange, wherever bonds are traded actively. In cases where debt securities are not actively traded, the Company has used CRISIL corporate bond valuer model for measuring fair value, i.e., fair value has been computed using the Fixed Income Money Market and Derivatives Association of India ('FIMMDA') data on corporate bond spreads, and such instruments are classified as Level 2.

Derivative Financial Instruments: A generally accepted framework for the valuation of the swap explains the position in each leg of the swap as a 'bond'. Therefore, a receive floating - pay fixed swap can be viewed as a portfolio consisting a short position in fixed bond and long position a floating rate bond. The value of the swap is the net proceeds from such bond positions, i.e., Receipt - Payment. The swaps were valued on and with inputs from the swap providers using the terms of the swap contract.

Equity Shares Measured at Fair Value through Other Comprehensive Income: Unquoted equity shares are measured at fair value through other comprehensive income on the basis of the net worth of the investee company, and are classified as Level 3.

The Company has determined that the carrying values of cash and cash equivalents, bank balances, trade receivables, loans, Investment in debentures, trade payables, short-term debts, borrowings, bank overdrafts and other current liabilities are a reasonable approximation of their fair value and, hence, their carrying values are deemed to be fair values.

NOTE: 50 RISK MANAGEMENT(a) Financial Risk Management Objectives and Policies

The Company's principal financial liabilities comprise borrowings (including Debt Securities and Subordinate Liabilities) and trade and other payables. The main purpose of these financial liabilities is to finance and support the Company's operations. The Company's principal financial assets include loans, investments, cash and cash equivalents and other receivables that derive directly from its operations.

The Company is exposed certain Risks such as Market Risk, Credit Risk, Liquidity Risk, etc., The Company's senior management oversees the management of these risks. The Company's senior management is supported by a Risk Management Committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk Committee provides assurance to the Company's senior management that the Company's financial risk activities are governed by appropriate policies and procedures, and that financial risks are identified, measured and managed in accordance with the Company's policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

The Company has identified and implemented comprehensive policies and procedures to assess, monitor and manage risk throughout the Company. The risk management process is continuously reviewed, improved and adapted in the changing risk scenario, and the agility of the risk management process is monitored and reviewed for its appropriateness in the changing risk landscape. The process of ongoing risk evaluation involves re-assessing the risk landscape in response to specific events, while simultaneously considering the long-term economic outlook.

The Company has an elaborate process for risk management. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

Operational and Business Risk

Operational risk refers to the risk of loss arising from activities conducted within an entity, due to inadequate structures, system failures, untrained personnel, or inefficient products or processes. To strengthen the overall framework, a Board-approved Operational Risk Management Framework has been established, and is executed by a dedicated team within the Risk Management function. A bottom-up Risk and Control Self-Assessment (RCSA) process is employed to identify high-risk areas and potential gaps, serving as an early warning mechanism to enable timely initiation of remedial measures.

Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. In the case of the Company, market risk primarily comprises of interest rate risk. Financial instruments affected by market risk include loans and borrowings.

The analyses exclude the impact of movements in market variables on the carrying values of gratuity, other post-retirement obligations and provisions.

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held on 31^st March 2025 and 31^st March 2024.

Equity Investment Risk

The Company's investments in listed and non-listed equity securities are accounted at cost in the financial statements net of impairment. The expected cash flows from these entities are regularly monitored internally and also independently by third party valuer, wherever necessary, to identify impairment indicators.

Interest Rate Risk

Interest rate risk is the risk of loss in the Company's net income out of change in the level of interest rates and/or their implied volatility. To mitigate the interest rate risk, ALM policy of the Company stipulates interest rate sensitivity gap of all the time buckets. The Interest rate sensitivity statement is prepared every month and placed before Asset-Liability Committee ("ALCO"). The statement captures the duration of rate sensitive assets and liabilities of the Company. The impact of change in interest rate on the earning of the Company is also measured every month, and the same is presented to ALCO.

