DIRECTORS' REPORT

Your directors take pleasure in presenting the 77^th Annual
Report together with the audited financial statements of the
Company for the financial year ('FY') ended March 31, 2026.

MACRO ECONOMIC ENVIRONMENT

The global economy in 2025 demonstrated resilience, albeit a
tenuous one, amid heightened uncertainty, shaped by the after
effects of earlier monetary tightening, elevated geopolitical
risks, and shifts in trade and industrial policies. As per IMF, global
growth remained moderate of around 3.0%~3.2% for 2025,
reflecting weak momentum in advanced economies and uneven
recovery across regions. Advanced economies experienced
subdued growth, constrained by tight financial conditions,
slowing household demand, and weak manufacturing activity.
Emerging markets and developing economies continued to
outperform advanced economies, supported by domestic
demand, services exports, and fiscal spending, although
performance varied significantly across countries. Geopolitical
and trade-related uncertainties persisted, characterised by
selective tariff actions, industrial policy interventions, and
ongoing geopolitical conflicts, contributing to market volatility
and cautious business investment sentiment. Overall, the year
2025 was characterised by moderate growth, easing but uneven
inflation, and elevated downside risks, with economic outcomes
remaining highly sensitive to policy clarity and geopolitical
developments.

Despite uncertain global economic conditions, the Indian
economy continued to demonstrate strong resilience during
FY 26, supported by sustained public capital expenditure,
improving private investment, and steady domestic
consumption. Inflation is expected to remain largely within
the policy tolerance band, aided by calibrated monetary
measures and easing supply-side pressures. While global
economic uncertainties continue to pose external headwinds,
India's services exports and robust domestic demand provide
stability. Ongoing structural reforms and a continued focus on
infrastructure and manufacturing are expected to strengthen
the country's medium-term growth prospects.

India's real GDP growth for FY 26 is likely to be in the range
of 7.3% ~ 7.6%. Upside risks to growth include stronger than
anticipated domestic demand, improved investment sentiment,
favourable monetary policy transmission and renewed capital
inflows. Conversely downside risks stem from heightened
geopolitical tensions, volatility in global financial markets,
energy and commodity price shocks, and a sharper than

expected slowdown in global growth, which could adversely
affect inflation, external balances and financing conditions.

COMPANY OVERVIEW

Cholamandalam Financial Holdings Limited ('CFHL') is registered
as a Core Investment Company ('CIC') with the Reserve Bank of
India ('RBI') and holds a Certificate of Registration dated January
6, 2020, under Section 45-IA of the Reserve Bank of India Act,
1934. Pursuant to the Scale Based Regulatory Framework for
NBFC's notified by RBI, the Company being a CIC falls under the
category of Middle Layer NBFC ('NBFC-ML').

The Company holds substantial investments in the following
financial services/risk management companies of the
Murugappa Group (hereinafter collectively referred to as 'the
group companies').

• Cholamandalam Investment and Finance Company

Limited('CIFCL'), a non-banking finance company engaged
in lending business, offers vehicle finance, home loans,
loan against property, SME loans, secured business and
personal loans, consumer & small enterprises loans,
consumer durable loans, gold loans and a variety of other
financial services to customers;

• Cholamandalam MS General Insurance Company

Limited('CMSGICL'), engaged in general insurance

business, offers a wide range of insurance products that
include Motor, Health, Property, Accident, Engineering,
Liability, Marine, Travel and Crop insurance for individuals
and corporates;

• Cholamandalam MS Risk Services Limited('CMSRSL')
offers comprehensive Risk Management and Engineering
solutions.

SHARE CAPITAL

The paid-up equity share capital of CFHL as of March 31, 2026,
was '18.78 Crore.

APPROPRIATIONS

The Company has transferred a sum of '14.09 Crore (previous
year: '12.89 Crore) to Statutory Reserve under section 45-IC of
the Reserve Bank of India Act, 1934 for the year ended March
31, 2026.

DIVIDEND

The Board of Directors have recommended a final dividend at
the rate of 130% i.e. '1.30/- (previous year: '1.30/- per share)
per equity share of face value of '1/- each for the year ended
March 31, 2026.

BUSINESS ENVIRONMENT

CFHL earns revenue primarily by way of dividend income
from investments held in group companies. An overview of
the financial services sector in which the Company operates
along with a business update of group companies in FY 26 is
summarised in the following paragraphs.

STANDALONE FINANCIAL RESULTS (' in Crore)

NBFC INDUSTRY & BUSINESS UPDATE

During the year under review, the Indian NBFC sector
demonstrated steady growth and resilience, supported by
improving liquidity conditions and calibrated regulatory easing.
Credit growth for NBFCs continued to outpace that of banks,
driven by diversified and retail focused lenders, while asset
quality remained largely stable due to disciplined underwriting
and improved collection efficiencies. Regulatory oversight
through the implementation of RBI's Scale Based Regulatory
Framework will continue to further enhance governance,
transparency, and risk management standards across the sector.

Looking ahead, the NBFC sector is expected to sustain measured
growth, supported by improving liquidity conditions, a stable
interest rate environment, and continued demand for retail
and MSME credit. While regulatory vigilance remains high, the
strengthened framework is expected to enhance stakeholder
confidence and long term sectoral stability.

Cholamandalam Investment and Finance Company
Limited('CIFCL'), an associate company of CFHL, was
incorporated in the year 1978 as the financial services arm of
the Murugappa Group. The Company is registered as an NBFC
Investment and Credit Company (NBFC-ICC) and continues
to be classified as an NBFC Upper Layer ( NBFC-UL) under the
RBI's Scale-Based Regulatory Framework. CIFCL continues to
be one of the leading comprehensive financial service providers.

Vehicle Finance('VF')

Industry

The Indian automobile industry sustained its growth momentum
in FY 26, supported by a combination of cyclical recovery and
structural tailwinds. The Commercial Vehicle (CV) segment
emerged as a key growth driver, registering a robust 13%
expansion and achieving peak volumes, reflecting strong

underlying economic activity. Segment-wise, growth remained
broad-based. Heavy Commercial Vehicles (HCVs) and Light
Commercial Vehicles (LCVs) grew by 10% and 17%, respectively,
driven by an infrastructure investments, rising industrial
activity, and e-commerce-led logistics demand. Growth in Small
Commercial Vehicles (SCVs), however remained comparatively
subdued at 6%, indicating a gradual recovery following a two-
year downturn.

The Passenger Vehicle (PV) segment continued its structural
growth trajectory, expanding by 8% in FY 26 and recording
its fourth consecutive year of peak sales. This growth
reflects evolving consumer preferences, including increasing
urbanisation, rising disposable incomes, and a marked shift
toward SUVs and premium variants.

The two-wheeler segment recorded strong growth of 11% in
FY 26, driven by a recovery in rural demand, improved access to
financing, and enhancing affordability. Demand from Tier 3 and
Tier 4 markets, along with increasing participation by women
riders, has structurally expanded the consumer base.

The Construction Equipment (CE) industry experienced a
contraction of 8% in FY 26, primarily due to the high base
of the previous year and a temporary slowdown in project
execution during certain periods. The tractor industry recorded
exceptional growth of 23% in FY 26, achieving peak sales levels
on the back of favourable monsoon conditions, strong rural
liquidity, and higher agricultural output.