1. Borrowings having contractual tenor less than 12 months are considered as floating rate.

2. Face value of borrowings has been considered for above disclosure.

Foreign Exchange Risk

Foreign exchange risk is the risk of impact related to fair value or future cash flows of an exposure in foreign currency, which fluctuate due to changes in foreign exchange rates. The Company's exposure to the risk of fluctuation in foreign exchange rates primarily relates to its External Commercial Borrowings. The Company uses derivative instruments like cross currency swaps to hedge exposure to foreign currency risk.

The Company has taken foreign currency floating rate borrowings, which are linked to USD SOFR or JPY TONA. For managing the foreign currency risk and interest rate risk, arising from changes in applicable benchmark (USD SOFR or JPY TONA) on such borrowings, the Company has entered into Cross Currency Swap (CCS) for the entire loan liability covering the entire tenor of the loan along with the interest payable. Under the terms of the CCS, the Company pays interest at the fixed rate to the swap counterparty in INR and receives the floating interest payments based on the applicable benchmark (USD SOFR or JPY TONA) in foreign currency.

Credit Risk

Credit risk refers to the potential loss the Company may suffer if customers or counterparties fail to fulfil their contractual obligations. The Company manages and mitigates credit risk by establishing limits on the level of exposure it is willing to accept for individual counterparties, as well as for specific geographic regions and industry sectors. These exposures are continuously monitored to ensure compliance with the defined limits.

The Company has instituted a credit quality review process to enable early detection of potential changes in the creditworthiness of counterparties, including periodic re-assessment of collateral. Counterparty limits are determined through a credit risk classification system, which assigns a risk rating to each counterparty. These risk ratings are reviewed and updated on a regular basis. The credit quality review process is designed to allow the Company to evaluate potential losses arising from its exposures and to implement corrective measures as necessary.

Impairment Assessment

The Company is using Expected Credit Loss (ECL) model for credit loss provisioning.

The ECL model ensures:

(a) timely recognition of expected credit losses (ECLs),

(b) a structured assessment of significant increases in credit risk, leading to enhanced disclosure standards, and

(c) the development of more accurate business ratios.

The following references provide details on the Company's impairment assessment and measurement methodologies, and should be read alongside the Material Accounting Policy Information provided in Note No. 2.

• An overview of the Company's internal grading system (refer to the section Definition of Default below).

• Details on how the Company defines, calculates, and monitors Probability of Default (PD), Exposure at Default (EAD), and Loss Given Default (LGD) (refer to sections The Company's Internal Rating and PD Estimation Process, Probability of Default, and Exposure at Default below).

• Criteria used by the Company to determine when there has been a significant increase in credit risk (refer to Significant Increase in Credit Risk below).

• The Company's policy for segmenting financial assets assessed on a collective basis (refer to Grouping Financial Assets Measured on a Collective Basis below).

• ECL calculation methodologies across Stage 1, Stage 2, and Stage 3 assets (refer to Probability of Default, Exposure at Default, and Loss Given Default sections below).

Definition of Default

The Company categorises a financial instrument as defaulted and, therefore, as Stage 3 (credit-impaired) for ECL purposes— when the borrower is 90 days past due on contractual payments.

Additionally, as part of a qualitative assessment, the Company evaluates several indicators of unlikeliness to pay, including:

a) Significant financial difficulties faced by the borrower or issuer;

b) Breach of contractual obligations, such as defaults or overdue payments;

c) Increased likelihood of bankruptcy or financial reorganisation of the borrower; and

d) Any material adverse development/news, etc.

The Company's Internal Rating and PD Estimation Process

Internal Rating

In line with regulatory expectations (as outlined by the Reserve Bank of India), a robust internal credit rating framework has been established to support effective credit risk management. The Company has developed its internal rating framework in collaboration with CRISIL. Ratings are assigned to all eligible customers or portfolio pools, and are integral to internal decision-making processes.