Business Analysis

CIFCL's Vehicle Finance business comprising a diversified
portfolio of Commercial Vehicles, Passenger Vehicles, Two
wheelers, Three Wheelers, Used Vehicles, Tractors and
Construction Equipment, continues to be the largest segment
contributing 53% of its business Assets under Management
('AUM') as of March 31, 2026.

Vehicle Finance (VF) disbursements during the year stood at
'62,123 Crore, as against '53,922 Crore in the previous year,
registering a robust growth of 15% and profit before tax ('PBT')
for the year was '3,145 Crore as against '2,824 Crore in the
previous year, reflecting a healthy growth of 11%, supported by
improved business volumes and operational efficiencies. This
growth was primarily driven by strong momentum across key
segments. New commercial vehicles recorded a 20% year-on-
year increase, the new passenger vehicle segment grew by 15%,
while the two-wheeler segment witnessed a significant surge
of 34%, reflecting improving demand dynamics and market
recovery.

The VF business will continue to maintain a calibrated mix
of new and used vehicle financing, with a focus on sustaining
higher yields and margins. Given its predominantly fixed-rate
lending model, the stabilisation of interest rates is expected

to support expansion in net interest margins (NIMs), thereby
strengthening overall profitability. The division continues to
invest in strengthening its credit architecture through data-
driven underwriting frameworks with no-touch and low-touch
swim lanes, leveraging alternate data sources and analytics led
decision making. This enhanced credit ecosystem is aimed at
improving risk segmentation, enabling sharper credit filters
at micro-market levels, and reducing delinquencies while
improving portfolio quality.

Tech-powered centralized lead generation, score based pre¬
approved loan offers for wallet deepening, hyper-personalized
marketing campaigns along with conversational D2C loans are
expected to enhance engagement with the existing customer
base driving repeat and cross-sell opportunities aimed at
strengthening customer lifetime value.

Technology will remain a core enabler, with increased adoption
of digital tools and GenAI-led solutions across the value chain
including underwriting, customer engagement, and collections.
Personalized, data-driven collection strategies are expected
to enhance recovery efficiencies and optimize operating costs,
further strengthening the resilience and scalability of the VF
business.

Loan against Property ('LAP')

Industry

The NBFC Loan Against Property (LAP) portfolio is expected
to register moderate growth of 19-21% in FY 27, driven by
rising property ownership, sustained demand from MSMEs,
increasing reliance on secured credit for business expansion,
and steady sourcing from non-metro markets and self-employed
customer segments. However, the ongoing geopolitical tensions
in West Asia present incremental downside risks through
elevated inflation, supply chain disruptions and a moderation
in economic activity, which could impact borrower cash flows
and asset quality, particularly within MSME-linked segments.
While the secured nature of LAP provides relative resilience,
portfolio performance and growth momentum remain sensitive
to evolving macroeconomic conditions and the interest rate
trajectory.

Business Analysis

LAP business of CIFCL delivered a strong performance in FY 26,
with disbursements rising to '20,459 Crore, reflecting a growth
of 14% over FY 25 and a five-year CAGR of 41% (FY 21-FY 26).
Assets Under Management (AUM) increased by 26% year on
year to '52,295 Crore in FY 26 up from '41,439 Crore in FY 25,
translating into a 29% CAGR over FY 21 to FY 26.

Growth was driven by strategic expansion into non-metro
markets, supported by scaling up of distribution capabilities, a

diversified channel ecosystem, and a continued focus on retail
ticket LAP. The business has also initiated deployment of AI-
enabled tools to enhance underwriting processes and KYC
verification, thereby improving efficiency. LAP continues to
remain a key contributor to MSME growth in India by supporting
business expansion and working capital requirements, with 97%
of FY 26 disbursements directed towards the Self-Employed
Non-Professional (SENP) segment, reinforcing the company's
focus on underserved borrower segments.

During the year under review, the business further strengthened
its focus on early-bucket delinquency management through pre¬
delinquency interventions, early risk identification, analytics-
driven prioritisation frameworks, and enhanced digital
collection capabilities, resulting in a significant improvement in
customer reach engagement and collection effectiveness.

Home Loans ('HL')

Industry

The housing finance services industry is expected to report
a double-digit growth in revenues supported by continued
healthy demand for housing, particularly affordable housing.
The industry is likely to grow at a healthy pace on the back of
a revival in demand for affordable housing and increasing in
demand for mid-segment and premium housing. Delinquencies
remained stable during FY 26 following a marginal uptick in
first quarter due to portfolio seasoning for entities that sourced
significant portfolios in recent years.

Business Analysis

As of March 31, 2026, CIFCL's HL business had over 1.68 lakh
live accounts (20% growth YoY) with an AUM of '22,688 Crore
(23% growth YoY). The portfolio is predominantly sourced from
Tier II, III, IV cities and towns. The disbursements for FY 26
stands at '7,363 Crore. The target customer segment continues
to be the lower middle income group. Nearly 88% of the
portfolio comprises business owners with semi-formal income
and significant business vintage while the remaining portfolio
consists of customers who are first time borrowers.

The HL business leverages CIFCL's strengths in reaching and
underwriting lower and middle-income borrowers across the
country, extending its presence to even the smallest villages and
towns through prudent underwriting, careful risk segmentation
and a balanced portfolio mix. CIFCL offers loans for self¬
construction, purchase of new flats/independent houses,
purchase of pre-owned flats/independent houses, balance
transfer from other financiers, mortgage of existing houses for
business use and shop loans and also facilitates purchase of plot.

The business has been strengthening its channel partner
network to reach larger customer base. CIFCL continues to build

a strong ecosystem of channel partners, complimented by its
digital offerings for customer on boarding and service delivery,
making it a trustworthy choice for customers pan-India.

Small and Medium Enterprises('SME')

Industry

The MSME sector continues to be a cornerstone of India's
economic growth, contributing significantly to employment,
manufacturing, and exports. In recent years, the sector has
demonstrated remarkable resilience, with its share in India's
Gross Value Added (GVA) increasing from 29.6% in FY 22 to
30.1% in FY 23 & FY 24, highlighting its growing contribution
to the country's economic output. This sector plays a vital
role in both economic and social development by fostering
entrepreneurship and generating substantial employment
opportunities at comparatively lower capital cost. The
formalization of the MSME sector particularly within the micro
and small enterprises segment has gained significant momentum
through the increasing adoption of Udyam Registration and
Udyam Assist Portal.

Business Analysis

SME business disbursements during the year stood at '7,312
Crore in FY 26. AUM grew by 41% to '9,338 Crore in FY 26 as
compared to '6,628 Crore in FY 25. Profits before tax for the
year stood at '165 Crore as against '111 Crore in the previous
year with growth of 49%.

The SME business has expanded its footprint across the
country, covering 22 regions with over 120 branches serving
approximately 12,200 MSME customers. The business has
established strategic partnerships with over 40 OEMs across
key segments such as Industrial equipment, Gensets, Medical
Equipment and Solar finance to drive greater financial inclusion
in the market.

With the continued growth of the SME ecosystem, CIFCLs
SME loans business division offers a comprehensive bouquet
of products to meet the requirements of working capital and
capital expenditure requirements of SMEs. The portfolio
includes multiple products like term loan, micro term loan,
equipment finance, supply chain finance and Leasing. Further,
subproducts offered under equipment finance are industrial
equipment finance, genset finance, medical equipment finance,
working capital finance and lease rental discounting.

During the financial year, solar funding was launched as the
company's first Green Finance offering aimed at funding
commercial and industrial Roof top installations. Under the
leasing segment, the business also commenced financing of
corporate car leases, commercial vehicles and Equipment
leasing.

Consumer Durables Loan ('CD')

Industry

According to industry reports by IBEF, India's consumer
electronics and appliances sector is witnessing strong structural
growth and is expected to emerge as one of the largest
markets globally. By FY 27, India is projected to become the
fourth-largest consumer durables market in the world, with
the sector growing at an estimated ~11% CAGR, driven by
rising disposable incomes, urbanisation, increasing household
penetration, and a shift toward smart, energy-efficient, and
premium appliances. The market size is expected to reach
~'3 lakh crore by FY 29, supported by favourable demographics
and technology-led consumption trends.

The industry recorded double-digit growth during FY 25 &
FY 26, driven by strong demand for premium, feature-rich,
and connected products, including large-screen televisions,
AI-enabled laptops, and smart appliances. Premiumisation
is becoming increasingly evident across product categories,
reflecting rising aspirational consumption across urban as well
as Tier II and Tier III markets. On the supply side, government
initiatives such as the Production Linked Incentive (PLI) scheme
for electronics and white goods have strengthened domestic
manufacturing capabilities and localisation. Overall, the sector
is entering a phase where structural growth drivers such as
improved credit access and expansion of distribution networks,
remain strong, while cyclical headwinds including inflation
pressures, pricing challenges and geopolitical uncertainties may
temporarily moderate growth momentum.

Business Analysis

FY 26 was a year of strong expansion for CIFCL's Consumer
Durables (CD) lending business, with disbursement growth of
50% from last FY. This growth was supported by the addition
of several leading brands - Vivo, Oppo, Realme, Xiaomi, Haier,
Whirlpool, Havells-Lloyd, Tecno, Infinix, TCL, IFB, and Amstrad
- significantly strengthening the product and dealer ecosystem.
The brand network is expected to be further expanded in FY 27.

The year also marked an important milestone in strengthening
CIFCL's in-house digital and sourcing capabilities. FY 26 also
witnessed significant enhancements to digital processes aimed
at improving efficiency, turnaround times, and portfolio quality.
These capabilities are expected to be leveraged more extensively
in FY 27 to drive higher operating efficiency, sharper portfolio
monitoring, and more scalable execution.

Consumer & Small Enterprise Loan ('CSEL')

The CSEL division witnessed a strong resurgence in FY 26.
Despite challenges in the MSME sector, the division implemented
multiple technological and analytical interventions, achieving a

disbursement of '7,137 Crore with AUM growing by 13% YOY
to '12,362 Crore. With a live customer base of over 1.8 lakh and
presence across 500 locations, the division delivered a profit
before tax of '147 Crore.

Secured Business and Personal Loan ('SBPL')

Industry

India's lending landscape continues to exhibit a structural credit
gap, with a large segment of borrowers remaining underserved
despite having both collateral and repayment capacity. This
segment-distinct from traditional Loan Against Property (LAP)
customers—is often excluded from formal credit channels due
to rigid underwriting norms, limited documentation, and non¬
standard income profiles. The challenge is more pronounced in
rural and semi-urban regions, where access to formal banking
remains limited. Despite improvements in financial inclusion,
barriers such as low financial literacy, informal income streams,
and high servicing costs persist. As a result, many households
continue to rely on informal credit sources, including
moneylenders, highlighting a significant unmet demand.

SBPL addresses this gap by offering collateral-backed business
and personal loans tailored to this underserved segment. Its
approach combines cash flow-based credit assessment with
prudent loan-to-value (LTV) ratios, enabling access to smaller
ticket-size loans aligned with customer needs. By leveraging
property as collateral while evaluating repayment capacity
beyond traditional metrics, SBPL expands access to formal credit
in underpenetrated markets while maintaining a disciplined risk
management framework.

Business Analysis

As of 31^st March, 2026, the SBPL business of CIFCL had crossed
over 89,000 live accounts with an AUM of '3,537 Crore. The
average ticket size is around '4.49 lakh with an average tenure
of 6 years. SBPL vertical is currently being distributed across
400 touchpoint locations spanning 11 states.

Key differentiators include a high-touch, on-ground engagement
model that brings services directly to customers, a proprietary
income assessment framework tailored to informal business
profiles, and a seamless digital journey that ensures speed
and transparency. The offering is further strengthened by
customised solutions designed to meet the needs of first-time
borrowers entering the formal credit ecosystem.

Gold Loans

Industry

The gold loan industry has emerged as one of the fastest-growing
retail credit segments over the past year. The portfolio stood at
approximately '16 lakh crore as of December 2025, growing
by over 40% year-on-year. This rapid expansion was strongly
supported by an unprecedented rally in gold prices. In recent

months, gold prices experienced short-term volatility owing to
heightened geopolitical tensions, which triggered sharp two¬
way movements as safe-haven demand and oil-driven inflation
concerns pulled prices in opposite directions.

The growing scale of the gold loan market has attracted
increased regulatory attention, signalling a systemic shift
in what was traditionally an unorganised sector. Despite its
significant growth, the gold loan industry remains substantially
underpenetrated indicating considerable potential for further
expansion.

Business Analysis

As on 31 March 2026, CIFCL has built a Gold Loans AUM of
'1,804 Crore from over 26,000 customers across ~119 branches
in South and East India, with an average AUM of over '15 Crore
per branch. The average ticket size stands at around '2 lakh,
with a portfolio of over 1,800 kg of gold as underlying security.
This has been possible due to its key differentiators in the gold
loan industry including 100% paperless customer journey, more
than 10 security measures in every branch, rigorous appraisal
and risk assessment, deep micro-market understanding and
customer experience at the core of our offering. The business
plans to deepen its footprint in the coming years.

Digital / Technology Initiatives

CIFCL has been on a rapid journey transforming a company that
leverages technology to digitize its business processes into one
that is fundamentally driven by digital innovation. At the heart
of this transformation will be the tech-enabled and intelligence-
led experience, where speed, convenience and relevance are
paramount. Customers today expect significantly improved
Turnaround Times (TAT) along with timely and appropriate
product offers tailored to their specific needs. Platforms like
Chola One deliver this by providing a seamless, end-to-end
digital journey—from origination to servicing. Simultaneously,
ecosystem partners such as dealers, brokers, and OEMs will
continue to be empowered by platforms like Gaadi Bazaar, which
integrate vehicle trading, auctions, and trade advances into a
unified digital workflow, creating a cohesive and highly efficient
value chain for all stakeholders. The foundation for delivering
a delightful experience for our customers will be based on
continuous optimization of internal IT operations through the
increasing adoption of Artificial Intelligence (AI). Generative
AI is transforming the entire software development lifecycle
and IT operations landscape. From AI-assisted code generation
and automated testing to intelligent support and proactive
operations, AI is helping accelerate delivery timelines while
enhancing system resilience. This deep integration ensures that
the technology backbone remains as agile and responsive as
the market demands. By balancing aggressive digital innovation
with robust cybersecurity and risk management practices,

the company intends to build enduring customer trust while
establishing a platform that seamlessly blends innovation
and customer-centricity as key driver of sustainable business
growth.