As per the Company's policy, eligible borrowers must have an internal credit rating of at least 'investment grade' according to the internal credit model or possess a valid and current external rating.

Probability of Default (PD)

PD represents the likelihood that a borrower will default within a one-year horizon (used for Stage 1 assets). For Stage 2 assets, where there is a significant increase in credit risk, the PD is assessed over the borrower's lifetime.

Exposure at Default (EAD)

EAD represents the gross exposure or potential exposure under a facility at the point of default. It estimates the total outstanding amount that is owed by the borrower at the time of default.

Loss Given Default (LGD)

LGD is expressed as the percentage of the EAD that is expected to be lost in the event of default. It is influenced by factors such as the type and value of collateral, expected recovery proceeds, and recovery costs, all considered on a net present value (NPV) basis.

Significant Increase in Credit Risk

a) A significant increase in credit risk is deemed to have occurred when account performance deteriorates and there is no foreseeable resolution.

b) For large borrowers, a comprehensive assessment of multiple risk factors—industry risk, business risk, management risk, financial risk, and banking and facility-level conduct—is undertaken to determine whether credit risk has significantly increased.

c) Credit ratings are also utilised as indicators of significant credit risk changes. These ratings evaluate a borrower's capacity and willingness to meet financial obligations promptly and consistently, serving as a measure of the relative risk of default.

d) Any other material negative/adverse news/development.

The Company by way of loan sanction letter and other loan securing documents agrees with its customers on collateral security to be provided by the customers in secured loan exposures that are subject to credit risk. Collateral security enables us to recover all or part of the outstanding exposure by liquidating the collateral asset provided, in cases where the borrower is unable or unwilling to fulfil its primary obligations.

Collateral security accepted by the Company could be in the form of:

a) Financial collateral in the form of pledge of equity shares, units of mutual funds, assignment of life insurance policies;

b) Current assets in the form of inventories meant for sale or receivables arising out of the sale of finished goods;

c) Fixed asset (in the form of immovable properties - real estate, Plant and Machinery, Equipment);

d) Third-party obligation (in the form of irrevocable unconditional guarantee issued by bank, Third party);

e) Risk participation from Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE); and

f) Assignment of borrower's rights and interests under agreements with third parties.

In addition, the Company also stipulates escrow of cash flows and a Debt Service Reserve Account (DSRA) for specific loans.

Collateral serves to mitigate the inherent risk of credit loss in an exposure, by either improving recoveries in the event of a default or substituting the borrower.

As part of the assessment of a credit transaction the availability, adequacy and suitability of collateral for the transaction is evaluated and decided upon. The Company's processes include verification of the title to the collateral offered and valuation by technical experts where warranted. The Company accepts as collateral only securities of good quality and have in place legally effective and enforceable documentation.

For guarantee's taken, the guarantor's creditworthiness is assessed during the credit assessment process of the transaction. The Company has collateral type specific haircuts in place, which are reviewed at intervals as appropriate to the type of collateral.

The Company recognises that collateral can be a credit mitigant (alternative source of repayment), but does not replace or dilute the underwriting standards the Company adopts to underwrite credit exposures.

(b) Forward-Looking Information

The Company determines impairment allowances based on the Expected Credit Loss (ECL) model under Ind AS, using empirical portfolio performance adjusted for forward-looking macro-economic factors. Provisioning under this approach remains higher than the floor levels prescribed by the RBI for NBFCs. ECL estimation is statistically validated, incorporating historical data, current conditions, and anticipated portfolio performance. It is based on three key components: Probability of Default (PD), Loss Given Default (LGD), and Exposure at Default (EAD). The Company's PD models intrinsically account for macro-economic influences, considering factors such as GDP trends and extraordinary events like demonetisation. With most portfolios having weathered one to two economic cycles, default probabilities reflect upturns, downturns, and stable conditions.