Outlook

The outlook for FY 27 remains stable, underpinned by resilient
domestic demand, sustained infrastructure investment, and
continued expansion in formal credit penetration, even as
growth normalises after a strong base. Consumption and credit-
led segments including automobiles, mortgages and consumer
lending are expected to exhibit healthy and more calibrated
growth, supported by improving origination quality, better
risk selection, and digital underwriting. In unsecured lending,
recent moderation and regulatory actions have strengthened
portfolio resilience, with improving performance of newer
cohorts supporting a gradual recovery in growth momentum.
Against this backdrop, CIFCL remains well positioned to pursue
disciplined growth, safeguard asset quality, and drive long-term
value creation through prudent capital allocation, strong risk
management practices and robust governance.

GENERAL INSURANCE INDUSTRY & BUSINESS UPDATE

Industry

The industry for multi-line players underwent a transitionary
year, with growth in H1 at 5.3% and H2 growth at 10.6% to
attain an annual growth of about 8%. The truncated growth in
H1 arose from lower automobile sales, loss of crop premium and
the effect of 1/n* reporting (As per IRDAI mandate, effective
October 2024, premium collected upfront for long-term policies
shall be recognised as Gross Written Premium (GWP) evenly
over the policy period on a 1/n basis, where "n" represents the
total policy duration, with recognition on a yearly basis from
the commencement of risk). The strong growth observed in
the second half year was supported by GST relief on health
insurance and the moderation of GST rates for automobiles.

The industry is witnessing a decline in property premiums
arising from steep discounts. The continuance of high discounts
in motor own damage premiums coupled with the absence of
revision in motor third-party premiums is leading to a situation
of elevated combined ratios in the motor line of business.
Competition remains intense, with private insurers using
differentiated strategies that drive higher acquisition costs,
while public sector players pursue aggressive pricing.

The Gross Direct Premium of multi-line non-life insurers
(excluding Standalone Health & Specialized insurers) was
reported at around '2,78,600 Crore, registering a growth of
around 8% over the previous year. The market share of public
sector companies was 36.8% with the private sector companies'
share at 63.2%. The standalone health insurance (SAHI)

companies grew by 19.4% to '45,900 Crore. Amongst the
various lines of businesses, motor insurance segment registered
a growth of 9.2% and fire line registered a growth of 13.4%. The
growth in the health and personal accident lines for general
insurers was placed at 13.4% and 37.9% respectively.

Underwriting results for the industry deteriorated with
combined ratios climbing up (partly due to the upfront absorption
of costs on long term premium sourcing). The industry faces
pressure from medical inflation, discounting pressure and the
regulatory direction to keep health premium pricing increases
capped at 10% for the senior citizen section of the population
which impairs economic viability for the long term. Investment
income continues to act as a stabilizing force for profitability,
supported by resilient equity markets. With insurers stepping
up the equity portfolio composition of the investment corpus,
the investment returns have remained steady.

Business Analysis

Cholamandalam MS General Insurance Company Limited
('CMSGICL') the insurance subsidiary of CFHL, is registered with
the Insurance Regulatory and Development Authority of India
('IRDA') to carry on general insurance business. CMSGICL offers
a wide range of insurance coverage including motor, travel,
health, accident, home and other types of insurance for individual
and corporate customers. The company ended the year with
gross direct premium (under 1/n method) of '7,762 Crore with
a degrowth of 4.45% arising from loss of Crop business of over
'590 Crore (figures under IGAAP (Indian Generally Accepted
Accounting Principles)).

CMSGICL's market share improved in the second half of the
year, following a subdued first half impacted by the loss of crop
business. It continued to maintain a cautious stance in the group
health (employer-employee) portfolio, while making progress
in expanding its presence and improving volumes across Gram
Panchayats. While achieving growth in topline, CMSGICL also
rationalized its management expenses. During the year, the
company renewed all its bancassurance arrangements and
entered into several new tie ups across banks, NBFCs and OEM
(Original Equipment Manufacturer) programs, while further
strengthening its individual agency network.

Motor Insurance

The Motor Line of business registered a growth of around 4.7%
during the year as compared to the industry growth of 9.2%. The
composition of the motor portfolio comprises of Cars at 49.3%,
Commercial vehicles (including tractors) at 40.1% and Two
wheelers at. 10.7%.

The premium pricing in motor own damage witnessed severe
pressure with discounts across vehicle categories staying at
higher levels. However, through active portfolio management by

strategic pricing adjustments, commission, choice of geography,
product segments and varied penetration, CMSGICL was
successful in securing growth and maintaining efficiencies. In
the third-party segment, the pricing remained static even as
the industry witnessed inflation in medical costs as well with
continuous increase of the minimum wage levels across all
states in the country.

Property and Casualty Insurance

In the fire line of business, CMSGICL registered a growth of
1.6% as against industry growth of 13.4% impacted by the
1/n reporting in the first half of the year. Premium pricing was
stable in Q1 and witnessed deterioration from Q2. Marine line
of businesses witnessed improved performance with increase in
the levels of economic activity and focused sourcing.

The company continues to follow disciplined underwriting and
prudent risk selection in the highly demanding environment. A
higher proportion of business sourced from the 'Preferred' risk
category, coupled with a well-diversified geographic distribution
of exposures, disciplined line-size management, and prudent
accumulation controls, has ensured that the company maintains
robust risk management processes.

Health, Accident and Travel Insurance

CMSGICL's overall health, accident and travel volumes grew
by 2.7% during the year with stronger growth in Group health.
Pricing of health indemnity products was revised within the
regulatory framework.

Reinsurance ('RI')

Globally, reinsurers had a better year and operated in a
situation of surplus capacity. In India, the impact of natural
catastrophe events was low and its impact on company's
retention & reinsurers shares remained limited. During the
year, the company's proportional and non-proportional
reinsurance arrangements performed well, generating
underwriting surpluses for reinsurers. The company entered
into new reinsurance arrangements in the areas of surety bonds,
commercial cyber and liability lines of business.

Based on the underlying portfolio performance and risk profile,
the company further strengthened its reinsurance arrangements
by restructuring its program to increase capacity and enhance
the scope of coverage across key treaties. The reinsurance
placements were supported by strong reinsurer participation,
reflecting continued confidence in the company's underwriting
discipline, portfolio quality, and risk management framework.

Claims function

Claims settlement improved in all lines of business. Settlement of
motor TP claims crossed 24,000 with compromise settlement of

70%. Motor OD team disposed of over 5 Lakh claims during the
year resulting in reduction of outstanding claims. The severity
was on higher side mainly due to increase in part & labor costs
and drop in salvage realization levels. Health claim settlement at
over 1.62 Lakh claims for the year were strong. 74% of the total
claims paid were on a cashless basis as compared to 65% in the
previous year. Overall, the loss ratio in the commercial insurance
lines was stable in the absence of any major catastrophic event
during the year.

CMSGICL continues to focus on harnessing efficiencies for
severity control across all lines, automation for speed and
operational controls, and a proactive approach to servicing
for building transparency and enhancing satisfaction levels of
customers.