Additionally, the Industry Rating Module, developed with CRISIL, integrates forward-looking indicators—such as demand-supply dynamics, trade factors, and policy changes—enhancing the transition from through-the-cycle to point-in-time risk assessment.

Grouping Financial Assets Measured on a Collective Basis

The Company calculates ECLs either on a collective or an individual basis.

Asset classes where the Company calculates ECL on an individual basis include:

1. Corporate Portfolio

Asset classes where the Company calculates ECL on a collective basis include:

1. Retail Portfolio

The ECL methodology allows for individual assessment for corporates and, therefore, these loans are generally measured individually as each of these exposures have unique characteristics and structuring. For retail exposures and exposures which can be clubbed in homogenous pools, ECL is measured on a collective basis. This has been arrived at based on common characteristics like nature of product, customer profile, etc .

(c) Analysis of Risk Concentration

Concentration analysis are presented for Portfolio Pool, Location, Top Borrower Exposures, Group Exposures, etc., These are regularly analysed and presented for further review/action. Based on the exposures of the Company towards various sectors, analysis is as follows:

(d) Liquidity Risk and Funding Management

Liquidity risk is defined as the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk arises because of the possibility that the Company might be unable to meet its payment obligations, when they fall due, as a result of mismatches in the timing of the cash flows under both normal and stress circumstances.

The Company manages its liquidity requirement by analysing the maturity pattern of the Company's cash flows of financial assets and financial liabilities. The Asset-Liability Management of the Company is periodically reviewed by its Asset-Liability Management Committee.

The Company maintains a portfolio of highly marketable and diverse assets that are assumed to be easily liquidated in the event of an unforeseen interruption in cash flow. The Company also has lines of credit that it can access to meet liquidity needs. In accordance with the Company's policy, the liquidity position is assessed under a variety of scenarios, giving due consideration to stress factors relating to both the market in general and specifically to the Company. Net liquid assets consist of cash. The ratios during the year were as follows:

Borrowings from banks and financial institutions and issue of debentures are considered as important sources of funds to finance lending to customers. They are monitored using the advances to borrowings ratio, which compares loans and advances to customers as a percentage of secured and unsecured borrowings.

Analysis of Financial Liabilities by Remaining Contractual Maturities

The table below summarises the maturity profile of the undiscounted cash flows of the Company's financial liabilities:

Money raised by way of borrowing from bank and financial institution have been applied by the Company for the purposes for which they were raised, other than temporary deployment pending application of proceeds.

NOTE: 59 ULTIMATE BENEFICIARY

No funds (which are material either individually or in the aggregate) 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 Intermediaries shall, directly or indirectly, lend or invest in other persons or entities identified in any manner, whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

No funds (which are material either individually or in the aggregate) have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner, whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

NOTE: 60

1) The Company has sold its entire stake of 50.002% in Aditya Birla Insurance Brokers Limited ("ABIBL") to Edme Services Private Limited, part of the Samara Capital Group and an affiliate of Samara Alternate Investment Fund on 30^th August 2024 and, accordingly, ABIBL has ceased to be a Subsidiary of the Company w.e.f. 30^th August 2024. The Company has recognised gain of ? 262.74 crore (Net of Tax, Gain is ? 225.17 crore) during the year ended 31^st March 2025.

2) The Hon'ble NCLT has sanctioned the Scheme, vide order dated 2^nd July 2024 for amalgamation of Aditya Birla Money Insurance Advisory Services Limited ("ABMIASL"), Aditya Birla Money Mart Limited ("ABMML") and Aditya Birla Capital Technology Services Limited ("ABCTSL") with Aditya Birla Financial Shared Services Limited ("ABFSSL"), all wholly owned subsidiaries of the Company. As per the Hon'ble NCLT order, the effective date of the Scheme is 2^nd July 2024 and, accordingly, ABMIASL, ABMML and ABCTSL has ceased to exist.