Outlook

The general insurance industry is poised to grow against the
backdrop of sustained economic momentum in India and
continued policy thrust from the Government of India and
the Regulator towards improving insurance penetration and
financial inclusion, aligned with the vision of "Insurance for All
by 2047”. Looking ahead, the operating environment is expected
to remain challenging, shaped by a combination of regulatory,
competitive, and macro-economic factors. Several significant
regulatory initiatives are slated for implementation during
the year ahead, including the transition to Ind-AS, anticipated
changes in the EoM regulations, new regulations arising from
amendments to the Insurance Act, the proposed revisions to the
PMFBY Crop Insurance Scheme etc. Interest rates are expected
to trend upwards during the year ahead. While higher yields on
incremental investments are expected to support investment
income over the medium term, volatility in equity markets,
driven by geopolitical developments, may moderate overall
investment returns. While industry growth is anticipated to
improve, it is likely to continue to be influenced by aggressive
pricing behaviour. Structural tailwinds include steady credit
offtake, growth in the auto sector, and persistently low levels of
insurance penetration.

Digital/Technology Initiatives

Technology has become a key driver in connecting people across
various walks of life. As digital and technology advancements
evolve, the Digital Personal Data Protection (DPDP) Act
ensures that data democratization is balanced with stringent
privacy and consent frameworks. Aligned with the trend, digital
transformation continues to be the focus area for the group.
Various initiatives and technology tools have been deployed for
automation of repetitive activities across functions wherever
opportunity exists. Digital/Technology initiatives implemented
by CMSGICL during the year include - Transition to Cloud
architecture, Workflow systems in Motor OD, developing

a SuperApp for use by channel partners and employees,
implementing a Data Lake that serves as the reservoir for
all business data which is used for external data integration
requirements. Several other operating measures were put in
place relating to the operational aspects of information security
and running awareness campaigns for employees.

RISK MANAGEMENT SERVICES - BUSINESS UPDATE

Cholamandalam MS Risk Services Limited ('CMSRSL'), is a joint
venture entity of the Murugappa Group and Mitsui Sumitomo
Insurance Company Limited, Japan. Established in the year
1994, CMSRSL provides risk management and engineering
solutions in the areas of safety, health and environment.
CMSRSL is part of the Inogen Alliance. Inogen Alliance is a
global network of environment, health, safety and sustainability
consulting companies working together to provide one point of
contact to guide multinational organizations to meet their global
commitments locally.

FY 2025-26 was a landmark year for the company, with record-
high revenue and profitability reflecting sustained business
momentum and focused execution. The company continued
to advance its strategic service offerings through the delivery
of long-term projects in Cultural Transformation, Behaviour-
Based Safety, and sustainability. It further strengthened its
ecosystem of strategic partnerships with organizations such as
Inogen, EIC Dubai, and BPC, while deepening engagement with
its joint venture partner, Mitsui Sumitomo Insurance Company
(MSI). These initiatives contributed to expanding the company's
capabilities, reinforcing client relationships, and supporting its
long-term growth objectives.

During the year, more than 530 assignments in process safety,
around 200 in electrical safety, and over 80 in environmental
services were executed. Additionally, the company continues
to operate more than 88 Driver Management Centers,
providing monthly counselling to over 40,000 drivers, and
manages 8 Contractor Incubation Centers, driving over
25,000 monthly safety observations and interventions to
improve safety behaviour among contract workers. CMSRSL
actively participated in various industry forums by presenting
technical papers and contributing to panel discussions, thereby
strengthening brand presence and demonstrating technical
excellence. On the market and brand front, focused efforts
were pursued to strengthen visibility and client engagement,
including over 400 interactive sessions and the initiation of
Customer Advisory Council discussions.

CMSRSL continues to support Cholamandalam MS General
Insurance Company Limited and its clients through value-added
services such as Thermography, Safety Audits, Cargo Loss
Minimization Studies, and BRSR reporting. The Joint Venture
Partner, Mitsui Sumitomo Insurance Company Limited, Japan,

continues to support the company by facilitating engagement
with Japanese companies in India for risk management services.

The company enters FY 27 with a strong executable order book
providing revenue visibility and stability for the year ahead.
The continued strength of long-term contract engagements for
sharper operational focus, and the engagement of consultants
to stabilize the Project Management Office are expected
to further strengthen execution discipline and support the
company's growth and profitability objectives. CMSRSL remains
committed to strengthening its organizational capabilities
through structured, forward-looking skill development
initiatives thereby positioning the organization for sustained
and scalable growth.

CONSOLIDATED FINANCIAL RESULTS (' in Crore)

A report on the performance and financial position of each of
the group companies in compliance with section 129(3) of the
Act read with the Companies (Accounts) Rules, 2014, in the
prescribed form AOC-1 is annexed to this Report as Annexure I.
The consolidated financial statements of the Company prepared
in accordance with the Companies Act, 2013('the Act') and the
relevant Accounting Standards, forms part of the annual report.

The annual report containing standalone and consolidated
financial statements will be uploaded on the Company's website,
www.cholafhl.com. Annual accounts of the group companies
will also be uploaded on the Company's website and be made
available for inspection by shareholders through electronic
mode until the date of the Annual General Meeting ('AGM').

FINANCIAL REVIEW

CFHL earned an income of '89.79 Crore (previous year: '86.20
Crore) and profit before tax was '85.90 Crore (previous year:
'82.57 Crore) for the financial year ended March 31, 2026.
Aggregate investments stood at '1,293.46 Crore (previous
year: '1,290.72 Crore) as on March 31, 2026. There has been
no change in nature of business of the company and the group
companies during the year.

Associate Company: Cholamandalam Investment and Finance
Company Limited ('CIFCL)

The Company holds 43.8% in the paid-up equity share capital
of CIFCL as on March 31, 2026, and is deemed to have de-facto
control as per the principles of Ind AS 110. Accordingly, CIFCL
is treated as a 'subsidiary' for the purpose of consolidation of
financial statements. The securities of CIFCL are listed and
traded on the National Stock Exchange of India Limited ('NSE')
and the BSE Limited ('BSE').

CIFCL's Assets under Management('AUM') grew by 21% to
'2,42,630 Crore as of March 31, 2026 (previous year: '1,99,876
Crore). Loan disbursements aggregated to '1,11,642 Crore
(previous year: '1,00,869 Crore) registering a growth of 11%
during the year. Profit after tax grew by 23% to '5,220 Crore
(previous year: '4,259 Crore). Investment portfolio of CIFCL at
the close of FY 26 was '6,638 Crore including investments in
government securities aggregating to '4,152 Crore.

CIFCL raised funds from banks, financial institutions and money
markets to support the growth of its businesses at competitive
interest rates without compromising the right mix of long and
short-term borrowings, thereby maintaining a healthy asset
liability position. In FY 26, the company raised commercial
papers('CP') of '20,715 Crore of which '9,650 Crore were
repaid in FY 26. CP outstanding as at the end of the year was
'11,065 Crore. Medium and long-term secured NCDs to the
tune of ' 9,602 Crore by private placement were mobilised at
competitive rates. As of March 31, 2026, outstanding NCDs
stood at '28,228 Crore ('24,454 Crore Private Placement and
'3,774 Crore public placement) and CCD at ' 630 Crore.

The Tier II borrowings raised during the year were '100 Crore
of perpetual debt and '2,502 Crore of sub debt. As of March 31,
2026, Tier II borrowings were '13,223 Crore. CIFCL's capital
adequacy ratio stood at 19.21% as on March 31, 2026, as against
the minimum regulatory requirement of 15%.