3) During the year ended 31^st March 2024, the Company had sold 1,39,94,199 Equity Shares of Aditya Birla Sun Life AMC Limited ("ABSLAMC") representing 4.86% of the issued and paid-up equity share capital of ABSLAMC, and recognised gain of ? 635.77 crore (Net of Tax, Gain is ? 566.17 crore).

During the year ended 31^st March 2025, the Company has further sold 3,90,728 Equity Shares of ABSLAMC, representing 0.14% of the issued and paid-up equity share capital of ABSLAMC, and has recognised gain of ? 20.48 crore (Net of Tax, Gain is ? 18.19 crore).

4) The Company during the financial year 2023-24, issued equity share capital through Qualified Institutional Placement of 10,00,00,000 shares to Qualified Institutional Buyers, and through Preferential Issuance of 7,57,11,688 shares to its Promoter and a member of Promoter Group entity, all aggregating to ? 3,000 crore. In accordance with Ind AS 32, the costs, that are attributable directly to the above transaction, have been adjusted against securities premium reserve.

NOTE: 61

The Company has not been declared wilful defaulter by any bank or financial institution or other lender.

NOTE: 62

No proceedings have been initiated or pending against the Company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.

NOTE: 63

The Company has not defaulted in repayment of principal and interest during the year ended and as at the Balance Sheet date 31^st March 2025.

NOTE: 64

During the year ended 31^st March 2024, the Finance Committee of the Board of Directors of erstwhile ABFL at its Meeting held on 21^st September 2023 approved the Prospectus for the issue of Secured, Redeemable, Non-Convertible Debentures ("NCDs") of the face value of ? 1,000 each for an amount aggregating upto ? 1,000 crore ("Base Issue Size") with an option to retain oversubscription upto ? 1,000 crore ("Green Shoe Option") for an aggregate amount upto ? 2,000 crore ("Issue Size"), which is within the overall limit of ? 5,000 crore. Thereafter, the Company (erstwhile ABFL) has allotted by way of public issue 2,00,00,000 NCDs having face value of ? 1,000 each aggregating upto ? 2,000 crore. The said NCDs were subsequently allotted on 9^th October 2023, and listed on the National Stock Exchange of India Limited and the BSE Limited.

NOTE: 65 BUSINESS COMBINATION

Pursuant to the Scheme of Amalgamation approved by the Hon'ble National Company Law Tribunal (NCLT) under Sections 230-232 of the Companies Act, 2013, erstwhile Aditya Birla Finance Limited ("the ABFL"), then a wholly owned subsidiary of the Company, was amalgamated with the Company ("ABCL") with effect from the Appointed Date, i.e., 1^st April 2024. The Scheme became effective upon filing of the certified order of the NCLT with the Registrar of Companies on 1^st April 2025.

As per the Scheme, all the shares of erstwhile ABFL, which were held by the ABCL (either directly and/or through nominees), has been cancelled. The holders of Non-Convertible Debentures (NCDs) of erstwhile ABFL have become holders of NCDs of ABCL on the same terms and conditions (including same rights, interests and benefits).

The amalgamation has been accounted for as a common control business combination in accordance with Appendix C of Ind AS 103 - Business Combinations, using the pooling of interest method. Accordingly:

a) The assets, liabilities, and reserves of the erstwhile ABFL have been transferred to and vested in the ABCL at their respective carrying values.

b) The Standalone Financial Statements for the year ended 31^st March 2025 include the financials of the erstwhile ABFL for the year ended 31^st March 2025 (merged financial statements).

c) The comparative figures for the year ended 31^st March 2024 have been restated to include the corresponding figures of the erstwhile ABFL for that period after carrying out adjustments with respect to amalgamation.

Further, in accordance with the no objection letter issued by the Reserve Bank of India ("RBI"), while approving the Scheme, the Certificates of Registration held by the erstwhile ABFL as NBFC-ICC and by the Company as NBFC-CIC have been surrendered, and a fresh application for registration of the Company as an NBFC-ICC has been made. Pending the receipt of Registration as NBFC-ICC, the RBI has permitted the Company to operate as an NBFC-ICC.