CIFCL paid an interim dividend of '1.30 (65%) per equity share
of face value of '2/- each for FY 26. The Board of CIFCL has
recommended a final dividend of '0.70 (35%) per equity share
for FY 26, subject to their shareholders' approval.

The subsidiary companies of CIFCL are Cholamandalam
Securities Limited ('CSEC'), Cholamandalam Leasing Limited
('CLL') (Formerly and 'Cholamandalam Home Finance Limited)
and Payswiff Technologies Private Limited ('Payswiff'). Payswiff
is treated as JV for consolidation purposes. CSEC is engaged
in offering stock broking, depository and research services to
retail, corporate and institutional clients and is also a distributor
of financial products like mutual funds, fixed deposits and bonds.
CLL is an Asset Company which will own Electric Vehicles and
deploy them through structured contracts with enterprise
end customers. Payswiff is engaged in the business of offline

payment aggregator services and provides e-commerce
solutions. Vishvakarma Payments Private Limited is the
associate company of CIFCL.

CSEC achieved a gross income of '92.54 Crore (previous year:
' 104.44 Crore) and profit before tax of '10.80 Crore (previous
year: '10.85 Crore) for the year ended March 31, 2026. CLL
recorded a gross income of ' 2.71 Crore (previous year: '3.45
Crore) and made a profit of '0.91 Crore (previous year loss:
'0.71 Crore) for the year ended March 31, 2026. Payswiff
recorded a gross consolidated income of '100.24 Crore
(previous year: '110.87 Crore) and made a profit before tax of
'6.72 Crore (previous year: profit '6.27 Crore) for the year
ended March 31, 2026.

Subsidiary Company: Cholamandalam MS General Insurance
Company Limited ('CMSGICL')

CMSGICL is a joint venture between the Murugappa Group
and Mitsui Sumitomo Insurance Company Limited, Japan. The
Company holds 60% of the paid-up equity share capital of
CMSGICL. The IRDAI has deferred implementation of Ind-AS for
insurance companies. Therefore, the accounts of CMSGICL have
been converted as per the Ind AS for consolidation purposes and
figures of CMSGICL reported in this annual report are under
Ind-AS.

CMSGICL achieved a gross written premium of '9,110 Crore in
FY 26 (previous year: '8,564 Crore) and profit before tax was
'342 Crore (previous year: '650 Crore). The overall profitability
for the year reflects the impact of several business dynamics,
including the absence of crop business, higher motor claim ratios
and fair value movements in equity investments. The company's
investment portfolio stood at '19,013 Crore as of March 31,
2026 (previous year: '18,601 Crore). In the context of evolving
interest rate conditions, returns were optimized through the
redeployment of accretions and maturity proceeds into higher-
yielding instruments. The investment portfolio continued to
maintain a strong quality profile, with zero non-performing
assets as of the balance sheet date. The solvency ratio as of March
31, 2026, was 1.96 times (minimum regulatory requirement:
1.50 times), indicating a comfortable capital position. With a
focus on supporting future growth and strengthening solvency,
the Board of CMSGICL has decided not to recommend dividend
for FY 26.

Joint Venture: Cholamandalam MS Risk Services Limited
('CMSRSL')

The Company holds 49.5% stake in CMSRSL. CMSRSL achieved
an income of '98.78 Crore (previous year: '83.20 Crore) and
profit before tax of '10.32 Crore (previous year: '9.53 Crore)
for the year ended March 31, 2026. The Board of CMSRSL has
recommended a final dividend of 50% i.e. '5/- per equity share
of face value of '10/- each for FY 26.

DIRECTORS

As per the provisions of section 152 of the Act, Mr. Vellayan
Subbiah (DIN: 01138759) retires by rotation at the ensuing
AGM and being eligible has offered himself for re-appointment.
The Board recommends the re-appointment of Mr. Vellayan
as a director liable to retire by rotation and the resolution in
this regard forms part of the Notice convening the 77^th AGM.
Information as required to be disclosed under regulation 36(3)
of the SEBI Listing Regulations for re-appointment of director is
provided in the Notice convening the AGM.

DECLARATION FROM INDEPENDENT DIRECTORS

The Independent Directors ('IDs'), Mr. B Ramaratnam,
Mrs. Vasudha Sundararaman and Mr. K Balasubramanian have
submitted declarations stating that they meet the criteria of
independence as required under the provisions of section
149(6) of the Act and regulation 16(1)(b) of the SEBI Listing
Regulations. In the opinion of the Board, all the IDs possess
integrity, expertise and relevant experience in their respective
fields including the proficiency required to effectively discharge
their roles and responsibilities in directing and guiding the
affairs of the Company.

In terms of section 150 of the Act read with the Companies
(Appointment & Qualification of Directors) Rules, 2014, the IDs
of the Company have registered their names in the independent
directors' data bank, created and maintained by the Indian
Institute of Corporate Affairs ('IICA'). The IDs are also required
to pass an online proficiency self-assessment test conducted by
the IICA within a period of two years from the date of inclusion of
their names in the data bank, subject to exemption to individuals
who fulfil the eligibility criteria prescribed under the said Rules.
All the IDs are compliant with the requirements specified in the
Rules.

KEY MANAGERIAL PERSONNEL

Pursuant to the provisions of section 203 of the Act,
Mr. N Ganesh, Manager & Chief Financial Officer and
Mrs. E Krithika, Company Secretary are the key managerial
personnel of the Company and there were no changes during
the year. Mr. Ganesh was re-appointed as the Manager of the
Company for a third term of three years effective June 15,
2023. His tenure as the Manager concludes at the close of
business hours on June 14, 2026. The Board places on record
its appreciation for the contributions rendered by Mr. Ganesh
during his tenure as Manager of the Company.

Based on the recommendation of the Nomination &
Remuneration Committee, the Board of Directors subject to
shareholders' approval appointed Mr. Shyam Shankar as the
Manager of the Company for a period of five (5) years with effect
from June 15, 2026. Necessary resolution seeking shareholders'
approval for the appointment of Mr. Shyam Shankar as the

Manager of the Company forms part of the Notice convening
the 77^th AGM.

STATUTORY AUDITORS

The shareholders at the 75^th AGM held on August 9, 2024,
appointed M/s. R G N Price & Co., ('RGNP'), Chartered
Accountants (Firm Registration No. 002785S) as the statutory
auditors of the Company for a period of three years commencing
from the conclusion of the 75^th AGM till the conclusion of the
78^th AGM. RGNP have confirmed their eligibility to continue as
statutory auditors for FY 27.

The Auditors' Report issued by RGNP for the year under
review is unmodified and does not contain any qualification,
reservation, or adverse remark. The statutory auditors have not
reported any incident of fraud to the Audit Committee or the
Board of Directors under section 143(12) of the Act during the
year.

INTERNAL CONTROL SYSTEM AND INTERNAL AUDIT

Internal control system of an organisation is looked at as the key
to its effective functioning. The Company has internal control
systems in place commensurate with the nature of business
and size of its operations, to ensure compliance with internal
policies, regulatory matters and to safeguard reliability of
financial reporting and its disclosures. An audit of systems and
processes is conducted by the internal auditor of the Company.

The internal audit is performed based on the audit plan approved
by the Audit Committee annually. The internal audit report
along with the observations, if any, and recommendations from
the audit review are discussed and reviewed in the quarterly
meetings of the Audit Committee. The Audit Committee
evaluates the adequacy and effectiveness of internal controls,
performance of the internal audit, recommends improvements
and reviews the action taken.

FINANCEDeposits

The Company has not accepted any fixed deposits under
Chapter V of the Companies Act, 2013 and as such no amount
of principal and interest were outstanding as of March 31, 2026.

Particulars of Loans, Guarantees or Investments

During the year the Company has not made any investments
in group companies. The provisions of section 186 of the Act
pertaining to investment is not applicable to CFHL since the
Company is an NBFC whose principal business is acquisition of
securities. Information regarding investments of the Company is
given in the financial statements. During the year the Company
has not given any loans or guarantees under the provisions of
section 186 of the Act.

Internal Financial Control Systems with reference to the
Financial Statements

The Company has put in place adequate internal financial
controls to ensure reliability of financial and operational
information and regulatory and statutory compliance. The
Company's business processes are equipped with monitoring
and reporting processes to ensure financial discipline and
accountability. The internal financial control systems are
monitored both by the internal and statutory auditors of the
Company. The statutory auditors of the Company have also
certified the existence and operating effectiveness of the
internal financial controls as of March 31, 2026.

Financial Ratios

Key ratios relevant to the Company's operations are given in the
table below:

The Company being a holding investment company and not
having debt obligations, ratios viz., debtors turnover, inventory
turnover and interest coverage ratios are not applicable. The
increase in adjusted net-worth ratio is on account of an increase
in unrealised gains on investment in subsidiaries. The leverage
ratio (maximum regulatory requirement: 2.5 times) and adjusted
net-worth ratio (minimum regulatory requirement:30%) are
computed in accordance with the RBI Master Directions for
Core Investment Companies ('Master Directions of RBI'). There

was no significant change in other key ratios applicable to the
Company.

RISK MANAGEMENT

Risk management is a process to identify and manage threats
that could have an impact on the operations of the Company.
Generally, this involves reviewing business operations,
identifying potential threats to the Company and the likelihood of
their occurrence and then taking appropriate actions to address
the most likely threats. The Company adopts a systematic
approach to mitigate risks associated with accomplishment
of objectives, operations, revenues and regulations. The risk
management framework of the Company comprises of the
following key elements viz., a) Risk Assessment: study of
threats and vulnerability and exposure to various risks; b) Risk
Management and Monitoring: probability of risk assumption
is estimated and monitored; and c) Risk Mitigation: measures
adopted to mitigate risks by the Company.

The Risk Management Committee assists the Board in
monitoring various risks, reviews and analyses risk exposures
and mitigation plans related to the Company and its group
companies. A Risk Management Policy has been approved by
the Board of Directors which inter alia sets out risk strategy,
approach and mitigation plans, liquidity risk management
and asset liability management. During the year the Risk
Management Committee of CFHL reviewed key risk exposures
of the Company along with mitigation measures, asset liability
management, structural liquidity management besides review of
key risk exposures and mitigation measures of group companies.

Key risk exposures of the Company along with risk mitigation
measures are provided in the table below. The risks furnished
hereunder are not exhaustive and assessment of risk is based on
management perception.

Further, risks arising out of NBFC and insurance business
constitute the dominant risks of the Company on a consolidated
basis. The group companies have their own risk management
framework in line with their strategic business operations as
appropriate to the industry in which they operate. The risk
management framework of NBFC and insurance business
are broadly based on clear understanding and identification
of various risks, disciplined risk assessment by evaluating
the probability and impact of each risk, measurement and
monitoring of risks by establishing key risk indicators with
thresholds for all critical risks and adequate review mechanism
to monitor and control risks. The business operations of each
of the group companies, the risks faced by them, and the risk
mitigation tools followed by them are reviewed periodically
by the Risk Management Committees and the Boards of the
respective companies.

CIFCL embeds a proactive, Board-governed risk culture across
all organizational layers to safeguard long-term operational
stability and sustainable strategic growth. The Risk Management
Committee (a committee of the Board of Directors) oversees the
proactive risk management culture by setting the organization's
risk appetite, by monitoring key risks and by ensuring alignment
with strategic goals. The Risk Management division, under
the Chief Risk Officer, develops and reviews risk management
policies and establishes risk management framework across
the organisation, including various metrics, indicators and

other data. Risk owners across departments are responsible for
implementing mitigation strategies and reporting emerging risks.
Driven by robust internal controls, sound operating procedures
and constant regulatory alignment, the team continually evolves
to mitigate emerging market and technology vulnerabilities.

Managing risks is an integral part of the insurance business.
CMSGICL manages risks in an informed and disciplined manner
and within a pre-determined risk appetite and tolerance. The
risk management and internal control systems are designed to
ensure that these risks are managed effectively and efficiently.
All risk management activities are aligned to corporate aims,
objectives, organizational priorities and are designed to
protect and enhance the reputation and standing of CMSGICL.
CMSGICL has put in place an appropriate risk management
process covering various risks that the company is exposed to,
which are discussed and reviewed by the Risk Management
Committee of its Board on a quarterly basis.

CORPORATE GOVERNANCE

The Company firmly believes in committing itself to maintaining
high standards of corporate governance. A report on corporate
governance of the Company together with a certificate from
practicing company secretaries in accordance with the SEBI
Listing Regulations is annexed to this Report as Annexure II. The
Report further contains other details which are required to be
provided in the Board's Report.

BOARD MEETINGS

Five meetings of the Board were held during the year ended
March 31, 2026. Further details on the Board meetings are
disclosed in the Report on Corporate Governance.

COMPOSITION OF THE AUDIT COMMITTEE

The Board has constituted an Audit Committee in terms of the
applicable provisions of the Act, the SEBI Listing Regulations and
the Master Directions of RBI. The details of terms of reference,
composition and meetings of the committee are disclosed in the
Report on Corporate Governance.

BOARD EVALUATION

Pursuant to the provisions of section 134 of the Act and
regulation 17 of the SEBI Listing Regulations, the Board of
Directors have carried out an annual performance evaluation
of the Board itself, the individual directors, various committees
of the Board and the Chairman for FY 26. The manner in which
the evaluation has been carried out is provided in the Report on
Corporate Governance.

POLICY ON BOARD NOMINATION AND REMUNERATION

The Board has adopted a Policy on the Selection, Appointment
and Remuneration of Directors and Senior Management
Personnel. The details of the Policy are provided in the Corporate
Governance Report forming part of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY ('CSR')

The Company, being a part of the Murugappa Group, is known
for its tradition of philanthropy and community service. The
Company's philosophy is to reach out to the community through
service-oriented philanthropic institutions in the fields of
education and healthcare. With the enactment of Corporate
Social Responsibility (CSR) provisions in the Companies Act,
2013, the Company has framed a CSR Policy and the policy is
available on the Company's website athttps://files.cholamandalam.
com/cholafhl/Corporate Social Responsibility Policy 5b340bbc1d.
pdf Pursuant to the provisions of section 135(5) of the Act, every
company shall spend at least two percentage of its average net
profits made during the three immediately preceding financial
year in pursuance of its CSR Policy.