The Company has not traded or invested in Crypto Currency or Virtual Currency during the financial year ended 31^st March 2025.

NOTE: 67

There is no income surrendered/disclosed as income during the current/previous year in the tax assessments under Income-tax Act, 1961, that has not been recorded in the books of account.

NOTE: 68

There are no amounts due and outstanding to be credited to Investor Education and Protection Fund as at 31^st March 2025.

NOTE: 69

The Indian Parliament has approved the Code on Social Security, 2020, which subsumes the Provident Fund and the Gratuity Act and rules thereunder. The Ministry of Labour and Employment has also released draft rules thereunder on 13^th November 2020, and has invited suggestions from stakeholders. The Company will evaluate the rules, assess the impact, if any, and account for the same once the rules are notified and become effective.

NOTE: 70

The Letter of Comfort were issued for availing credit facilities/credit rating by subsidiaries of ? 345 crore, with an explicit clause that it is not in the nature of financial guarantee.

The figures for the current financial year under the disclosure as required in RBI Master Directions represent the figures of the Amalgamated Company from the appointed date 1^st April 2024. The figures/ratios for the previous financial year are the same as disclosed in the previous year audited financial statement of the Company. Hence, figures/ratios for the current year ended, 31^st March 2025 are not comparable with figures, for the previous year ended 31^st March 2024.

1. In computing the above information, certain estimates/assumptions have been made by the Company's Management, which have been relied upon by the auditors.

2. Unweighted values must be calculated as outstanding balances maturing or callable within 30 days (for inflows and outflows).

3. Weighted values must be calculated after the application of respective haircuts (for HQLA) and stress factors on inflow and outflow.

4. The calculation has been arrived based on average daily computation.

(viii) Qualitative Disclosure

a) The main drivers of their LCR results and the evolution of the contribution of inputs to the LCR's calculation over time: RBI had introduced the liquidity coverage ratio (LCR) to ensure that NBFC has an adequate stock of unencumbered high-quality liquid assets (HQLA) to survive a significant liquidity stress lasting for a period of 30 days. LCR is defined as a ratio of HQLA to the total net cash outflows estimated for the next 30 calendar days. At 31^st March 2025, the applicable minimum LCR required to be maintained by NBFC is 100%.

The Company has an Asset-Liability Committee ("ALCO"), a management-level committee to handle liquidity risk. The ALCO meets at periodic intervals. At the apex level, the Risk Committee (RC), a sub-committee of the Board of Directors of the Company, oversees the liquidity risk management. The RC subsequently updates the Board of Directors on the same.

b) Intra-period changes as well as changes over time: The details for the four quarters ended 30^th June 2024, 30^th September 2024, 31^st December 2024 and year ended 31^st March 2025 are disclosed in Note No. 72-I(vii).

1. In terms of the requirement as per RBI notification no. RBI/2019-20/170 DOR (NBFC).CC.PD. No.109/22.10.106/2019-20 dated 13^th March 2020 on Implementation of Indian Accounting Standards, Non Banking Finance Companies (NBFCs) are required to create an impairment reserve for any shortfall in impairment allowances under Ind AS 109 and Income Recognition, Asset Classification and Provisioning (IRACP) norms (including provision on standard assets). The impairment allowances under Ind AS 109 made by the corporation exceeds the total provision required under IRACP (including standard asset provisioning), as at 31^st March 2025, and, accordingly, no amount is required to be transferred to impairment reserve.

2. Amounts in NPA that have been classified otherwise than as Stage-3 represent loan assets that were restructured, but have not completed one year of satisfactory performance as at the reporting date.

NOTE: 76 EVENTS AFTER REPORTING DATE

There have been no events after the reporting date that require adjustments or disclosure in these financial statements.

NOTE: 77

The figures for previous year have been regrouped/rearranged/recasted, wherever necessary, to conform to current period presentation.