In compliance with the aforesaid provisions, the Company has
spent '7.30 Lakh towards CSR activities approved by the Board
during the year ended March 31, 2026. An annual report on CSR
activities is appended as Annexure III to this Report.

RELATED PARTY TRANSACTIONS

The Company has formulated a policy on related party
transactions. All transactions that were entered into by the
Company with related parties during the financial year were
in the ordinary course of business and on an arm's length basis.

There were no materially significant related party transactions
during the year which had potential conflict with the interests of
the Company at large. Pursuant to section 134(3)(h) of the Act
read with rule 8(2) of the Companies (Accounts) Rules, 2014,
there were no transactions during the year to be reported under
section 188(1) of the Act in Form AOC-2.

Necessary disclosures on related party transactions have been
made in the notes to the financial statements. None of the
Directors had any pecuniary relationships or transactions vis-a¬
vis the Company.

HUMAN RESOURCES ('HR') AND PARTICULARS OF
EMPLOYEES

Human Resources ('HR') are the valuable assets for the group.
CFHL along with its group companies has a work force of more
than 54,000 employees as of March 31, 2026. The group's strong
human resource practices continue to facilitate the achievement
of organizational goals and business objectives. Employee safety
and well-being remain key priorities. The group also focuses
on effective talent planning and resourcing strategies to meet
evolving business requirements and strengthen leadership
capabilities for the future.

As of March 31, 2026, CFHL had two employees. The information
required to be disclosed under the provisions of section 197
of the Act read with rule 5 of the Companies (Appointment
& Remuneration of Managerial Personnel) Rules, 2014 is
appended as Annexure IV to this Report.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION
AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company has no activity relating to consumption of energy
or technology absorption etc. and does not have any foreign
exchange earnings or outgo.

WHISTLE-BLOWER/VIGIL MECHANISM

In compliance with the provisions of section 177(9) of the Act
read with the Companies (Meetings of Board and its Powers)
Rules, 2014, regulation 22 of the SEBI Listing Regulations
and the Scale Based Regulations of RBI, the company has
established a whistleblower/vigil mechanism for directors and
employees to report genuine concerns. The mechanism provides
for adequate safeguards against victimisation of persons using
the mechanism and makes provision for direct access to the
Chairman of the Audit Committee in appropriate or exceptional
cases. The policy is available on the Company's website at
https://files.cholamandalam.com/cholafhl/Whistle Blower Policy
e21da92742.pdf.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

Pursuant to the Sexual Harassment of Women at Workplace
(Prevention, Prohibition & Redressal) Act, 2013, the Company

has formulated a policy for prevention of sexual harassment at
workplace. An internal complaints committee ('ICC') is in place
to redress complaints received regarding sexual harassment.
The policy extends to all employees (permanent, contractual,
temporary and trainees). During the calendar year 2025 no
referrals were received under the policy, and no complaints
were pending at the beginning and end of the year.

SECRETARIAL AUDIT REPORT

The shareholders at the 76^th AGM held on August 8, 2025,
approved the appointment of M/s. Sridharan & Sridharan
Associates (M/s SSA), Practicing Company Secretaries,
as the secretarial auditor of the Company for a period of
five consecutive years commencing from FY 2025-26.
M/s. SSA conducted secretarial audit for the year ended March
31, 2026. The Report issued by the secretarial auditor in the
prescribed form MR-3 is annexed to this Report as Annexure V.
The secretarial audit report does not contain any qualification,
reservation or adverse remarks by the secretarial auditor.

In compliance with regulation 24A of the SEBI Listing
Regulations, the secretarial audit report of the Company's
material subsidiary, Cholamandalam MS General Insurance
Company Limited, for the year ended March 31, 2026, is annexed
to this Report as Annexure VI.

COST RECORD AND COST AUDIT

Maintenance of cost records and requirements of cost audit as
prescribed under the provisions of section 148(1) of the Act is
not applicable to the Company.

ANNUAL RETURN

Pursuant to the provisions of section 92(3) and section 134(3)
(a) of the Companies Act, 2013, the annual return for the year
ended March 31, 2026, is available on the Company's website at
https://www.cholafhl.com/investors/annual-return

COMPLIANCE WITH SECRETARIAL STANDARDS

The Company has complied with the Secretarial Standards
on Meetings of the Board of Directors (SS-1) and Secretarial
Standards on General Meetings (SS-2) issued by the Institute of
Company Secretaries of India.

MATERIAL CHANGES AND COMMITMENTS AFFECTING
THE FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments affecting the
financial position of the Company which occurred between
March 31, 2026, and the date of this Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

Pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations,
the Business Responsibility and Sustainability Report (BRSR)

for FY 2025-26, including BRSR Core disclosures and the
assessment report of M/s. B. Thiagarajan & Co., Chartered
Accountants, is annexed to this Report as Annexure VII. The
BRSR includes details of Company's performance against the
9 (nine) principles of the National Guidelines on Responsible
Business Conduct and a report under each principle, which is
divided into essential and leadership indicators.

DIRECTORS' RESPONSIBILITY STATEMENT

The Board of Directors confirms that the Company has in
place a framework of internal financial control and compliance,
which is reviewed by the Audit Committee and the Board and
independently reviewed by the internal auditors and statutory
auditors. Further, pursuant to section 134(5) of the Companies
Act, 2013, the Board of Directors confirms that:

a) i n the preparation of the annual financial statements for
the year ended March 31, 2026, the applicable accounting
standards have been followed and that there were no
material departures therefrom;

b) they have, in the selection of the accounting policies,
consulted the statutory auditors and have applied their
recommendations 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 as
at March 31, 2026 and of the profit of the Company for the
year ended on that date;

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

d) they have prepared the annual financial statements 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
during the year ended March 31, 2026; and

f) proper system has been devised to ensure compliance with
the provisions of all applicable laws and that such systems
were adequate and operating effectively during the year
ended March 31, 2026.

DECLARATIONS/AFFIRMATIONS

• There was no significant material orders passed by the
regulators or courts or tribunals impacting the Company's
going-concern status and its operations in future.

• The Company does not carry on any activities other than
those specifically permitted by the RBI for CICs.

RBI does not accept any responsibility or guarantee about the
present position as to the financial soundness of the Company
or the correctness of any of the statements or representations
made or opinions expressed by the Company and for discharge
of any liability by the Company.

Neither there is any provision in law to keep, nor does the
Company keep any part of the deposits with RBI and by issuing a
Certificate of Registration to the Company, RBI neither accepts
any responsibility nor guarantees the payment of deposits to any
depositor or any person who has lent any sum to the Company.

• There are no applications made or any proceedings pending

under the Insolvency and Bankruptcy Code, 2016 during
the year.

• During the year, the Company had not made any one-time
settlements with banks or financial institutions.

ACKNOWLEDGMENT

The Directors express their gratitude for the support and
co-operation extended by the Ministry of Corporate Affairs,
Securities and Exchange Board of India, Reserve Bank of India,
Stock Exchanges and other statutory authorities. The Directors
also wish to thank all investors, vendors, financial institutions,
banks and joint venture partners for their continued support
and faith reposed in the Company. The Board places on record
its appreciation for the contribution made by the employees of
the Company and its group companies across all levels.

On behalf of the Board
M M Murugappan

Place : Chennai Chairman

Date : May 8, 2026 DIN: 00170478